आयकर अपीलीय अिधकरण,अहमदाबाद (cid:8)यायपीठ ‘SMC’ अहमदाबाद।

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD ]]

BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER AND SHRI MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER ITA No.1388/Ahd/2025 Asstt.Year : 2018-19 Grindly Gases & Petrochemicals P. Ltd. The JCIT, TDS Range

303, B.N. Chambers Vadodara.

R.C. Dutt Road Vadodara 390 007.

PAN : AAACCS 7129 F (Applicant) (Responent)

Assessee by : None Revenue by : Shri Arvind Kumbhara, Sr.DR सुनवाई क(cid:9) तारीख/Date of Hearing : 22/09/2025 घोषणा क(cid:9) तारीख /Date of Pronouncement: 24/09/2025 आदेश/O R D E R PER MAKARAND V.MAHADEOKAR, AM:

This appeal by the assessee arises from the order dated

30.04.2025 passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”], for Assessment Year 2016-17, whereby the CIT(A) confirmed the penalty of Rs. 4,25,157/- levied under section 271C of the Income- tax Act, 1961 [hereinafter referred to as “the Act”]. The penalty had been imposed by the Joint Commissioner of Income-tax, TDS Range, Vadodara vide order dated 28.02.2023, in proceedings initiated for failure to deduct tax at source on interest under section 194A of the Act.

2. Facts of the Case

2.1 The brief facts, as culled out from the penalty order under section 271C passed by the Joint Commissioner of Income-tax, TDS Range, Vadodara, are that during the Financial Year 2015-16 the assessee made payment of interest amounting in aggregate to Rs.42,51,571/-. On verification of records, it was noticed that no tax had been deducted at source on the said payment as required by section 194A. The Assessing Officer recorded that an order under sections 201(1)/201(1A) had already been passed on 04.08.2021 holding the assessee to be an assessee-in-default in respect of the said non-deduction. The matter was thereafter taken up for levy of penalty under section 271C.

2.2 In the penalty order, it is recorded that notices under section 274 read with section 271C were issued on 25.08.2022, 25.11.2022 and finally on 20.12.2022, all duly served, but the assessee failed to furnish any reply. The Assessing Officer observed that the assessee was liable to deduct tax at 10 percent on the interest payment of Rs. 42,51,571/-, amounting to Rs. 4,25,157/-, but no deduction was made. Referring to section 271C, the Assessing Officer held that in the absence of any reasonable cause, the assessee was liable for penalty equal to the tax not deducted and accordingly imposed a penalty of Rs.4,25,157/-.

2.3 The assessee preferred appeal before the CIT(A) where the assessee placed on record a statement of facts stating that it has been facing huge financial difficulties and that the interest payment of Rs.42,51,571/- pertained to Techtonic Motors Pvt. Ltd. The assessee also stated that the TDS along with interest had been paid subsequently to the date of deduction.

2.4 The CIT(A) noted that during appellate proceedings the assessee failed to provide any satisfactory explanation or supporting evidence for the non-deduction of tax in F.Y. 2015-16 relevant to A.Y. 2016-17. Referring to section 271C, it was observed that since the assessee had not deducted and deposited tax on the interest payments as required under section 194A, it was liable for penalty. The CIT(A) further held that the assessee did not demonstrate any reasonable cause for the lapse and had offered no satisfactory explanation for the default.

Accordingly, the CIT(A) dismissed the appeal.

3. Aggrieved by the order of CIT(A) the assessee is in appeal before us raising following grounds:

1. The Learned CIT (Appeals) erred in disregarding the decision of the Honourable Kerala High Court contested by U.S. Technologies Pvt.Ltd. before the Hon'ble Apex Court filed during the course of appellate proceedings and further erred in confirming the penalty of Rs.4,25,157/-u/s 271C of the Act.

2. The appellant company craves, leave to add, alter or amend any of the grounds m