A ‘Month’ for imposing Penalty for TDS Default means 30 Days, not a British Calendar Month: ITAT [Read Order]

The Income Tax Appellate Tribunal ( ITAT ), Delhi bench has held that for the purpose of imposing the penalty under section 201(1A) of the Income Tax Act for TDS Default, a ‘month’ means 30 days and not a British Calendar Month.

Assessee committed default on deducting tax at source on Salary. While concluding the proceedings, the AO calculated the interest on late payment at Rs.9,80,607/- whereas the assessee calculated the same at Rs.9,48,970/-, and the difference being Rs.31,637/-. AO had taken the month to be the British calendar month as defined in Section 3(35) of the General Clauses Act and the calculated one day in March and two days in May as two full months and calculated interest for three months including the month of April also.

The assessee claimed that the calculation of interest for three months by the AO is incorrect.

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The Tribunal rejected the view of the Assessing Officer and held that the said view cannot be accepted.

“In view of the fact that the assessee did not furnish the requisite information as observed by the learned CIT(A) in para 2.3 of his order, we deem it just and necessary, while setting aside the impugned order, to remand the matter to the file of the learned CIT(A) to enable the assessee to submit the actual calculation showing the discrepancies in the calculation of interest by the AO and the assessee respectively. Learned CIT(A), after considering the same, would decide the matter in the light of our above observations that the month as occurred in Section 201(1A) shall mean a period of 30 days and not a British calendar month. We order so accordingly,” the Tribunal said.