UNION BANK OF INDIA vs. COMMISSIONER OF INCOME TAX

ITA/13/2004HC Punjab & HaryanaPHHC01051251200423 November 2010Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL5 pages
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What were the facts?

The appellant, Manager of Union Bank of India, Ludhiana, was obligated to deduct income tax at source under Section 194A(3)(vii) on interest exceeding Rs. 10,000/- paid/credited. For the financial year 1999-2000 (assessment year 2000-2001), the appellant failed to deduct tax for 59 persons who had filed declarations under Section 197A in Form 15H. The delay in submitting these declarations to the Commissioner of Income Tax (CIT) ranged from 65 to 447 days. The CIT initiated penalty proceedings under Section 272A(2)(f). The appellant contended the lapse was due to a bona fide mistake and reasonable cause, and that no loss occurred to the Revenue. The CIT levied a penalty of Rs. 1,26,606/-. The Income Tax Appellate Tribunal upheld the penalty, leading to the present appeal.

What did the High Court hold?

The High Court held that the explanation furnished by the assessee for the delay in submitting Form 15H to the Department was plausible and that the non-compliance could not be considered deliberate. The Court found that the pronouncement in CIT vs. State Bank of Patiala (supra) fully supported the assessee's case. In that case, the Court had held that if the assessee was not required to deduct tax at source, no loss of revenue had occurred, and the default was technical, no penalty under Section 272A(2)(f) was leviable. The Tribunal, therefore, erred in upholding the penalty. The appeal was allowed, and the substantial questions of law were answered in favour of the assessee. The operative direction was to allow the appeal, implying deletion of the penalty.

What were the issues?

1. Whether the Tribunal was justified in upholding the levy of penalty under Section 272A(2)(f) based on its interpretation of the provision? (Question of law) 2. Whether the Tribunal was right in upholding the penalty under Section 272A(2)(f) despite the assessee committing a default under a bona fide belief and with a reasonable cause, as forms were believed to be sent annually? (Question of mixed law and fact) 3. Whether the Tribunal was justified in upholding the penalty based on the number of days of delay? (Question of mixed law and fact) 4. Whether the Tribunal was justified in not following its own prior decision where a penalty under similar circumstances was deleted, thus acting against the doctrine of judicial consistency and perversely? (Question of law) Assessee's contentions: The delay in furnishing Form 15H was not deliberate but due to a misunderstanding regarding the filing deadline, believing it was to be filed with Form 27A by June 30th instead of the 7th of the following month. The assessee had a reasonable cause under Section 273B, and thus no penalty should have been levied. The default was technical, and without intent, no penalty was warranted. Reliance was placed on this Court's decision in CIT vs. State Bank of Patiala (2005) 277 ITR 315, which held that no penalty is exigible for unintentional technical defaults causing no loss of revenue. Revenue's contentions: The Revenue supported the orders of the CIT and the Tribunal.

Which sections of the Income-tax Act were involved?

Section 260A,Section 194A(3)(vii),Section 197A,Section 272A(2)(f),Section 273B

AI-generated summary — verify with the full judgment below

Income Tax Appeal No. 13 of 2004 1 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 13 of 2004 Date of Decision: 23.11.2010 Manager, Union Bank of India Ludhiana --- Appellant Versus Commissioner of Income Tax Ludhiana --- Respondent ---- CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL. --- PRESENT:Mr. Pankaj Jain, Advocate for the appellant-assessee.

Mr. Rajesh Katoch, Standing Counsel for the respondent-Revenue. --- AJAY KUMAR MITTAL, J.

This appeal under Section 260A of the Income-tax Act, 1961 (for short “the Act’”) has been filed by the assessee against the order dated 10.9.2003, passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘B’, Chandigarh, (in short “the Tribunal”) in ITA No. 861/CHANDI/01, relating to the assessment year 2000-2001. Income Tax Appeal No. 13 of 2004 2 The assessee has claimed the following substantial questions of law for determination by this Court: 1- Whether under the facts and circumstances of the case and on an interpretation of Section 272A(2)(f), the Tribunal is justified in upholding t

The order continues below.

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