M/S WORLD TRADE PARK LIMITED,JAIPUR vs. JOINT COMMISSIONER OF INCOME TAX (TDS), JAIPUR

PER BENCH : These three appeals by the assessee are directed against three separate orders of ld. CIT (A)-3, Jaipur all dated 23rd October, 2017 arising from penalty order passed under section 272A(2)(k) of the Income Tax Act for the assessment year 2011-12. The assessee has raised the common ground in these appeals except the quantum of penalty levied under section 272A(2)(k). The ground raised in ITA No. 999/JP/2017 is as under :-

“ 1. That the CIT (A)-III, Jaipur has grossly erred in upholding imposition of penalty of Rs. 2,79,400/- under section 272A(2)(k).”

2 ITA Nos. 999, 1000 & 1006/JP/2017 M/s. World Trade Park Ltd., Jaipur.

statement/return in respect of the TDS on salary payment as well as other

payments. Accordingly, the AO issued show cause notices to initiate the proceedings

for levy of penalty under section 272A(2)(k) for late/non filing of TDS statements by

the assessee in the prescribed Form no. 24Q and 26Q. The assessee explained the

reasons for delay in compliance of the provisions of deduction of tax and payment of

the same as well as filing the quarterly TDS statement that the payment could not

be made due to financial difficulties and since the payment has not been made, the

TDS return could not be filed as required by the Scheme of TDS Returns. The AO

after considering the submissions of the assessee came to the conclusion that non

deposit of TDS on time itself attracts initiation of prosecution proceedings, therefore,

the explanation of the assessee was not acceptable to the AO. Consequently, the AO

levied the penalty under section 272A(2)(k) of the Act. The assessee challenged the

action of the AO before ld. CIT (A) and further explained the cause of delay in filing

the e-TDS statement in Form No. 24Q and 26Q was on account of the fact that CPC

computer system generate number for acknowledgement for the receipt of such

statement which was not in the hands of the assessee. The generation of the

number could not occur till such time the PAN and information available on 26AS

were tallied by the computer system itself. The contention and explanation of the

assessee did not find favour from the ld. CIT (A) and accordingly the penalty levied

under section 272A(2)(k) was confirmed by the ld. CIT (A).

(a) Delay in filing e-TDS statement in Form No. 24Q and 26Q was on account

of the facts that CPC computer systems generate number for

3 ITA Nos. 999, 1000 & 1006/JP/2017 M/s. World Trade Park Ltd., Jaipur.

acknowledging the receipt of such statements which was not in the hands

of the appellant. The generation of that number could not occur till such

time, the PAN and information not available on 26AS were tallied by the

computer system itself. The relevant software was also not available to

the Franchisee outsourced by the department or NSDL being the apex

nodal agency. Therefore, there was delay in the generation of number for

filing the statements. The circumstances were therefore beyond the

control of the assessee resulting in delay in e-filing of TDS returns.

(b) During the period there was genuine difficulty in uploading the TDS

returns since the number could not be generated till the time PAN and

information available in 26AS was tallied by the computer system itself as

acknowledged in the decision of State Bank of India v. JOT (TDS) 68 SOT

370 (cuttack).

(c) Furthermore the presumption of AO that the penalty is automatic and has

to be levied in routine and mechanic manner is not correct. It is also to be

noted that there is no allegation that there is delay in depositing the TDS.

The only reason for levying the penalty is the consequential filing of 24Q

and 26Q. Mere delay in filing the quarterly returns particularly where the

taxes deposited are in time and for which there is no dispute would not be

justifiable for visiting the appellant with the penalty proceedings.

(d) Act of the assessee cannot be said to be intentional or willfull and

therefore penalty should not be imposed because the assessee was

prevented by sufficient cause.

4 ITA Nos. 999, 1000 & 1006/JP/2017 M/s. World Trade Park Ltd., Jaipur.

(e) Non filing of TDS return does not involve any revenue loss and is merely a

technical default.

(f) The assessee did not derive any benefit from non-filing of quarterly

statements in time as the amount of TDS was duly deposited in the

government treasury within the prescribed time. Such delay has not

caused any loss to the revenue.

He has further submitted that there is no fault under section 200(3) or even 206C(3)

as stipulated under section 272A(2)(k) and thus penalty imposed under section

272A(2)(k) deserves to be deleted. He has reiterated the submissions as made

before the CIT (A). The ld. A/R relied on the order of the Jaipur Bench of the

Tribunal in the case of Argus Golden Trades India Ltd. vs. Jt. Commissioner of

Income-tax, TDS, Jaipur, 82 taxmann.com 479. The ld. A/R has also referred to the Notification No. 41/2010 dated 31st May, 2010 and submitted that quotation of PAN

in the statement is mandatory. Therefore, in the absence of the PAN of all the

deductees it is not possible to submit the quarterly TDS statement and hence the

delay due to the reason explained by the assessee is a bonafide explanation for

which no penalty under section 272A(2)(k) is leviable.

3.1. On the other hand, the ld. D/R has submitted that the AO has initiated the

penalty proceedings for default in filing the quarterly TDS statement by the

assessee. He has further contended that so far as the PAN of the deductees is

concerned, the assessee cannot take this excuse when the assessee is paying salary

to its employees without compliance of the provisions of section 200(3) or 206C of

the IT Act. He has relied upon the orders of the authorities below.

5 ITA Nos. 999, 1000 & 1006/JP/2017 M/s. World Trade Park Ltd., Jaipur.

record. The assessee has taken a legal objection against the validity of the order

passed under section 272A(2)(k) and submitted that the AO has not specified the

default of the assessee whether it is for not filing of TDS return or for not filing of

TDS statement. In support of his contention, he has relied upon the decision of

Coordinate Bench of this Tribunal in the case of Argus Golden Trades India Ltd. vs.

Jt. Commissioner of Income-tax, TDS, Jaipur (supra). We find that as per the

impugned order passed under section 272A(2)(k), the AO has levied the penalty due

to the default of the assessee in filing the quarterly TDS statement in Form No. 24Q

and 26Q. It is pertinent to note that the Form No. 24Q and 26Q are required for

submitting the quarterly TDS statement in respect of TDS on salary and TDS on non

salary payments. Therefore, the penalty has been levied by the AO against the

default of not submitting/delivering the quarterly TDS statements. We further note

that the Annual TDS Return is filed as per Form No. 24 and 26 and, therefore, there

is a clear distinction between the two requirements of filing the quarterly TDS

statement and Annual TDS return. The forms are also separately provided for the

purpose of filing the quarterly TDS statement as well as for Annual TDS return in

Form No. 24Q and 26Q as well as Form No. 24 and 26 respectively. Since the

assessee has raised a legal objection which was not raised before the authorities

below and further the said objection of the assessee can be considered and decided

only after considering the show cause notice issued by the AO to ascertain whether

there was any defect and illegality in the show cause notice for initiation of penalty

u/s 272A(2)(k) of the Act. Accordingly, in the facts and circumstances of the case

when this issue was not raised before the authorities below and further the show

6 ITA Nos. 999, 1000 & 1006/JP/2017 M/s. World Trade Park Ltd., Jaipur. cause notice issued by the AO is not available before us, we set aside the matter in these three appeals to the record of the ld. CIT (A) for re-adjudication of the same after considering the objection raised by the assessee. Needless to say, the assessee be given an appropriate opportunity of hearing before passing the fresh order. 4. In the result, appeals of the assessee are allowed for statistical purposes.

Order pronounced in the open court on 11/05/2018.

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सहायक पंजीकार@Aेेज. त्महपेजतंत