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Facts
The assessee defaulted in depositing TDS within the stipulated time and also in filing quarterly TDS returns. Penalties were levied under Section 271C for non-deposit of TDS and under Section 272A(2)(g) for delayed filing of TDS returns. The CIT(A) confirmed these penalties.
Held
The Tribunal held that penalty under Section 271C is not leviable for delayed remittance of TDS, relying on the Supreme Court decision in US Technologies. It also held that penalty for delayed filing of TDS returns was levied under an inapplicable section (272A(2)(g)) and that the relevant section (272A(2)(k) or 271H) did not attract penalty for the period in question.
Key Issues
Whether penalty under Section 271C is leviable for delayed remittance of TDS, and whether penalty under Section 272A(2)(g) is sustainable for delayed filing of TDS returns when the relevant provisions and period of default do not attract such penalty.
Sections Cited
272A(2)(g), 271C, 201(1), 201(1A), 133A, 194C, 194H, 194-I, 194J, 192B, 156, 273B, 203, 206C, 192(1A), 200(3), 272A(2)(k), 271H, 201(1A), 276B, 115-O, 194B
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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SMT.ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER All four appeals relate to the same assessee and pertain to two different assessment years i.e. Asst.Year 2015-16 and 2016-17 with the issues involved relating to levy of penalty under section 272A(2)(g) and section 271C of the Income Tax Act, 1961 ("the Act" for short). All the appeals arise from the order passed by the ld.CIT(A) under section 250(6) of the Act, confirming the penalty levied by the AO for both the assessment years.
While the appeal in IT No.2679/Ahd/2017 and 2681/Ahd/2017 pertains to the issue of levy of penalty under section 271C of the Act to 2681/Ahd/2017 (4 Appeals) 2 for the Asst.Year 2015-16 and 2016-17 respectively, the appeal in and 2680/Ahd/2017 relates to levy of penalty under section 272A(2)(g) of the Act for the impugned assessment years before us.
Both the penalties, it was common ground, were inter-related for the violation of the provisions of the Act pertaining to the tax deducted at source (TDS), with penalty under section 271C of the Act being levied for not depositing the TDS in time, while that levied under section 272A(2)(g) for not filing the requisite TDS returns (quarterly) in time pertaining to the same TDS which was not found deposited in time by the assessee. For both the impugned assessment years before us the assessee has been visited with penalty both for not depositing TDS in time and also for not furnishing requisite TDS returns in time. All the issues involved in the present appeals arise, it was common ground, from the same background of the facts, therefore, all the appeals were taken up together for hearing and are being dealt with by this common consolidated order.
We shall be dealing with the levy of both the penalties, u/s 271C & 272A(2)(g) of the Act by dealing with the facts pertaining to Asst.Year 2015-16.
ITA 2678/Ahd/2017 A.Y 2015-16 - 272A(2)(g) ITA 2679/Ahd/2017A.Y 2015-16 - 271C
The facts relating to the issue, as noted in the order of the ld.CIT(A) ,is that the assessee is a company incorporated under the Companies Act, 1956 and is engaged in the profession of spreading higher education by running management institute. During the year under appeal, the assessee had incurred expenditure referred to in sections 194C, 194H, 194-I, 194J and 192B and defaulted in to 2681/Ahd/2017 (4 Appeals) 3 complying with the TDS provisions. A survey operation under section 133A of the Act was carried out at the business premises of the assessee on 30.11.2015 by the Income Tax Authority of TDS Range, Ahmedabad. During the course of survey, it was observed by the survey team that the assessee had defaulted in deposit of TDS amounting to the tune of Rs.26,33,867/- to the Government account. The DCIT(TDS), Ahmedabad passed an order under section 201(1)/201(1A) of the Act on 11.3.2016 whereby the assessee- company was treated as assessee-in-default for total sum of Rs.31,11,556/-, for the unpaid TDS amount of Rs.26,33,867/- and Rs.4,77,689/- being interest under section 201(1A) of the Act. After considering the payment already made by the assessee, a demand of Rs.9,72,910/- was raised for the said year. In the said order, the AO also initiated penalty proceedings both under section 271C of the Act for not paying TDS pertaining to the financial year 2014-15 within the stipulated time and under section 272A(2)(g) of the Act for failure to issue TDS certificate on time. Thereafter, orders were passed imposing penalty under section 271C of the Act of Rs.26,33,867/- for the alleged default of not paying TDS within stipulated time, and under section 272A(2)(g) of the Act of Rs.2,58,000/- for the alleged default of not filing quarterly statement in form no.24Q and 26Q for the financial year 2014-15 within stipulated time. Both the penalties were confirmed by the ld.CIT(A).
Aggrieved by the same, the assessee has come up in appeal before the Tribunal challenging levy of penalty under section 271C of the Act in its appeal in for Asst.Year 2015-16 raising the following grounds:
to 2681/Ahd/2017 (4 Appeals)
4. Your appellant being dissatisfied with the order passed by the Commissioner of Income Tax (Appeals)-S, Ahmedabad presents this appeal against the same on the following amongst other grounds.
The Order passed by CIT (Appeals) is bad in law and on facts and hence, it submitted that the same be cancelled and be suitably modified.
2. On the facts of the case as well as in law, learned CIT(A) grossly erred in confirming the order u/s. 271C imposing penalty of Rs.26,33,867/- without appreciating the fact that the AO who has passed the impugned penalty order has not issued notice of demand u/s. 156 of the I.T. Act. The notice of demand u/s. 156 was issued by a subordinate authority.
3. On the facts of the case as well as in law, learned CIT(A) grossly erred in confirming the order u/s. 271C imposing penalty of Rs.26,33,867/- without appreciating the fact that the AO had passed the impugned order without affording the appellant assessee a reasonable opportunity of being heard and the order has been passed in violation of the principles of natural justice. It, therefore prayed that the impugned order may please be cancelled.
4. The learned CIT(A) has erred in law and on facts in confirming the order u/s. 271C dated 24/10/2016 imposing penalty of Rs.26,33,867/- for A.Y. 2015-16 for the alleged default of depositing the amount of tax deducted at source to the credit of government account within the stipulated time, without appreciating the fact that in the entire amount of TDS together with interest has been subsequently deposited by the assessee to the credit of the government account. Therefore, the impugned penalty is not sustainable in the eyes of law.
5. The learned CIT (A) has erred in law and on facts in confirming the impugned penalty order in utter disregard to the fact that there has been no failure to deduct tax at source as per the provisions contained in Chapter XVIIB of the Income Tax Act but there was only a delay in depositing the amount of the TDS to the credit of the Central Government Account. Therefore, the impugned penalty is not sustainable in the eyes of law.
6. The learned CIT (A) has grossly erred in law and on facts in confirming in impugned penalty order in utter disregard to the legal position that penalty under Section 271C is leviable only in a case where there is failure to deduct tax at source under the provisions of Chapter XVIIB or to pay the whole or any part: or tax under Sub Section (2) of Section 115-0 or second proviso to Section 194B. In the instant case, there has been no tax liability u/s. 115-O or Section 194B of the I.T. Act. Therefore, imposition of the impugned penalty is bad in law.
On the facts of the case as well as in law, learned CIT(A) grossly erred in confirming the impugned penalty order in utter disregard to the provisions of Section 273B of the Income Tax Act which provides that no penalty is Ieviable if the default is on account of good and sufficient reason. The appellant submits that | the default is attributable to reasonable cause to 2681/Ahd/2017 (4 Appeals) 5
within the meaning of Section 273B \ of the I.T. Act and therefore the impugned penalty is bad in law. 8. It is therefore prayed that the impugned penalty order passed by the AO and confirmed by the CIT(A) may please be deleted. the assessee has challenged the levy of penalty u/s 272A(2)(g) of the Act for A.Y 2015-16 raising the following grounds:
1. The Order passed by learned CIT (Appeals) is bad in law and on facts and hence, it is submitted that the same be cancelled and be suitably modified.
2. The order passed by the teamed CIT (A) is bad in law and contrary to the provisions of the Income Tax Act, facts of the case and evidence on record. Therefore, the order under appeal is perverse and it is prayed that the impugned order passed by the CIT (A) confirming the penalty levied by the AO may please be cancelled.
3. On the facts of the case as well as in law, learned CIT (A) grossly erred in confirming the order u/s. 272A(2)(g) imposing penalty of Rs.2,58,000/- for the alleged default of delay in filing quarterly statements in Form 24Q and 26Q for F.Y. 2015-16.
4. On the facts of the case as well as in law, learned CIT (A) grossly erred in confirming the order u/s. 272A(2)(g) imposing penalty of Rs.2,58,000/- without recording any finding of fact in the body of the penalty order as to the nature of the default committed by the appellant that attracted the impugned penalty. It is therefore prayed that impugned penalty order may please be cancelled.
5. On the facts of the case as well as in law, learned CIT (A) grossly erred in confirming the impugned penalty order, which was passed without affording the appellant assessee a reasonable opportunity of being heard and the order has been passed in violation of the principles of natural justice. It is therefore prayed that the impugned order may please be cancelled.
6. On the facts of the case as well as in law, learned CIT (A) grossly erred in confirming the impugned penalty order in utter disregard to the provisions of Section 273B of the Income Tax Act which provides that no penalty is leviable if the default is on account of good and sufficient reason. The appellant submits that the default is attributable to reasonable cause within the meaning of Section 273B of the I.T. Act and therefore the impugned penalty is bad in law. It is therefore prayed that the impugned order may please be cancelled.
7. On the facts of the case as well as in law, learned CIT (A) grossly erred in confirming the impugned penalty order without appreciating the fact that the demand notice u/s. 156 of the I.T. Act was not issued and signed by the Additional CIT who has passed the penalty order u/s. 272A(2)(g) but was signed by the ACIT, IDS Circle, Ahmedabad. to 2681/Ahd/2017 (4 Appeals) 6
It is therefore prayed that the impugned penalty order u/s. 272A(2)(g) may please be cancelled.”
During the course of hearing before us, the ld.counsel for the assessee raised common contentions against the levy of both the penalties and filed brief submission in writing in this regard, which are reproduced hereunder:
> Issues involved in the captioned appeal pertain levy of penalty u/s 272A(2)(g) and 271C of the Act. Appeal-wise details are as follows:
* IT A 2678/Ahd/2017-AY 15-16- S.272A(2)(g); * ITA 2679/Ahd/2017-AY 15-16-S.271C; * ITA 2680/Ahd/2017 - AY16-17-S.272A(2)(g); * ITA 2681/Ahd/2017-AY 16-17-S.271C; > AO passed ex-parte orders whereby penalty u/s 272A(2)(g) and 271C of the Act came to be levied for AYs 15-16 & 16-17 by observing that assessee's case is squarely covered vide decision of Hon 'ble Kerala High Court in the case of "U. S. Technologies vs. CIT-ITA 3 of 2009".
> Such penalty u/s 272A(2)(g) and 271C for both the years in question came to be confirmed by CIT(A). Hence, assessee is in appeal before Hon'ble the ITAT.
“Decision of Hon’ble Kerala High Court” relied upon by AO for levying penalty in question has been “reversed” by “Hon’ble the Apex Court”
^ AO levied penalty by observing that assessee's case is squarely covered vide decision of Hon'ble Kerala High Court in the case of "U. S. Technologies vs. CIT -ITA 3 of2009" - reported at (2010) 195 Taxman 323 (Kerala).
> The said decision of Hon'ble Kerala High Court has been reversed by Hon'ble Apex Court vide decision in the case of "U S Technologies P. Ltd, vs. CIT — (2023) 453 ITR 644 (SC)"
> Thus, the very basis for levying penalty in question does not survive any further. On this short count, the penalty in question deserves to be deleted.
“There is “no loss to the revenue” since the “amount of TDS” has been deposited with the Govt. with “interest”.
> Assessee has deposited amount of TDS along with interest.
Thus, assessee has compensated Govt. for late payment of TDS. > Accordingly, there is no loss to the revenue. / > Under such circumstances, penalty u/s 272A(2) cannot be levied. > Reliance is placed on CIT v Harsiddh Construction P Ltd - 244 ITR 417 (Guj). to 2681/Ahd/2017 (4 Appeals) 7 Whether to levy penalty u/s 272A(2) and 271C is at the “discretion” of AO; such discretion has to be exercised judiciously and accordingly, penalty u/s.272A(2) and 271C must be levied merely for technical or venial breach”. Whether penalty u/s.272A(2) and 271C of the Act should be levied or not is as the ”discretion of AO”. Depositing TDS belatedly is merely a technical or venial breach which does not warrant levy of penalty u/s 272 A or 271C of the Act. It is well settled that in case of mere technical or venial breach, penalty should not be levied. Reliance is placed on decision of Hon'ble the Apex Court in the case of "Hindustan Steel Ltd. vs. State of Orissa - (1972) 83 ITR 26 (SC)". If there is “reasonable cause” for dfault, penalty should not be levied: S.273B provides that in case reasonable cause is shown, penalty u/s 272A(2) / 271C must not be levied. Assessee could not deposit TDS with the Govt. treasury within the prescribed time limit owing to financial crunch. Thus, there was a reasonable cause for default.
Under such circumstances, no case is made out for levy of penalty. Reliance is placed on "CIT vs. Eli Lilly And Co. (India) P. Ltd. - 321 ITR 225 (SC)". Once assessee is subjected to penalty u/s.271C, question of levy of penalty u/s.272A(2)(g) does not arise at all: It is well settled that once an assessee is subjected to penalty u/s 271C, question of levy of penalty u/s 272A(2)(g) does not arise at all. Reliance is placed on following decisions:
Sri Ram Memorial Education Promotion Society — 287 ITR 155 (All.) Sri Ram Memorial Education Promotion Society -152 Taxman 257 (All.) 4 Sahara India Mutual Fund Benefit Co. Ltd. -157 Taxman 52 (All.); In view of the above, penalty u/s 272A(2)(g) and 271C of the Act for AYs 2015-16 & 2016-17 deserve to be deleted.
The ld.DR, however, heavily relied on the order of the ld.CIT(A).
We have heard contentions of both the parties. The issue for adjudication before us is relating to the levy of penalty under section 271C and 272A(2)(g) of the Act. The violation stated to be committed by the assessee for attracting the levy of penalty of the impugned penalties are – to 2681/Ahd/2017 (4 Appeals) 8 (i) 271C of the Act- for not depositing the TDS in prescribed time, and (ii) section 272A(2)(g) of the Act - for not filing quarterly statements of TDS in Form No.24Q and 26Q for the impugned year within the stipulated time in relation to the TDS which was not deposited in time by the assessee.
Since both the penalties arise on account of the act of delay in deposit of TDS by the assessee, we shall first deal with the basic penalty levied for the default of non-deposit of TDS within the time prescribed in law, under section 271C of the Act.
One of the contentions of the ld.counsel for the assessee before us was that, though, the assessee had argued before the ld.CIT(A) that section 271C of the Act levies penalty for non-deduction of tax at source and not for default in depositing TDS in time, the same was rejected by the ld.CIT(A) relying on the decision of the Hon’ble Kerala High Court in the case of US Technologies Vs. CIT, of 2009. He pointed out that both the AO and the ld.CIT(A) referred to this decision of the Hon’ble Kerala High Court for holding that section 271C of the Act attracts penalty for the default in the delay in deposit of TDS also, besides levying of penalty for non-deduction of TDS. The ld.counsel for the assessee pointed out that this decision of the Kerala High Court has since been reversed by the Hon’ble Supreme Court in its decision in US Technologies Vs. CIT, (2023) 453 ITR 644 (SC). Copy of the said decision was placed before us, and it was pointed from the same that the Hon’ble Apex Court had gone through the provisions of section 271C and categorically held that on true interpretation of section 271C there is no penalty leviable on a mere delay of remittance of TDS after deducting the same by the concerned assessee. to 2681/Ahd/2017 (4 Appeals) 9 13. The ld.DR though relied on the order of the ld.CIT(A) was unable to controvert the contentions of the ld.counsel of the assessee that the decision on which the ld.CIT(A) and the AO had relied for levy of penalty in the case of the assessee under section 271C of the Act in the case of US Technologies (supra), has since been reversed by the Hon’ble Apex Court. He was unable to point out any distinguishing facts in relation to the said decision before us.
We have heard both the parties and also gone through the orders of the Revenue authorities and also various decisions cited before us. As noted above, the issue for adjudication is the levy of penalty under section 271C of the Act and default for which the penalty has been levied, is delayed remittance of TDS deducted by the assessee. These facts are on record, and there is no dispute about the said two facts.
Having noted so and going through the decisions of the Hon’ble Apex Court in US Technologies (supra) we see no reason to disagree with the ld.counsel for the assessee that the Hon’ble Apex Court has categorically held that default for delayed remittance of TDS does not attract any penalty under section 271C of the Act. The issue before the Hon’ble Apex Court was identical, wherein it noted the question posed for consideration of the Court as to the meaning and scope of the word “failure to deduct” occurred in section 271C(1)(a), and whether any assessee who caused delay in remittance of TDS deducted by him, can be said a person who “fails to deduct TDS”. This question is noted at para 7.2 of its order. The Hon’ble Apex Court then went on to analyse the statutory provisions pertaining to sections 272A(2)(g), 271C, 273B and 276B of the Act. After analyzing the said provisions, the Hon’ble Apex Court observed that the language of section 271C of the Act is very clear and it attracts to 2681/Ahd/2017 (4 Appeals) 10 the levy of penalty only for the default to deduct tax at source. The Hon’ble Apex Court noted that it does not speak about the belated remittance of TDS and noting that penalty provisions are to be strictly and literally read, and nothing is to be added or taken out, the Hon’ble Court held that there could not be any penalty leviable on belated remittance of TDS after the same is deducted by the assessee, under section 271C of the Act. Thereafter, the Apex Court dealt with the provisions of section 271C(1)(b) of the Act and noted that as per the said section only a limited violation, relating to section 115-O or section 194B of the Act, would constitute an understanding where penalty could be imposed under section 271C(1)(b) on non-payment of TDS. The Hon’ble Apex Court further noted that the statute provides for the levy of penalty for the delayed remittances of TDS under section 201(1A) of the Act, which was compensatory in nature, and similarly about prosecution under section 276B of the Act on failure to pay TDS after deducting. The Hon’ble Apex Court also referred to CBDT Circular No.551 dated 23.1.1998 and noted that it talked about the levy of penalty on failure to deduct TDS and noted that even the CBDT has taken note of the fact that no penalty is envisaged under section 271C of the Act for belated remittance of TDS. Considering all of the above, the Hon’ble Apex Court categorically held that no penalty under section 271C of the Act is leviable for default of not depositing TDS deducted.
The issue before us, is therefore, as rightly pointed out by the Ld.Counsel for the assessee, squarely covered in favour of the assessee by the decision of the Hon’ble apex court in US Technologies (supra) following which we hold no penalty could have been levied under section 271C of the Act for the act of delayed remittance of to 2681/Ahd/2017 (4 Appeals) 11 TDS. The penalty therefore levied of Rs. 26,33,867/- u/s 271C of the Act is directed to be deleted. Appeal of the assessee in is accordingly allowed.
We shall now take up the issue of levy of penalty under section 272A(2)(g) of the Act challenged in ITA No.2678/Ahd/2017
The order levying penalty reveals that the penalty was levied for delayed filing of quarterly returns of TDS in Form No.24Q and 26Q for the financial year 2014-15, and the delayed returns pertained to TDS which the assessee had deducted, but failed to deposit with the Government in time, for which penalty u/s 271C of the Act was also levied and which has been dealt with by us in assessees appeal in above. The delay was noted to be of, in all, 2580 days, and as provided under section 272A(2)(g) of the Act, penalty of Rupees hundred per day, totaling to Rs.2,58,000/- was levied on the assessee.
It is pertinent to first consider the default, which attracts the levy of penalty in terms of section 272A(2)(g) of the Act. Therefore, it is relevant to reproduce the said sub-clause as under:
272A. (1) If any person,— (2) If any person fails— …. …. …. …. …. …. …. …. (g) to furnish a certificate as required by section 203 or section 206C; or he shall pay, by way of penalty, a sum of one hundred rupees for every day during which the failure continues: to 2681/Ahd/2017 (4 Appeals) 12
As per sub-clause (g) of section 272A(2), it is the non-furnishing of certificates as provided for under section 203 of the Act, which attracts levy of penalty. Section 203 refers to the furnishing of TDS certificates as under: 203. (1) Every person deducting tax in accordance with the foregoing provisions of this Chapter shall, within such period as may be prescribed from the time of credit or payment of the sum, or, as the case may be, from the time of issue of a cheque or warrant for payment of any dividend to a shareholder, furnish to the person to whose account such credit is given or to whom such payment is made or the cheque or warrant is issued, a certificate to the effect that tax has been deducted, and specifying the amount so deducted, the rate at which the tax has been deducted and such other particulars as may be prescribed.
(2) Every person, being an employer, referred to in sub-section (1A) of section 192 shall, within such period, as may be prescribed, furnish to the person in respect of whose income such payment of tax has been made, a certificate to the effect that tax has been paid to the Central Government, and specify the amount so paid, the rate at which the tax has been paid and such other particulars as may be prescribed.
Section 203 of the Act, as is evident from a bare perusal of the section mandates furnishing of TDS certificates within prescribed time. Thus, the default attracting penalty section 272A(2)(g) of the Act is that of non-furnishing of TDS certificates in time as specified u/s 203 of the Act .
Therefore, this sub-clause does not attract penalty for delayed filing of quarterly returns in Form No.24Q and 26Q, for which it has been levied in the present case. And for this reason alone the penalty levied in the present case u/s 272A(2)(g) of the Act is not sustainable.
Be that so, we have noted that sub-clause (k) of section 272(A)(2) deals with the levy of penalty for non-filing or delayed filing of the quarterly returns. The relevant sub-clause is reproduced hereunder:
272A. (1) If any person,— (2) If any person fails— to 2681/Ahd/2017 (4 Appeals) 13
(k) to deliver or cause to be delivered a copy of the statement within the time specified in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C; he shall pay, by way of penalty, a sum of one hundred rupees for every day during which the failure continues: 23. Even considering that the AO had inadvertently mentioned incorrect section for levy of penalty, we find that no penalty was leviable u/s 272A(2)(k) of the Act also in the impugned year. We have noted that as per the second proviso to the section no penalty was leviable u/s. 272A(2)(k) if the failure occurred on or after 1ST July 2012. The second proviso to the section reads as under:
Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc. 272A. (2) If any person fails,— …. …. ….. ….. ….. Provided further that no penalty shall be levied under this section for the failure referred to in clause (k), if such failure relates to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012. In the impugned case before us the default has occurred in F.Y 2014-15 and 2015-16.
It was further noted that the impugned default attracted penalty u/s 271H of the Act after 01-07-2012 and the quantum also was at variance. The provisions of section 271H of the Act read as under; 271H. (1) Without prejudice to the provisions of the Act, the Assessing Officer may direct that a person shall pay by way of penalty, if, he— (a) fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C; or (b) furnishes incorrect information in the statement which is required to be delivered or caused to be delivered under sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C. (2) The penalty referred to in sub-section (1) shall be a sum which shall not be less than ten thousand rupees but which may extend to one lakh rupees. to 2681/Ahd/2017 (4 Appeals) 14 (3) Notwithstanding anything contained in the foregoing provisions of this section, no penalty shall be levied for the failure referred to in clause (a) of sub- section (1), if the person proves that after paying tax deducted or collected along with the fee and interest, if any, to the credit of the Central Government, he had delivered or cause to be delivered the statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C before the expiry of a period of one 22[year] from the time prescribed for delivering or causing to be delivered such statement. (4) The provisions of this section shall apply to a statement referred to in sub- section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.
Both the parties were confronted with this position of law and the case put up for seeking clarification if any from both the sides. The order sheet entry dated 06-02-2025 fixing the case for seeking the above clarification reads as under:
“The assesses in the impugned appeals is aggrieved with the levy of penalty under section 272A(2) (g) of the Act. The default attracting the penalty is for delay in filing quarterly return of TDS in Form No.24Q and 26Q. The provision of law, however reveals that the said default attracts penalty under section 272A(2)(k) of the Act. Further, the second provisio to the section states that no penalty under section 272A(2) (k) of the Act is to be levied, if the failure occurs on or after 1st July, 2012. In the impugned case before us, the failure is stated to have occurred in financial year 2014-15 and 2015-16. As per the provisions of law, therefore, no penalty is leviable on the default committed by the assessee of delayed filing of quarterly returns. Penalty, however, we have noted, for this default is leviable under section 271H of the Act after 1.7.2012. Both the parties are directed to come up before us with their contentions on this observation regarding the position of law on the issue noted by us above. The impugned appeals are accordingly fixed for seeking the above clarification on 13th February, 2025.
Thereafter when the matter was ultimately heard on 25th February 2025 both the parties admitted to the position of law noted by us that no penalty was leviable for the default in non/ delayed filing of TDS returns u/s 272A(2)(k) of the Act in the impugned year. That the same was leviable u/s 271H of the Act and the quantum of penalty also was at variance as against that provided u/s 272A(2)(g) of the Act. to 2681/Ahd/2017 (4 Appeals) 15 27. Accordingly, since admittedly the penalty for default in furnishing of quarterly returns has been levied by invoking the provision of law which was not applicable in the impugned year at all, the same, we hold, is not sustainable.
In view of the above, we hold that the penalty levied for the delay in furnishing returns in Form No.24Q and 26Q was wrongly levied and confirmed by the ld.CIT(A) for all the reasons noted above. The order of the ld.CIT(A) is, therefore, set aside and the appeal of the assessee is allowed.
In effect appeal of the assessee in is allowed.
In effect, all the appeals of the assessee are allowed. Order pronounced in the Court on 7th March, 2025 at Ahmedabad.