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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI GEORGE GEORGE K. & SHRI B.R. BASKARAN
PER GEORGE GEORGE K., JUDICIAL MEMBER:
These appeals at the instance of the assessee are directed against two orders of CIT(A), both dated 5.11.2015. The relevant assessment years are 2010-11 & 2012-13.
Common issue is raised in these appeals, hence, they were heard together and are being disposed of by this consolidated order. The solitary issue raised in this appeal is whether the CIT(A) was justified in confirming the penalty imposed u/s 272A(2)(k) of the Income-tax Act,1961 ['the Act' for short].
Brief facts of the case are as follows:
& 44/Bang/2016 M/s. IDEB Projects Pvt. Ltd., Bangalore
Page 2 of 6 Assessee has deducted tax at source for the assessment years 2010-11 & 2012-13. However, there was a delay in furnishing quarterly returns/statements. The details of belated furnished quarterly statements for the assessment years 2010-11 & 2012-13 are as follows: For A.Y. 2010-11: RRR Number Form Periodicity Due Date Date of Delay Num filing (Days) 60510100329615 24Q Q4 15/06/10 29/10/10 136 60510100316831 26Q Q1 15/07/09 29/09/10 441 60510100316842 26Q Q2 15/10/09 29/09/10 349 60510100316816 26Q Q3 15/01/10 29/09/10 257 60510100316820 26Q Q4 15/06/10 29/09/10 106 For A.Y. 2012-13: RRR Number Form Periodicity Due Date Date of Delay Num filing (Days) 60510200397474 24Q Q4 15/05/12 28/06/12 44 60510100513192 26Q Q1 15/07/11 09/07/12 360 60510100513203 26Q Q2 15/10/11 09/07/12 268 60510100513214 26Q Q3 15/01/12 09/07/12 176 60510100513225 26Q Q4 15/05/12 09/07/12 55
For the above contravention of provision of section 200(3) of the Act, penalty u/s 272A(2)(k) of the Act was imposed by Jt. CIT(TDS) amounting to Rs.1,28,900/- and Rs.90,300/- for assessment years 2010-11 & 2012-13 respectively. The Jt. CIT (TDS) by referring to the judgement of the Hon’ble Delhi High Court in the case of Court on its own motion Vs. CIT reported in 210 Taxman 452 (Delhi) held that non-furnishing of prescribed statement u/s 200(3) of the Act within the due date is not a venial breach of provision because the tax payer credit for the TDS statements cannot be granted on time if TDS statements are not filed on time by the deductor. Therefore, it was concluded by the Ld. JCIT(TDS) that penalty has to be imposed in the facts of the case. & 44/Bang/2016 M/s. IDEB Projects Pvt. Ltd., Bangalore
Page 3 of 6 5. Aggrieved by orders of Jt. CIT(TDS) in imposing penalty u/s 272A(2)(k) of the Act for assessment years 2010-11 & 2012-13, the assessee preferred appeals before the first appellate authority. The CIT(A) confirmed the penalty imposed by the Jt. CIT(TDS). The relevant finding of the CIT(A) reads as follows: “3.4 I have carefully considered the appellant’s contentions/submissions and also perused the penalty orders for the assessment year in question. As rightly observed by the A.O., the requirement of filing the TDS returns as per the provisions of section 200(3) itself is technical only in the sense that it does not involve any revenue implication and, therefore, the penalty leviable u/s 272A(2)(k) for non- compliance with such a requirement cannot be held to be unjustifiable on the ground that the delay in filing the TDS returns in time is only a technical default. What should be taken into consideration is the impact the delayed filing of the statutory forms has on the deductees while dealing with their claims for credit being given to the taxes deducted at source. As rightly observed by the A.O., the problems faced by the A.Os concerned dealing with the assessments of deductees are manifold because, on the one hand, they are unable to deny credit to the TDS made as shown in the TDS certificates produced by them before the A.Os and, on the other, the AOs are unable to give credit in the absence of corroborating evidence in the statutory forms viz. 24Q and 26Q as also due to failure of the deductors to upload the relevant data in the computer system. It is in this context the decision of the Hon’ble High Court of Delhi in ‘Court on its own Motion v. CIT’ referred to at para 3.2 supra becomes most relevant as the inability on the part of the AOs dealing with the claims of deductees led to the Hon’ble High Court passing strictures. It is in the light of these difficulties that the penalty levied as envisaged in the section is justifiable. Accordingly, I uphold the penalty of Rs.1,28,900/- levied on the appellant by the A.O. for the assessment year 2010-11.”
Aggrieved by the orders of the CIT(A), assessee has preferred these appeals before the Tribunal. The Ld. A.R. limited submission before the Tribunal was that penalty u/s 272A(2)(k) of the Act can be levied only from the date of payment of tax as the statement u/s 200(3) of the Act is required to be filed only after payment of tax to the Central Government. In this context, the Ld. A.R. relied on the order of the Cuttack Bench of the Tribunal in the case of N.K. Media & 44/Bang/2016 M/s. IDEB Projects Pvt. Ltd., Bangalore Page 4 of 6 Ventures (P) Ltd. Vs. Jt. CIT (TDS), Bhubaneshwar reported in (2015) 59 Taxmann.com 365 (Cuttack Trib.). The Ld. D.R. strongly supported the order passed by the Income tax authorities.
We have heard the rival submissions and perused the material on record. The only contention raised by the A.R. was that penalty, if any should be restricted for the period from the date of payment of TDS where the tax was paid late up to the date of filing of TDS statement, since before the payment of TDS, e-TDS return could not be furnished. In this context, we refer to the order of the Cuttack Bench in the case of N.K. Media Ventures (P) Ltd. Vs. Jt. CIT(TDS), Bhubaneshwar (supra), wherein it was held as follows:
.”9. As regards the default in not paying the tax to the Central Government in time or for non deducting the tax at source, there are other provisions for ensuring compliance. In case the assessee fails to deduct the tax at source or after deducting fails to pay the same to the Central Government the assessee is deemed to be in default under section 201(1) and is liable for penalty. The assessee is also liable to pay interest for the period of default till the payment of tax under section 201(1A). Therefore in our view the period for levying the penalty has to be counted from the date of payment of tax because the delay in filing the return till the date of payment of tax is already explained on the ground that the assessee could not pay the taxes for which separate penal provisions exist. The assessee has also explained the reasons for not paying the tax to the Central Government in time which was because of financial difficulties. The assessee has filed the copies of P & L account and balance sheet to substantiate the claim that it was incurring losses and there were substantial liabilities on account of creditors. The assessee has placed reliance on the decision of Mumbai Tribunal in which financial hitches have been accepted as reasonable cause for default in payment of tax. Once the delay in payment of tax is explained satisfactorily, penalty u/s. 272A(2)(k) of the Act cannot be levied for the period till payment of tax. Hence, we modify the order of the Assessing Officer. The Assessing Officer is directed to levy the penalty u/s. 272A(2)(k) of the Act only for the delay in payment of tax by the assessee. The order of Ld. CIT(A) is modified accordingly.
Similar view was held by the Pune Bench of the ITAT in the case of Nava Maharashtra Vidhyalaya Vs. Addl. CIT Pune reported in (2016) 74 Taxmann.com 240 (Pune Trib.) The relevant finding of the Tribunal reads as follows: “Para 28 ………………In this bunch of appeals, there are cases where the assessee has defaulted in not & 44/Bang/2016 M/s. IDEB Projects Pvt. Ltd., Bangalore
Page 5 of 6 depositing tax deducted at source in time. In such cases, the returns were delayed because of default on behalf of the deductor. In such cases, penalty under section 272A(2)(k) of the Act is leviable. However, the same is to be restricted from the date of payment of TDS to the date of filing e-TDS statements since e-TDS statements cannot be filed without payment of TDS to the credit of Central Government. Similar ratio has been laid down by the Chandigarh Bench of Tribunal in Ashirwad Complex case (supra). Accordingly, we hold so.”
In the instant case, assessee was in acute shortage of money, as the real estate business was in recession and it had hit the cash flow of the assessee. Consequently, assessee incurred huge loss from financial year 2008-09 onwards. For the assessment year 2008-09, assessee had incurred a loss of Rs.36.21 crores and Rs.363.93 crores for the financial year 2009-10. These losses continued to pile up for the subsequent financial years also. Due to this assessee company could not pay TDS on time. The e-TDS statement u/s 200(3) of the Act can only be filed after paying the taxes to the Central Government. In other words, the quarterly return of the TDS requires filling of date relating to payment of taxes. Therefore, such returns could be filed only after paying the tax to the Central Government account. As regards the default in non-paying the taxes to the Central Government account in time or for non-deducting the tax at source, there are other provisions for ensuring compliance. In case the assessee fails to deduct tax at source or after deducting fails to pay the same to the Central Government account, the assessee is deemed to be in default u/s 201(1) of the Act. The assessee is also liable to pay interest for the period of default till the payment of tax u/s 201(1A) of the Act. The assessee is also liable for penalty u/s 271C of the Act and prosecution u/s 276B of the Act. Therefore, the period levying the penalty has to be counted from the date of payment of tax because the delay in filing the return till the date of payment & 44/Bang/2016 M/s. IDEB Projects Pvt. Ltd., Bangalore Page 6 of 6 of tax was already explained on the ground that the assessee could not pay the taxes for which separate penal provisions exist.
In the light of the above judicial pronouncement and the aforesaid reasoning, we direct the A.O. to levy penalty u/s 272(2)(k) of the Act from the date of payment of TDS up to the date of filing of e-TDS statements, since e-TDS statement cannot be filed without payment of TDS to the credit of the Central Government account.
In the result, the appeals filed by the assessee are partly allowed.
Order pronounced in the open court on 10th Sept, 2020