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Income Tax Appellate Tribunal, DELHI BENCH : G : NEW DELHI
Before: SHRI R.K. PANDA & SHRI K. NARASIMHA CHARY
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER Assessment Year: 2011-12 S.N.G. Developers Ltd., Vs JCIT (TDS), 112, Indraprakash Building, Range-51, 21, Barakhamba Road, New Delhi. New Delhi. PAN: AAFCS8465B (Appellant) (Respondent) Assessee by : Shri Mayank Patawari, CA Revenue by : Shri N.K. Bansal, Sr. DR Date of Hearing : 29.04.2019 Date of Pronouncement : 30.04.2019 ORDER
PER R.K. PANDA, AM:
This appeal filed by the assessee is directed against the order dated 30th June, 2016 of the CIT(A)-41, New Delhi, relating to assessment year 2011-12.
Levy of penalty of Rs.2,26,400/- u/s 272A(2)(k) by the JCIT and upheld by the CIT(A) is the only issue raised by the assessee in the grounds of appeal.
Facts of the case, in brief, are that the assessee filed its e-TDS return for F.Y.
2010-11 in Form No. 24Q and 26Q as per the details given in the following chart:-
F.Y. 2010-11 Quarterly Returns Due Date Date of Submission Late (Days) 24Q, 1Q 15.07.2010 30.07.2011 380 24Q, 2Q 15.10.2010 30.07.2011 288 24Q, 3Q 15.01.2011 30.07.2011 196 24Q, 4Q 15.06.2011 30.07.2011 76 Total 940 F.Y. 2010-11 Quarterly Returns Due Date Date of Submission Late (Days) 26Q, 1Q 15.07.2010 30.11.2011 476 26Q, 2Q 15.10.2010 30.11.2011 384 26Q, 3Q 15.01.2011 30.11.2011 292 26Q, 4Q 15.06.2011 30.11.2011 172 Total 1324
The quarterly TDS returns were required to be filed under the provisions of section 200(3) of the IT Act and the assessee failed to deliver or caused to be delivered a copy of the statement within the time specified under sub-section (3) of section 200.
The Assessing Officer issued a show cause notice for imposition of penalty u/s 272A(2)(k) r.w. section 274(1) of the IT Act asking the assessee to explain as to why penalty shall not be imposed. It was submitted by the assessee that the company was regularly adhering to financial discipline. However, due to certain unfortunate events that has taken place in the real estate industry for the last four financial years, the assessee failed to deposit tax within the prescribed time limit. However, the JCIT rejected the explanation given by the assessee and levied penalty of Rs.2,26,400/- being the total of default for 24Q 94 days for F.Y. 2010-11 and default in 26Q of 1324 days for F.Y. 2010-11.
In appeal, the ld.CIT(A) confirmed the action of the Assessing Officer by observing as under:-
“4.5 The delay in filing of TDS return for F.Y. 2010-11 in Form 24Q for the all four Quarters by 940 no. of days and in Form 26Q for the all four Quarters by 1324 no. of days (total 2264 no. of days). The very fact that in the case of the appellant, the delay is not of one or two days but has been of about 2264 no. of days in F.Y. 2010-11 cumulatively, does reveal a willful attempt on part of the appellant for non- compliance of statutory provisions. What is to be seen is whether there was a reasonable cause or justification for not filing the requisite return within the prescribed time limit.
4.6 Vide letter dated 27.06.2016, the appellant has stated that:-
“Last few years have been unfortunate for the company. Being a part of the Real Estate Industry, we have faced severe recession in the last four Financial Years i.e. 2008-09, 2009-10, 2010-11 and 2011-12 due to which we failed to deposit tax with in prescribed time limit.”
4.7. The plea taken by the appellant, is not found tenable enough to constitute a ‘reasonable cause’ for delay of filing of TDS Return. Moreover the delay of 2264 days of filing of return in 24Q & 26Q for the all four Quarters in F.Y. 2010-11 is viewed as an instance of deliberate negligence.
4.8 The appellant has stated that a survey u/s 133A was conducted in its premise on 27.12.2010 and later on proceedings u/s 201(1 )/201(1 A) had been initiated. The quarterly TDS statements for F.Y. 2010-11 were required to be filed on 15.07.2010, 15.10.2010, 15.01.2011 and 15.05.2011 respectively. However, the statements have been filed by the appellant on 30.07.2011 (24Q) and 03.11.2011 (26Q) respectively.
Admittedly, the proceedings u/s 201(1) and 201(1 A) had been initiated in the case of the appellant after the survey u/s 133A on 27.12.2010. Despite this, the quarterly statements have been filed after considerable delay. This can not be considered under the purview reasonable cause contemplated u/s 273B of the IT. Act.
Further, tax deducted at source belongs to the Central Government. The credit for the same is to be given to the deductee to whom payment has been made by the deductor. Hence, financial hardship cited by the appellant does not come into play directly. In the facts and circumstance, I am of the considered view that the appellant’s case is clearly distinguishable from the judicial pronouncement relied upon by it. Accordingly, no interference is called for in respect of the penalty order passed by the Joint CIT.
Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal
The ld. counsel for the assessee, referring to the Annexure 1 filed along with the paper book, submitted that the loan account with UCO Bank was classified as NPA and even public notice was issued. The same has been taken over by an asset reconstruction company, namely, M/s Edelweiss Asset Reconstruction Co. Ltd. Referring to the Annexure 2 filed along with the paper book, he submitted that the company had gone for one time settlement of its secured loan outstanding from Asia Pragati Capfin Private Limited on account of which the party had agreed to accept an amount of Rs.22.50 crores along with respective interest against all dues till 31.03.2011 but the company has not been able to pay them. Referring to Annexure 3 filed along with the paper book, he submitted that the company dropped the development of its township project at Dharuhera as it did not have enough money for bank guarantee for change of land use. Referring to Annexure 4 filed along with the paper book, he submitted that the assessee company has drastically cut down its expenses and went for retrenchment of employees also by reducing the number of offices from 20 to 9. He submitted that the assessee has deposited the entire tax liability along with interest. Referring to the provisions of section 273B of the Act, he submitted that there is a reasonable cause on the part of the assessee for such non- furnishing of the TDS returns. Referring to the copy of the order of the Tribunal in the case of JCL Infra ltd. vs. Addl.CIT, he submitted that under identical circumstances, the Tribunal considered the explanation offered by the assessee as reasonable cause within the meaning of section 273B of the Act and deleted the penalty so levied by the Assessing Officer and upheld by the CIT(A). Referring to the following decisions, he submitted that penalty levied by the JCIT and upheld by the CIT(A) in the instant case should be deleted:- i) M/s Aquafil Polymers Co. Pvt. Ltd. vs. Addl.CIT, TDS Range, Ahmedabad,
ITA Nos.3246 & 3247/Ahe/2015, dated February 3, 2016; ii) Income-Tax officer, Ward 49(1), vs. Amcon Engineers (P) Ltd., & 2254/Del/2011, dated June 29,2012; iii) Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC); and iv) Investascent Wealth Advisors Pvt. Ltd. vs. Addl. CIT (ITAT Bangalore).
The ld. DR, on the other hand, heavily relied on the order of the CIT(A). He submitted that as mentioned by the ld.CIT(A), the delay was of 2264 number of days cumulatively and it reveals a willful attempt on the part of the assessee for non- compliance of the statutory provisions. The explanation given by the assessee is general and vague and it should not have kept the tax so deducted from the payments with itself instead of paying to the credit of the Central Government. He submitted that because of the default committed by the assessee credit could not be given to the deductees and they have to undergo undue hardship because of the default committed by the assessee. Further, the financial hardship cannot be a ground to give immunity to the assessee from the mischief of the penalty provisions. He accordingly submitted that the order of the CIT(A) be upheld.
We have considered the rival arguments made by both the sides and perused the orders of the JCIT and the CIT(A). We have also gone through the various decisions cited before us. There is no doubt to the fact that there is delay in filing return in Form No.24Q for all the four quarters by 940 days and in Form No.26Q for all the quarters by 1324 number of days. However, it is also a fact that the bank account of the assessee was declared as NPA and public notices were given. The assessee company has drastically reduced its number of offices and had retrenched certain employees due to the financial crisis that it had undergone. The development project was also dropped because of financial crisis and liquidity crunch. There is also default on the part of the assessee to adhere to the one time settlement of its secured loan outstanding. All these facts indicate that there was some problem going on in the financial affairs of the assessee company. Under these circumstances, we are of the considered opinion that there was a reasonable cause on the part of the assessee for delayed deposit of the TDS and non-furnishing of the TDS returns in Form No.24Q and 26Q for all the four quarters during F.Y. 2010-11.
We find an identical issue had come up before the Delhi Bench of the Tribunal in the case of JCL Infra ltd. (supra). The relevant portion of the order of the Tribunal reads as under:-
“5. We have heard the Ld. Sr. Departmental Representative and have also perused the impugned orders. The assessee has pleaded before the Ld. CIT (A) that the delay was due to severe financial crisis which the assessee was facing. However, it is seen that the Ld. CIT (A) has not considered this submission of the assessee and has upheld the penalty on the ground that even the tax deducted at source was not deposited in time. However, it is our considered opinion severe financial crisis is a reasonable cause which would have prevented the asssessee from depositing the TDS within the prescribed time period. In such a circumstance, we hold that the explanation offered by the assessee would constitute ‘reasonable cause’ within the meaning of section 273B of the Act and hence the assessee would be entitled to immunity from the levy of penalty u/s 272A(2)(k). Accordingly, in view of the facts, we set aside the impugned orders and direct the AO to delete the penalty.”
Similar view has been taken by the Tribunal in the case of M/s Aquafil Polymers Co. Pvt. Ltd. (supra). Respectfully following the decision cited (supra), we are of the considered opinion that there was a reasonable cause on the part of the assessee for non submission of the TDS returns in Form No.24Q and 26Q for F.Y.
2010-11 within the meaning of provisions of section 273B of the IT Act, 1961. We, therefore, set aside the order of the ld.CIT(A) and direct the JCIT to cancel the penalty so levied by him. The grounds raised by the assessee are accordingly allowed.
In the result, the appeal filed by the assessee is allowed.