THE CIVIL SURGEON CUM SUPRINTENDENT,JHABUA vs. JCIT(TDS), INDORE

*" l *\/. I i" o^i- -. ' \\os-3 CS"{p//s o$rt '& .9 )io /'t't t ) ; l-hr: Civil Surgeon Cum Superintendent, Jhabua v. JCIT (TDS) tndore l.T.A. No.307 to 309/lnd/2016/ A.Y.09-10 to L1-12 Page 1 of 11 3{ITFT 3rftft?r grfuA',qur, $dT ;aryrryft6;, gdlT IN THE INCOME TAX APPELLATD TRIBUNAL, INDORE BENCH, INDORE ,:. ,, . fr fr.rrJr.rrt'r, ;anfrs' rrq-sq ileff * 3It.fr.Fhdn, tgt rr6€q k q?TqT .'. I !: 1! lj.i:,, BEFoRE SHRI C.M.GARG, JUDICI.A,L MEMBER , ,l'|in '.i -...":.' ., . . ;',..I,\ AND SHRI O.P.MEENA, ACCOUNTANT MEMEER ,i ,, j i ,,i 3Ir3r.g./I.T.A No. 3O7to 3O9/lnd,l2AL6 . '.,:,. 'l ,,,'.,n I ,.. ...:,.,.r).2' ftttkur aflAssessment Year :2OOg-1O to }OLL-L2 . 1 ,.. 1..\ ,' .,, r: !\ i 1'L TW Civil Surgeon Curn v. JCIT(TDS| Indore Superintendent, Jhabua TAN: BPLCO 1691 E sr{drefflAppellant FzrQff/Respondent Shri Pavan Ved, .ddvocate 3rffirntr trI 3ft t/eppellant bv q-eqttr ft 3fi{ t/nespond.ent Shri R.P. Morya JCIT by 09-08-2AL7 g.f,{r$ trr arftYDate of hearing TqFrlwn fI arfiq/Date of 10-o8-20L7 pronouncement snitrloRoBn FEit O.P.MEENA. ACCOUNT MEMBEIR. . ;;."'r+ ' 1: ,it. ,r'. 3 _____J_:_l-Tl 1 , , r, ,, ."- r .t ,$ 1. This appeal filed by the Assessee is directed against the separate orders all pated January 20, 2016 of Learned Commissioner of r/ Income-tax (Appeals)- Ujjain [in short CIT(A)] pertaining to Assessment Year 2OO9-10 to 2OIl-12, which in turn has arisen from

r ) The Civil surgeon cum superintendent, Jhabua v. JCIT (TDs) lndore Page 2 of 11 l.T.A. No.307 to3O9llndl2016/ A.Y.09-10 to 11--12 the orcler all dated Decemberlg, 2013 passed by the JCIT (TDS)- lnclore (in short "the Ao") under section 272A(2\(k) of Income Tax Act,1961 (in shortthe Act'). since common issue involved in all the appeals for the assessment year 2OOg-10 to 2oL1-72, hience, these were heard together and being disposed-of by this common order for the sake of convenience and brevity. 2. Though the deductor-l\ppellant has taken as many as 8 grounds of appeals but in sum and substance is that the Ld' CIT (Al erred in conlirmilrg the Penalty (Rs. 521960 forAY:o9-10), (Rs. 72,OOO lt.Y. 10-111, ( k. L,3d+,OOO A.Y. 11-12) levied ugder section 272A(2)(k) of the A,ct for the delay in submissions of TDS returns for quarter 1 and 4l'of the assessment years 2OO9-1O' 2010-11 and 2}LL-La, ignoring various reasonable cause under section 27gB of the Act and while the Ld. CIT (A) has deleted year 2OL2- penalty under section 272A (21(kl for, the "u"9;:T:nt l 13 where delay was less than 6ne'year on tge''reasoning that 'i'I. ': I ' 'l':\tl I delay attributable d.ue to lack of Knowledge of provisions, i confirmin$tne penalty for the assessment yeat 2AO9'1o to zaLL- L2 on sarfte reasoning and set of facts'

Y The Civil Surgeon Cum Superintendent, Jhabua v. JCIT (TDS) lndore Page 3 of 11 l.T.A. No.307 to 309/lnd/2016/ A.Y.09-10 to L1-12 3. Facts in brief are that the Appellant is Government Department. and was required to deduct TDS and deposit into government account and required to furnish quarterly returns in respect of tax .: ,,,,.i1;l'dfd.gQ.,ted. However, the deductor has furnished first quarter ..t, ' .-...'. , ..', ' , .s,tate'rf ent late by 480 days, second quarter by 3BB days, third . l,:, '..'1,, ,tt, 1.,-, ' ; 4.., i It quar$gi by 296 days and fourth quarter late by 176 days. It was . ,t; ; ;;1..i -. l, explained that there are only professional staff namely heiper and accounts assistant. The assessee' establishment is located in rural and tribal area. The assessee is a government hospital and was not supported by the competent staff having the required Knowledge and expertise of filing online quarterly e-TDS Returns, hence, there was reasonable cause, therefore, the penalty may not be levied. However, the AO viewed. that the law is not to be overlooked and to be followed with utmost care, alertness, and it is the duty of the office to have efficient staff. He further observed that non-filing of statement affects r l,ir,t-... 3 public at large, hence, there is n9 deas$aable'causg.'a--4ffiordingly, the AO levied penalty @100 per day on per delay at Rs. 53,960, Rs. T2,OOO rna,S". 1, 34,OOO respectively for the assessment years 2009- tO, 2O10-1 1 and 2oll-12 respectively.

The Civil Surgeon Cum Superintendent, Jhabua v. JCIT (TDS) tndore l.T.A. No.307 to 309llndl2016l A.Y.09-L0 to 1.1-12 Page 4 of 11 4. The assessee deductor filed an appeal before CIT (A), who confirmed the action of the AO on the ground that such a long delay of more than l-2 years cannot be attributable due to lack of knowledge. 5. Aggrieved the assessee deductor filed this appeal before us. The learned counsel for the assessee submitted that the appellant is government organization and situated in tribal a-rea where required facilities are not instantly available. The assessee is professional doctor was Ltnaware the requirement of filing TDS returns though he has made deduction of TDS properly and sarne was credited to government account. Nor the assessee was assisted by professional staff to handle the matter as he was posted in tribal area where suitable professionai advice is not easily available. There was no earlier practice by the predecessor office in the Department of filing such returns. The Ld. CIT (A) found this explanatiofr acceptable for 11: ] ,',;;,if',1 the assessment year 2OL2-13'dnd. penalty *as cancelled against which the Revenue fiIes no appeal. Hence, on similar facts and t reasons, the penalty for remaining ye ff, which are prior to u Assessment year 2Ol2-L3, should also be cancelled, as lack of knowledge existed for earlier years also. In support of this proposition

fl -lhe Civil Surgeon Cum Superintendent, Jhabua v. JCIT (TDS) Indore l.T.A. No.307 to309/lnd/2016/ A.Y.09-10 to 11-L2 Page 5 of 11 the 1d. Counsel for the assessee relied in the case of Motilal Padamapat 118 ITR 326 (SC) to contend that the offence was only a technical or venial breach of law for which penalty should not be " levied automatically simpiy for non-compliance. The Appellant being ,.., , ,. . & goYqrnment organTzatron, no malafide intention behind delayed , -, , -, -'i l l -, I .J, fi1i4g'',6f return. Neither ITO (TDS) nor CIT (A) have observed any t| . i. ; l, l,', ',\', ' ' -..''t'itihlafide intention, hence, no penalty is leviable as he1d. in the case / , \!r!

of Hindustan Steel Ltd. v. State of Orissa 11972)83 ITR 26(SC). The ld. Counsel for the assessee also submitted that fulI TDS was deposited in time and none of deductee has made complaint against the assessee. The ld. Counsel for the assessee also submitted extrilct from memorarldum of Finance Bill 2015, according to which e-filing made compulsory from April OL, 2010 only and penalty provisions were introduced. Therefore, it was prayed that the penalty as confirmed by the Ld. CIT (A) may please be deleted. ti,,r'- ! t 6. on the other hand, the Ld,. DR th61ie'd bn tn" 'iai&brU of tower authorities. 7, We ha# heard the rival submissions of both the parties and perused the material available on record. We find that there was shortage of staff and the staff was not technicall), competent to e-file

The Civilsurgeon Cum Superintendent, Jhabua v'.iClT (TDS) lndore Page 6 of 11 r.T.A. No.307 to 3O9llndl2o16l A.Y.09-10 to 11-12 the statement. The lack of knowledge and shortage of staff was considered to be reasonable cause by coordinated bench of Cuttack Tribunal in the case of BM(TDS) UCO Bank v. Addl. cIT 120131 23 ITR 209(Cuttack). The non conversant with the complex procedure for subrpissiol of relurn / non technically competent staff was also recognized as reasonable cause in the case of BM(TDS) SBI v. Addl. CIT (TDS) [2014] 62 SOT 119(Cuttack). We observe that the various Benches of Tribunal have time and again held that where there was case of reasonableness, there was no merit in levying the penalty un<ler section 272A{2\(k) of the Act. Thus, in order to adjudicate the issue before us, we accept the case of reasonable cause as relevant to secticl n 2738 of the Act p.ut up by the assessee in the appeals before us, which admittedly relate to different quarters of assessment year 2OOg-10 to 2ol1-12. Where for the first time, in A.Y. 2O1l-12' there was requirement of e-TDS furnishing o['r]p$ statement and I \.\': j j ., ';,1,if-'-' since there were certain complications in e-filing of TDS returns because of ;;Ystem failure, which adrnittedly, was amended 18 times r/ by the Department, the delay in furnishing the said ret.urns late could rrot be attributed to the assessee. The onus was upon the authorities to provide platfclrm for easy compliance to nervly introduced .a', r: ::.ti | .: l .' i ,,.,r.-:,: :i , r. :: i: ,:. '' i.'l

'rhe Civil Surgeon Cum Superintendent, lhabua v. JCIT (TDS) lndore l.T.A. No.307 to 309/tndl2016l A.y.09-10 to 11_ j.2 Page 7 of 11 provisions of the Act. Where the authorities ancl the technical support not being available to small assessees coulcl not provide such facilities, then the delay in furnishing the e-TDS returns late should be liberally construed. Hence, there \ /as practical difliculty on the :.' .. l' pa{t, ot'assessee to comply ',\rith newly introduced requirement of e- \ :. .. 1.t TDS,qlih-rg of TDS statements, being technical delay and not venial in ',t ,,, :.,1 . ;,,,.: . '..',1.,.,nq$tr;fe, merits to be considered as reasonable cause for non-levy of 1 .. l , .!,\, \.. ,f penalty as per the requirements of sectton 273P of the Act. We holct so. In this case, the assessee has not defaulteci in clepositing tax cleducted at source in time, but only the returns were delayed because of non-availability of technical competent stalf and the assessee being doctor was unaware of the provision of filing of TDS Returns though he had deducted rDS properly and deposited the salne in government account properly. 8. The Hon'ble Punjab & I-Iaryana High court in FIMT Lta. v. crr [zoost zz+ trn s+1/[?oo4J1.t+o'raxm#,'6oohad held that where the tax deducted at source had been paid" in time ancl the necessary 4fturrrs in respect thereto were filed in time with the Income Tax Department, mere late issue of tax deduction on to the Revenue and the delay in certificate, there was no loss : : . ..': .i' ,. '. -

The Civil Surgeon Cum Superintendent, ihabua v. JCIT (TDS) tndore l.T.A. No.307 to 309/tnd/2016/ A.Y.09-L0 to 11-L2 Page 8 of 11 Iurnishir:g the tax ileduction certiiicate was held to be mereiy technical or venial in nature and penalty levied under section 272A(2)(k) of the Act was deleted. It may be clarified herein that earlier under section 272A (2) (k) of the Act, penalty was leviable wh.ere the tax deduction certificate was not issued in time. However, by Finance (No.2) Act, 2OO4 w. e. f. 01.04.2OO5, i.t has been provided that where a person fails to deiiver or cause to be delivered copy of statement within time specified in section 200(3) of the Act or the proviso to section 2O6C (3) of the Act, then he shal1 pay by way of penalty sum of Rs.1O0/- for every day of defaulL It is further provided under the said sub-section that the amount of penalty for failure shali not exceed the amount of tax deductible or collectable, as the case may be. It is further provide that no penalty sha1l be levied under clause (a) for failure to furnish the statement under section 200(3) of tlre Act or proviso to section 2O6C (3) qf the Act ool gr after first day ! 1 ltt'4n' | .,u of July 2OL2. 9. The Hon'ble Rajasthan High Court in the case of CIT v. t Superinten'&ing Engineer [2003] 260 ITR 6a 1 (Raj ) I L31 Taxman 596 (Raj) held as"tLrc purpose oJ'leug of perualty uruder section 272A (2) (c) appears to be to put pressure on tLrc thoughtless and inefficient officers

The Civil Surgeon Cum Superintendent,lhabua v. JCIT (TDS) lndore r.T.A. No.307 to 309llndl2016l A.Y.09-10 to 11-1"2 Page 9 of 11 to perform th.eir duty punch)allA in the public interest, but a tctx a.utlrcritA can.not inflict penaltA in a tLtouglttless or routine man.ner. 'fh.e pena"ltA urLder section 272A (2) (c) cannot be leuied in a routine rnanner. lng {jscretion uested witlt the authontA is lo be exercised .ytdiciously - "''')' on cenlsideration oJ' all releuant circumstances. A bon.a. rtde breac:h ':-I i l) canrlq{llead to a penalty under sectiort 272A (2) (")" '; ..-f 6:) "' In this regard, reference is to be made to the provisions of ..1,,,,,,r.,)';r" section 2738, where it has been provided that in case a person establishes or proves that he had reasonable cause for the failure to comply with the provisions of various sections provided in section 273P , then no penalty shall be imposabie on such person for the said failure. Reading of section 2731F shorns that under it, the ser:tion fers to along with many other sections, clause (c) or ciause (d) of sub-section (1) or sub-section (2) of section 272A. What is relerrant for adjudication is section 272A (2), since penalty has been levied for t /,!, k,. ! default in furnishing e-TDS retqrrJs'rihder sectiorv2TlA (2) (k). Since covers the cases of 1e.y of penalty under section 27 38 t , then in line with the provisions of said section in section 27?jA(2) establishes its case of reasonable cause for not case a person the provisions of said section, then tlre complying with ,,ge-_gtion . ' ..:.'.' ',i.'

The Civil Surgeon Cum Superintendent, Jhabua v, JCIT (TDS) lndore r.T.A. No.307 to 309/lnd/2016/ A.Y.09-L0 to 1.1-12 Page 10 of 11 provides that such a person shall not be liable to the penalty irnposable for the said failure Le. under section 2727A(2). We find thett the assessee deductor has no technicai competency to fi1e the ret.urn by itself without external aid. The deductor is also not competent to do so by itself to as per Rule 37E- and fiiing of return of 'lax 1)educted at Source Schenre 2003 , which requires submission of quarterly Statement through NSDL or ot"her approved agencies i.e. third party, not under control of the assessee. The CBDT Vide Circular No. 07 l2OL4 dtd. 4th March 2OL4 has observed that it has received several petitions from deductors being office of the Government regard"ing delay in filing of TDS/TCS statement due to late of furnishing Book Identification Number (BIN) by the Principal Accounts Officer /DTO and considering these problems, the due date for filing of TDS return in government Sector was extended for F.Y. 2012-13 and 2OL3-14. Thus, the diffic}lties fac,e,,4,by the government I t .i.;'-T' rj ] t{,,,, Sector were also recognized by the CBDT. We find that there was neither any willful negligence nor any malafide on the part of t cleducto, X"=."ree in the matter of compliance and therefore, the clelay was due to reasonable cause. The penalty under section '27'2A(2)(k) cannot be levied in mechanical and in routin:. manner i:-. l 1 i:: i. l. liti 1;, ,. - . . l,i., :

'ihe Civilsurgeon cum superintendent, Jhabua v. icrr (TDS) rndore l.T.A. No.307 to 309/tnd/20t6/ A.y.Og_10 to 11_12 Page 11 of 11 where there is technical and venial breach supported by reasonable .;i , cause, imposition of penalty is not justified as heid by the H.,-ble , 'i So,PAtme court in the case of Hindustan steel Ltd. v. state of orissa l. ,'.,)i}t, 11972;t'83 ITR 26(sc). considering the facts ancl circumstances of the l,,i :i:,.P.;,ii#e are of the considered opi,ion that the penalty so levied rrnder section 272A (2) (k) in the case of the deductor assessee is not at al1-justified' we therefore, cancel the penalty levied under section 272A (2) (k) in the case of the assessee deductor for the assessrnent year 2oog-7o, 2a10-11 and 2oll-12. Thus, the grounds of appeai of the assessee is allowed for the assessment year 2oog_ra,, 2o10_11 and 2O l7-L2. 11' In the result, the appeal of the assessee stands allowed. L2. The order pronounced i, the open court on Augu ,rf zon Sd SlL I I I I uudlcml MEMBER AccouNTANT ME}IaER 'l ,.q 1tl1t,y t ;i ),'4. r i I ,t, J ffi"*";s*if (DR)/Guard fi)e. t ,BY order i{