JANARDAN NIRMAN PVT. LTD.,KOLKATA vs. JCIT,(TDS), RANGE-57, KOLKATA, KOLKATA

This appeal by the Assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals)-24, Kolkata [in short the ld CITA] in Appeal No. 153/CIT(A)-24/Kol/2011-12 dated 30.06.2016 against the penalty order passed by the JCIT(TDS), Range-57, Kolkata[ in short the ld AO] under section 272A(2)(k)/274 of the Income Tax Act, 1961 (in short “the Act”) dated 18.10.2011 for the Assessment Year 2010-11.

The only issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in upholding the levy of penalty u/s 272A(2)(k) of the Act, in the facts and circumstances of the case.

We have heard the rival submissions. We find that the ld. AR stated that company was incorporated on 14.08.2008 and the year under appeal was the second year of operations carried out by the assessee, wherein the assessee was still in the process of regularization the various teething troubles that normally gets associated with the newly incorporated company. He further stated that the delay in obtaining the PAN from 95% of the payees was due to reason beyond its control. He pleaded that the assessee being in the second year of operations during the year under appeal, was more concentrating on the development of its business activities and in the process had to engage itself in carrying on of business with certain people who are not assessed to tax. With great persuasion from the side of the assessee, certain payees were made to obtain PAN and those permanent account numbers were duly recorded by the assessee in the TDS returns filed on quarterly basis. These factors had largely contributed for the delay in filing of quarterly TDS returns by the assessee and accordingly pleaded that no penalty would be exigible in the facts and circumstances of the case. He further pleaded that the assessee had duly complied with the provisions of Chapter XVIIB of the Act by way of proper deduction of tax at source and due remittance of the same to the account of the central government in time. Hence, he pleaded that the condition prescribed for filing of quarterly TDS returns in time is a mere procedural requirement and for the reasons stated for the delay hereinabove the assessee would be entitled for immunity provided in section 273B of the Act. He placed reliance on the decision of Co-ordinate Bench of Jaipur Tribunal in the case of M/s Argus Golden Trades vs. JCIT, TDS, Jaipur in I.T.A. No. 522/JP/2016 for assessment year 2011-12 dated 24.05.2017 in support of its contentions. In response to these arguments, the Ld. DR argued that CBDT Press Release dated 12.02.2008 was in the public domain and was issued six months prior to incorporation of the assessee company. Hence, the assessee company is bound to follow

We have given the careful consideration on the arguments advanced by both the parties. We find that the assessee is prevented from reasonable cause by not obtaining the PAN from 95% of payees in time in the facts and circumstances of the case. We find from the details of parties on whom tax has been deducted for each quarter, the assessee had deducted tax at source from 40 parties in quarter 1; 55 parties in quarter 2; 42 parties in quarter 3 and 63 parties in quarter 4. Since more number of deductees were involved, the explanation given by the assessee, that more time was taken for obtaining PAN from the respective payees, is understandable and deserves to be appreciated. This would also constitute the reasonable cause in terms of section 273B of the Act wherein the assessee would be eligible for immunity from levy of penalty u/s 272A(2)(k) of the Act. We also find that the Co-ordinate Bench of Jaipur Tribunal in the case of M/s Argus Golden Trades vs. JCIT, TDS, Jaipur(supra) had held as under: “……………………………….. The assessee has submitted that since there were large number of deductees scattered throughout the country, a fact not disputed by the Revenue, it took them some time to collect the PANs of these deductees and thereafter, it was able to upload the e-TDS returns in the IT system maintained by the Revenue. Further, the taxes have deducted and deposited at the prescribed rate with delay of few days. Hence, there is no loss to the Revenue which is caused due to the delay in filing of the e-TDS return which is totally unintentional. Further, our attention was drawn to the decision of the Co-ordinate Benches in case of Collector Land Acquisition, UCO Bank and SBI (supra) wherein non-availability of PAN was held to be a reasonable cause for delay in filing of the e-TDS return. Given the peculiarity of the facts in the present case where there was a change effected in the IT system for mandatory requirement of PANs of all deductees before the returns can be validated and uploaded, the fact that there were large number of deductees spread throughout the country and efforts were made by the assessee to obtain their PANs numbers, the fact that taxes have been deducted and deposited, hence no loss to the Revenue, we find that assessee has a reasonable cause for delayed filing of its e-TDS return in terms of section 273B and the penalty under section 272(A)(K) is hereby deleted.”

In the result, the appeal of the assessee is allowed.