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Income Tax Appellate Tribunal, “D” BENCH : KOLKATA
Before: Hon’ble Shri N.V.Vasudevan, JM & Hon’ble Shri M.Balaganesh, AM ]
ORDER Per M.Balaganesh, AM
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.
Janardan Nirman Pvt. Ltd. A.Yr.2010-11 3. The brief facts of this issue is that the assessee had filed quarterly TDS statements for each quarter for the financial year 2009-10 with considerable delay. The reason adduced by the assessee for the said delay was due to non-availability of PAN of the 95% of the payees. The assessee stated that on receipt of the PAN from 95% of the payees the assessee had duly uploaded the quarterly TDS returns from time to time. However, it stated that the assessee had duly deducted the tax at source in respect of every payment made to the respective payees and had remitted the said taxes to the account of the Central Government in due time. Hence, it was pleaded that there was no loss to the exchequer in this regard. The assessee further pleaded that the delay in obtaining the PAN from 95% of the payees was due to reasons beyond its control. The ld. AO however did not heed to these contentions of the assessee and placed reliance on the CBDT Press release vide No. 402/92/1006-MC(10 of 2008) dated 12.02.2008 wherein the limit of PAN for payees has been increased from 90% to 95% for the purpose of uploading the TDS returns. The Ld. AO stated that this CBDT press release dated 12.02.2008 was issued prior to the incorporation of the company and accordingly, the assessee ought to have been aware of the same. With these observations, he levied the penalty for delayed filing of quarterly TDS returns for each quarter @ Rs. 100 per day of each such failure in accordance with the provisions of section 272A(2)(k) of the Act. This action of the Ld. AO was upheld by the Ld. CIT(A). Aggrieved, the assessee is in appeal before us on the following grounds: 1. For that Learned Commissioner of Income Tax(Appeals) should have cancelled the Penalty Order u/s 272A(2)(k)/274 read with Section 200(3) of the Income Tax Act, 1961, dated 18.10.2011, passed by Learned JCIT(TDS), Range- 57, Kolkata.
2. For that Learned CIT(A) failed to consider merit of the case.
3. For that the Penalty levied by the Learned JCIT & confirmed by the Learned CIT(A) is liable to be deleted.
4. For that the entire Penalty proceedings should have been found by the Learned CIT(A) as not in accordance with the law. 2
Janardan Nirman Pvt. Ltd. A.Yr.2010-11
For that each ground is without prejudice to all other grounds.
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 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
Janardan Nirman Pvt. Ltd. A.Yr.2010-11 the same while filing TDS returns and accordingly manage its business affairs by having transaction with organized people having PAN.
5. 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 view of the aforesaid finding and facts and circumstances of the case and respectfully following the Co-ordinate Bench decision of Jaipur Tribunal referred to supra, we hold 4
Janardan Nirman Pvt. Ltd. A.Yr.2010-11 that the penalty levied u/s 272A(2)(k) of the Act would have to be cancelled. Accordingly, grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 12.01.2018