M/S LUDWIG PFEIFFER GYPSUMS STRUCTURE INDIA PVT. LTD.,NEW DELHI vs. DCIT, NEW DELHI

PER CHANDRA MOHAN GARG, JUDICIAL MEMBER

3. The effective grounds involved in this appeal read as under:

“1. The order of the ld. CIT(A) dated 15.4.2011 is bad in law and on facts.

2. That on facts and in law, the ld. CIT(A) has erred in holding that the amount of Rs. 58,86,151/- was rightly disallowed u/s 40(a)(ia) of the Income-tax Act, 1961 as the TDS made thereon was deposited in the Government’s account after the due date specified in sub-section (1) of section 139 of the Income-tax Act, 1961, without appreciating the fact that the delay in depositing the TDS occurred due to technical change in the method of depositing TDS which was beyond the control of the assessee.”

TDS through cheque, but the company refused to accept same by way of cheque. Consequently, the assessee applied for online banking in ICICI Bank in the third week of September and tried its best to get online banking. The ld. AR drew our attention toward the paper book of the assessee containing 17 pages and pointed out that there was sufficient bank balance with t of Rs. 20,14,379/- [paper book page 4] as per bank account statement with ICICI Bank to deposit Rs. 7,26,666/- TDS online and the bank also allotted ID Password to the assessee [paper book page 12] but the same, despite of several requests and efforts by the assessee to the bank, could not be activated enabling the assessee to deposit TDS online till 30.9.2008 [paper book page 7 to 11]. The ld. AR vehemently pointed out that the assessee despite of all possible bonafide efforts, could not deposit the amount of TDS on or before 30.9.2008 and the same could be deposited on 3.10.2008 through State Bank of India as 1.10.2008 was bank holiday and 2.10.2008 was public holiday on the occasion of the birthday of the Father of the Nation Mahatma Gandhi. The ld. Counsel for the assessee pointed out that the authorities below did not give any attention to the facts and circumstances which narrated the bonafide efforts of the assessee to deposit the amount on or before 30.9.2008 and ignored a vital point that the circumstances which could lead to only three days in depositing the TDS were beyond the control of the assessee. The ld.

AR strenuously contended that the A.O as well as the ld. CIT(A) ignored these vital facts that the assessee got the ID and password for making online payment of tax but despite of several requests to the ICICI Bank it could not be activated before 30.9.2008 and after bank holidays, the tax was deposited on 3.10.2008 through SBI which shows the bonafide efforts of the assessee to deposit TDS on time. The assessee cannot be expected to do or perform impossible things. The ld. AR also contended that the three days of delay in payment of TDS was not intentional or deliberate but it was caused due to the above stated reasons beyond the control of the assessee. The ld. AR submitted that there was a good and plausible ‘reasonable cause’ in the delay of three days in depositing the TDS, therefore, it would be justified to allow benefit of the expenses in the relevant A.Y. The ld. AR also explained that the ‘reasonable cause’ has been described by the jurisdictional High Court of Delhi in the case of Woodward Governors India [P] Ltd Vs. CIT [2002] 253 ITR 745 [Delhi] for the purpose of application of section 273C in the backdrop of section 273B of ht Act, which is applicable to the facts of the present case.

9. On careful consideration of the above, we are of the considered view that as per the pay in slip and challan, the cheque of TDS was deposited with the SBI on 3.10.2008 and that it has to be presumed and is amply clear that the assessee deposited TDS on 3.10.2008 which was delayed by 3 days. When we further analyze the acts and efforts of the assessee, then we find that the assessee, for making online payment of tax, secured ID and password from ICICI bank but despite of several requests, the same could not be activated on or before 30.9.2008 resulting into the non deposit of TDS within the prescribed period. We cannot ignore the fact that the assessee has made several efforts and requested the bank but his online payment of tax facility could not be activated. The delay cannot be attributed to the assessee as activation of online payment account was caused by the system failure on the part of the bank and not by the assessee. Undisputedly, and admittedly, 1.10.2008 was a bank holiday and 2nd October is a National Holiday being birthday of Mahatma Gandhi. TDS was deposited on the very next day, i.e. 3.10.2008 which also goes to prove the bonafide sincere efforts on the part of the assessee. In view of the above noted facts, we are satisfied that there was a plausible and reasonable cause which caused three days delay in depositing the tax to the exchequer, which was beyond the control of the assessee. We also hold that the assessee had sufficient funds to deposit TDS on or before 3.9.2008 and it also made several efforts to deposit tax within the prescribed time frame but failed to do so due to reasons beyond his control.

“ In the case of Krishnaswamy S. Pd. v. Union of India [2006] 201 CTR (SCI 183 : [2006] 281 ITR 305 (SC), the Hon'ble Supreme Court has held that the maxim actus curiae neminem garvabit, i.e., an act of Court shall prejudice no man, is founded upon justice and good sense which serves a safe and certain guide for 7 the administration of law. The other relevant maxim is lex non cogit ad impossibilia - the law does not compel a man to do what he cannot possibly perform. The law itself and its administration is understood to disclaim as it does in its general aphorisms, all intention of compelling impossibilities, and the administration of law must adopt that general exception in the consideration of particular cases.

“9. We have considered the arguments advanced by the parties, in view of the materials available record, and orders of the lower authorities and the judgments relied on by the learned Authorised Representative. Admittedly, there was fire in the strong room of the Department wherein the seized books and documents of the assessee were destroyed. Had the same not been destroyed, admittedly, there was no excuse with the assessee for filing the return late. The assessee had also applied for the copies of the seized books and documents to the Department along with required challan of Rs. loo but due to destruction of the same in the fire, these could not be supplied by the Department to the assessee. There is also no doubt that whatever reason for the delay has been assigned by the assessee which was beyond his power and control is bona fide one, but the material question before us is as to whether there is scope in the provisions of law to accommodate such person, keeping in view the exceptional facts and circumstances of the case. Though impossibility of performance is in general no excuse for not performing an obligation, yet when the obligation is one implied by law, impossibility of performance is a good excuse. The law itself and the administration of it, said Sir W. Scott, with reference to an alleged infraction of the Revenue laws, must yield to that to which everything must bend, to necessity; the law, in its most positive and peremptory injunctions, is understood to disclaim, as it does in it general aphorisms, all intentions of compelling to impossibilities, and the administration of laws must adopt that general exception in the consideration of all particular cases (page No. 162 of ’Brooms Legal Maxims, 10th Edn., by Herberts Broom, LL.D). There is also no dispute that provision laid down under Section 80 of the IT Act is a machinery provision and as per the judgment of Hon'ble Supreme Court in the case of CIT v. National' Taj Traders (supra), relied on by the learned Authorised Representative, rule of strict construction applies only to charging provision or one imposing penalty and not machinery provisions. We thus are of the definite view that there was sufficient reason beyond his power and control with the assessee for delay in filing the return and the law does not compel a man to do that which he cannot possibly perform. We find support from the ratio of decision of the Hon'ble Supreme Court in the case of CIT v. National Taj Traders (supra), that rule of strict construction applies only to charging provision or one imposing penalty and not to the machinery provisions. We thus in the interest of justice find no reason to deny the claim of carry forward of loss of Rs. 7,35,100 of the assessee only on the basis that the return was filed late due to the reason which was admittedly a bona fide one beyond the power and control of both the parties. We thus respectfully following the principle laid down in the maxim 'lex non cogit ad impossibillia' as discussed above and the ratio of judgment of Hon'ble Supreme Court in the case of CIT v. National Taj Traders (supra), direct the AO to allow the claim of carry forward of the loss while accepting the return of income filed by the assessee.”

satisfied that despite of all possible and sincere efforts on the part of the assessee, the delay of three days occurred which cannot be attributed or alleged against the assessee for making disallowance of the impugned amount. Thus the disallowance is demolished and the A.O is directed to allow the claim of the assessee in this regard.

The order is pronounced in the open court on 22.07.2016.