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IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH “B”, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No.3051/Mum/2016 (Assessment Year- 2009-10) ITA No.3052/Mum/2016 (Assessment Year- 2011-12) Aspandiar R. Irani & Gustad R. Addl. CIT, TDS Range, Irani, Plot No. 35, Opp. Silver Thane. Arch Hsg. Soc., Road No.1, Vs. Samata Nagar, Thane-400606. PAN: AABAA1195Q (Appellant) (Respondent)
Assessee by : Shri Devendra Jain (AR) Revenue by : Shri Suman Kumar (DR) Date of hearing : 13.04.2017 Date of Pronouncement : 13.04.2017 Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeal by assessee u/s 253 of the Income-tax Act (‘the Act’) are directed against the order of ld. CIT(A)-1, Thane dated 23.02.2016 for AY-2009- 10 & AY-2010-11. In both the appeals, the assessee has raised identical grounds of appeal. The ld. CIT(A) passed the consolidated order for both the years. Thus, both the appeals were heard together and are decided by common order to avoid the conflicting decision. In appeal for AY 2009-10, the assessee has raised the following ground of appeal: Ground "a. The ld. A.O. erred in imposing penalty u/s 272A(2)(k) of the Income Tax Act, 1961 to the extent of Rs. 1,13,700/- on late filing of TDS return for Quarter 1 to Quarter 4 of F.Y. 2008-09 (I.e. A.Y. 2009-10). 2. In appeal for AY 2010-11, the assessee has raised the following grounds of appeal:
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"a. The ld. A.O. erred in imposing penalty u/s 272A(2)(k) of the Income Tax Act, 1961 to the extent of Rs. 38,200/- on late filing of TDS return for Quarter 1 of F.Y. 2010-11 & AY 2011-12.” 3. For AY 2009-10, the AO observed that in the Quarterly statement of TDS u/s 200(3), the assessee furnished the following statement: RRR No. Period Due date Date of filing Delay Amount of TDs 50810100132444 Q1 15-7-08 25-9-2009 437 114320 50810100132433 Q2 15-10-08 25-9-2009 345 75912 50810100132411 Q3 15-1-09 25-9-2009 253 58779 50810100132422 Q4 15-6-09 25-9-2009 102 138298
The Assessing Officer (‘AO’) noticed that there was delay in deposit of TDS. The AO issued a show cause notice for imposing penalty u/s 272A(2)(k). The assessee filed its reply dated 25.01.2013. The reply filed by assessee was not accepted by AO holding that there is no merit in the contention of assessee and levied the penalty of Rs. 100/- for each day of default. Thus, the AO worked out a penalty of Rs. 43,700/- for first Quarter, Rs. 34,500/- for second quarter, Rs. 25,300/- for third Quarter and Rs. 10,200/- for fourth Quarters. On appeal before the ld. CIT(A), the penalty was confirmed. 5. Similarly for Ay 2011-12, the AO observed that the deposit of TDS was due on 15.07.2010 and the same was deposited on 01.08.2011 thus there is delay of 382 days, thus the AO levied a penalty of Rs. 38,200/- @ of Rs. 100/- per day. On appeal before the ld. CIT (A), the penalty was confirmed. Thus, further aggrieved by the order of ld. CIT(A), these appeals are filed before us. 6. We have heard the ld. Authorized Representative (AR) of assessee and ld. Departmental Representative (DR) for Revenue and perused the material available on record. The Ld. AR of the assessee argued that the issue raised in the present appeal is covered by the decision of Mumbai Tribunal in Dube Motel India Pvt. Ltd. vs. JCIT in ITA No. 6117 & 6118/Mum/1998 dated 05.02.2001 and in Porwal Creative Vision (P.) Ltd. vs. ACIT (2011) 10 taxmann.com 222 (Mum). It was further argued that assessee has paid the tax with interest due to delay in
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deposit of Quarterly statement and it was further argued that penalty could be levied from the date of payment of tax as per the statement u/s 200(3) is required to be filed only after payment of tax to the Government. On the other hand, ld. DR for the Revenue supported the order of authorities below. 7. We have considered the rival contention of the parties and find that almost similar issue was considered by the Co-ordinate Bench of Tribunal in Porwal Creative Vision (P.) Ltd. (supra). The Co-ordinate Bench of this Tribunal passed the following order:
“5. We have perused the records and considered the rival contentions carefully. The dispute is regarding levy of penalty under section 272A(2)(c)(k). The penalty has been levied for not submitting the quarterly returns for tax deducted at source (TDS) within the prescribed time limit. We have gone through the relevant legal provisions. The Learned AR for the assessee has rightly pointed out that clause (c) of section 272A(2) is not applicable as the same relates to return/ statement under section 133, 206 and 206C. The section 206 was in force only up to 31.3.2005 and therefore is not applicable in case of the assessee. The section 206 related to collection of tax and not TDS whereas section 133 was also unrelated to TDS and therefore these sections are not applicable. The clause (k) of section 272A(2) is however found applicable in case of the assessee which requires a person to deliver or caused to be delivered copy of the statement as specified under section 200(3). Under the provisions of section 200(3) r.w.r.31A a person deducting tax at source is required to prepare a statement in the prescribed form being the Form No.26Q and deliver the same to the prescribed income-tax authorities after paying the tax deducted to the credit of Central Government. The said section 200(3) is reproduced below as a ready reference.
200(3) Any person deducting any sum on or after the first day of April, 2005 in accordance with the foregoing provisions of this chapter or as the case may be, any person being an employer referred to in sub section (1A) of section 192 shall after paying the tax deducted to the credit of the Central Government within the prescribed time, prepare such statement for such period as may be prescribed and deliver or caused to be delivered to the prescribed income tax authority or the person authorized by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed.
Thus under the provisions of section 200(3) aforesaid r.w.r. 31A a quarterly statement of TDS in Form No.26Q is required to be filed by the assessee by 15th July, 15th October, 15th January and 15th June (last quarter of the year). In this case there has been delay in both the years as indicated by the AO in the table reproduced at page 2 of this order. The penalty has therefore been levied @ Rs.100/- per day of default is starting from the due date to the date of filing the quarterly return. The case of the assessee is that it had deducted the TDS at the time of crediting amounts in the books of account and the payment could not be made due to financial difficulties and since the payments had not been made the TDS returns could not be filed as the same required data relating to payment of TDS. The Learned AR has also argued that penalty under section 272A(2)(k) could be levied only from the date of payment of tax
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as the statement under section 200(3) is required to be filed only after payment of tax to the Central Government. We find force in the argument advanced by the Learned AR. Section 200(3) which has been reproduced earlier clearly provides that after paying the tax deducted to the credit of Central Government within the prescribed time, the assessee shall prepare a statement as prescribed and submit to the authority concerned within the prescribed time limit. The assessee therefore can file the return only after paying the tax to the Central Government. The quarterly returns of TDS require filling of data relating to payment of taxes and therefore such returns could be filed only after paying the tax to the Central Government. Therefore in our view penalty has to be levied for the delay only from the date of paying the tax to the Central Government.
6.1 As regards the default in not paying the tax to the Central Government in time or for non deducting the tax at source, there are other provisions for ensuring compliance. In case the assessee fails to deduct the tax at source or after deducting fails to pay the same to the Central Government the assessee is deemed to be in default under section 201(1) and is liable for penalty. The assessee is also liable to pay interest for the period of default till the payment of tax under section 201(1A). Therefore in our view the period for levying the penalty has to be counted from the date of payment of tax because the delay in filing the return till the date of payment of tax is already explained on the ground that the assessee could not pay the taxes for which separate penal provisions exist. The assessee has also explained the reasons for not paying the tax to the Central Government in time which was because of financial difficulties. The assessee has filed the copies of P & L account and balance sheet to substantiate the claim that it was incurring losses and there were substantial liabilities on account of creditors. The assessee has placed reliance on some decisions of the tribunal in which financial difficulties have been accepted as reasonable cause for default in payment of tax. The Madras bench of the tribunal in case of R.Karuppaswamy Vs 2nd ITO (9 TTJ 442) had cancelled the penalty levied for default in payment of self assessment tax on the ground paucity of funds. Similarly the Bombay bench of the tribunal in case of 3rd ITO Vs Bombay Cable Co. Pvt.Ltd. (11 TTJ 386) had upheld the dropping of penalty proceeding and deletion of interest levied under section 201(1A) for failure to deposit the TDS with Central Government on the ground of financial difficulties. Once the delay in payment of tax is explained satisfactorily, penalty under section 272A(2)(k) for the period till payment of taxes, cannot be levied in our opinion.
In view of the foregoing discussion we hold that penalty under section 272A(2)(k) shall be levied only for the delay from the date of payment of taxes by the assessee. The order of CIT(A) is modified accordingly.” 8. Considering the decision of Co-ordinate Bench, we direct the AO to work out the penalty afresh in accordance with the aforesaid decision of the Tribunal from the date of payment of tax by the assessee. 9. In the result, both the appeal of the assessee is partly allowed. Order pronounced in the open court on 13th day of April 2017. Sd/- Sd/- (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER
ITA Nos.3051 & 3052/M/2016- Aspandiar R. Irani & Gustad R. Irani
Mumbai; Dated 13/04/2017 S.K.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT BY ORDER, 5. DR, ITAT, Mumbai 6. Guard file. स�या�पत��त //True Copy/ (Asstt.Registrar) ITAT, Mumbai