Loading judgment…
No AI summary yet for this case.
Assessee by : Sh. P.R. Raiyani (AR) Revenue by : Sh. Suman Kumar-DR Date of hearing : 27.04.2017 Date of Pronouncement : 05.05.2017 Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee under section 253 of the Income-tax Act (‘the Act’) is directed against the order of ld. CIT (A)-14, Mumbai dated 10.10.2014 for AY- 2010-11. The assessee has raised a number of grounds, however as per our considered view the only substantial ground of appeal is “whether the Learned Commissioner (Appeals) erred in upholding the penalty of Rs.1,63,807/- imposed by Additional Commissioner of income Tax (TDS), under section 272A(2)(k) of the Act.” Rest of the grounds of appeal is argumentative or explanatory in nature.
2. Brief facts of the case are that Assessing Officer noticed that the assessee failed to furnish the quarterly TDS returns within time, for financial year 2009- 10 before the prescribed authority as required under section 200(3) of the Act read with Rule 31 of Income Tax Rules. The Assessing Officer prepared the following statement on the basis of TDS deposited, due date of filing the TDS returns, date of filing the TDS statements and the number of delay.
Bhagirath Bearings Pvt Ltd Qtr TDS Amount Due date of Date of filing No. of deposited filing the return delay statements Q-1/26Q 74486 74486 15.07.2009 29.07.2010 544 Q-2/26Q 66,032 66,032 15.10.2009 29.07.2010 422 Q-3/26Q 66,348 66,348 15.01.2009 29.07.2010 356 Q-4/26Q 73,512 73,512 15.06.2010 29.07.2010 209 Q-4/26Q 7,707 7,707 209
The assessing officer issued a show cause notice dated 24th Oct 2010 under section 272 A(2)(k) to the assessee. The assessee filed his reply. In the reply of assessee contended that reasons for late filing of returns of TDS was that their experienced accountant who used to compile the data for quarterly TDS return left services from July 2009 and the new accountant who was employed thereafter was not well-verse with the procedure of filing of the returns. The directors of the assessee were not well versed either with the computer operation or in handling the accounts and were dependent upon the accountants. The assessee admit that returns were filed late, however TDS was paid from time to time and there was some delay in payment of TDS. The assessee received intimation from the Department about the short deduction for few payments and the demand was raised including the interest on such short payments, upon receipt of such intimation and demand notice the assessee paid the balance amount of Rs. 6,940/-. The assessee further contended that there was unintentional compliance in furnishing the statement of the TDS. The assessee also contended that there was no malafide intention on the part of assessee. The assessee never defaulted on earlier occasions or in subsequent years. The contention of assessee was not accepted by the Assessing Officer. The Assessing Officer concluded that it is statutory obligation of the assessee to deduct tax wherever deductible and paid to the accounts of the government, the assessee has to ensure timely submission of TDS statement. The excuse made by the assessee for getting skilled staff etc, are not tenable and reasonable cause to see the benefit under section 273B of the Act. The Assessing Officer further concluded that there is a clear-cut laxity on the part of assessee which cannot be now put forth as a reasonable cause for not filing statement in time. The Assessing Officer on the basis of number of delays in furnishing the return levied penalty @ Rs.100/- per day for each quarterly 2 Bhagirath Bearings Pvt Ltd statement and worked out the penalty of Rs. 1,63,807/-. On appeal before Commissioner (Appeals) the penalty was sustained. Aggrieved by the order of Learned Commissioner (Appeals), the assessee has filed the present appeal before us.
We have heard the ld.AR of the assessee and the ld. DR for the Revenue and perused the material available on record. In addition to his oral submission, the ld. AR of the assessee also filed written synopsis. The ld AR of the assessee argued that since inception of the assessee-company, no penalty under section 272A(2)(k) was imposed on the assessee. During the financial year 2009-10 the assessee deducted tax at source and it had paid tax so deducted. Quarterly statements could not be filed within time prescribed as the Accountant of the assessee who was looking after the said work left his job abruptly. The officials of the assessee persuaded the said employee to join the assessee and to complete his pending work, however despite the repeated efforts of the assessee the employee refused to join the duty and due to the said reasons the new staff appointed by assessee-company could not compile the statement and furnished the return of TDS in time. It was argued that certainly there was delay in furnishing the statement of TDS returns, however it was not intentional, but it was due to the bonafide reasons. In support of the submission, the ld. AR of the assessee relied upon the decisions of Hon’ble Supreme Court in Hindustan Steel Ltd, Vs State of Orissa 83 ITR 26(SC), CIT Vs Eli Lilly and Co. India Private Limited 312 ITR 225(SC ), CIT Vs. Harsidh Construction Private Limited 244 ITR 147 (Gujarat), decision of Ahmedabad Tribunal in Acquafil Polymers Co. Private Limited (ITA No. 3246 & 3247/Ahd/2015 dated 03.02.2016, Kiri Industries Ltd. Vs. ACIT (ITA No. 2733/Ahd/2015 dated 01.01.2016, Br. Manager, State Bank of India Vs. ACIT [(2014) 41 taxmann.com 268], Branch Manager Punjab National Bank [(2014) 140 TTJ 622], ACIT Vs. Lok Prakashan Ltd. [ITA No. 2815/Ahd /2009 dt. 08.01.2010]. On the other hand the learned DR for the revenue supported the order of authorities below. The learned DR further argued that the assessee has not shown sufficient cause for delay in furnishing the return of TDS. The plea Bhagirath Bearings Pvt Ltd of the assessee that the accountant left the employment is the self serving statement of the assessee.
We have considered the rival submission of the parties and gone through the record of the case. The assessing officer levied the penalty shoot delay in filing TDS statements within statutory period. There is no dispute that assessee deposited amount of TDS in every quarter. The assessee paid interest for delay in deposit of TDS. The assessee had paid an interest of Rs. 6,940/-. The contention of assessee throughout the proceedings is that not furnishing the statement/ returns within statutory period was neither intentional nor deliberate. The delay in furnishing the statement was due to the reasons that the person who was looking after for furnishing the statement of TDS returns left employment of assessee. The assessee made their effort to bring the employee back in their employment. In support of their contention the assessee has placed on record the copy of e-mail communication with the employee (page 23ofPB). The lower authorities have not given any finding that non-furnishing of TDS returns was deliberate or the assessee got any benefit due to delay in furnishing the statement. The Hon’ble Supreme Court in Hindustan Steel Ltd Versus State of Orissa supra held that; “An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of authority to be exercised judiciously and on the consideration of all relevant circumstances even if minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, where there is technical or venial breach of the provision of the Act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statue. The Hon’ble Apex Court further in case of CIT Vs Eli Lilly and Co (India)(P) Limited(supra) held; “Section 273B states that notwithstanding anything contained in section 271C, no penalty shall be imposed on the person or the assessee for failure to detect tax at source if such person or the assessee proves that there was a reasonable cause for the said failure. Therefore, the liability to levy penalty can be fastened only on only on the person who do not have a good case and sufficient reason for not deducting tax at source. Only those persons will be