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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri M. Balaganesh, AM & Shri S. S. Viswanethra Ravi, JM]
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA [Before Shri M. Balaganesh, AM & Shri S. S. Viswanethra Ravi, JM]
I.T.A No.666/Kol/2014 Assessment Year: 2010-11
M. M. J. Exports Pvt. Ltd. Vs. Joint Commissioner of Income-tax, (PAN: CALMO2366A) Range-58, (TDS), Kolkata. (Appellant) (Respondent) Date of hearing: 06.03.2017 Date of pronouncement: 10.03.2017
For the Appellant: Shri Manoj Kr. Tiwari, AR For the Respondent: Shri Saurabh Kumar, Addl. CIT
ORDER Per Shri M. Balaganesh, AM: This appeal by assessee is arising out of order of CIT(A)-1, Kolkata vide Appeal No. 706/CIT(A)-1/Circle-58/2011-12 dated 23.12.2013. Assessment was framed by JCIT(TDS), Range-58, Kolkata u/s. 272A(2)(k)/274 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2010-11 vide his order dated 20.09.2011.
The only issue to be decided in this appeal is as to whether the ld CITA was justified in confirming the penalty levied u/s 272A(2)(k) of the Act in the sum of Rs. 18,993/- in the facts and circumstances of the case.
The brief facts of this issue is that the ld AO observed that the assessee had furnished its quarterly TDS returns in Form No. 24Q and 26Q with huge delay and accordingly levied penalty u/s 272A(2)(k) of the Act . The assessee submitted that due to precarious financial condition , there were delays in payment of TDS and as a result, the returns for the relevant quarters in the prescribed form were filed belatedly. It was also submitted that regarding Form No. 26Q, since tax had neither been deducted nor had been paid for the Quarters 1, 2 & 3 of the financial year 2009-10, the assessee was under no obligation to submit TDS returns for the above quarters. Payment of TDS for Quarter (Q in short) 4 could only be made on 7.3.2011 because of precarious financial condition. Returns for Q 1, Q 2, Q 3 and Q 4 were filed together on 15.3.2011 as assessee was waiting for remittance of TDS thereon. Regarding Form No. 24Q, the assessee stated that
2 ITA No.666/Kol/2014 MMJ Exports Pvt. Ltd. AY 2010-11 since tax had neither been deducted nor had been paid for the Quarters 1 & 2 of the financial year 2009-10, the assessee was under no obligation to submit TDS returns for the above quarters. Payment of TDS for Q 3 was made only on 5.2.2010 and 30.4.2010 and that of Q 4 was made only on 9.7.2010 , 4.8.2010 and 16.9.2010 because of precarious financial condition. Returns for Q 3 and Q 4 were filed on 24.11.2010 as assessee was waiting for remittance of TDS thereon. The ld AR also stated that the penalty in any case cannot exceed the tax payable thereon which is clear from the statute and hence even assuming without conceding that penalty is leviable, it should be restricted only to the extent of tax payable and accordingly the penalty figure was worked out at Rs. 11,200/-. It was further pleaded that the assessee could not even make payment of salaries in time to its employees which proves the precarious financial condition of the assessee and hence the statutory payments were kept in hold which had contributed to the delay in filing of TDS returns. The ld CITA however upheld the action of the ld AO. Aggrieved, the assessee is in appeal before us on the following grounds:- “1. For that, on the facts and in the circumstances of the case, the imposition of penalty is perverse, rather against evidence and material on record and without an iota of material or evidence to support and sustain the same. 2. for that, on the facts and in the circumstances of the case, the impugned penalty imposed amounting to Rs.18,993/- (Rupees eighteen thousand nine hundred and ninety three only) by the Ld. Joint Commissioner of Income-tax (TDS), Range-58/Kolkata and confirmed by the Ld. CIT(A)/Kolkata is perverse and ought to be deleted in entirety.”
The ld AR reiterated the facts stated before the lower authorities and stated that there was acute financial crisis in the organization and for that reason there was delay in payment of salary and other charges. Since TDS provisions were very stringent , it required trained personnel to comply with the return filing requirements and in the instant case, the assessee’s staff were not equipped to perform the said work and efficient staff could not be retained by the assessee due to delayed payments of salary resulting from paucity of funds. The non-availability of adequate funds with the assessee leading to delayed remittance of TDS which eventually lead to delayed filing of returns constitute reasonable cause in terms of section 273B of the Act and hence penalty u/s 272A(2)(k) should not be levied in the instant case. He argued that the breach committed by the assessee by delayed filing of TDS returns in only venial in nature and there is no loss to the exchequer. Hence no penalty should be levied in respect of violation of procedural
3 ITA No.666/Kol/2014 MMJ Exports Pvt. Ltd. AY 2010-11 law. In support of his various propositions, he placed reliance on certain decisions. In response to this, the ld DR vehemently relied on the orders of the lower authorities.
We have heard the rival submissions. The facts stated hereinabove remain undisputed and hence the same are not reiterated for the sake of brevity. We find that the assessee has been facing acute shortage of funds even for payment of salary and other charges. Hence it had contributed to the delayed remittance of TDS. The ld AR stated that even the TDS portion of Rs. 4,265/- was remitted on 4.3.2011 by the sister concern of the assessee M/s Arunachal Plywood Industries Ltd in support of which he placed on record the bank statements of the said company. We find lot of force in the argument of the ld AR that the TDS returns could be electronically filed only after remittance of the requisite tax and interest thereon. Since the assessee had remitted the TDS portion itself belatedly by requesting the sister concern to make payment thereon and by mobilizing its own resources , it had eventually led to the belated filing of TDS returns. Hence this itself would, in our considered opinion, constitute reasonable cause u/s 273B of th Act. Hence assessee should not be invited with penalty for mere technical venial breach. We find that the reliance placed on the decision of co-ordinate bench of Mumbai Tribunal in the case of M/s Eagle Couriers vs Addl CIT (TDS) in ITA No. 3865/Mum/2014 dated 9.1.2017 clearly supports the case of the assessee, wherein it was held that :-
----------------------------- Late filing of TDS returns is a technical default. One should not be penalized for technical default. This view has been taken by various benches of tribunal and high courts. The Tribunal, Lucknow Bench, in Punjab National Bank v/s ACIT, [2011] 140 TTJ 622 ; 16 taxmann.com 318 (Lucknow) , held that non-filing of quarterly statements does not involve any revenue loss and is a mere technical default. Even otherwise, there was only a technical and venial breach of the provision contained in Rule 31A of the I.T. Rules, 1962 , requiring the assessee to submit quarterly statements of deduction of tax under section 200(3) within the time prescribed. Such delay had not caused any loss to the Revenue. The Tribunal, Jaipur Bench, in Rajasthan Tribal Area Developmetn Co-Op. Federation Ltd v/s ITO, 60 TTJ 427 (Jai.) held that for mere failure to furnish TDS returns, penalty was not justified as there was no default in deducting tax at source or in deposing the tax in government treasury. The Tribunal, Mumbai Bench, in Royal Metal Printers Pvt Ltd, v/s ITO, [2010] 37 SOT 139 (Mum.) , had categorically stated that the delay in filing the TDS returns even if they are characterized as negligence on the part of the asesssee, can only be considered as a technical or venial breach of law for which penalty should not be levied automatically. In view of the above, we do not
4 ITA No.666/Kol/2014 MMJ Exports Pvt. Ltd. AY 2010-11 find any merit in imposing penalty for technical default in delay in filing TDS returns. Consequently, the grounds raised by the assesse are allowed.
In view of the aforesaid facts and circumstances and respectfully following the judicial precedent relied upon hereinabove, we cancel the levy of penalty u/s 272A(2)(k) of the Act and accordingly the grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 10.03.2017
Sd/- Sd/- (S. S. Viswanethra Ravi) (M. Balaganesh) Judicial Member Accountant Member
Dated : 10th March, 2017
Jd.(Sr.P.S.)
Copy of the order forwarded to: APPELLANT – MMJ Exports Pvt. Ltd., 113, Park Street, 4th Floor, 1. Poddar Point, Kolkata-700 016. Respondent – JCIT, Range-58 (TDS), Kolkata. 2 3. The CIT(A), Kolkata 4. CIT, Kolkata. 5. DR, Kolkata Benches, Kolkata /True Copy, By order,
Asstt. Registrar.