RAZA PAPER MART,MUMBAI vs. ADDL CIT (TDS) RG 3, MUMBAI

आदेश / O R D E R Per Ashwani Taneja (Accountant Member): These Appeals have been filed by the assessee against the order of Ld. CIT(A) dated 07.03.2014 passed against the

3 Raza Paper Mart years new system of filing of TDS return electronically was recently launched and the assessee did not have sufficient resources to adopt and adapt to the new system of filing of returns. On the top of it, there was late receipt of bills from the deductees, non-availability of PAN numbers of many deductees and shortage of trained staff to implement the compliances. It was further submitted that TDS amounts were duly deducted and deposited into the government treasury well within time and as per rates prescribed and there is no dispute on that. Thus, though there was substantive compliance of the law, but merely a technical or venial breach due to the reasons stated above. Relying upon the judgment of Hon’ble Supreme Court in the case of Hindustan Steel Ltd. vs. State of Orissa 83 ITR 26 (SC), it was requested that penalty should be deleted. In addition to that he relied upon the following decisions in support of his claim that if TDS was deducted and deposited in time, penalty u/s 272A(2) shall not be leviable: 1. CIT vs. Harsiddh Construction Pvt. Ltd. 144 ITR 417(Guj) 2. Sahara India Mutual Benefit Co. Ltd. 157 taxman 52(All) 3. Crest Communication Ltd. 106 ITD 558(Mumbai) 4. Saturday Club Limited 85 ITD 224(Cal) 3.2. We have gone through the entire facts and circumstances of the case and submissions made by both the sides as well as judgments relied upon by both the sides. It is noted that undisputed facts are that there was full compliance made by the assessee with respect to deduction and deposit of tax within time in accordance with law and no lapse has been reportedly made by the assessee in this regard. Thus, as per

4 Raza Paper Mart the facts narrated before us, substantive compliance of the law has been made by the assessee. The delay occurred in filing of TDS returns because in some cases there was late receipt of bills from the deductees and if some other case assessee did not have PAN numbers of the deductees. The assessee has also submitted that assessee was finding it difficult to switch over to the new system of filing of TDS return electronically as the assessee did not have requisite strength of trained staff and other required resources. These facts and constraints narrated by the assessee have not been disputed or negated by AO, Ld. CIT(A) or by the DR before us. Under these circumstances, in our view, AO should not have levied the penalty. Such penal provisions have been brought in the statute to set right the taxpayer of negligent and non- compliant nature. These provisions were not brought for collection of revenue and nor these are meant to cause undue hardship even to those taxpayers who had made serious efforts to make compliance but somehow there were some technical lapses of venial nature. The AO has not been able to bring anything on record to show that assessee’s case would fall in a category where the levy of penalty would be justified. Thus, taking into account all the facts and circumstances of the case, levy of penalty is held to be not justified in the case before us. 3.3. Before parting with, we shall also like to place on record apprehension expressed by the Ld. DR that delay in filing of TDS return make it difficult for the deductees at times to make claim of TDS credit in their respective income tax returns. We

5 Raza Paper Mart agree with the Ld. DR on this issue and thus we are of the opinion that deductors must make sincere efforts to file TDS returns timely, as now long time has passed since new system of filing of TDS returns electronically was introduced. Thus, all sincere efforts should be made by the assessee in future to file all the TDS return timely and in accordance with law. In absence of the same, the AO shall be at liberty to initiate penalty proceedings under the law. 3.4. With the aforesaid directions the penalty levied in these three appeals are directed to be deleted and all the three appeals are allowed.