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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: Shri P.M.Jagtap & Shri S.S. Viswanethra Ravi
ORDER SHRI S.S. VISWANETHRA RAVI, JM This appeal of the assessee against the order dated 21-05-2013 of the CIT, Kolkata-IV, Kolkata confirming the penalty levied by the AO u/s. 272A(2)(f) of the I.T Act, 1961 for the assessment year 2007-08 to the extent of Rs. 57,172/-.
Only effective ground in this appeal of assessee is as to whether the ld.CIT(A) justified in confirming the penalty order to the extent of Rs. 57,172/- in the facts and circumstances of the case.
Brief facts of the case are that the assessee is a firm dealing with the business of trading of raw jute, yarn and shares. The assessee filed its return of income declaring a total income of Rs. 93,427/-. The AO determined the income of the assessee at Rs.1,00,300/- and passed an assessment order u/s. 143(3) of the Act on 29-12-2009 . Thereafter, the ld. CIT having exercising his jurisdictional power u/s. 263 of the Act found the during the course of assessment proceedings, the Assessee had committed a default for non-cognizance of disallowance of interest expenditure u/s. 40(a)(ia) r.w.s 194A of the Act and notice was issued to the assessee. In response to such notice the assessee submitted that the loan creditors has deposited their Form No.15G/15H requesting the assessee not to deduct TDS at source on such amount. Besides, the assessee also submitted that it is not conversant with intricate tax laws and it is not assisted by any qualified or competent tax advisor. The assessee also submitted that it did not derive any pecuniary benefits and does not have ulterior motive.
Having considered the submissions of the assessee, the CIT confirmed the impugned penalty by observing as under as under:- “ Keeping in view the above discussion, it is hereby held that the assessee has committed default which attracts the penal consequence u/s. 272A(2)(f) of IT Act and the penalty under this section is hereby levied. It has been noticed that the assessee was liable to furnish such form No.15G/15H on or before 7th April, 2007. Though the assessee never furnished these forms as per Sec. 197A(2) till date, however, assessee’s submission before the undersigned in the course of proceeding U/s. 263 of IT Act can be held as sufficient compliance to the provision of this section. Therefore, the date of order U/s. 263 of IT Act i.e. 29.03.2012 is taken as compliance date. The penalty leviable comes to Rs.1,81,800/- for default of 1818 days (w.e.f 8.4.2007 to 29.03.2012)( Rs.100/- for day defaults). As per the data available, the assessee was liable to deduct Rs.57,172/- on the payment of interest expenses of Rs.5,71,723/- to twenty nine deductees. Therefore, the penalty levied shall be restricted to Rs.57,172/-. “
As aggrieved by such order of the CIT in restricting the impugned penalty, now the assessee is in appeal before us and reiterated the same submissions as made before the CIT. In support of his submission, the ld.AR relied on the decision of the Hon’ble Supreme Court in the case of Hindustan Steel Ltd Vs. State of Orissa reported in 83 ITR 26(SC).
On the other hand, the ld.DR submits that the Section 272A(2)(f) is very much clear that any one fails to submit Form No.15/15H within time as specified therein is/are guilty and penalty can be imposed for such failure.
We have heard the rival submissions and perused the material available on record including the case law supra as relied on by the ld.AR for the assessee before us. We find from the impugned order of CIT that the assessee has to submit the Form No. 15G/15H on or before 7-4-2007. But, however, before the CIT u/s. 263 proceedings the assessee requested to take the compliance as on date i.e 29-03-2012 as required u/s. 272A(2)(f) of the Act. We further find from the order of the CIT that there is delay in default of 1818 days (w.e.f 8-4-2007 to 29-03-2012) for which the specified amount u/s. 272A(2)(f) the leviable penalty comes to Rs.1,81,800/-. But the CIT restricted the penalty to Rs.57,172/-. In this regard, we may refer to the decision supra as relied on by the ld.AR during the arguments before us that the facts therein are Sales Tax Officer imposed penalty on the assessee for failure to register the assessee as a dealer. The Appellate Assistant Commissioner confirmed the order of the Sales Tax Officer. In second appeal the Tribunal substantially reduced the penalty imposed on the assessee therein. The Hon’ble High Court of Orissa also confirmed the penalty imposed and agreed with the order of the Tribunal therein. Hon’ble Supreme Harikishan Dass Ramkishan Court in the case of supra therein held that the liability to pay penalty does not arise merely upon proof of default in registering the assessee as a dealer. Relevant portion of which is reproduced herein below for better understanding :- “… … .. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, 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 the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions 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 statute. “
A perusal of the aforesaid observations of the Hon’ble Supreme Court, the Hon’ble Court held that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, 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 the authority to be exercised judicially and on a consideration of all the relevant circumstances. In the present case the loan creditors submitted the requisite Form No.15G/15H with the assessee. He could not produce the same before the authorities below within time as specified u/s. 272A(2)(f). However, before CIT-A the assessee submitted that it is not conversant with intricate tax laws and not assisted Harikishan Dass Ramkishan by any qualified/competent tax advisor. He did not get any pecuniary benefits out of it. Taking into considerations the observations made by the Hon’ble Supreme Court in the case of supra, we could not see any deliberate act of defiance of law and an act conscious disregard for filing forms 15G/15H before the authorities and in our view for not producing the said Form Nos. 15G/15H with the authorities within time specified is a statutory obligation and CIT-A could have exercised his discretion judicially in cancelling penalty considering all the relevant circumstances as submitted by the assessee. Taking into considerations the submissions made by the assessee before the CIT-A that non submission of Form Nos.15G/15H is a technical and venial breach of the provisions of the Act. We find that the assessee neither acted deliberately nor defiance of law in submitting the said forms before the authorities. Thus, we are of the view that the facts and laws as laid by the Hon’ble Supreme Court in the case of supra is applicable to the facts and circumstances of the present case. We hold that the penalty imposed is unjustified. Accordingly, the same is cancelled and the ground raised by the assessee is allowed.
In the result, the appeal of the assessee is allowed as stated above. Order Pronounced in the Open Court on 5th August, 2016.