THE COMMANDER WORKS ENGINEERS,PATIALA vs. JCIT (TDS), CHANDIGARH

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘A’, CHANDIGARH

BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.1573/Chd/2017 (Assessment Year : 2012-13) The Commander Works Engineers, Vs. The JCIT (TDS), Headquarter Bldg No.26, Chandigarh. New Lal Bagh, Patiala. PAN: PTLH12424G (Appellant) (Respondent)

Appellant by : Shri Vibhor Garg, CA Respondent by : Shri Surinder Meena, JCIT Date of hearing : 23.05.2018 Date of Pronouncement : 04.07.2018

ORDER PER ANNAPURNA GUPTA, AM:

This appeal has been preferred by the assessee against

the order of learned Commissioner of Income Tax (Appeals)-

1, Ludhiana (hereinafter referred to as CIT(Appeals)) dated 7.9.2017 relating to assessment year 2012-13, levying

penalty u/s 272A(2)(k) of the Income Tax Act, 1961 (in

short ‘the Act’), for late filing of TDS returns.

Patiaia observed that the quarterly statement in form

number. 24Q for the 1 s t, 2 nd, 3r d and 4 t h quarters of the

F.Y.2011-12 were filed on 03.03.2014, which otherwise was due to be filed on 31.07.2011, 31.10.2011, 31.01.2012 and

15.05.2012 respectively. There was, thus, a delay of 945

days, 855 days, 765 days and 660 days respectively in

delivering or causing to be delivered the said statement

within the time specified in sub- section (3) of section 200

of the Act. The person responsible [hereinafter

referred to as "PR"] making the aforesaid compliance was put to notice requiring him to show cause as to why penalty

under the provisions of section 272A(2)(k) read with

section 274 of the Act not to be levied for late filing of

the quarterly statements. In response, it was submitted

that TDS of officers and staff working in the jurisdiction of

PR was being deducted by PCDA WC, Chandigarh and TDS

return was also being filed by them. It was submitted that

on 27.03.2012, PCDA WC, Chandigarh, directed the

assessee PR to obtain separate TAN, DDO Registration No.,

DDO Code, PIN code of Patiaia office etc. Thereafter all the

applied and received and further said things was

intimated to PCDA (WC), Chandigarh on 09.01.2013.

Further, no intimation was received from

PCDA(WC), Chandigarh to the assessee regarding

deduction and deposit of TDS. It was contended that only

after receiving notice of ITO (IDS), Patiala regarding non

filing of TDS return of 24Q of quarter 1, 2 n d ,3 r d and 4 t h of

F.Y. 2011-12, the said TDS returns were filed on

03.03.2014. It was also stated that there was no malafide

intention of the assessee in not submitting the statement

in time. Reference was made of the decision of the ITAT

Lucknow judgement 2011(5) TMI 831 in the case of

Branch Manager, PNB Vs Addl.Commissioner of Income

Tax in IT Appeal No.285(Luck)2011, dated 31.05.2011.

Joint Commissioner of Income Tax, TDS, Chandigarh held

that the delay in filing the statement was not occasioned

by any reasonable and sufficient cause and proceeded to

penalise the assessee under the provisions of section

272A(2)(k) of the Act, levying penalty of Rs.1,61,390/-.

CIT(Appeals) who dismissed the assessee’s appeal stating

that considering the period of default it was clear that the

PR had treated the statutory provisions with contempt

and that there was a conscious disregard of the obligation

cast on it and thus no bonafide reason for the default.

The Ld.CIT(A) held as under:

“6. The submissions of the appellant have been considered. There is no doubt that the penalty has been levied for the technical breach of not filing the quarterly statement within the stipulated period and that there was no loss in as much as the due taxes were paid on time. Even if the aforesaid technical breach be considered venial in view of the fact that there is no loss of revenue as taxes have been deducted and paid to the treasury of the Government, the default on the part of PR cannot be treated with levity as the responsibility cast upon him has not been discharged as per the statutory provision in this regard. It is also not a case of a default for a day or two. The default continued for more than a year which goes on to show that the PR treated the statutory provision of law with an undeserving contempt. If due care and caution is not exercised by the person responsible for making compliance to the provisions of law, the ensuing default cannot be considered as venial. The prescribed penalty for such a breach has been mandated by the statute. The PR is called upon to

effect compliance to the provisions in every quarter in respect of the withholding tax obligations, failng which the penalty has to be imposed. In the instant case, the PR cannot claim that the default was occasioned because of the bonafide belief that such quarterly statement can be filed as late as has been filed in the instant case. The default may not be contumacious but there is definitely a conscious disregard of the obligation cast upon the PR. Besides, if a default or a mistake can be avoided or obviated by exercising some care and caution, such default cannot be considered as occasioned by a reasonable cause or a sufficient cause. Imposition of penalty in such cases would also act as a deterrent for the PR to be careful and not cause breach of the statutory provision without any reasonable cause. The imposition of penalty is, hereby, confirmed. It is ordered accordingly.” 6. Aggrieved, the assessee has come up in appeal before

us raising the following grounds:

“1. Because the action for upholding the levy of penalty u/s 272A(2)(k) for Rs.1,61,390/- is being challenged on facts & law and the quantum thereof is being disputed too. 2. That the appellant prays for any consequential relief and or legal claim arising out of the present appeal and leave for any addition, deletion, amendment and modification in the grounds of appeal before the disposal of the same.” 7. Before us, the Ld. counsel for assessee reiterated

the contentions made before the CIT(Appeals) that there

was reasonable cause for the delay. Our attention was

drawn to the submissions made in this regard before the

CIT(Appeals) placed at Paper Book page 1 to 3 as under:

The TDS of the appellant and officers and staff working under; him was being deducted at sources by PCDA WC, Chandigarh and return of TDS was being filed by them. On 27/03/2012 appellant had received a letter from PCDA WC, Chandigarh to apply and obtain separate TAN, DDO Registration No., DDO Code, PIN code of Patiala office. Thereafter all the above was applied in due course and we received the TAN on 19th April, 2012. We have intimated

all the above details to PCDA (WC), Chandigarh on 09/01/2013. As no intimation was received from PCDA (WC), Chandigarh regarding deduction and deposit of TDS by appellant it was presumed that the tax continued to be deducted and deposited by the PCDA WC, Chandigarh in their own TAN for the F/Y. 2011-12. As such we had bonafide belief that that the required information of TDS for F/Y. 2011-12 was submitted by the Controlling Office Chandigarh to the Income Tax Authorities as in the past. The ITO TDS- Patiala advised/required us to file the TDS returns, 24Q-1 to 24Q-4 for the F/Y. 2011-12 at Patiala vide her letter dated 09/01/2014 only than we came to know that the required informations for Patiala Office have not been filed. The sequence of correspondence with the PCDA (WC), Chandigarh and HQ Delhi and relevant records are enclosed herewith (Ann, Pg 1 to 37)” 8. Referring to the above it was contended that earlier the

TDS compliances were being done by PCDA WC and it

was only on 27/03/12 ,when the due date for filing TDS

returns of first three quarters of the year had expired,that

it was asked to obtain and apply for TAN and other

requirements for deducting TDS and even after the

assessee had complied with the same it was never asked

to take over the TDS compliances required under law.It

was contended therefore that the assessee was of the

belief that the TDS compliances would be continued by

PCDA WC and it was only when notices of non compliance

was received from the ITO-TDS that the assessee became

aware of its default which was immediately complied with.

Our attention was drawn to a datewise state of case

annexed with the submissions as under:

It was also pointed out that documents evidencing the

same had also been annexed thereto .Ld.Counsel for the

assessee therefore contended that the assessee had

sufficiently demonstrated the existence of reasonable

cause for the late deposit of TDS returns and the findings

of the CIT(A) in this regard were therefore incorrect.It was

contended that the penalty levied therefore ought to be

deleted.

The Ld. DR on the other hand relied upon the order of

the CIT(Appeals).

orders of the authorities below and also the documents

referred to before us. The issue before us being levy of

penalty u/s 272A(2)(k) of the Act,for late deposit of TDS

returns, there is no dispute that no penalty is leviable if

the assessee proves that there was a reasonable cause for

the failure,as provided u/s 273B of the Act.

We find merit in the contentions of the Ld. counsel for

assessee that the assessee had sufficiently demonstrated

the existence of reasonable cause for the default. The Ld.

counsel for assessee has contended that it was not

required to deduct TDS earlier and was only intimated on

27.3.2012 to obtain TAN, DDO Registration No., DDO

Code, etc. to facilitate TDS compliances. That it complied

with the same, but in the absence of any specific order to

deduct tax at source, refrained from doing so, presuming

that it was being continued to be done by PCDA(WC) and

it was only when ITO-TDS, issued notice to it requiring it

to file TDS return vide letter dated 9.1.2014 that they

come to know of the default and hence the delay. Copies

of all correspondence in this regard were also placed. No

infirmity in these facts have been pointed out to us by the

Revenue. It is therefore abundantly clear that the ‘Person

Responsible’ had a bonafide reason for the delay in filing

TDS returns. Being required to comply with the TDS

requirements and compliances for the first time and that

too not being specifically intimated to do so by the

authority who was earlier doing it, the ‘Person

Responsible’s belief that the authority was continuing to

do so was a bonafide and reasonable belief. Therefore, the

filing of TDS return later on, only on being required to do

so by the ITO TDS, automatically resulted in delay on

account of a reasonable cause. There is no merit in the

contention of the CIT(Appeals) that the penalty was

justified considering the huge period of delay. The

assessee having duly explained the cause for the delay.

“Person Responsible” cannot be held responsible for the

delay nor can be said to have consciously disregarded the

obligation cast upon him.

having shown reasonable cause for the delay in filing TDS

return, no penalty u/s 272A(2)(k) of the Act is leviable

and the same is, therefore directed to be deleted.

Order pronounced in the Open Court.

Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 4th July, 2018 *Rati* Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR

Assistant Registrar, ITAT, Chandigarh