No penalty for late TDS return filing if tax deducted & deposited in time

IN THE ITAT DELHI BENCH ‘C’

Haryana Distillery Ltd.

v.

Joint Commissioner of Income-tax, Karnal

BHAVNESH SAINI, JUDICIAL MEMBER
AND PRASHANT MAHARISHI, ACCOUNTANT MEMBER

IT APPEAL NOS. 1642 & 1643 (DELHI) OF 2015
[ASSESSMENT YEARS 2010-11 AND 2011-12]

SEPTEMBER  4, 2018

K. Sampath, Sr. Advocate for the Appellant. A.K. Yadav, Sr. D.R. for the Respondent.

ORDER

Bhavnesh Saini, Judicial Member – Both the appeals by the assessee are directed against the common Order of the Ld. CIT (A), Panchkula, Dated 19.01.2015, for the A.Ys. 2010-2011 and 2011-2012, challenging the levy of penalty under section 272A(2)(k) of the I.T. Act, 1961.

2. Briefly the facts of the case are that as per information available with the Department, the person responsible in the instant case has deducted and deposited TDS/TCS but failed to file the requisite return within the stipulated period. The due date of filing of e-TDS return in Form-24Q for F.Y. 2009-2010 was 15.06.2010 whereas return was filed on 06.07.2010. The due dates of filing of TCS returns in Form 27EQ were 15.07.2009, 15.10.2009, 15.01.2010 and 15.06.2010 for F.Ys. 2009-2010 and 15.07.2010, 15.10.2010, 15.01.2010 and 15.05.2011 for F.Y. 2010-2011 respectively. Total delay in filing e-TDS return was 21 days for Form 24Q and 689, 599, 509 and 359 days for Form 27EQ for first to fourth quarter for F.Y. 2009-2010 and 371, 276, 186, 66 days for first to fourth quarter for F.Y. 2010-2011. The A.O. accordingly levied the penalty under section 272A(2)(k) of the I.T. Act, 1961.

3. The assessee submitted before Ld. CIT (A) that it was explained before A.O. during penalty proceedings that the relevant Forms as mentioned above were filed on the stated dates after collecting requisite data i.e., PAN from several purchasers. It was explained that assessee is engaged in business of production of potable country liquor/Alcohol. It was also explained that the assessee regularly collected TCS and the same were deposited on the due dates as prescribed there for under the Act. No default is made-out in the timely deduction and deposit of TCS. It was mentioned that the licensees being small operators, did not obtain PAN. It was clearly explained that many of them did not furnish PAN particulars to the assessee despite due request on time because they did not then have it. In the absence of necessary details, the prescribed limit of collection of 85% PAN particulars of the persons in respect of which a collector has to file TCS return would not be complied with. In respect of late filing of Form-24Q, it was pointed-out that Manager, Accounts of the Assessee-Company was on leave due to serious illness and in his absence, the filing could not be done at the appropriate time though the deduction and deposit of tax was done as per Rule. The assessee further submitted that A.O. has not understood the basic importance and significance of penalty proceedings. Although, the penalty may be prescribed under the Act for failure to carry-out statutory obligation, yet, that by itself cannot be a ground for holding an assessee guilty. The penalty will be levied only in a case where the conduct is contumacious or dishonest or is in willful disregard of the statute. There could not be a penalty for any venial or technical breach of provisions. Bonafide mistake and plausible reasons cause penalty proceedings to be dropped. The assessee relied upon the decision of the Hon’ble Supreme Court in the case of Hindustan Steel Ltd., v. State of Orissa [1972] 83 ITR 26. The belated filing of the Forms has not caused any damage or detriment to the Revenue. The taxes by way of TCS/TDS have been duly deducted and deposited in time and details have been duly given to the deductee. So, no loss is caused to the Revenue. In the absence of details furnished by the respective parties in time, there was a delay in filing the requisite statements. In the absence of collection of the details from the parties, the return could not be filed in time which is beyond the control of the assessee and plausible reasons for default. The assessee relied upon the Order of ITAT, Chandigadh Bench in the case of Collector, Land Acquisition v. Addl. CIT (TDS) [2012] 52 SOT 81 (URO) (Chd.).

4. The Ld. CIT (A), however, did not accept the contention of assessee because it was a statutory requirement on the part of the assessee to deduct tax and deposit the amount with the Government and further required to submit the requisite statement as per the provisions of Section 200(3) of the I.T. Act. The assessee has failed to comply with the provision of Law. Therefore, the appeal of the assessee were dismissed by the Ld. CIT (A).

5. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and relied upon the decision of the Hon’ble Supreme Court in the case of Hindustan Steel Ltd. (supra) in which it was held as under :

“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 bona fide belief that the offender is not liable to act in the manner prescribed by the statute.”

5.1 Order of ITAT, Chandigadh Bench in the case of Collector Land Acquisition (supra) in which it was held as under :

“Where non-furnishing of PAN by payee caused delay in filing of e-TDS return, penalty for such late filing not to be levied.”

5.2 Order of ITAT, Mumbai Bench in the case of Royal Metal Printers (P.) Ltd. v. Addl. CIT (TDS) [2010] 37 SOT 139 in which it was held as under :

“Delay in filing of TDS returns by assessee was only on account of change of provisions of the Act and tax having been deducted and deposited in time, there was only technical or venial breach, supported by reasonable cause, hence, penalty levied under s. 272A(2)(c) is cancelled.”

6. Order of ITAT, Delhi Bench in the case of ITO (TDS) v. Executive Engineer [2015] 69 SOT 421 in which it was held as under :

“No penalty was imposable under section 272B where assessee failed to mention correct PAN of few deductees in quarterly e-TDS return which in fact were not available with it at relevant time but on being show-caused it obtained correct PANs and filed revised return.”

7. On the other hand, Ld. D.R. relied upon the Orders of the authorities below.

8. We have heard the rival submissions and perused the material available on record and Orders of the authorities below. Section 272A(2)(k) of the I.T. Act provides penalty for failure to deliver or cause to deliver a copy of the statement within the time specified in sub-section (3) of Section 200 or the proviso to sub-section 3 of Section 206(c) of the I.T. Act. Section 273B of the I.T. Act provides that no penalty shall be imposed on the person or the assessee as the case may be for any failure referred to in the said provision, if assessee proves that there was a reasonable cause for the said failure. It is an admitted fact that assessee deducted tax on time and deposited with the Revenue Department on time. There was only a technical or venial breach to the provisions contained above, requiring the assessee to submit the quarterly return statements of tax deducted at source within the time provided under the Law. It is not a case of the Revenue that assessee did not file the required statements with the Revenue Department. The requisite statement/returns have been filed belatedly, for which, penalty have been imposed. The assessee explained the reasons for this default because the concerned parties did not provide PAN and other details on time. Therefore, in the absence of the complete details, the requisite return/statement could not be filed on time. The assessee also pleaded that Manager, Accounts of the Company was on leave due to serious illness, therefore, there was no compliance on the part of the assessee within the time. The above facts clearly prove that the statement/returns to be furnished by the assessee within the time were entirely depending upon the information to be supplied by the purchasers. The assessee explained that the purchaser/licensee being small operator did not obtain PAN, therefore, particulars could not be filed in time. This was the reason for not filing the return/statement within the period of limitation. Further, the Manager, Accounts was ill, therefore, there was delay in making compliance. These facts clearly show that assessee had a reasonable cause for failure to comply with the provisions of Law. On filing the belated returns/statements, Revenue has not suffered any loss because tax deducted was already deposited on time with the Revenue Department. It was, therefore, a technical or venial breach to the provisions contained in the Act for submitting return statement of tax deducted at source. The above reasons are sufficient to hold that the penalty need not be levied in the facts and circumstances of the case. We, accordingly, set aside the orders of the authorities below and cancel the penalty for both the years.

9. In the result, both the appeals of the Assessee are allowed.

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