Penalty for Delay in Filing TDS Statement- Non-Availability of Staff not a valid defence

Delhi Development Authority Vs JCIT (ITAT Delhi)

Undisputed, it is a fact on record that there is inordinate delay in filing the TDS statement in respect of 2nd and 4th quarter in filing Form 24Q and also in filing the TDS statement for Q2, Q3 and Q4. There is delay of 289 days in filing Form 24Q and 675 days in filing form No. 26Q. On perusal of the details of filing of TDS statement, it is seen that the delay is substantial ranging for almost more than one year. We are not inclined to subscribe the plea of the assessee that once, the TDS deducted was deposited within time, there was no loss to the Revenue. In our opinion, simply because the assessee deposited the amount to the Government account, it will not go to mitigate the rigors of assessee’s failure to file the TDS statements within the stipulated time. Moreover, the assessee being a Government Organization is supposed to make strict compliance of law. The contention of the assessee is further not tenable that there is no loss to revenue due to the delay in filing the TDS statements, as the requisite TDS was deposited to the Govt. account in time. It is significant to note that such an inordinate delay may cause loss to Revenue while processing the refunds, if any, to the deductees which fetches substantial amount of interest to be paid by the Government on such refunds, if paid with delay. Moreover, the change /lack of staff with the assessee-organization is not found substantiated by any evidence on record and such a reason, in our considered opinion, does not constitute to be a reasonable cause to file the TDS statements with such an inordinate delay. The case laws relied by the assessee do not render any support to the assessee, as in the instant case we do not find a reasonable cause for filing the TDS statements with delay. In view of this, we find no infirmity in the order of the ld. Authorities below in saddling the penalty  against the assessee for above breach of law. Accordingly, the appeal of the assessee deserves to fail being devoid of merits.

FULL TEXT OF THE ITAT JUDGMENT

This is an appeal filed by the assessee against the order of ld. CIT(A)-41, New Delhi dated 04.03.2015 for the assessment year 2011-12 on the following grounds of appeal :

1. That the learned Assessing Officer erred while imposing penalty u/s 272 A(2)(k) of Rs. 96400.00 on account of delay in filing e-TDS return u/s 200(3) of Income Tax Act, 1961. Without considering the genuine reason for delay in filing e-TDS return , the genuine reason for delay in filing e-TDS return for delay in filing e-TDS return are as follows:

The Quarterly returns of 24Q, Q2 and Quarterly returns of 26Q, Q2 with due date of 15.1 0.2010 were submitted on 03.05.2011 and 31.05.2012 respectively due to reason that DDA was assigned the prestigious /challenging job for organizing the Common Wealth Games,201 0 which  was completed in the month of October 2010. All the staff of DDA was over burdened with the responsibility to cope up the target of organizing the Common Wealth Games, 2010. It is further submitted that during the month of November, 2010 to February, 2011 mostly staff including concerned Dealing Assistant, Cashier ,AAO , Sr. AO & Dy. CAO have been transferred and all new staff/ Officer were posted in CAU(CWG) due to which the said Quarterly returns were submitted on 03.05.2011 and 31.05.2012 respectively.

The Quarterly returns of 26Q, Q3 with due date of 15.01.2011 were submitted on 27.01.2011 due to reason that some verification and correction of error of Permanent Account Number of Contractor was done, due to which the said Quarterly return was submitted on 27.01.2011.

The Quarterly returns of 26Q, Q4 and Quarterly returns of 26Q, Q4 with due date of 15.05.2011 were submitted on 12.08.2011 and 23.0 7.2011 respectively because it was time consuming job to collect the information of correct PAN Account Number of employees of the Zone which also involves the payment of class- III & IV staff and also to collect the information of correct Permanent Account numbers of numerous contractors for the said returns pertains to last Quarter ending the financial year 2010-1 1 from various divisions namely CWGD- 1,2,3,4,5,6,7,8,9, CWG Electrical Division – 1,2,3 Horticulture division -1,6 & 9 situated at scattered location of Delhi i.e Seed Bed Park( Laxmi Nagar), Asian Games Village, Yamuna Spoils Complex(Anand Vihar), Sir! Fort Sports Complex, Hasanpur( Near Hasanpur Depot), Sarita Vihar, Vikas Minar, Sheikh Sarai and Dwarka.

It would be appreciated that the delay in filing e-TDS return is not willful and was on account of reasons beyond the control of the assessee. There is also no loss of revenue as the tax due on all the payments has already been deducted and deposited in the treasury. Hence, the demand raised by the department is not justifiable and deposited in the Treasury. Hence the demand raised by the department is not justifiable. Therefore, it is requested to your honour to delete the demand raised by the department.

2. The brief facts of the case are that the assessee filed e-TDS return for F.Y. 2010-11 in Form No. 24Q and 26Q as per details given in the following table :

Financial Year 2010-11

The Assessing Officer on examination of records of the assessee found that the assessee had not filed quarterly TDS statement for F.Y. 2010-11 within due date as provided u/s. 206/206C of the Act read with Rule 37 of the IT Rules, 1962. He observed that as per the provisions contained u/s. 2 00(3) read with Rule 31A, the assessee being the deductor was required to filed the quarterly TDS statement for each quarter by 15^th July, 15^th October, 15^th January and 15^th May of the year. As the assessee did not file the quarterly statement within the prescribed date, the Assessing Officer issued a show cause notice to the assessee to explain why penalty u/s. 272A(2)(k) should not be imposed. In response to the show cause notice, as stated by the Assessing Officer though the assessee admitted the default committed in filing the TDS statement, but requested for not imposing penalty and submitted as under :

“i). It is submitted that Quarterly Returns 24Q.2Q and quarterly returns of 26Q.2Q with due date of 15.1 0.2010 were submitted on 03.05.2011 and 31.05.2011 respectively due to reason that DDA was assigned that prestigious challenging job for organizing the common Wealth Games 0 2010, which was completed in the month of October, 2010. All the staff of DDA was over burdened with the responsibility to cope up the target of organizing the Common Wealth Games-2010. It is further submitted that during the month of November, 2010 to February, 2011 mostly staff including concerned Dealing Assistant. Cashier, AAO Sr. A.O. and Dy. CAO have been transferred and all new staff/offers were posted in CAU/(CWG), due to which, the said quarterly Returns were submitted on 03.05.2011 and 31.05.2012 respectively.

ii) The Quarterly Returns of 26Q.3Q with due of 15.01.2011 were submitted on 27.01.2011 due to reason that some verification and correction of said quarterly return was submitted on 27.01.2011.

iii) Quarterly Returns of last quarter, i.e., 24Q.4Q and Quarterly Returns of 26Q.4Q with due date of 15.05.2011 and 23.07.2011 respectively because it was time consuming job to collect the information of correct Permanent Account Number of numerous employees of the Zone which also involves the payment of class-III & IV staff and also to collect the information of correct PAN of numerous contractors for the quarterly returns pertains to last quarter ending the F.Y. 2010-11 from various  division namely CWGD-1, 2, 3, 4, 5, 6, 7, 8, 9. CWG Electrical Division- 1, 2, 3, Horticulture Division-1, 6 & 9 situated at scattered location of Delhi, i.e., Seed Bed Park (Laxmi Nagar), Asian Games Village Complex, Yamuna Sports Complex (Anand Vihar). Siri Fort Sports Complex, Hasanpur (Near Hasanpur Depot), Sarita Vihar, Vikas Minar, Sheikh Sarai and Dwarka.”

3. The Assessing Officer after examining the explanation of the assessee was of the view that the assessee has not made out a case that the default was due to reasonable cause and observed that the delay was due to deliberate negligence on the part of the assessee and the negligence has no excuse in law. Therefore, he proceeded to pass the order imposing penalty u/s. 272A(2)(k) for Rs.96,400/-. Being aggrieved of the penalty order, the assessee preferred an appeal before the first appellate authority where he submitted that the delay in submitting the TDS statement was due to change/shortage of staff and hence, not collecting correct PANs. The ld. CIT(A), however, was not convinced with the explanation of the assessee and he observed that the provisions contained u/s. 203 read with Rule 31A require strict compliance. Therefore, the plea of change/lack of staff and non-availability of correct PANs would not constitute a reasonable cause. Accordingly, he confirmed the levy of penalty.

4. The ld. Counsel for the assessee submitted before us that though there is delay in filing the TDS statements for various quarters, but the said delay was not deliberate one or negligence of the assessee, but it was on account of change/lack of staff and non-availability of correct PANs. The ld. Counsel submitted that even though there was delay in filing the TDS statements, all the TDS deducted from the deductees has been deposited to the Central Government account and therefore, there was no loss to the Revenue. Thus, for a mere technical breach, penalty should not be levied. It was further submitted that when the assessee had deposited the TDS amount to the Government Account, the assessee has to be treated as a law abiding citizen and the delay in filing the TDS statements should not be attributed as negligence on the part of the assessee. He also submitted that the Government has assigned a specific responsibility for organizing commonwealth game 2010, which was completed in the month of October, 2010. He relied on the following judgments :

i). Argus Golden Traders India Ltd. vs. JCIT. 57 ITR 195 (ITAT Jaipur)

ii). Nav Maharashtra Vidyalaya vs. Addl. CIT, 61 ITD 732 (ITAT Pune)

iii). Branch Managar (TDS), UCO Bank vs. Addl. CIT, 35 taxmann.com 45 (ITAT Cuttack)

5. On the other hand, the ld. DR relied on the order of the lower authorities and filed a small written synopsis, which is placed on record. The ld. DR further submitted that as per provisions of section 272A(2)(k), there is no option left to the Assessing Officer in the matter of levy of penalty, as the word used is “shall”, which casts a mandatory obligation on the part of assessee. Further, in the present case the assessee has been remained negligent in carrying out the statutory mandate and the plea that it was due to change/lack of staff and non-availability of correct PANs is not acceptable. The assessee is a Government Organization and it should make strict compliance of law. Therefore, the authorities below have rightly imposed penalty against the assessee for non-compliance of TDS e-filing procedure. The case laws cited by the assessee are not applicable in the present case, as there is no reasonable cause with the assessee for not complying with the TDS provisions in time.

6. After hearing the submissions of both the parties and perusing the material available on record, we observe that undisputedly, it is a fact on record that there is inordinate delay in filing the TDS statement in respect of 2nd and 4th quarter in filing Form 24Q and also in filing the TDS statement for Q2, Q3 and Q4. There is delay of 289 days in filing Form 24Q and 675 days in filing form No. 26Q. On perusal of the details of filing of TDS statement, it is seen that the delay is substantial ranging for almost more than one year. We are not inclined to subscribe the plea of the assessee that once, the TDS deducted was deposited within time, there was no loss to the Revenue. In our opinion, simply because the assessee deposited the amount to the Government account, it will not go to mitigate the rigors of assessee’s failure to file the TDS statements within the stipulated time. Moreover, the assessee being a Government Organization is supposed to make strict compliance of law. The contention of the assessee is further not tenable that there is no loss to revenue due to the delay in filing the TDS statements, as the requisite TDS was deposited to the Govt. account in time. It is significant to note that such an inordinate delay may cause loss to Revenue while processing the refunds, if any, to the deductees which fetches substantial amount of interest to be paid by the Government on such refunds, if paid with delay. Moreover, the change /lack of staff with the assessee-organization is not found substantiated by any evidence on record and such a reason, in our considered opinion, does not constitute to be a reasonable cause to file the TDS statements with such an inordinate delay. The case laws relied by the assessee do not render any support to the assessee, as in the instant case we do not find a reasonable cause for filing the TDS statements with delay. In view of this, we find no infirmity in the order of the ld. Authorities below in saddling the penalty  against the assessee for above breach of law. Accordingly, the appeal of the assessee deserves to fail being devoid of merits.

7. In the result, the appeal is dismissed.

Order pronounced in the open court on 22nd June, 2018.