Non-Availability of PAN of Deductee is not valid excuse for not filing TDS Return

Mahanadi Coal Fields Ltd. Vs JCIT (ITAT Cuttack)

We noted from the impugned order in respect of assessment year 2008-2009, the assessee had not filed TDS return in respect of form 24Q with the prescribed authorities. The assessee is paying salary to his employees and he should have asked to the deductee for furnishing PAN before making salary payments. Ld. AR of the assessee could not demonstrate that the assessee has furnished any reasonable cause for non-furnishing of PAN by the deductee so as to enable him to get the benefit of Section 273B of the Act and he has deducted TDS and deposited to the Government within the time with the prescribed authority. We understand that the MCL is a big company wherein tax experts are also working and this also not the first time scheme for filing return. TDS has been deducted and paid to the Government but in case of refund the exchequer suffers loss by way of interest on refund which has paid by the Income Tax Department to the deductee. The assessee could have asked to his employees to furnish their PAN by way of in writing so that it can be considered that there was a reasonable cause for not filing of PAN by the deductee, however, no such instance has been provided by the ld. AR of the assessee before us. The assessee was also not prevented by any reasonable cause for delay in filing the 24Q & 26Q statements as required by the Act for all the quarters in a financial year. The case law cited by the ld. AR of the assessee is distinguishable from the present facts of the case. Quarterly filing TDS return has been introduced by the Government since 2003 which requires the quarterly submission of the TDS return with NSDL or other approved agencies by the Income Tax Departemnt. The assessee cannot escape himself for non-filing quarterly TDS merely stating that the PAN of the employees are not available. The penalty is provided in the Income Tax provisions u/s.272A(2)(k) of the Act is mandatory in nature except in case of reasonable cause proved by the assessee, which is lack in this case. Therefore, the lower authorities are justified to impose the penalty as per the provisions of Section 272A(2)(k) of the Act. We also noted from the above chart reproduced above there is huge delay for filing the quarterly TDS return. In the totality of the facts and circumstances of the case, we uphold the action of the CIT(A) and dismiss the grounds of appeal raised by the assessee.

FULL TEXT OF THE ITAT JUDGEMENT

All these appeals have been filed by the assessee against the separate orders of the CIT(A), Sambalpur, all dated 08.04.2019 for the assessment years2008-2009, 2009-2010 & 2011-2012.

2. Since the issues involved in all the appeals are identical to each other, except different in figure, therefore, as agreed by the parties, all the appeals are heard analogously and disposed off by this consolidated order. For the sake of convenience, we shall take into consideration the facts and grounds mentioned in ITA No.220/CTK/2019 for the Financial Year 2007-2008 relevant to assessment year 2008-2009 for deciding all the appeals.

3. The sole issue involved in all the appeals is relating to confirming the penalty imposed by the AO u/s.272A(2)(k) of the Act.

4. Brief facts of the case are that the assessee filed the quarterly statements of TDS in Form Nos.24Q and 26Q of different quarters for the financial year 2007-2008. Since there was no reasonable explanation for huge delay in filing the 24Q and 26Q statements, the JCIT(TDS) concluded that the penalty u/s.272A(2)(k) of the Act is leviable in the case of the assessee. Accordingly, the AO levied penalty for the Financial Year 2007-2008 relevant to assessment year 2008­2009 in the following manner :-

5. Aggrieved by the order of AO, the assessee has filed an appeal before the CIT(A) and the CIT(A) after considering the submissions of the assessee confirmed the order of the AO.

6. Further aggrieved from the order of CIT(A), the assessee is in appeal before the Income Tax Appellate Tribunal.

7. AR of the assessee before us submitted that there was a reasonable cause for non-filing quarterly TDS with the NSDL in appropriate form due to non-availability of the PAN of the deductee. The assessee is a public sector undertaking and there was no mens rea involved on this issue and the tax was duly deducted by the assessee and it was also deposited in the Government treasury within the stipulated time and, therefore, there is no loss to the exchequer. Therefore, the assessee should get immunity as per the provisions of Section 273B of the Act. In support of his arguments, he relied on the judgment of the coordinate bench of the Tribunal in the case of Director, Printing, Stationery & Publication Vs. Adl.CIT(TDS), ITA No.111/CTK/2013 and other connected appeals, dated 11.03.2013.

8. On the other hand, ld. DR relied on the order of lower authorities and submitted that the assessee could not establish the reasonable cause for non-filing TDS return with the prescribed authority within the stipulated time. The CIT(A) also allowed sufficient time for proving the reasonable cause for getting immunity as per the provisions of Section 273B of the Act but the assessee was unable to substantiate the reasonable cause. He further submitted that the major penalty has been imposed by the authorities below for non-filing the quarterly TDS return in respect of Form No.24Q which relates to the salary payment. Therefore, there is no question for not submitting the PAN to his deductor. He also submitted that in the peculiar facts of the case, the case law relied on by the ld. AR is not applicable in the present facts of the case.

9. After hearing both the sides and perusing the entire material on record, we noted from the impugned order in respect of assessment year 2008-2009, the assessee had not filed TDS return in respect of form 24Q with the prescribed authorities. The assessee is paying salary to his employees and he should have asked to the deductee for furnishing PAN before making salary payments. Ld. AR of the assessee could not demonstrate that the assessee has furnished any reasonable cause for non-furnishing of PAN by the deductee so as to enable him to get the benefit of Section 273B of the Act and he has deducted TDS and deposited to the Government within the time with the prescribed authority. We understand that the MCL is a big company wherein tax experts are also working and this also not the first time scheme for filing return. TDS has been deducted and paid to the Government but in case of refund the exchequer suffers loss by way of interest on refund which has paid by the Income Tax Department to the deductee. The assessee could have asked to his employees to furnish their PAN by way of in writing so that it can be considered that there was a reasonable cause for not filing of PAN by the deductee, however, no such instance has been provided by the ld. AR of the assessee before us. The assessee was also not prevented by any reasonable cause for delay in filing the 24Q & 26Q statements as required by the Act for all the quarters in a financial year. The case law cited by the ld. AR of the assessee is distinguishable from the present facts of the case. Quarterly filing TDS return has been introduced by the Government since 2003 which requires the quarterly submission of the TDS return with NSDL or other approved agencies by the Income Tax Departemnt. The assessee cannot escape himself for non-filing quarterly TDS merely stating that the PAN of the employees are not available. The penalty is provided in the Income Tax provisions u/s.272A(2)(k) of the Act is mandatory in nature except in case of reasonable cause proved by the assessee, which is lack in this case. Therefore, the lower authorities are justified to impose the penalty as per the provisions of Section 272A(2)(k) of the Act. We also noted from the above chart reproduced above there is huge delay for filing the quarterly TDS return. In the totality of the facts and circumstances of the case, we uphold the action of the CIT(A) and dismiss the grounds of appeal raised by the assessee.

10. Since we have dismissed the appeal of the assessee for assessment year 2008-2009, therefore, the similar and identical grounds raised by the assessee for the assessment years 2009-2010 & 2011-2012 are also dismissed. In F.Y.2008-2009, there was an issue in regard to Form No.26Q4 but the ld. AR could not prove any reasonable cause for non-furnishing of PAN of the deductee. Accordingly, all the appeals of the assessee are dismissed.

11. In the result, all the three appeals of the assessee are dismissed.