Case Law Details

Case Name : Telangana State Medical Services Infrastructure Development Corporation Vs ACIT (ITAT Hyderabad)
Appeal Number : ITA Nos. 1528, 1529 &
Date of Judgement/Order : 1530/H/2016
Related Assessment Year : 06/09/2021

Telangana State Medical Services Infrastructure Development Corporation Vs ACIT (ITAT Hyderabad)

No penalty for delay in filing quarterly TDS statement if entire tax along with interest deposited in Government account

Conclusion: Penalty under Section 272A(2)(k) could not be imposed merely for the delay in filing Quarterly TDS Statement as the entire tax along with interest thereon had been deposited in to Govt. account and later, assessee filed quarterly TDS returns for all the quarters and Revenue had not suffered any loss because tax deducted was already deposited on time and there was mere technical or venial breach to provisions contained in Act for submitting return/statements of TDS.

Held: During the course of survey, it was found that, the assessee-deductor had failed to file TDS Quarterly Statements/Returns U/s.200(3) for the F.Y.2008-09 relevant to the AY 2009-10 in respect of all the four quarters in form No.24Q & 26Q. AO levied penalty U/s.272A(2)(k) as assessee-deductor had not filed quarterly TDS statements in Form No.24Q and 26Q for all the four quarters of the F.Y.2008-09 within the time prescribed by the I.T. Act. It was found from the orders of authorities below that the entire tax along with interest thereon had been deposited in to Govt. account and later, assessee filed quarterly TDS returns for all the quarters. Following the decision  in the case of Maharashtra Jeevan Pradhikaran Vs. JCIT, in ITA No. 2410/PUN/2017 wherein it was held that Revenue had not suffered any loss because tax deducted was already deposited on time and there was mere technical or venial breach to provisions contained in Act for submitting return/statements of TDS. Therefore, penalty was not to be levied and question was answered in favour of the assessee.

No penalty for delay in filing quarterly TDS statement if entire tax with interest deposited

FULL TEXT OF THE ORDER OF ITAT HYDERABAD

These three appeals filed by the assessee are directed against CIT(A) – 8, Hyderabad’s separate orders, all dated 22/08/2016 for AYs 2009-10 to 2011-12 involving proceedings u/s 272A(2)(k) of the Income- Tax Act, 1961; in short “the Act”. As the facts and grounds are identical in all these appeals, the same were clubbed and heard together and, therefore, a common order is passed for the sake of convenience. Therefore, the decision taken in AY 2009-10 shall mutatis-mutandis apply to the other appeals as well.

2. The grounds raised by the assessee, which are common in all the appeals, except quantum of additions, are as under:

1. The CIT (Appeals) is not justified in ignoring the fact that in spite of new filing procedure, the assessee filed TDS quarterly return in respect of Form No. 26Q voluntarily before conducting survey and in 24Q for the applicable quarter.

2. The CIT (Appeals) is not justified in supporting the assessing officer who levied the penalty even though assessee has paid taxes and interest as per the orders of the Assessing officer and not retained any amount of TDS without remittance and also cooperated in all the assessment proceedings.

3. The CIT (Appeals) is not justified in supporting the assessing officer who acted against law in imposing the penalty on the assessee under section 272A (2) (K) without affording him a reasonable opportunity of being heard in the matter.

4. The CIT (Appeals) is not justified in supporting the assessing officer for levying penalty for non-filing of form 24Q where there are no transactions required to be filed.

5. In the first appeal to CIT (appeals) the assessee pleaded that penalty to be waived. The assessee placed the reliance on the Honourable Supreme Court’s decision in the case of Hindustan Steels Vs State of Orissa 83 ITR 26 Where it was held that penalty should not be imposed merely it is lawful to do so and Venial breaches should not be visited with penalties

Even though the assessee being a State Government entity and the case being the technical nature, the CIT (Appeals) has ignored the plea made by the assesse, even the Tax collected along with the interest applicable was duly remitted by the assessee and the delay was only in filling the form 24Q & 26Q. This is only a technical mistake and revenue neutral

Also CIT (appeals) has ignored the penalty levied by the assessing officer for the quarters 1, 2& 3 of A Y.2009-1 0, for non-filing of form 24Q – even though no amounts were collected by the assessee during those quarters

And also in the case of Harsiddh Construction (P) Ltd. vs. CIT244 ITR 417 Hon’ble Gujarat High Court upheld the decision of the tribunal and cancelled the penalty levied

In a similar case between Income-tax Officer TDS-2, Ahmedabad.V/s. The Oriental Insurance Company Ltd. the tribunal has upheld the decision made by the CIT (Appeals) and the grounds raised by the revenue were dismissed (We have attached the copies of the above cases for your kind perusal)”

2.1 The assessee also filed petition for admission of additional grounds. Since none appeared on behalf of the assessee therefore the additional grounds are rejected.

3. Briefly the facts as taken from AY 2009-10 are that the assessee deductor AP Health & Medical Housing Infrastructure Development Corporation is a State Government Organization. A survey operation U/s.133A was conducted in the premises of the assessee-deductor by the Income-tax Officer (TDS), Ward-3(2)r Vijayawada, on 05/01/2011. During the course of survey, it was found that, the assessee-deductor had failed to file TDS Quarterly Statements/Returns U/s.200(3) of the LT. Act for the F.Y.2008-09 relevant to the AY 2009-10 in respect of all the four quarters in form No.24Q & 26Q.

3.1 The AO observed that in the case of assessee-deductor, proposals were forwarded by the Income-tax Officer, Ward-3(2), Vijayawada, to this office for levy of penalty U/s.272A(2)(k) of the Income-tax Act, 1961, as the assessee-deductor had not filed quarterly TDS statements in Form No.24Q and 26Q for all the four quarters of the F.Y.2008-09 within the time prescribed by the I.T. Act.

3.2 On verification of the computerized database of the Income-tax department, it was noticed that the assessee failed to file quarterly TDS statements in form No.24Q & 26Q for all the 4 quarters of the F.Y. 2008-09 as per the provisions of section 200(3) of the I.T. Act. It was further observed that as per the provisions of section 200(3) of the I.T. Act any person deducting any sum in accordance with the TDS provisions is required to prepare and deliver the quarterly TDS statements in form No. 24Q and 26Q in respect of TDS on salaries and on payments other than salaries respectively Within the prescribed time. As per Rule-31A of the IT. Rules, such quarterly TDS statements / returns are required to be filed by 15-07-2008, 15-10­2008, 15-01-2009 and 15-062009 for the first, second, third and fourth quarters of the F.Y. 2008-09 respectively.

3.3 Keeping in view the failure of the assessee to file quarterly TDS statements/returns in Form No. 24Q & 26Q for all the quarters of the F.Y.2008-09, the AO initiated penalty proceedings u/s.272A(2)(k) of the I.T. Act by issue of notice dated 10/07/2012. As per the said notice, the assessee was requested to show cause as to why an order imposing penalty u/s. 272A(2)(k) of the I.T. Act should not be passed in its case and the case was posted for hearing on 25/07/2012.

3.4. However, in response to the above cited show-cause letter, the assessee neither appeared for the hearing nor filed any written explanation regarding why penalty u/s.272A(2)(k) should not be levied. Further, the assessee did not give any explanation regarding the non-filing of form No.24Q/26Q within prescribed statutory time.

3.5 . In view of the non-response from the assessee-deductor, the AO verified from the AST system whether the TDS statements/returns are filed or not. On verification, it was found that that the assessee filed TDs quarterly return in respect of Form NO.24Q for the fourth quarter On 16-02-2011 and in respect of Form 26Q, for all the four quarters on 13-09-2010, after the stipulated due date i.e. 2 years after expiry of the due dates. The details of the due dates for the quarterly statements, dates of filing of returns and the delay in no. of days are as under:

Nature of return Due date Date of
filing of
return
Delay in
no. of
days
24Q – 1st Quarter 15/07/2008 Not filed 1661
24Q – 2nd Quarter 15/10/2008 Not filed 1569
24Q – 3rd Quarter 15/01/2008 Not filed 1477
24Q – 4th Quarter 15/06/2008 16/02/2011 611
26Q – 1st Quarter 15/07/2008 13/09/2010 790
26Q – 2nd Quarter 15/10/2008 13/09/2010 698
26Q – 3rd Quarter 15/01/2008 13/09/2010 606
26Q – 4th Quarter 15/06/2009 13/09/2010 455

Since the assessee-deductor not filed quarterly returns within the stipulated dates, the AO calculated the penalty taking into consideration the numbers of days delay u/s 272A(2)(k), which comes to Rs. 7,76,270/-.

4. When the assessee carried the matter in appeal before the CIT(A), the CIT(A) confirmed the penalty order.

5. Aggrieved by the order of CIT(A), the assessee is in appeal before the ITAT.

6. At the time of hearing these appeals, none appeared on behalf of the assessee, therefore, we proceed to decide the appeals after hearing the ld. DR and the facts available on record.

7. Before us, the ld. DR submitted that the assessee failed to file TDS quarterly returns within the prescribed time in form Nos. 24Q and 26Q for deduction of tax at source for the FY 2008-09 and, therefore, the revenue authorities have rightly levied the penalty 272A(2)(k).

8. After hearing the ld. DR and perusing the material on record as well as the orders of revenue authorities, we find from the penalty order that the assessee has not filed TDS returns in the prescribed forms 24Q and 26Q for all the quarters within the stipulated time and, therefore, the AO levied penalty @ 100/- per day for delay in default for filing of TDS returns. Further, we find from the orders of authorities below that the entire tax along with interest thereon had been deposited in to Govt. account and later, the assessee filed quarterly TDS returns for all the quarters. The issue in dispute is squarely covered by the decision of the coordinate bench of ITAT, Pune in the case of Maharashtra Jeevan Pradhikaran Vs. JCIT, in ITA No. 2410/PUN/2017 vide order dated 17th May, 2021 wherein the coordinate bench has held as under:

6. We have perused the case records and heard the rival contentions. We have also considered judicial precedents placed on record. In this case penalty has been levied u/s. 272A(2)(k) of the Act due to late filing of TDS statements/returns. However, it is an undisputed fact as admitted by the parties herein, that no loss has been caused to the Revenue by the action of the assessee. There may have been procedural lapse on the part of the assessee however, due to such procedural lapse no prejudice has been caused to the Revenue. This fact has also been admitted by the Ld. DR.

6.1 The assessee has also enclosed details of payments and return filed at Page 1 of the paper book which was also placed before the Department. Therein, it is evident that taxes were deducted and paid to the government account. In this case, it was also conceded by the parties that income tax deducted at source was deposited in time but only filing of statement of quarterly deduction of income tax at source was delayed beyond prescribed time. The Pune Bench of the Tribunal in the case of Nav Maharashtra Vidyalaya Vs. Addl. CIT, reported in (2016) 74 Taxmann.com 240 ( Pune Tribunal), wherein the issue of levying penalty u/s. 272A(2)(k) of the Act has been elaborately dealt with and the issue of reasonable cause that has been also discussed in detail. This case was further referred in deciding the same issue by the Mumbai Bench of the Tribunal in the case of The Board of Control for Cricket In India Vs. ACIT (TDS)-2, ITA No.1999/Mum/2017 dated 05.10.2018. The provisions of Section 272A(2)(k) are subject to provisions of section  273B of the Act and hence, the relevance of reasonable cause has to be established. For the sake of completeness, the observations ITA No. 2410/PUN/2017 A.Y.2011-12 and findings of the Pune Bench of the Tribunal in the above referred case are as follows:

“17. We have heard the rival contentions and perused the record. In this bunch of appeals, the issue which arises for adjudication is against the levy of penalty under section 272A(2)(k) of the Act for late filing of TDS statements / returns. In this regard, reference is being made to the relevant provisions of the Act. Under Chapter XVII of the Act, duty is upon the person making certain payments to deduct tax at source under the respective sections. The said tax deducted at source is due to be the income received by the deductee as per section 198 of the Act. Section  199 of the Act further provides that where any deduction is made under the Chapter and paid to the Central Government, then the same is to be treated as payment of tax on behalf of the person from whose income such deduction is made.

18. Section 200 of the Act lays down the duty of the person deducting tax, which reads as under:-

“200. (1) Any person deducting any sum in accordance with the foregoing provisions of this Chapter shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs.

(2) Any person being an employer, referred to in sub-section (1A) of section 192 shall pay, within the prescribed time, I.T.A. No.1999/Mum/2017 the tax to the credit of the Central Government or as the Board directs.

(2A) In case of an office of the Government, where the sum deducted in accordance with the foregoing provisions of this Chapter or tax referred to in sub-section (1A) of section 192 has been paid to the credit of the Central Government without the production of a challan, the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person, by whatever name called, who is responsible for crediting such sum or tax to the credit of the Central Government, shall deliver or cause to be delivered to the prescribed income-tax authority, or to the person authorised by such authority, a statement in such form, verified in such manner, setting forth such particulars and within such time as may be prescribed. (3) Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter or, as the case may be, any person being an employer referred to in sub-section (1A) of section  192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time, prepare such statements for such period as may be prescribed and deliver or cause to be delivered to the prescribed income- tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed: Provided that the person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be specified by the authority. “

19. Under section 200(1) of the Act, it is provided that any person deducting any sum in accordance with the provisions of the Chapter shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs. Under section 200(2) of the Act, any person being an employer, as referred to in sub-section (1A) of section 192 of the Act shall pay, within the prescribed time, the tax to the credit of the Central Government or as the Board directs. Under sub­section (2A) of the Act, it is provided that where the sum has been deducted in accordance with foregoing provisions of the Chapter, by the office of the Government, then duty is upon the Treasury Officer or the Drawing & Disbursing Officer or any other person, to deliver or cause to be delivered to the prescribed income tax authorities, or to the person authorized by such authority, I.T.A. No.1999/Mum/2017 statement in such form, verified in such manner, setting forth such particulars within such time as may be prescribed. Under section 200(3) of the Act, similar responsibility is on any person deducting any sum on or after first day of April, 2005 in accordance with foregoing provisions of the Chapter, including any person as an employer referred to in section 192(1A) of the Act. The onus is upon such person that he shall after paying the tax to the credit of Central Government within prescribed time, prepare such statement for such period as may be prescribed and deliver or cause to be delivered to the prescribed income tax authority or any person so authorized, such statement in such form and verified in such manner and setting forth such particulars and within such time as may be provided. The duty is upon a person deducting any sum in accordance with various provisions under the Chapter and also upon an employer who is making deduction out of the payments made to the employees, then sub-section (3) requires that the deductor is to prepare a statement for such period as may be prescribed, which is to be delivered to the prescribed authority, in such form and verified and setting forth such particulars as may be prescribed. The said statement is to be delivered within such time as may be prescribed.

20. In other words, any deductor deducting any sum on or after first day of April, 2005 in accordance with the provisions of Chapter has the following duties i.e. after paying the tax deducted at source credit to the Central Government, the TDS statements within prescribed time shall be prepared and filed. Rules 31A of the Rules provide the time limit for deposit of the tax deducted statement as per section 200(3) of the Act. The TDS statements are to be deposited quarterly i.e. quarter ending 30th June, 30th September, 31st December and 31st March of each financial year and the due date for furnishing the TDS statements is 15th July for the first quarter, 15th October for the second quarter, 15th January for the third quarter and 15th May of the immediately following financial year for the fourth quarter i.e. 31st March. The said statements could be furnished either in paper form or electronically. However, subsequent to the amendment by IT (Sixth) Amendment Rules, 2010 with retrospective effect from 01.04.2010, it was provided that furnishing of statements electronically in accordance with the format and standards prescribed became mandatory. The deductor in the said statement of tax deducted at source was compulsorily required to quote its tax deduction and Collection Account Number i.e. TAN number. Further, quote its Permanent Accountant Number except in the case where the deductor was office of Government and also quote PAN number of all the deductees. Further, the deductor was required to furnish the particulars of tax paid to the Central Government including Book I.T.A. No.1999/Mum/2017 Identification Number or challan indication number as the case may be. He was also required to furnish the particulars of amount paid or credited on which tax was not deducted.

21. In view of various provisions of the Act, as pointed out above, the substitution was made by Income Tax (Sixth) Amendment Rules, 2010 and was applicable for the financial year 2010-11. Since e-compliance of TDS returns was introduced in the said financial year, there was time and again amendments/corrections in order to make system of filing TDS returns user-friendly. The learned Authorized Representative for the assessee has pointed out that there were about 18 amendments / corrections in this regard. In the present set of appeals before us admittedly, there was default in furnishing e-TDS statements late for the respective quarters by different assessee, but all relating to assessment year 2011-12. The question which arises for adjudication before us is whether in such cases where e- TDS was made compulsory for the instant assessment year and where the software was not user-friendly and required amendments at the end of the Government itself from time to time and the compliance being a complex procedure introduced for the first time and where originally the deductors were not in default in depositing the paper TDS returns, does the assessee deductor have reasonable cause for not furnishing the said e-TDS returns in time. In this regard, reference is to be made to the provisions of section 273B of the Act, where it has been provided that in case a person establishes or proves that he had reasonable cause for the failure to comply with the provisions of various sections provided in section 273B of the Act, then no penalty shall be imposable on such person for the said failure. Reading of section 273B of the Act shows that under it, the Section refers to along with many other sections clause (c) or clause (d) of sub- section (1) or sub-section (2) of section 272A of the Act. What is relevant for adjudication before us is section 272A(2) of the Act, since penalty has been levied for default in furnishing e-TDS returns under section  272A(2)(k) of the Act. Since section 273B of the Act covers the cases of levy of penalty under section 272A(2) of the Act, then in line with the provisions of said section in case a person establishes its case of reasonable cause for not complying with the provisions of said section, then the section provides that such a person shall not be liable to the penalty imposable for the said failure i.e. under section 272A(2) of the Act. The CIT(A) in the case of several assessee before us has wrongly come to the conclusion that the provisions of section 273B of the Act do not cover the defaults under section 272A(2)(k) of the Act. We reverse the finding of CIT(A) in this regard.

22. Now, coming to the case of reasonableness put up before us by different assessee. The first plea raised by all the assessee is that where the compliance to the provisions of the Act was complicated and difficult and in the absence of any technical support in this regard, default if any, in furnishing the TDS returns late should be condoned. Another plea raised by some of the assessee was that where the tax deducted at source was not paid in time, e-TDS returns as such could not be filed and hence, the assessee was prevented by reasonable cause in not filing e-TDS returns in time and as such, no merit in levy of penalty. Another plea raised before us is that charging of fees for each day of default and then, restricting the same to the tax deducted at source was not correct.

One another aspect of reasonableness was that in case the returns for quarter 1 was filed belatedly, then the returns for consequent quarters also got delayed for no default and as such, no penalty was leviable for such quarters. Different learned Authorized Representatives appearing before us has made reference to the decisions of various Benches of Tribunal. On the other hand, the learned Departmental Representative for the Revenue has placed reliance on the ratio laid down by the Hon’ble Allahabad High Court in Raja Harpal Singh Inter College’s case (supra) and Chandigarh Bench of Tribunal in Central Scientific Instruments Organization’s case (supra). One last aspect pointed out by the learned ITA No. 2410/PUN/2017 A.Y.2011-12 Authorized Representative for the assessee was that the CIT(A) has acknowledged that there was reasonable cause in not furnishing e-TDS returns in time. However, no benefit of the same was given to the assessee because the CIT(A) was of the view that the provisions of section 273B of the Act do not cover penalty leviable under section 272A(2)(k) of the Act.

23. First of all, we shall deal with the last submission of the assessee that under the provisions of section 273B of the Act, the provisions of section 272A(2)(k) of the Act are referred and in case the person establishes its case of reasonable cause, then no penalty is to be leviable for such defaults. The case put up by the assessee was that where tax was deducted at source and merely because e-TDS statements / returns were not filed in time does not result in any loss of revenue and hence, no merit in levy of penalty under section 272A(2)(k) of the Act. The claim of deduction of tax deducted at source, its payment to the Treasury to the Government and thereafter, the credit to be allowed to the deductee of tax deducted from his account, all work on the principle that the tax is collected and deposited in the account of the Government as income is earned. In other words, the said provisions of tax deducted are advance payments of tax as you earn the income. Taxes are deducted by the deductor out of payments due to the deductee and such tax deducted is the income of deductee. The credit for tax deduction at source would I.T.A. No.1999/Mum/2017 be allowed to the deductee only after the tax deducted at source is deposited in the credit of the Government and the deductor files the compliance report in this regard by way of e- TDS returns. Thus, it is obligatory upon the person deducting tax to deposit the tax deducted at source and also to furnish statement declaring tax deduction made from the account of various deductees. Earlier provisions were to be complied with manually by filing the TDS returns in paper form. However, as per IT (Sixth) Amendment Rules, 2010 with retrospective effect from 01.04.2010, the deductor was asked to file e-TDS statements for which infrastructure was provided and it was required that the assessee complies to the said filing of e-TDS returns. However, since assessment year 2011-12 was the first year of introduction of such facilities of e-TDS returns, there were certain hindrances which were taken care of by the authorities by way of various amendments introduced in this behalf. The case of the assessee on the other hand, is that they were small taxpayers and in the absence of technical guidance provided and because of technical hitches, the TDS returns could not be filed in time. Most of the assessee before us have paid the tax deducted at source to the Treasury within time frame but have defaulted in filing e-TDS statements. In some of the cases, there is default in payment of tax deducted at source and consequently, delay in filing the e-TDS returns. The question which arises is whether in the abovesaid scenario, can the provisions of section 273B of the Act can be applied in order to decide the issue of levy of penalty under section  272A(2)(k) of the Act.

24. The Hon’ble Punjab & Haryana High Court in HMT Ltd. v. CIT [2005] 274 ITR 544/[2004] 140 Taxman 606 had held that where the tax deducted at source had been paid in time and the necessary returns in respect thereto were filed in time with the Income Tax Department, on mere late issue of tax deduction certificate, there was no loss to the Revenue and the delay in furnishing the tax deduction certificate was held to be merely technical or venial in nature and penalty levied under section 272A(2)(k) of the Act was deleted. It may be clarified herein that earlier under section 272A(2)(k) of the Act, penalty was leviable where the tax deduction certificate was not issued in time. However, by Finance (No.2) Act, 2004 w.e.f. 01.04.2005, it has ITA No. 2410/PUN/2017 A.Y.2011-12 been provided that where a person fails to deliver or cause to be delivered copy of statement within time specified in section 200(3) of the Act or the proviso to section 206C(3) of the Act, then he shall pay by way of penalty sum of Rs.100/- for every day of default. It is further provided under the said sub-section that the amount of penalty for failure shall not exceed the amount of tax deductible or collectable, as the case may be. It is further I.T.A. No.1999/Mum/2017 provided that no penalty shall be levied under clause (a) for failure to furnish the statement under section 200(3) of the Act or proviso to section 206C(3) of the Act, on or after first day of July, 2012.

25. The learned Departmental Representative for the Revenue has placed strong reliance on the ratio laid down by the Hon’ble Allahabad High Court in Raja Harpal Singh Inter College’s case (supra) for the proposition that where the e-TDS statement was not filed in time, then penalty under section 272A(2)(k) of the Act has been held to be leviable. In the facts of the said case before the Hon’ble High Court, the assessee was deducting the tax at source but had not filed the e-TDS returns for five successive assessment years starting from 2008-09 to 2012-13. The assessee failed to furnish any explanation before the Assessing Officer for the said default and only on the last date, it was pointed out that since the Principal of college had joined recently, it would take some time to collect the records for filing the e-TDS statements. The assessee however, failed to comply with notice and the Assessing Officer held the assessee to be liable for levy of penalty under section 272A(2)(k) of the Act. Before the CIT(A), the assessee for the first time offered an explanation that prior to joining regular Principal in the college on 25.01.2010, only officiating Principal had been working, who did not have idea of e-TDS statements and requirement of filing the same. The Tribunal noted that the appellate authority had accepted the explanation offered by the assessee and imposed penalty only from 01.04.2010 though regular Principal had joined the college on 25.01.2010. The Tribunal dismissed the appeal of assessee as no explanation was furnished for non-furnishing TDS statements in time. The Hon’ble High Court thus, in this regard observed that the requirement of filing e-TDS statements in time could not be overlooked. In such circumstances, the Hon’ble High court held that it cannot be urged by the Counsel for the assessee that no penalty could have been imposed for non-filing e-TDS returns in time since it had not resulted in any loss to the Revenue. The Hon’ble High Court further took note of the fact that before the Assessing Officer, no explanation was offered. However, an explanation was offered before the appellate authority, which was taken into consideration and the penalty amount was suitably reduced as the case of appellant that regular Principal assumed charge on 25.01.2010, was accepted and the penalty was imposed after that date. The appeal of the assessee in this regard was thus, dismissed.

26. Applying the said ratio laid down by the Hon’ble Allahabad High Court in Raja Harpal Singh Inter College’s case (supra), there is no merit in the plea of the learned Departmental Representative for the Revenue that the Hon’ble High Court has laid down the proposition that in every case of default in filing the I.T.A. No.1999/Mum/2017 e-TDS statements in time, penalty under section 272A(2)(k) of the Act is leviable. The Hon’ble High Court in an appeal filed by the assessee dismissed the plea of assessee that no penalty is leviable but has upheld the orders of authorities below, wherein the CIT(A) had restricted the levy of penalty from the date of 1st April, 2010 in respect of e-TDS statements to be filed for assessment years 2008-09 to 2012-13, since the assessee had explained that regular Principal had assumed charge on 25.01.2010. In other words, the Hon’ble High Court has accepted the explanation offered ITA No. 2410/PUN/2017 A.Y.2011-12 by the assessee regarding reasonableness of cause of delay in furnishing e-TDS returns late partially. Admittedly, the default in filing the said e-TDS returns have not been accepted in full but taking into consideration the reasonableness of explanation, the penalty chargeable under section 272A(2)(k) of the Act has been restricted i.e. suitably reduced in the case of appellant as held by the Hon’ble High Court.

27. Another reliance placed upon by the learned Departmental Representative for the Revenue is on the ratio laid down by the Chandigarh Bench of Tribunal in Central Scientific Instruments Organization’s case (supra). In the facts of the said case, the assessee had filed TDS returns in Form No.26Q belatedly after expiry of 10 years from prescribed time limit and the assessee had submitted that he was unaware of provisions of section 200(3) of the Act. The assessee had deposited the tax to the Central Government at relevant time, however, the assessee failed to furnish TDS returns. The delay in filing the returns in prescribed form for all four quarters was 6463 days in assessment year 2009-10 and in assessment year 2010-11 for all four quarter was 4966 days and in assessment year 2011-12, the delay was 3474 days. In view of the factual aspects of the case, where the delay is so huge and in the absence of any explanation of the assessee, we find no merit in the reliance placed upon on such decision by the learned Departmental Representative for the Revenue.

28. On the other hand, various Benches of Tribunal have time and again held that where there was case of reasonableness, there was no merit in levying the penalty under section 272A(2)(k) of the Act. Thus, in order to adjudicate the issue before us, we accept the case of reasonable cause as relevant to section 273B of the Act put up by the assessee in the respective cases in the appeals before us, which admittedly relate to different quarters of assessment year 2011-12. Where for the first time, there was requirement of e-TDS furnishing of TDS statement and since there were certain complications in e-filing of TDS returns because of system failure, which admittedly, was amended 18 times by the Department, the delay in furnishing the said returns late I.T.A. No.1999/Mum/2017 could not be attributed to the assessee. The onus was upon the authorities to provide platform for easy compliance to newly introduced provisions of the Act. Where such facilities could not be provided by the authorities and the technical support not being available to small assessees, who are in appeal before us, then the delay in furnishing the e-TDS returns late should be liberally construed. Hence, there was practical difficulty on the part of assessee to comply with newly introduced requirement of e- TDS filing of TDS statements, being technical delay and not venial in nature, merits to be considered as reasonable cause for non-levy of penalty as per the requirements of section 273B of the Act. We hold so. In this bunch of appeals, there are cases where the assessee has defaulted in not depositing tax deducted at source in time, in such cases, the returns were delayed because of default on behalf of the deductor. In such cases, penalty under section 272A(2)(k) of the Act is leviable. However, the same is to be restricted from the date of payment of TDS to the date of filing e-TDS statements since e-TDS statements cannot be filed without payment of TDS to the credit of Central Government. Similar ratio has been laid down by the Chandigarh Bench of Tribunal in Ashirwad Complex case (supra). Accordingly, we hold so.

29. Another issue raised in some of the appeals is that where all quarterly returns relating to assessment year 2011-12 were filed on one date i.e. there was default in furnishing the returns for each of the quarters late, the case of the assessee was that because of overlapping ITA No. 2410/PUN/2017 A.Y.2011-12 default, penalty at best should be restricted to quarter No.1 and no penalty should be levied for the subsequent quarters. We find merit in the above plea of the assessee and accordingly, we direct the Assessing Officer to restrict the penalty leviable to first quarter which is in default and for the overlapping default, no penalty is to be levied under section 272A(2)(k) of the Act. We direct the Assessing Officer to verify the claim of assessee in this regard and work out the penalty accordingly.

30. The issue arising in other appeals before us is identical and following our directions in the paras hereinabove, the Assessing Officer in the case of individual assessee has to verify the claim of assessee and work out penalty, if any, leviable accordingly after affording reasonable opportunity of hearing to the assessee.

31. In the result, all the appeals of assessee are allowed as indicated above.”

7. Similarly, the Jaipur Bench of the Tribunal in the case of Argus Golden Trades India Ltd. Vs. JCIT reported in (2017) 50 CCH 0071 ( Jaipur-

Tribunal) and Lucknow Bench of the Tribunal in the case of Punjab  National Bank v. ACIT (2011) 140 TTJ 0622 (Lko.) has deleted the penalty levied u/s.272A(2)(k) of the Act. Similarly, Delhi Bench of the Tribunal in the case of Haryana Distillery Ltd. Vs. Joint Commissioner of Income Tax (supra.), the question arose whether since on filing belated returns/statements, Revenue had not suffered any loss because tax deducted was already deposited on time and there was mere technical or venial breach to provisions contained in Act for submitting return/statements of TDS. Therefore, penalty was not to be levied and question was answered in favour of the assessee.

8. Respectfully following the aforesaid judicial pronouncements which are in conformity with the facts and circumstances in the present case before us and following the same parity of reasoning, we set aside the order of the Ld. CIT(Appeals) and direct the Assessing Officer to delete penalty from the hands of the assessee.

8.1 Respectfully following the aforesaid decision, we set aside the order of the CIT(A) and direct the AO to delete the penalty levied u/s 272A(2)(k) in the hands of the assessee. Accordingly the grounds raised by the assessee on this issue are allowed.

9. The facts and grounds raised in AYs 2010-11 and 2011-12 are materially identical to that of AY 2009-10, following the decision therein, we direct the AO to delete the penalty levied u/s 272A(2)(k) in these appeals as well.

10. In the result, all three appeals under consideration are allowed in above terms. A copy of this common order be placed in the respective case files.

Pronounced in the open court on 6th September, 2021.

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