2004 (8) TMI 77 - HC - Income Tax

Penalty u/s 272A(2)(f) - Penalty proceedings had been initiated by the Assessing Officer for delay in furnishing the declarations in Form No. 15H furnished by various depositors within the time stipulated under section 197A(1A) of the Act - Tribunal has found that the assessee was not required to deduct any tax at source under section 194A of the Act as in none of the cases, interest payable exceeded Rs. 10,000 and, thus, even Form No. 15H was not required to be filed - It is clear that the default in the present case is merely of technical or venial in nature Held that no penalty under section 272A(2)(f) of the Act was leviable.

Summary

Issues:
- Appeal against cancellation of penalty under section 272A(2)(f) of the Income-tax Act, 1961.
- Interpretation of statutory obligations for filing Form No. 15H under section 197A(1A) of the Act.
- Application of penalty under section 272A(2)(f) for technical default.
- Consideration of relevant circumstances for imposing penalty.

Analysis:
The High Court of PUNJAB AND HARYANA heard an appeal against the cancellation of a penalty under section 272A(2)(f) of the Income-tax Act, 1961. The penalty was imposed for delay in furnishing declarations in Form No. 15H by various depositors within the stipulated time under section 197A(1A) of the Act. The Tribunal found that the assessee was not required to deduct tax at source under section 194A as the interest payable did not exceed Rs. 10,000 in any case, making the filing of Form No. 15H unnecessary. It was also noted that there was no loss of revenue involved, as acknowledged by the departmental representative. The Tribunal held that since there was no requirement to deduct tax at source and no revenue loss occurred, the default in not filing Form No. 15H was technical in nature, and hence, no penalty was leviable under section 272A(2)(f). The Tribunal relied on the judgment in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 to support its conclusion.

Upon reviewing the Tribunal's order, the High Court concurred with the factual position presented. The Court observed that the default in this case was merely technical or venial. Citing the Supreme Court's judgment in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26, the Court emphasized that the imposition of a penalty for failing to fulfill a statutory obligation should result from deliberate defiance of the law or contumacious conduct. The Court highlighted that penalties should not be imposed merely because it is lawful to do so. It stressed that the authority must exercise discretion judiciously, considering all relevant circumstances. The Court noted that even if a minimum penalty is prescribed, it can be refused in cases of technical or venial breaches or when the breach stems from a genuine belief that the offender is not obligated to act as per the statute.

In conclusion, the High Court found no merit in the appeal and dismissed it outright. The judgment underscored the importance of considering the nature of the default, the intent behind the actions, and the absence of revenue loss in determining the applicability of penalties for statutory non-compliance.