2014 (9) TMI 930 - AT - Income Tax

Penalty under section 272A(2)(c) - delay in filing quarterly returns - Held that - There is a delay in filing quarterly returns but at the same time the delay was due to the reason that initially the staff was not familiar with new e-TDS filing system. The delay occurred due to unawareness of technical application of electronic filing of return but still fact remains that due tax was duly deposited in the Government exchequer and there is no loss to the Revenue. The year under consideration was the first year of submitting TDS statement in electronic form for the corporate assessee which was made mandatory - It is also a fact that at that time every corporate assessee faced almost similar difficulty, thus, on this technical default no penalty should be imposed. Another fact worth mentioning here is that the electronic filing by the assessee was not pursuant to any notice by the Department. In view of this fact and more specifically when no loss was caused to the Revenue the reasons explained by the assessee are convincing in terms of section 272A(2)(c) of the Act. The object of the constitution is to levy and collect due taxes, therefore, there was no justification to impose penalty by the learned Additional Commissioner-(TDS). The observation made by the learned Additional Commissioner of Income-tax-(TDS) that the assessee deliberately filed the return late is also not substantiated more specifically when the assessee has already paid the taxes, and there is no gain to the assessee in late filing. Hence, we find no infirmity in the conclusion drawn by the learned Commissioner of Income-tax (Appeals) being more sympathetic/practical approach. - Decided against Revenue.

Summary

Issues: Revenue's challenge to relief granted by CIT(A) in penalty imposition for delay in filing quarterly returns due to unawareness of electronic filing system.

Analysis:
The Appellate Tribunal, in this case, addressed the Revenue's challenge against the relief granted by the Commissioner of Income-tax (Appeals) (CIT(A)) in a penalty imposition matter related to the delay in filing quarterly returns. The Revenue contended that the CIT(A) wrongly granted relief to the assessee, emphasizing that the delay was due to the staff's unfamiliarity with the electronic filing system. The Revenue argued that despite the technical fault in electronic filing, the tax was duly deposited, resulting in no loss to the Revenue. On the other hand, the assessee's counsel defended the CIT(A)'s decision, highlighting that the delay was primarily due to unawareness of the technical aspects of electronic filing. The Tribunal carefully considered the arguments and material on record, including the penalty order under section 272A(2)(c) of the Income-tax Act, 1961.

The Tribunal noted that the delay in filing the returns was undisputed and primarily attributed to the staff's lack of familiarity with the new electronic filing system. It acknowledged that the year in question was the first year mandating electronic filing for corporate assessees, leading to common difficulties faced by many in the corporate sector. Despite these challenges, the assessee voluntarily filed the quarterly TDS returns without any notice from the Department, and no revenue loss was incurred. The Tribunal found the reasons for the delay acceptable under section 272A(2)(c) of the Act and concluded that penalizing the assessee was unjustified.

In analyzing the imposition of penalty under section 272A(2)(c), the Tribunal emphasized the importance of substantial justice over technicalities. It highlighted that the objective of tax collection should not warrant penalties when no loss is caused to the Revenue. The Tribunal rejected the Revenue's argument that the late filing was deliberate, noting that the taxes were paid, and there was no benefit to the assessee in delaying the filing. Ultimately, the Tribunal found no merit in the Revenue's appeal and dismissed it, upholding the CIT(A)'s decision as a more sympathetic and practical approach to the situation.

In conclusion, the Tribunal's judgment emphasized the contextual factors surrounding the delay in filing the returns, the lack of revenue loss, and the practical approach to penalty imposition under the circumstances. The decision underscored the need for a balanced consideration of technical defaults in tax compliance cases, especially when no actual harm is caused to the Revenue.