2010 (1) TMI 1177 - AT - Income Tax

Penalty levied u/s 272A(2)(k) r.w.s. 200(3) - delay in submission of e-TDS return - Delay in furnishing of the quarterly statements levied penalty as the delay was for 2583 days in respect of Form No.24Q and 1889 days in respect of Form, No.26Q - reasonable cause within the meaning of section 273B - The finding of the Learned Commissioner of Income-tax (Appeals) is that the assessee was prevented from filing the quarterly statements within prescribed time because of the lack of knowledge of the requirement of law on the part of the Directors of the assessee-company and its employees HELD THAT - We find that the provisions of furnishing of the quarterly statements were introduced under sub- section (3) of section 200 by the Finance (No.2) Act, 2004 w.e.f. 1- 4-2005. We find that Revenue could not bring any material before us to controvert the above finding of the Learned Commissioner of Income-tax (Appeals) and to show that the assessee was earlier aware of this requirement of law. Further, on the facts of the case that the assessee has paid the tax within the prescribed time, itself shows that ordinarily there would not be any benefit to the assessee for which it would deliberately delay the submission of the quarterly statements. Contention of the Revenue that ignorance of law cannot be an excuse is found to be unacceptable in view of the decision of Motilal Padampat Sugar Mills Co. Ltd 1978 (12) TMI 45 - SUPREME COURT wherein it was held that there is no presumption in this country that every person knows the law and it would be contrary to common sense and reason if it were so. It was also stated that it is impossible to know all the statutory law, and not very possible to know all the common law . No error in the findings of CIT(A ) that the breach of provisions by the assessee by filing the quarterly statements with certain delay was a technical or venial breach of law only. Keeping in view the decision of Hindustan Steel Ltd. 1969 (8) TMI 31 - SUPREME COURT and the decision of Harsiddh Construction Pvt. Ltd. 1999 (12) TMI 30 - GUJARAT HIGH COURT we do not find any good reason to interfere with - Decided in favour of assessee.

Issues Involved:
1. Validity of penalty levied under Section 272A(2)(k) of the Income-tax Act, 1961.
2. Reasonable cause for delay in filing quarterly TDS returns.
3. Interpretation of Section 273B of the Income-tax Act, 1961.
4. Application of judicial precedents regarding penalty imposition.

Detailed Analysis:

1. Validity of Penalty Levied under Section 272A(2)(k) of the Income-tax Act, 1961:
The Revenue filed an appeal against the order of the Commissioner of Income-tax (Appeals) who deleted the penalty of Rs. 4,47,200/- levied by the Assessing Officer under Section 272A(2)(k) of the Income-tax Act, 1961. The penalty was imposed due to the assessee's default in filing Form No.24Q and 26Q for 2583 and 1889 days, respectively. The Assessing Officer found the assessee's explanation for the delay unsatisfactory and levied a penalty of Rs. 100/- per day for the total days of default.

2. Reasonable Cause for Delay in Filing Quarterly TDS Returns:
The Commissioner of Income-tax (Appeals) observed that the assessee had deposited the tax deducted at source within the stipulated time and the default was only related to the late submission of forms. The Commissioner noted that the penalty was imposed routinely without establishing that the default was without reasonable cause. The assessee claimed a bona fide belief that filing Form No.24Q and 26Q was not required once the tax was deposited. The Commissioner agreed, considering this belief as a reasonable cause under Section 273B of the Act.

3. Interpretation of Section 273B of the Income-tax Act, 1961:
Section 273B states that no penalty shall be imposed if the assessee proves that there was a reasonable cause for the default. The Commissioner of Income-tax (Appeals) referenced the Supreme Court's ruling in Hindustan Steel Ltd. vs. State of Orissa, which emphasized that penalties should not be imposed for technical or venial breaches of the law or when the default is due to a bona fide belief. The Commissioner also cited the Gujarat High Court's decision in Harsiddh Construction (P) Ltd. vs. CIT, which held that penalties are not mandatory for venial breaches when there is no loss of revenue.

4. Application of Judicial Precedents Regarding Penalty Imposition:
The Departmental Representative argued that the assessee's duty to file quarterly returns is mandatory under Section 200(3) and that ignorance of law is not a valid defense. However, the Commissioner of Income-tax (Appeals) found that the assessee's lack of knowledge about the requirement to file quarterly statements constituted a reasonable cause. The Tribunal noted that the provisions for quarterly statements were introduced by the Finance (No.2) Act, 2004, effective from 1-4-2005, and the Revenue failed to show that the assessee was aware of this requirement earlier.

The Tribunal also referenced the Supreme Court's decision in Motilal Padampat Sugar Mills Co. Ltd. vs. State of UP, which held that there is no presumption that everyone knows the law. The Madras High Court in CIT vs. K P V S Mohammad Rowther & Co. also held that ignorance of law can be a reasonable cause for failure and justified the deletion of the penalty.

Conclusion:
The Tribunal upheld the order of the Commissioner of Income-tax (Appeals), concluding that the delay in filing quarterly statements was a technical or venial breach of law. The Tribunal found no error in the Commissioner's findings and dismissed the Revenue's appeal, affirming that the penalty was not justified under the circumstances. The order was signed, dated, and pronounced in court on 08-01-2010.

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