2011 (4) TMI 1392 - AT - Income Tax

Summary

Issues involved: Appeal against cancellation of penalty u/s 272A(2)(k) of the Income-tax Act, 1961 for non-filing of quarterly TDS statements.

Summary:
The appeal was filed by the Revenue against the cancellation of a penalty imposed u/s 272A(2)(k) of the Income-tax Act, 1961 for the assessment year 2008-09. The penalty was levied due to delays in filing quarterly TDS statements for the financial years 2007-08 and 2008-09. The assessee, a State Government Organization, explained that TDS was being paid through Treasury and was not aware of the requirement to file quarterly statements on time. The ld.CIT(A) cancelled the penalty, considering it a technical default as the tax was deducted and paid on time, and the quarterly statements were filed upon receiving notices. The ITAT upheld the cancellation, stating that the non-filing did not cause revenue loss, and it was a technical breach of rules. The decision was supported by the principle that penalties should not be imposed for technical or venial breaches.

The ITAT observed that the tax was deducted and paid on time by the Treasury Officer, but quarterly statements were delayed due to lack of knowledge, not intentional wrongdoing. The non-filing of statements did not result in revenue loss, and the tax amount was deposited within the prescribed time. The ITAT agreed with the ld.CIT(A) that the penalty was not justified as the default was technical and venial, and the assessee complied upon being informed of the lapse. Citing the decision in Hindustan Steel Ltd. vs. State of Orissa, the ITAT emphasized that penalties should be imposed only for deliberate defiance of law or contumacious conduct, not for technical breaches. Therefore, the ITAT upheld the cancellation of the penalty, concluding that no penalty could be validly levied on the assessee in this case.

In conclusion, the ITAT dismissed the appeal and upheld the decision to cancel the penalty, considering the non-filing of quarterly TDS statements as a technical default that did not warrant penalty imposition.