2013 (11) TMI 1680 - AT - Income Tax

Levy of penalty u/s 272A(2)(k) - Late filing of TDS return - HELD THAT - the penalty under section 272A(2)(k) of the Act merits to be restricted to the date of deposit of tax at source which admittedly is beyond the due date of filing the TDS returns. The decision in support was laid down in H.M.T. Ltd. Tractors Division Vs CIT 274 ITR 544 (P H) 2004 (8) TMI 50 - PUNJAB AND HARYANA HIGH COURT wherein it has been held that where the tax at source had been paid in time and the necessary return in respect thereof was 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 merely technical or venial in nature and penalty could not be imposed. Accordingly, direction given to the Assessing Officer to recompute the penalty leviable under section 272A(2)(k) of the Act in line with our directions. The grounds of appeal raised by the assessee are, thus partly allowed. In the result, appeal of the assessee is partly allowed.

Summary

Issues:
Levy of penalty under section 272A(2)(k) of the Income-tax Act, 1961.

Analysis:

Issue: Levy of Penalty under Section 272A(2)(k) of the Act

The case involved the appeal against the penalty levied under section 272A(2)(k) of the Income-tax Act, 1961, for late filing of quarterly returns of tax deducted at source for the financial year 2009-10. The Assessing Officer imposed a penalty for delay in filing the TDS returns, which was later reduced by the CIT(Appeals). The appellant contended that although the TDS returns were filed late, the taxes were deposited before the filing date, and credit for the same was not allowed. The crux of the issue was whether the penalty under section 272A(2)(k) should be upheld or restricted based on the circumstances of tax deposit and return filing.

The Tribunal considered the details of tax deducted at source, its deposit dates, due dates of filing TDS returns, and actual filing dates for each quarter. The appellant argued that despite the delay in filing, the tax amount was deposited before the filing date, indicating compliance with the tax obligations. The Tribunal referred to a precedent set by the Hon'ble Punjab & Haryana High Court in H.M.T. Ltd. Tractors Division Vs CIT, where it was held that if the tax at source was paid on time and the return was filed timely, a mere delay in issuing the tax deduction certificate should not result in a penalty. The Tribunal directed the Assessing Officer to recompute the penalty in line with this principle, considering the timely tax deposit as a mitigating factor against the penalty.

In conclusion, the Tribunal partially allowed the appeal, emphasizing that the penalty under section 272A(2)(k) should be restricted to the date of tax deposit, even if it was beyond the due date of filing the TDS returns. The decision was based on the principle that the delay in furnishing the tax deduction certificate was technical and did not result in any loss to the Revenue. The judgment provided clarity on the application of penalties under the Income-tax Act, ensuring a fair balance between compliance requirements and mitigating circumstances.