2016 (7) TMI 1248 - AT - Income Tax

Levy of penalty u/s. 272A(2)(k) - default in furnishing the quarterly tax deducted at source (TDS) returns - According to the assessee, the delay occurred due to the compliance guidelines as framed by NSDL mandatory quoting of 85% deductees Correct Pan numbers, etc., which were newly introduced at that time - Held that - It is an admitted fact that the TDS was deducted and the amount was deposited in the Government account well within the time. Though there is a delay in submitting the return, the reasons given thereto appears to be very cogent and reasonable. Further, even otherwise due to such delay in filing the return, no prejudice is caused to the Revenue, nor does the assessee stand to gain, and default cannot be attributed as intentional to such delay. Under these circumstances, for these reasons, we find that the reasons explained by the assessee constitute a reasonable cause and consequently find that the orders of the authorities below cannot be sustained under law, and are liable to be set aside. We, therefore, record a finding accordingly and allow the appeal of the assessee.

Summary

Issues:
Appeal against levy of penalty u/s. 272A(2)(k) for default in filing TDS returns.

Analysis:
The Appellate Tribunal ITAT Mumbai heard an appeal by the Assessee against the order of the CIT(A) confirming the penalty under section 272A(2)(k) of the Income Tax Act for failure to furnish quarterly TDS returns for the assessment year 2010-11. The Assessee did not appear during the hearing. The only issue was the confirmation of the penalty by the CIT(A).

During the proceedings, it was acknowledged that the Assessee had deducted TDS promptly but had delayed filing the quarterly returns. The delay was attributed to compliance guidelines introduced by NSDL regarding PAN numbers. The Assessee argued that the delay was unintentional and should not attract a penalty. The Assessee had deposited the TDS amount in the Government account within the stipulated time. The authorities noted that the delay did not prejudice the Revenue and was not intentional.

The Tribunal found the Assessee's reasons for the delay to be reasonable and held that the penalty imposed could not be sustained under the law. The Tribunal concluded that the delay was not intentional, did not benefit the Assessee, and did not harm the Revenue. Therefore, the Tribunal set aside the orders of the lower authorities and allowed the Assessee's appeal.

In the final judgment, the Tribunal pronounced that the Assessee's appeal was allowed on July 5th, 2016.