2016 (2) TMI 1079 - AT - Income Tax

Penalty imposed u/s. 272A(2)(k) - late filing of TDS returns - reasons for delay - Held that - The tax was deducted and deposited on receipt of payment and TDS returns were filed after deposit of taxes. Section 200(3) of the Income-tax Act provided that any person deducting any sum shall after paying the tax deducted to the credit of Central Government shall prepare statements for such period as may be prescribed and deliver to the prescribed income-tax authority. Provision of Section 272A(2)(k) of the Act provides for imposition of penalty for failure to deliver copy of statement within time specified in subsection (3) of Section 200 of 100/- for every day. These sections also clearly lay down that the filing of quarterly statements is consequential to payment of taxes. The delayed payment of taxes itself is the reasonable cause for late filing of quarterly statement and hence the assessee is not exigible to the levy of penalty. When the assessee is paid the tax with interest and the TDS statements are already filed though belatedly there is no loss to the Revenue as held by Hon ble Gujarat High Court in the case of Harsiddh Construction Pvt Ltd vs. CIT (1999 (12) TMI 30 - GUJARAT High Court ). - Decided in favour of assessee.

Summary

Issues:
Challenge against penalty imposed under section 272A(2)(k) of the Income-tax Act for late filing of TDS returns for Assessment Years 2011-12 & 2012-13.

Analysis:
The judgment pertains to two appeals filed by the assessee against penalties imposed for late filing of TDS returns. The tax was deducted and deposited on receipt of payment, and the TDS returns were filed after the deposit of taxes. Section 200(3) of the Income-tax Act mandates preparing and delivering statements after paying the tax deducted to the Central Government. Section 272A(2)(k) provides for penalties for failure to deliver statements within the specified time. The delay in filing quarterly statements due to delayed tax payment constitutes a reasonable cause for late filing, exempting the assessee from penalty. The Tribunal cited precedents where penalties were deleted when taxes were paid with interest before the show cause notice, causing no loss to the Revenue. The Tribunal emphasized that filing statements is consequential to tax payment, and delay in filing is a technical breach. The judgment highlights that penalties should not be imposed if there is a reasonable cause for the delay, as per Section 273B of the Act.

The Tribunal considered the financial crunch faced by the assessee as a reasonable cause for the delay in filing quarterly statements. It was noted that the full TDS amount along with interest was paid before the show cause notice, ensuring no loss to the Revenue. The judgment referenced previous cases where penalties were deleted due to reasonable causes like fund shortages leading to delayed deposits. The Tribunal emphasized that penalties under section 272A(2)(k) should not be levied if there is no loss to the Revenue and if there is a reasonable cause for the delay, as outlined in Section 273B of the Act.

Based on the legal discussions and precedents cited, the Tribunal decided to delete the penalties imposed by the Assessing Officer under section 272A(2)(k) for both Assessment Years 2011-12 and 2012-13. The judgment concluded that there was a reasonable cause for the delay in filing the quarterly statements, aligning with the provisions of Section 273B of the Income-tax Act. The appeals filed by the assessee were allowed, and the penalties were deleted.