2010 (11) TMI 228 - HC - Income Tax

Penalty u/s 272A (2)(f) - Delay in furnishing the certificate in Form 15H - As per the judgment of this Court in The Commissioner of Income Tax Vs. State Bank of Patiala 2004 -TMI - 10582 - PUNJAB AND HARYANA High Court wherein it had been held that unless there was a deliberate default in furnishing the certificates and if no loss of revenue had occasioned due to the said unintentional default on the part of the assessee no penalty was exigible - Decided in favour of assessee.

Summary

Issues:
1. Justification of penalty under Section 272A(2)(f) by the Tribunal.
2. Levy of penalty under Section 272A(2)(f) in case of default under a bona fide belief.
3. Justification of penalty based on the number of days delay.
4. Judicial consistency in upholding penalty.

Issue 1:
The appeal questioned the Tribunal's justification in upholding the penalty under Section 272A(2)(f) of the Income-tax Act, 1961. The appellant, a bank manager, failed to deduct income tax at source for 59 individuals who had submitted Form 15H declarations late, resulting in a penalty of Rs. 1,26,606. The CIT initiated penalty proceedings, which were upheld by the Tribunal. The appellant argued that the delay was unintentional due to a misunderstanding with bank officials regarding the filing deadline for Form 15H. Citing Section 273B of the Act, the appellant contended that no penalty should be imposed for a technical default without deliberate intent. The High Court found the explanation plausible and ruled in favor of the appellant, stating that no penalty was warranted as no loss of revenue occurred due to the unintentional default.

Issue 2:
The second issue raised was whether the Tribunal was correct in levying a penalty under Section 272A(2)(f) despite the appellant's default being based on a bona fide belief. The appellant argued that since the delay in submitting Form 15H was due to a misunderstanding, no penalty should be imposed. The High Court agreed with the appellant's argument, emphasizing that the default was technical in nature and not deliberate, thus ruling that the penalty was unjustified.

Issue 3:
The third issue pertained to the Tribunal's justification for upholding the penalty based on the number of days of delay in submitting Form 15H declarations. The appellant contended that the delay was not intentional and did not result in any revenue loss, thus challenging the penalty. The High Court, after considering the circumstances and the appellant's explanation, found the penalty unwarranted and ruled in favor of the appellant.

Issue 4:
The final issue raised concerns the Tribunal's failure to follow its own decision in a similar case where a penalty was deleted under comparable circumstances. The appellant argued that the Tribunal's decision lacked judicial consistency and was perverse. The High Court, after analyzing the facts and legal arguments, concluded that the Tribunal erred in upholding the penalty under Section 272A(2)(f) and allowed the appeal in favor of the appellant. The substantial questions of law were answered in favor of the appellant, highlighting the lack of deliberate default and absence of revenue loss as key factors in determining the unjustifiability of the penalty.