2011 (5) TMI 831 - AT - Income Tax

Penalty u/s 272A - failure to file quarterly TDS returns within prescribed time - Held that - There is no dispute that the quarterly statements were filed late by certain days, and that the tax was deducted and was paid to the credit of Government in time. However, quarterly statements could not be filed for the reasons which were beyond the control of the assessee. The act of the assessee cannot be said to be intentional or wilful and therefore, penalty should not have been imposed because the assessee was prevented by sufficient cause. It is seen that the non-filing of the quarterly statements does not involve any revenue loss and is a mere technical default. Thus, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute, no justification in imposing the penalty u/s 272A(2)(k) - Decided in favor of assessee.

Summary

Issues:
Penalty under s. 272A(2)(k) of the IT Act, 1961 for failure to file quarterly TDS returns within the stipulated time for the financial year 2007-08.

Detailed Analysis:

Issue 1: Penalty Imposed
The appeal challenged the penalty of Rs. 46,700 levied under s. 272A(2)(k) of the IT Act, 1961 for the assessment year 2008-09. The penalty was imposed by the Addl. CIT (TDS), Lucknow for the assessee's failure to file quarterly TDS returns in the prescribed Form Nos. 24Q and 26Q within the stipulated time as required by the IT Act and IT Rules. The penalty was calculated at Rs. 100 per day for a total delay of 467 days.

Issue 2: Assessee's Arguments
The assessee, a nationalized bank, contended that despite the delay in filing the quarterly statements, the due tax amounts were deducted and paid to the government on time. The assessee highlighted the mandatory requirement of quoting deductee PANs in e-TDS statements and the challenges faced in meeting the new PAN quoting thresholds set by the IT Department. The bank had to individually contact deductees to collect PANs, as non-compliance would result in the rejection of the TDS returns. The assessee argued that the delay was due to factors beyond its control and that no revenue loss occurred.

Issue 3: Tribunal's Decision
The Tribunal, after considering the submissions, held that the delay in filing the quarterly statements was due to technical reasons and did not involve intentional or willful actions by the assessee. The Tribunal noted that the tax was deducted and deposited on time, and the delay did not result in any revenue loss. Citing the decision in Hindustan Steel Ltd. v. State of Orissa, the Tribunal emphasized that penalties should not be imposed for technical or venial breaches of statutory obligations. Therefore, the Tribunal concluded that the penalty under s. 272A(2)(k) should not have been imposed on the assessee and subsequently canceled the penalty.

Conclusion:
The Tribunal allowed the appeal, ruling in favor of the assessee and canceling the penalty imposed under s. 272A(2)(k) of the IT Act, 1961. The decision was based on the finding that the delay in filing the quarterly TDS returns was a technical default and did not warrant the imposition of a penalty, especially considering that the tax deductions were made and deposited on time, and no revenue loss occurred.