2012 (5) TMI 50 - AT - Income Tax

Penalty levied u/s 272A(2)(k) delayed filing of e-TDS returns - Held that - There was only a technical and venial breach to the provisions contained in Rules 31A (2) of the Income Tax Rules, 1962 r.w.s. 200(3) requiring the assessee to submit quarterly returns on due date - as regards the delay in submitting TDS returns, it was explained by the assessee that due to non-furnishing of PAN numbers, the TDS certificate could not be filed in time, but the tax was deducted in time and deposited with the government account - it is clear that the assessee was prevented by sufficient case from filing the returns within the statutory period - assessee did not derive any benefit whatsoever by not filing the e-TDS returns in time, as the amount of TDS was duly deposited in the government treasury within prescribed time in favour of assessee.

Summary

Issues Involved:
1. Delay in filing e-TDS quarterly returns.
2. Justification for non-filing due to non-availability of PAN numbers.
3. Imposition of penalty under Section 272A(2)(k) of the Income Tax Act, 1961.
4. Consideration of technical and venial breach of statutory provisions.
5. Applicability of the Supreme Court's ruling in Hindustan Steels Ltd v. State of Orissa.

Issue-wise Detailed Analysis:

1. Delay in filing e-TDS quarterly returns:
The Person Responsible (PR) for the Collector Land Acquisition, Department of Industries & Commerce, Punjab, failed to file e-TDS quarterly returns on the respective due dates for the assessment years 2007-08 to 2010-11. The total number of days of default was calculated to be 6116, leading to a penalty of Rs. 6,11,600/- under Section 272A(2)(k) of the Income Tax Act, 1961.

2. Justification for non-filing due to non-availability of PAN numbers:
The PR argued that the delay was due to the non-availability of PAN numbers from the landowners, who were primarily agriculturists and did not possess PAN numbers. Despite efforts to obtain these numbers, including issuing letters to landowners, no responses were received due to improper addresses. Consequently, the e-TDS returns could not be filed in time, although the tax was deducted and deposited with the government account in a timely manner.

3. Imposition of penalty under Section 272A(2)(k) of the Income Tax Act, 1961:
The Assessing Officer and CIT(A) upheld the imposition of the penalty, arguing that the PR was obligated to obtain PAN numbers before releasing payments and to file returns within the prescribed period. However, the Tribunal found that the PR had satisfactorily explained the reasons for the delay, emphasizing that the delay did not result in any financial loss to the Revenue Department as the TDS amount was duly deposited.

4. Consideration of technical and venial breach of statutory provisions:
The Tribunal noted that the breach was technical and venial, as the tax was deducted and deposited on time, and the delay in filing returns was due to reasons beyond the PR's control. The Tribunal emphasized that the PR did not derive any benefit from the delay, and the breach did not cause any loss to the Revenue Department.

5. Applicability of the Supreme Court's ruling in Hindustan Steels Ltd v. State of Orissa:
The Tribunal referenced the Supreme Court's ruling in Hindustan Steels Ltd v. State of Orissa, which held that penalties should not be imposed for technical or venial breaches or where the breach flows from a bona fide belief. The Tribunal concluded that the PR was prevented by sufficient cause from filing the returns within the statutory period and that the imposition of the penalty was not justified.

Conclusion:
The Tribunal concluded that the penalty levied under Section 272A(2)(k) was not warranted, given the technical and venial nature of the breach and the bona fide reasons provided by the PR. As a result, the penalty was canceled, and the appeals were allowed.