2012 (10) TMI 251 - HC - Income Tax

Non issuance of form 16A to the deductee within time as required u/s 203(1) - non ascertaining the PAN Number from the payees - penalty levied under Section 272A(2)(g)- Held that - The explanation of the assessee for non-issuing the certificates within time prescribed was that the interest component in the compensation paid to the District Court for disbursement to the land owners/right holders is taxable as per Income Tax Act, 1961 and tax @ 11.2% have been deducted and deposited in the Government Account. Also that it was difficult to file return as the payment of compensation was made by the Hon ble Court and no PAN numbers were available with the office. It is also submitted that its office has filed all the TDS returns in form No. 24Q for the Ist, 2nd, 3rd and 4th quarters of the financial years 2006-07, 2007- 08, 2008-09 and 2009-10. The delay has been attributed on the part of the land owners due to the fact that land owners have not submitted their PAN numbers required for the purpose. However, the land owners had been asked to submit their PAN numbers vide this office letters dated 22.11.2007, 9.1.2008, 3.3.2009 and Public Notice has also been given in Daily Ajit Newspaper on 17.8.2010. As the assessee categorically stated before the lower authorities that due to non availability of the PAN numbers there was a delay in issuing & the assessee was prevented by sufficient cause from issuing Certifications in Form No. 16A within period prescribed hence there was only technical and venial breach of provisions contained in Rule 31 of the Income Tax Rules, 1962 read with section 200(3) of the Income Tax Act, 1961 - in favour of assessee.

Summary

Issues:
1. Penalty under Section 272A(2)(g) of the Income Tax Act for non-issuance of Form 16A within the prescribed time.
2. Reasonable cause for not issuing the certificate in Form 16-A within time.
3. Interpretation of provisions of Rule 31 of the Income Tax Rule, 1962 read with section 200(3) of the Income Tax Act, 1961.

Issue 1: The appeal by the revenue was against the order passed by the Income Tax Appellate Tribunal, Chandigarh Bench, regarding the penalty under Section 272A(2)(g) of the Income Tax Act for not issuing Form 16A within the stipulated time. The respondent had failed to issue Form 16A to deductees within the prescribed timeframe, leading to the initiation of penalty proceedings.

Issue 2: The Tribunal considered whether there was a reasonable cause for the delay in issuing the certificate in Form 16-A. The respondent explained that they had deducted the tax in time but faced challenges in obtaining PAN numbers from the payees. The Tribunal concluded that the respondent was prevented by sufficient cause from issuing the certificates within the prescribed period, as they had made efforts to obtain PAN numbers but faced delays due to non-cooperation from the landowners.

Issue 3: The Tribunal analyzed the provisions of Rule 31 of the Income Tax Rule, 1962 in conjunction with section 200(3) of the Income Tax Act, 1961. It noted that the delay in issuing Form 16A was due to technical reasons and a venial breach of the rules. The Tribunal emphasized that the tax was deducted and deposited on time, fulfilling the primary responsibility of the assessee. It also highlighted that the delay did not result in any loss to the Revenue, citing the decision of the Hon'ble Supreme Court in Hindustan Steels Ltd. v. CIT (1972) 83 ITR 26.

The judgment dismissed the revenue's appeal, stating that the respondent had a reasonable cause for the delay in issuing Form 16A and that there was no merit in the revenue's arguments. The Tribunal's findings were upheld, emphasizing that the penalty under Section 272A(2)(g) was not applicable in this case due to the circumstances surrounding the delay in issuing the certificates. The judgment highlighted the importance of considering all relevant circumstances before imposing penalties for failure to fulfill statutory obligations.