2014 (4) TMI 786 - AT - Income Tax

Confirmation of Penalty u/s 272A(2)(k) of the Act Quarterly statements with details of tax deducted at source not furnished - Held that - The paramount duty of the assessee is to remit the TDS amount within the statutory time limit - Payment of interest u/s 201(1A) of the Act will not absolve the assessee from penal consequences because interest is compensatory in nature whereas penal provisions are by way of deterrent measure - for escaping from rigors of penalty, the assessee has to satisfy the AO that there was a reasonable cause for the default committed by him - the explanation furnished by the assessee cannot be taken at its face value and appears to be an afterthought - allegation of the department that only because of the survey action, assessee came forward to file the returns assumes importance - since the assessee has failed to offer reasonable explanation in terms of section 273B of the Act, imposition of penalty is justified - the order of the CIT(A) is upheld for the penalty imposed u/s 272A(2)(k) Decided against Assessee.

Summary

Issues:
Penalty imposed under section 272A(2)(k) of the Income Tax Act for failure to file quarterly TDS returns within stipulated time.

Analysis:

1. Issue of Penalty Imposition:
The appeal was against the order of the CIT(A) confirming the penalty imposed under section 272A(2)(k) of the Income Tax Act. The Assessing Officer suggested the penalty due to the assessee's failure to file quarterly TDS returns within the prescribed time. The Addl. CIT issued a show cause notice, and the assessee's explanation citing reasons like economic recession and telengana agitation was deemed unsatisfactory. The penalty was imposed despite the assessee's claims of financial difficulties affecting timely filing.

2. Reasonable Cause for Delay:
The CIT(A) upheld the penalty, emphasizing the habitual delay in filing TDS returns and the lack of respect for statutory provisions. The appellant's argument of facing management chaos leading to delays was rejected, highlighting that the boom period in real estate coincided with the due date for filing TDS returns. The CIT(A) invoked section 273B, stating that no penalty is imposable if a reasonable cause is proven. Since the appellant failed to provide a valid reason for the delay, the penalty was confirmed.

3. Arguments and Counter-Arguments:
The appellant's representative argued that the delay was due to uncontrollable circumstances like management changes, and since the tax and interest were paid, the penalty was unwarranted. In contrast, the department contended that the penalty was justified due to the default in remitting the tax deducted and the late filing of returns. The tribunal noted the importance of timely remittance of TDS amounts, emphasizing that interest payment does not absolve from penalty.

4. Decision and Rationale:
The tribunal dismissed the appeal, emphasizing that the appellant failed to offer a reasonable explanation for the delay, as required by section 273B of the Act. The tribunal rejected the argument that paying interest under section 201(1A) should exempt from penalties, stating it would render penal provisions redundant. The tribunal upheld the penalty imposition, considering the totality of facts and circumstances, and confirmed the CIT(A)'s decision. The grounds raised by the appellant were ultimately dismissed, and the appeal was rejected.

In conclusion, the tribunal upheld the penalty imposed under section 272A(2)(k) due to the appellant's failure to provide a reasonable cause for the delay in filing quarterly TDS returns, despite arguments citing financial difficulties and management chaos.