2014 (10) TMI 10 - HC - Income Tax

Imposition of penalty u/s 271A(2)(c) delay in furnishing return for Tax Collection at Source (TCS) - whether penalty can be imposed for technical breach, delay in filing of statement in form 27EC Held that - It is the mandatory provision to furnish half yearly return - The returns were furnished on 12.06.1996 - It is not a procedural or technical mistake - The D.D.O. is responsible for furnishing the return, so the contention of the assessee cannot be accepted that it was supposed to be furnished by the Headquarter - It is the pios duty of the D.D.O. to furnish the return - It shows gross negligence on the part of the D.D.O, who has not furnished the return in Form No. 27EC well in time - It is not a technical mistake - The liability cannot be shifted on the Chartered Accountant or Headquarters - Such plea is not sufficient to make out the reasonable cause thus, the order of the Tribunal is upheld Decided against assessee.

Summary

Issues:
Appeals against consolidated order by Department, imposition of penalty under Section 272A(2)(C) of the Income Tax Act, delay in filing Form No. 27EC, responsibility of the D.D.O, gross negligence, plea of reasonable cause.

Analysis:

The judgment delivered by the High Court of Allahabad pertains to four appeals filed by the Department against a consolidated order passed by the Income Tax Appellate Tribunal. The appeals were admitted based on substantial questions of law regarding the imposition of penalty under Section 272A(2)(C) of the Income Tax Act. The primary issue revolved around whether the penalty could be justified in the given circumstances and if it could only be imposed for technical breaches such as delay in filing Form 27EC.

The case involved a State undertaking obligated to prepare and furnish Form 27EC as per the Income Tax rules. The penalty under Section 272A(2)(C) was imposed due to significant delays in filing the half-yearly returns for various periods. The Tribunal upheld the penalties imposed by the Assessing Officer and the First Appellate Authority.

During the proceedings, it was highlighted that the responsibility to furnish the returns rested with the D.D.O and not the Headquarters. The court emphasized that the obligation to file the returns was mandatory and not merely a procedural error. The court rejected the argument that the delay was due to the Headquarters' oversight, stating that it was the D.D.O's primary duty. The court found the D.D.O's negligence to be gross and emphasized that the liability could not be shifted to others like the Chartered Accountant or Headquarters.

Ultimately, the court ruled in favor of the Department, stating that the reasons provided by the Tribunal were sufficient to sustain the penalties imposed. The court dismissed all four appeals filed by the assessee, upholding the penalties under Section 272A(2)(C) of the Income Tax Act. The judgment reinforced the importance of timely compliance with tax regulations and held the responsible party, the D.D.O, accountable for the delays in filing the required returns.