2015 (9) TMI 430 - AT - Income Tax

Penalty imposed u/s. 272A(2)(k) - e-TDS statements filed much later than the due dates - Held that - Period for levying the penalty has to be counted from the date of payment of tax because the delay in filing the return till the date of payment of tax is already explained on the ground that the assessee could not pay the taxes for which separate penal provisions exist. The assessee has also explained the reasons for not paying the tax to the Central Government in time which was because of financial difficulties. The assessee has filed the copies of P & L account and balance sheet to substantiate the claim that it was incurring losses and there were substantial liabilities on account of creditors. The assessee has placed reliance on the decision of Mumbai Tribunal in the case of M/s. Porwal Creative Version P. Ltd. Vs. ACIT(TDS), Mumbai 2011 (3) TMI 880 - ITAT, Mumbai in which financial hitches have been accepted as reasonable cause for default in payment of tax. Once the delay in payment of tax is explained satisfactorily, penalty u/s. 272A(2)(k) of the Act cannot be levied for the period till payment of tax. Hence, we modify the order of the Assessing Officer. The Assessing Officer is directed to levy the penalty u/s. 272A(2)(k) of the Act only for the delay in payment of tax by the assessee. The order of Ld. CIT(A) is modified accordingly. - Decided partly in favour of assessee.

Summary

Issues:
Penalty imposed under section 272A(2)(k) for delayed filing of TDS returns.

Detailed Analysis:
The appeals were against orders of ld. CIT (A)-1 for A.Ys. 2008-09 to 2011-12. The common issue involved was the penalty imposed under section 272A(2)(k) for late filing of TDS returns. The assessee contended that TDS returns were delayed due to non-deposit of TDS on time because of financial constraints. The Assessing Officer imposed penalties for the delays based on the due dates and the actual filing dates provided in a table. The penalty was contested on grounds of financial difficulties causing delays in TDS deposit and subsequent return filing.

The Assessing Officer invoked section 272A(2)(k) for not submitting quarterly TDS returns within the prescribed time limit. The Tribunal analyzed the relevant sections of the Income Tax Act, specifically section 200(3) and its requirements for filing TDS statements. The penalty was calculated at Rs. 100 per day of default from the due date to the actual filing date. The Tribunal noted that TDS returns could only be filed after payment of tax to the Central Government, as per section 200(3).

The Tribunal considered the explanations provided by the assessee regarding financial difficulties leading to delayed TDS payments and subsequent return filings. It was highlighted that separate penal provisions exist for non-deduction or non-payment of TDS to the Central Government. The Tribunal found the reasons for delayed payments satisfactory, considering the financial challenges faced by the assessee. Relying on a Mumbai Tribunal decision, the Tribunal modified the penalty order to be levied only for the delay in payment of tax, not for the period until the tax payment was made.

The Tribunal's decision in one appeal was applied to the remaining appeals with identical facts and contentions. The appeals were partly allowed, modifying the penalty imposition to account for delays only from the date of payment of tax. The order was pronounced in accordance with ITAT Rules, 1963 at Cuttack.

This detailed analysis of the judgment provides insights into the legal interpretation of penalty provisions under section 272A(2)(k) for delayed filing of TDS returns, considering the financial constraints faced by the assessee and the requirements of the Income Tax Act related to TDS statements and payments to the Central Government.