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2016 (2) TMI 122 - AT - Income TaxPenalty u/s.272A(2)(k) - Tax Collection at Source (TCS) - Held that - The assessee was not aware of the provisions of TCS deduction and deposit and filing of quarterly returns. The assessee first came to know upon survey on its business premises and thereafter immediately deposited TCS along with interest and thus, it is technical and venial breach of provision causing no loss to Revenue. We are therefore of the considered view that the penalty levied u/s.271A(2)(k) cannot be sustained and therefore, the same is hereby ordered to be deleted. A.O. is directed accordingly. - Decided in favour of assessee Penalty u/s. 271CA - Held that - The assessee had paid TDS along with interest and therefore there was no loss to the revenue and there was only technical or venial breach with constitute reasonable cause within the meaning of section 273B of the Act and in view of this the order of CIT(A) cannot be sustained and we delete the penalty by allowing the appeal of the assessee.- Decided in favour of assessee
Issues Involved:
1. Penalty levied under Section 272A(2)(k) of the Income Tax Act. 2. Confirmation of penalty under Section 271CA of the Income Tax Act. Detailed Analysis: 1. Penalty Levied Under Section 272A(2)(k): The primary issue in these appeals is the confirmation of penalties levied under Section 272A(2)(k) by the Additional Commissioner of Income Tax, TDS Range, Ahmedabad. The penalties were imposed due to the assessee's failure to file quarterly statements in Form No. 27EQ for various financial years on the due dates. Facts of the Case: The assessee company, engaged in laying cross-country pipelines and operating solar power plants, was found during a survey on 13.11.2013 to have failed to file the required quarterly statements. Consequently, the A.O. issued a show-cause notice on 21.01.2014, which went unanswered, leading to the imposition of a penalty calculated at Rs. 100 per day of default, totaling Rs. 5,20,400/-. Arguments by the Assessee: The assessee argued that it was unaware of the TCS provisions under Section 206C related to scrap sales and only became aware during the survey. The assessee cooperated fully and paid the TCS along with interest from its own funds, as it was not feasible to collect the tax from buyers retrospectively. The assessee contended that: - The penalty under Section 272A(2)(k) was not applicable as the quarterly statement in Form No. 27EQ is required only after TCS is collected and paid to the Central Government. - The default was technical and venial, causing no loss to the Revenue since the TCS and interest were paid. - The penalty should not exceed the actual TCS due, which was only Rs. 2,388/- compared to the penalty of Rs. 5,20,400/- imposed. Tribunal's Findings: The Tribunal noted that the penalty under Section 272A(2)(k) applies only if a person fails to deliver the required statement within the specified time after collecting TCS. Since the assessee had not collected TCS initially and only paid it after the survey, the penalty was deemed inappropriate. The Tribunal referenced several cases, including M/s. Porwal Creative Vision Pvt. Ltd. vs. ACIT and ACIT vs. Lok Prakashan Ltd., where penalties were not imposed for similar defaults due to lack of knowledge and no resultant loss to the Revenue. The Tribunal concluded that the default was technical and venial, and in light of Section 273B, which provides for reasonable cause, the penalty should be deleted. 2. Confirmation of Penalty Under Section 271CA: In A.Y. 2008-09, the issue was the confirmation of a penalty of Rs. 25,272/- levied under Section 271CA for failure to collect TCS on scrap sales amounting to Rs. 25,27,204/-. Facts of the Case: During the survey, it was found that the assessee had not collected TCS on scrap sales. The DCIT determined a demand of Rs. 25,272/- and proposed a penalty under Section 271CA. Despite being issued show-cause notices, the assessee did not respond, leading to the penalty's imposition. Arguments by the Assessee: The assessee argued that the failure to collect TCS was due to a bona fide omission and lack of knowledge of the law. The TCS along with interest was paid immediately after the survey, causing no loss to the Revenue. The assessee cited several cases, including Khodidas Family Trust vs. ACIT and Harsiddh Construction Pvt. Ltd. vs. CIT, to support the argument that penalties should not be imposed for technical or venial breaches, especially when there is no revenue loss. Tribunal's Findings: The Tribunal agreed with the assessee's arguments, noting that the TCS along with interest was paid, resulting in no loss to the Revenue. The Tribunal referenced similar cases where penalties were deleted due to reasonable cause and technical breaches. Consequently, the penalty under Section 271CA was deleted. Conclusion: The Tribunal allowed the appeals of the assessee, deleting the penalties imposed under both Sections 272A(2)(k) and 271CA. The decisions were based on the assessee's lack of knowledge, immediate compliance upon discovery, and the absence of revenue loss, deeming the defaults as technical and venial breaches.
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