2015 (9) TMI 1636 - AT - Income Tax

Levy of penalty u/s 272A(2)(k) - assessee had failed to file the quarterly TDS return in Form No. 26Q for the second quarter by the due date and there was a delay of 191 days in filing the same - reasonable cause for delay - Held that - The reason for the delay as being on account of systems error and delay in filing return by Chartered Accountant on account of data mismatch. All that the Ld. Joint Commissioner found was that the reason was insufficient / unreasonable. The explanation of the assessee was not controverted. Such un-controverted explanation of the assessee constitutes reasonable cause within the meaning of Section 273B, which provides that no penalty shall be levied if reasonable cause for the failure is established by the assessee. Therefore the penalty could not be levied u/s 272A(2)(K) of the Act. Also an admitted fact that the Tax deducted at source, to which the F.No. 26 Q pertained, was paid within the prescribed time. No loss as such has therefore been caused to the Revenue. Delay in filing return is at best a technical or venial breach of law and no contumacious conduct can be attributed to the assessee. - Decided in favour of assessee.

Summary

Issues:
Levy of penalty under section 272A(2)(k) of the Income Tax Act, 1961.

Analysis:
The appellant filed an appeal against the order of Ld. CIT (Appeals)-2 Chandigarh regarding the penalty of Rs. 19,100 imposed under section 272A(2)(k) for a delay in filing the quarterly TDS return in Form No. 26Q. The appellant argued that the delay was due to a system error and a delay by the Chartered Accountant. The Assessing Officer (AO) found the reasons insufficient and imposed the penalty. The appellant cited various judgments to support their contention, including the case of Hindustan Steel Ltd. Vs. State of Orissa [1972] 83 ITR 26. The Ld. CIT(A) upheld the penalty, leading to the appellant's appeal before the tribunal.

The appellant contended that there was a reasonable cause for the delay, citing system errors and technical faults. They relied on Section 273B, which states that no penalty is leviable if a reasonable cause is established. The appellant referenced judgments like Sushma Tiwari Vs. Department of Income Tax and others to support their argument. The Departmental Representative (DR) relied on the Ld. CIT(A)'s order.

The tribunal found that the appellant's explanation for the delay was reasonable, as it was due to system errors and a delay by the Chartered Accountant. The delay did not result in any loss to the Revenue as the TDS was paid on time. Citing the case of Hindustan Steel Ltd., the tribunal emphasized that penalties should not be imposed for technical or venial breaches. Therefore, the tribunal upheld the Ld. CIT(A)'s decision to cancel the penalty of Rs. 19,100 under section 272A(2)(k).

In conclusion, the tribunal allowed the appeal of the assessee, emphasizing that the delay in filing the return was supported by a reasonable cause and was only a technical breach of the law. The penalty imposed under section 272A(2)(k) was canceled as it was deemed unjustified in light of the circumstances.