2017 (3) TMI 1735 - AT - Income Tax

Penalty u/s 272A(2)(k) - Filing quarterly TDS returns in Form No. 24Q and 26Q with huge delay - acute shortage of funds with assessee - reasonable cause of delay - Held that - We find that the assessee has been facing acute shortage of funds even for payment of salary and other charges. Hence it had contributed to the delayed remittance of TDS. As stated by assessee that even the TDS portion of 4, 265/- was remitted on 4.3.2011 by the sister concern of the assessee M/s Arunachal Plywood Industries Ltd in support of which he placed on record the bank statements of the said company. We find lot of force in the argument of the ld AR that the TDS returns could be electronically filed only after remittance of the requisite tax and interest thereon. Since the assessee had remitted the TDS portion itself belatedly by requesting the sister concern to make payment thereon and by mobilizing its own resources it had eventually led to the belated filing of TDS returns. Hence this itself would in our considered opinion constitute reasonable cause u/s 273B of th Act. Hence assessee should not be invited with penalty for mere technical venial breach - decided in favour of assessee

Summary

Issues:
- Justification of penalty under section 272A(2)(k) of the Income-tax Act, 1961 for delayed filing of TDS returns.

Detailed Analysis:
The appeal before the Appellate Tribunal ITAT Kolkata involved the question of whether the penalty imposed under section 272A(2)(k) of the Income-tax Act, 1961 was justified in the given circumstances. The case arose from the delayed filing of TDS returns by the assessee, leading to the penalty imposition of ?18,993. The assessee argued that the delays were due to financial constraints, which resulted in delayed remittance of TDS and subsequent filing of returns. The appellant contended that the penalty should not exceed the tax payable and should be restricted to the extent of tax due. The financial difficulties faced by the assessee, causing delays in salary payments and statutory obligations, were highlighted as reasons for the delayed TDS filings.

The Appellate Tribunal considered the submissions made by both parties. It was noted that the assessee had faced financial challenges, leading to delays in remitting TDS amounts and subsequently filing the returns. The appellant presented evidence of remittance of TDS by a sister concern to support their argument. The Tribunal acknowledged that the delayed remittance of TDS had directly contributed to the delayed filing of returns. The Tribunal also referred to legal precedents, including decisions by various benches and high courts, emphasizing that late filing of TDS returns is a technical default that should not automatically attract penalties. Citing previous rulings, the Tribunal concluded that penalizing for technical delays without causing revenue loss was unwarranted. Therefore, the Tribunal ruled in favor of the assessee, canceling the penalty under section 272A(2)(k) based on the reasonable cause for the delayed filings and the absence of revenue loss due to the delays.

In conclusion, the Appellate Tribunal ITAT Kolkata allowed the appeal of the assessee, setting aside the penalty imposed under section 272A(2)(k) of the Income-tax Act, 1961. The decision was based on the financial difficulties faced by the assessee, which led to delayed remittance of TDS and filing of returns, and the legal precedents emphasizing that penalties for technical delays without revenue loss are not justified.