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Issues involved: Interpretation of penalty provision u/s 272A(2)(g) of the Income-tax Act, 1961 for late issuance of TDS certificate.
The High Court considered an appeal filed by the revenue against an order of the Income-tax Appellate Tribunal related to the assessment year 1998-99. The issue at hand was the imposition of a penalty on the assessee for late issuance of TDS certificate, as the assessee had deducted tax at source but issued the certificate late. The revenue sought to levy the penalty u/s 272A(2)(g) of the Income-tax Act, 1961. The Tribunal based its decision on a Supreme Court case, Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26, where it was highlighted that the imposition of a penalty for failure to fulfill a statutory obligation is akin to a quasi-criminal proceeding. The Supreme Court emphasized that a penalty should not be imposed merely because it is lawful to do so. It should be imposed when there is deliberate defiance of law, contumacious conduct, or conscious disregard of obligation. The authority must exercise its discretion judiciously, especially in cases of technical or venial breaches. The High Court noted that the revenue was seeking to impose a penalty solely because it had the power to do so, without considering the circumstances and exercising discretion as required by the Supreme Court's guidance. The Court opined that in cases of minor technical defaults, there is no substantial reason to levy a penalty. Consequently, the Court found no substantial question of law for consideration and dismissed the appeal. In conclusion, the High Court upheld the decision of the Tribunal and dismissed the appeal, emphasizing the importance of exercising discretion judiciously while imposing penalties for statutory violations.
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