2018 (7) TMI 1315 - AT - Income Tax

Penalty u/s 272A(2)(k) - assessee did not file the quarterly statements in Form 26Q within the prescribed time - assessee has pleaded before the Ld. CIT (A) that the delay was due to severe financial crisis which the assessee was facing - Held that - As seen that the CIT (A) has not considered this submission of the assessee and has upheld the penalty on the ground that even the tax deducted at source was not deposited in time. However, it is our considered opinion severe financial crisis is a reasonable cause which would have prevented the assessee from depositing the TDS within the prescribed time period. The explanation offered by the assessee would constitute reasonable cause within the meaning of section 273B and hence the assessee would be entitled to immunity from the levy of penalty u/s 272A(2)(k). Set aside the impugned orders and direct the AO to delete the penalty. - Decided in favour of assessee.

Summary

Issues:
Appeals challenging penalty imposition under section 272A(2)(k) for delayed filing of TDS quarterly statements for assessment years 2008-09 and 2009-10.

Analysis:
1. Assessment Year 2008-09 Penalty:
The AO imposed a penalty of ?1,08,600 for delayed filing of TDS quarterly statements by 543 days. The CIT (A) noted mistakes in the calculation of default days and reduced the penalty to ?32,900. The ITAT considered the assessee's explanation of severe financial crisis as a reasonable cause for the delay. Relying on section 273B, the ITAT held that the assessee was entitled to immunity from penalty under section 272A(2)(k) and directed the AO to delete the penalty.

2. Assessment Year 2009-10 Penalty:
For this assessment year, a penalty of ?78,800 was imposed for delayed filing of TDS quarterly statements by 788 days. The CIT (A) reduced the penalty to ?27,400 based on corrected default days calculation. The ITAT, after considering the assessee's financial crisis explanation, held that the assessee had a reasonable cause for the delay. Citing section 273B, the ITAT directed the AO to delete the penalty, granting immunity to the assessee.

3. Overall Decision:
The ITAT allowed both appeals of the assessee, setting aside the penalties imposed under section 272A(2)(k) for assessment years 2008-09 and 2009-10. The ITAT accepted the assessee's explanation of severe financial crisis as a reasonable cause for the delayed filing of TDS quarterly statements, granting immunity from penalty under section 273B of the Income Tax Act, 1961.