2018 (12) TMI 677 - AT - Income Tax

Penalty levied u/s 272A(2)(k) - omission to deduct tax and filing of e-TDS returns within the stipulated time - delay of five years in filing the e-TDS statements - Held that - The explanation of the assessee that there was no experienced person at Kotagiri and it had to engage somebody from Coimbatore for filing of return appears to be not a valid reason for not filing the TDS returns. When the assessee was required to deduct tax and file the statement as required under Section 206C(3) of the Act within the time prescribed under Section 200(3) of the Act, the assessee is expected to comply with the mandates of the Income-tax Act. Kotagiri is not far away from Coimbatore. It may not be required for the assessee to wait till an inspection was carried out by the TDS Wing of the Department. From the very fact that the failure of the assessee for not filing the TDS was found during the inspection of TDS Wing of the Department, it appears that the assessee has not taken any step for filing the returns. Under similar circumstances, the Punjab & Haryana High Court High Court in Central Scientific Instruments Organisation 2016 (8) TMI 508 - PUNJAB AND HARYANA HIGH COURT has confirmed the penalty levied. - Decided against assessee.

Summary

Issues:
Appeals against penalty under Section 272A(2)(k) for assessment years 2008-09 and 2009-10.

Analysis:
1. The representative for the assessee argued that the failure to deduct tax and file e-TDS returns was unintentional and beyond the assessee's control. The tax was deducted and paid to the government account, but the returns were filed late due to lack of expertise locally, necessitating hiring from Coimbatore. The representative claimed the delay was circumstantial, not intentional.

2. The Departmental Representative contended that the substantial delay in filing returns warranted the penalty. Citing precedents like Central Scientific Instruments Organisation v. CIT (TDS) and Raja Harpal Singh Inter College v. Principal CIT, the Departmental Representative supported the penalty imposition.

3. The Tribunal observed that while the tax was deducted, the e-TDS statements were significantly delayed for both assessment years. The explanation of lack of local expertise was deemed insufficient justification for the delay in filing the returns. The Tribunal emphasized that compliance with the Income-tax Act mandates was expected, regardless of the local expertise availability.

4. The Tribunal noted that the proximity of Kotagiri to Coimbatore made it unnecessary for the assessee to wait for a TDS inspection to file the returns. The failure to file the TDS returns until the inspection indicated a lack of proactive steps by the assessee. Citing the precedent of Central Scientific Instruments Organisation, the Tribunal upheld the penalty, finding no grounds to interfere with the lower authority's decision.

5. Consequently, the Tribunal dismissed both appeals filed by the assessee, confirming the penalty under Section 272A(2)(k) for the assessment years 2008-09 and 2009-10.