2019 (7) TMI 698 - AT - Income Tax

Penalty u/s 272A(2)(k) /274 - delay in submitting quarterly returns in Form no. 26Q for Quarter-3 and Qtr-4 - proof of sufficient reasons for delay - bonafide belief - HELD THAT - We note that the assessee was not given reasonable opportunity by the Assessing Officer to explain the delay in filing quarterly returns in form no. 26Q. We note that the assessee has submitted documentary evidence in support of serious illness of the accountant of the assessee who was bed ridden for considerable period of time who used to look after the entire accounts and TDS compliance and no new accountant could be appointed because suitable candidate was not available in the market therefore the delay in filing the form 26Q has occurred. Assessee has explained satisfactorily the reason of not filing the return in form 26Q for quarter-3 and quarter-4, we consider that because of serious illness of the accountant of the assessee the return in form 26Q has not been filed in time and circumstances was beyond the control of the assessee, hence it is sufficient and reasonable cause as per section 273B of the Act. See Hindustan Steel Ltd. 1969 (8) TMI 31 - Supreme Court - Decided in favour of assessee.

Summary

Issues Involved:
- Penalty imposed under section 272A(2)(k) of the Income Tax Act, 1961 for delay in filing quarterly TDS statements.
- Reasonable cause for delay in filing TDS statements.
- Compliance with statutory obligations under section 200(3) of the Act.
- Opportunity provided to the assessee to explain the delay.

Analysis:

Issue 1: Penalty Imposed under Section 272A(2)(k)
The Assessing Officer found that the assessee had delayed filing quarterly TDS statements, leading to a penalty under section 272A(2)(k). The provision mandates a penalty of Rs. 100 per day for each day of delay. The Act emphasizes the importance of timely filing to prevent TDS mismatches and ensure proper credit for deductees. The penalty was imposed considering the seriousness of the default and the legislative intent expressed through amendments.

Issue 2: Reasonable Cause for Delay
The assessee argued that the delay was due to the serious illness of their accountant, who was bedridden for an extended period. The absence of the accountant, responsible for TDS compliance, was cited as a reasonable cause for the delay. The Tribunal noted that the assessee provided documentary evidence supporting the illness and the unavailability of a suitable replacement in the market. This explanation was considered a sufficient and reasonable cause under Section 273B of the Act.

Issue 3: Compliance with Statutory Obligations
The Tribunal observed that the assessee's failure to file the TDS statements on time did not comply with the statutory obligation under section 200(3) of the Act. Despite the technical nature of the default, the Act does not provide relaxation for late filing. The legislative amendments and the seriousness of TDS compliance underscored the importance of timely submissions.

Issue 4: Opportunity to Explain Delay
It was noted that the Assessing Officer did not provide the assessee with a reasonable opportunity to explain the delay in filing the TDS statements. The Tribunal considered the documentary evidence submitted by the assessee regarding the accountant's illness and the unavailability of a replacement. Relying on the principle of judicial discretion and considering the circumstances, the Tribunal deleted the imposed penalty based on the judgment in Hindustan Steel Ltd., emphasizing the need for a holistic evaluation of relevant factors.

In conclusion, the Tribunal allowed the assessee's appeal, overturning the penalty imposed under section 272A(2)(k) based on the reasonable cause for the delay and the unique circumstances presented in the case.