2021 (3) TMI 824 - AT - Income Tax

Penalty u/s 272A (2) (k) - assessee has failed to submit the quarterly TDS statements in Form No. 26Q and only after the show cause notice issued by the AO for levy of penalty u/s 272A(2)(k) the assessee has submitted the quarterly statements for all the four quarters of these four years - HELD THAT - There is no dispute that the assessee has been submitting the quarterly TDS statements in Form No. 24Q regularly without any default or delay however, only in respect of the TDS deducted from the payment other than salary, the assessee has filed to submit the quarterly statement in Form No. 26Q for these assessment years. It is pertinent to note that the assessee has duly deduct TDS and also deposited the same in the Government account within the prescribed due date and the default on the part of the assessee is only on account of submitting the quarterly TDS statements within the prescribed due date. The assessee has explained the cause of default as unawareness of the concerned staff of the office of the assessee whereas the salary is a regular payment to the employees and deduction of TDS and deposit of the same to the account of the Government is a regular practice followed by all the offices, but the TDS on other than the salary payment is depending upon the instance of payment or credit and therefore is not a regular payment like salary. Hence, it is a bonafide inadvertent mistake. The reasonable cause of ignorance of technical knowledge lack of infrastructure and the first time default on the part of the assessee was accepted by the Tribunal as a reasonable cause. The provisions of section 273B provides that no penalty shall be imposable on a person or the assessee inter alia u/s 272A (2) for any failure if he explain that there was a reasonable cause for such failure. Appeals of the assessee are allowed.

Summary

Issues:
Appeals against penalty orders u/s 272A(2)(k) for AYs 2008-09 to 2011-12.

Analysis:
1. The assessee failed to submit quarterly TDS statements in Form 26Q for AYs 2008-09 to 2011-12, leading to penalty imposition by the AO. The CIT(A) confirmed the penalty, citing the delay in filing appeals and subsequent confirmation of penalty.
2. The assessee argued that the delay was due to unawareness and staff turnover, leading to a reasonable cause for default. They highlighted compliance with TDS deductions under section 192 but faced challenges with non-salary payments. They referred to a Tribunal decision supporting leniency for first-time defaulters.
3. The Revenue contended that the failure to submit Form 26Q was negligence, not unawareness, and lacked a reasonable cause. They emphasized the statutory obligations under section 200(3) and rule 31A for timely submission.
4. The Tribunal reviewed the case, noting the regular compliance with Form 24Q but the lapse in Form 26Q submissions. They accepted the inadvertent mistake due to staff ignorance and non-regular nature of non-salary payments, aligning with the precedent of leniency for first-time defaulters.
5. Relying on section 273B, the Tribunal found a reasonable cause for the default, leading to the deletion of the penalty under section 272A(2)(k) for the AYs in question.
6. Consequently, all appeals by the assessee were allowed, and the penalty was revoked, emphasizing the inadvertent mistake and reasonable cause for the default.

Judgment Summary:
The Appellate Tribunal ITAT Allahabad reviewed appeals against penalty orders u/s 272A(2)(k) for AYs 2008-09 to 2011-12. The assessee's failure to submit Form 26Q quarterly TDS statements led to penalty imposition, upheld by the CIT(A). The assessee cited staff turnover and unawareness as reasons for the delay, emphasizing compliance with salary TDS but facing challenges with non-salary payments. The Revenue argued negligence and lack of reasonable cause for the default. The Tribunal found staff ignorance and the non-regular nature of non-salary payments as inadvertent mistakes, aligning with leniency for first-time defaulters. Relying on section 273B, the Tribunal revoked the penalty under section 272A(2)(k) for the AYs in question, allowing all appeals by the assessee.