2021 (6) TMI 504 - AT - Income Tax

Penalty u/s. 272A(2)(k) - Assessee had not offered any reasonable cause for delay in filing of TDS statements u/s. 200(3) - HELD THAT - Admittedly, we find that assessee had duly deducted the tax at source and had also remitted the same, of course with some delay, for which it had already been penalised with interest as per the Act. The interest u/s. 201(1A) of the Act had also been paid by the assessee. Admittedly, the assessee had indeed filed its TDS statements u/s. 200(3) of the Act beyond prescribed time. But we find that there is absolutely no loss to the exchequer pursuant to the said delay as the entire taxes that were due to the Government had already been duly remitted by the assessee. Hence, the default committed by the assessee is only a minor technical and venial breach. As settled law that no penalty could be levied on an assessee for a mere technical venial breach, more especially when there is no loss caused to the exchequer due to such breach. In view of the same, we have no hesitation in directing the ld. AO to delete the penalty levied u/s. 272A(2)(k) in the facts and circumstances of the instant case. Accordingly, the grounds raised by the assessee are allowed.

Summary

Issues involved:
Imposition of penalty under section 272A(2)(k) of the Income Tax Act, 1961 for delay in filing TDS statements.

Comprehensive Analysis:

Issue 1: Justification of penalty imposition
The appeal in ITA No. 4503/Mum/2019 for A.Y. 2012-13 challenged the penalty imposed under section 272A(2)(k) of the Act. The primary issue was whether the Commissioner of Income Tax (Appeals) was justified in upholding the penalty of ?500,700 for the delay in filing TDS statements as required under section 200(3) of the Act.

Issue 2: Penalty calculation and justification
The Assessing Officer (AO) calculated the penalty at ?500,700 at the rate of ?100 per day for the delay in filing the TDS statements. The AO's decision was based on the lack of reasonable cause presented by the assessee for the delay. However, the assessee contended that the delay was due to the non-payment of tax deducted at source on time, which prevented the electronic filing of TDS statements. The assessee argued that this delay was a reasonable cause under section 273B of the Act, especially since there was no loss to the exchequer as the taxes had been duly remitted.

Issue 3: Reasonable cause for delay
The assessee, engaged in real estate development, faced TDS defaults amounting to ?2,31,71,365, primarily related to interest payments to IL & FS. Despite the delay in filing TDS statements, the assessee had deducted and remitted the tax, paying the balance amount before the penalty proceedings. The Tribunal noted that there was no loss to the government due to the delay, as all taxes were duly paid. Citing settled law, the Tribunal emphasized that a penalty cannot be imposed for a technical breach when no loss is incurred by the exchequer.

Judgment:
The Tribunal directed the AO to delete the penalty imposed under section 272A(2)(k) considering the facts and circumstances of the case. The appeal of the assessee was allowed, emphasizing that the delay in filing TDS statements was a minor technical breach with no loss to the exchequer.

This detailed analysis highlights the key aspects of the judgment, including the penalty imposition, reasonable cause for delay, and the Tribunal's decision to delete the penalty based on the lack of loss to the government despite the technical breach.