2021 (12) TMI 395 - AT - Income Tax

Levy of penalty u/s. 271A(2)(g) - assessee company had failed in compliance of TDS provision by not filing due quarterly return within the due date nor furnished certificate as required under Section 203 - assessee company had failed in compliance of TDS provision by not filing due quarterly return within the due date nor furnished certificate as required under Section 203 - HELD THAT - As per decision of Jyoti Power Corporation (P) Ltd. 2018 (2) TMI 671 - GUJARAT HIGH COURT wherein it is held that since the assessee had deposited tax deducted along with interest and fully explain the reason for late deposit of such amount during the course of penalty proceeding which was neither controverted or found to be false by the JCIT, provision of Section 273B would be attracted and no penalty could be levied upon assessee. The assessee has demonstrated from the material placed on record that because of financial crisis there was delay in depositing TDS, therefore, TDS return filed late which resulted in issuing TDS certificate late. The assessee has attached copy of Income Tax Return, copy of bank statement of Tamil Mercantile Cooperative Bank, HDFC Bank showing borrowing of amount on 18.02.2013 for payment of TDS on 20.03.2013. The assessee has also submitted before the AO and Ld. CIT(A) that there was financial crisis in the case of the assessee company due to which TDS was deposited late - neither the AO nor the Ld. CIT(A) has controverted nor disprove the contention of the assessee that there was financial crisis, therefore, we consider that the case of the assessee is covered by the provision of Section 273B of the Act as it had submitted an explanation which found to be reasonable and the same has not been disproved by the lower authorities. Therefore, the appeal of the assessee is allowed.

Summary

Issues:
Levy of penalty under Section 271A(2)(g) of the Income Tax Act, 1961 for non-compliance with TDS provisions.

Analysis:
The appeal filed by the Assessee for A.Y. 2013-14 challenged the order of the CIT(A) under Section 272A(2)(g) of the Act. The Additional Commissioner (TDS) had imposed a penalty of ?19,700 for the Assessee's failure to comply with TDS provisions. The Assessee contended financial crisis as the reason for late TDS deposit and certificate issuance. The Assessee deposited the TDS amount with interest, but the delay was due to financial constraints. The Assessee's appeal was dismissed by the CIT(A), leading to the appeal before the ITAT.

During the appellate proceedings, the Assessee presented evidence of financial crisis causing the delay in TDS deposit and certificate issuance. The Assessee borrowed funds to pay the TDS, which was highlighted to the AO and CIT(A) but not considered. The Assessee argued that no loss occurred to the deductee as TDS certificates were issued before the due date of their Income Tax Return. The Assessee referred to relevant case laws supporting the contention that no penalty should be levied due to a reasonable cause for the delay.

The ITAT considered the Assessee's financial crisis explanation and found that the delay in TDS compliance was justified. The Assessee had paid the TDS amount along with interest, and the delay was due to financial constraints, which was not disproved by the Revenue authorities. The ITAT observed that the Assessee's case fell under Section 273B of the Act, as a reasonable explanation was provided and not refuted by the lower authorities. Consequently, the ITAT allowed the Assessee's appeal, ruling in favor of the Assessee based on the financial crisis explanation.

In conclusion, the ITAT allowed the Assessee's appeal, considering the financial crisis as a valid reason for the delay in TDS compliance. The ITAT held that the Assessee's explanation was reasonable and not contradicted by the Revenue authorities, leading to the decision in favor of the Assessee.