2000 (2) TMI 192 - AT - Income Tax

Summary

Issues Involved:
1. Justification of penalty for delayed submission of Forms 15H.
2. Interpretation of Section 272A(2)(f) regarding penalty imposition.
3. Applicability of the proviso to Section 272A(2) and its retrospective effect.
4. Determination of whether there was a reasonable cause for the delay.
5. Calculation of penalty amount.

Detailed Analysis:

1. Justification of Penalty for Delayed Submission of Forms 15H:
The primary issue was whether the penalty of Rs. 38,30,400 imposed on the assessee for a delay of 133 days in submitting 288 Forms 15H was justified. The assessee argued that the delay was due to the broker's failure to provide the forms on time, which was beyond their control. The CIT, however, found this explanation insufficient and imposed the penalty.

2. Interpretation of Section 272A(2)(f) Regarding Penalty Imposition:
The Tribunal had to decide whether the penalty should be imposed for each delayed form separately or as a single default. The Pune Bench of ITAT in the case of Executive Engineer v. Dy. CIT held that the imposition of penalty should be for the total default and not for each form separately. The Delhi Bench agreed with this interpretation, considering the default as a single instance.

3. Applicability of the Proviso to Section 272A(2) and Its Retrospective Effect:
The proviso to Section 272A(2), which limits the penalty to the amount of tax deductible, was argued to be clarificatory and thus retrospective. The Tribunal agreed with the assessee, citing Supreme Court decisions that clarificatory and procedural provisions are to be applied retrospectively. This meant that the penalty could not exceed the amount of tax deductible or collectible, which was Rs. 1,74,032 in this case.

4. Determination of Whether There Was a Reasonable Cause for the Delay:
The Tribunal examined whether the delay was due to reasonable cause under Section 273B. The broker's affidavit stated that the delay was due to difficulties in collecting the forms from depositors. The Judicial Member found this explanation satisfactory and considered it a reasonable cause, thereby advocating for the deletion of the entire penalty. However, the Accountant Member did not find the explanation sufficient and upheld a reduced penalty.

5. Calculation of Penalty Amount:
The Tribunal had to resolve the discrepancy in the penalty amount. The Accountant Member proposed a reduced penalty of Rs. 13,300, considering the delay as a single default. The Judicial Member, however, suggested that if the reasonable cause was not accepted, the penalty should be limited to the tax deductible amount (Rs. 1,74,032) as per the proviso to Section 272A(2).

Conclusion:
The Third Member ultimately agreed with the Judicial Member that there was a reasonable cause for the delay, leading to the deletion of the entire penalty. However, if the reasonable cause was not accepted, the penalty should be limited to Rs. 1,74,032, aligning with the proviso to Section 272A(2). The decision emphasized that the delay was due to factors beyond the assessee's control and that the penalty provisions should be interpreted in a manner that considers the entirety of circumstances and legislative intent.