2004 (6) TMI 275 - AT - Income Tax

Summary

Issues:
Cross-appeals against penalty reduction under s. 272A(2)(g) for financial year 1995-96.

Analysis:
1. The case involved cross-appeals by the assessee and the Revenue against the penalty reduction under s. 272A(2)(g) for the financial year 1995-96. The penalty was reduced from Rs. 4,99,200 to Rs. 24,272 by the CIT(A).

2. The deductor firm faced penalties due to late issue of TDS certificates, with the Jt. CIT alleging a delay of 4,992 days in issuing 35 certificates. The assessee explained that certificates were issued on time but were undated in the office copies due to clerical errors. The Jt. CIT imposed the penalty, stating the assessee failed to prove timely issuance of certificates or provide reasonable cause for the delay.

3. The CIT(A) upheld the penalty, noting the delay and lack of evidence for timely issuance. However, the CIT(A) restricted the penalty to Rs. 24,272 based on a retrospective amendment to s. 272A(2)(g), citing a Tribunal decision.

4. The Revenue appealed against the retrospective application of the penalty restriction, while the assessee challenged the quantum of penalty upheld by the CIT(A).

5. The ITAT Delhi-B held that the penalty under s. 272A(2)(g) was not justified in this case. Citing judicial precedents, the tribunal emphasized that penalties should not be imposed for technical breaches or bona fide errors. The onus was on the assessee to prove reasonable cause for the delay, which was considered discharged based on the preponderance of probabilities.

6. The tribunal found the assessee's conduct bona fide as TDS was deducted and deposited on time, and TDS returns were filed promptly. The undated TDS certificates accompanying the returns did not warrant a penalty, especially when payees had acknowledged timely receipt and tax credits. The tribunal criticized the Jt. CIT for rushing to penalize without verifying the facts adequately.

7. Consequently, the ITAT Delhi-B canceled the penalty, ruling that the procedural deficiency of undated certificates did not warrant the imposition of a penalty under s. 272A(2)(g). As a result, the appeal of the assessee was allowed, and the Revenue's appeal was dismissed. The retrospective aspect of the penalty amendment was deemed academic and not decided upon due to the penalty cancellation.