1995 (9) TMI 125 - AT - Income Tax

Assessment Year, Central Government, Show-cause Notice, Tax At Source, Tax Deducted At Source

Summary

Issues:
- Appeal against penalty under section 272A(2)(c) of the Income-tax Act, 1961.
- Reduction of penalty amount by CIT(A) to the tax deductible amount.
- Whether penalty should be deleted entirely based on the circumstances.

Analysis:

The judgment by the Appellate Tribunal ITAT Patna involved an appeal against a penalty imposed under section 272A(2)(c) of the Income-tax Act, 1961. The penalty was initially set at Rs. 27,000 by the Assessing Officer but was reduced to Rs. 5,595 by the CIT(A). The penalty was related to the failure to file a return in Form No. 26A under section 206 of the Act by the due date. The assessee argued that tax had been deducted at source and deposited with the Central Government, and the failure to file the return was a technical breach without adverse consequences. The CIT(A) reduced the penalty to the amount of tax deducted at source, considering it excessive. However, the Tribunal noted that the principles involved were crucial, and a detailed examination was necessary despite the small amount involved.

The Tribunal considered the legal provisions and past judgments, including the introduction of a proviso limiting the penalty amount to the tax deductible under section 272A(2) of the Act. The Tribunal highlighted the importance of determining whether the breach was merely technical or deliberate. The assessee argued that the failure to file the return was inadvertent and not deliberate, citing judgments emphasizing penalties for statutory breaches should not be imposed for minor or technical violations. However, the Tribunal noted an amendment shifting the burden on the assessee to prove a reasonable cause for the failure, which was not considered in the cited judgments due to different statutes and timelines.

The Tribunal delved into the historical context of penalties for non-filing of returns under section 206, emphasizing the seriousness of such offenses and the legislative amendments to facilitate penalty imposition. It was noted that the mere payment of tax deducted at source did not fulfill the purpose of filing a return under section 206, as it allowed for proper verification and checking. The Tribunal found that the failure to file the return, even after a show-cause notice, indicated a conscious disregard of obligations, justifying the penalty imposition based on the principles outlined in previous judgments.

In conclusion, the Tribunal upheld the penalty as sustained by the CIT(A) and dismissed the assessee's appeal, emphasizing the seriousness of the offense and the conscious disregard of obligations by the assessee.