1997 (11) TMI 137 - AT - Income Tax

Summary

Issues:
- Imposition of penalty under section 272A(2)(c) of the IT Act for failure to deduct income-tax at source and submit annual return under section 206.
- Justification of penalty imposed by the Assessing Officer.
- Validity of penalty order in the absence of a fixed Principal Officer for a Partnership Firm.
- Requirement of submitting statement under section 206 even when tax at source has not been deducted.
- Reasonable cause for non-submission of the statement under section 206.

Analysis:
The case involved an appeal challenging the imposition of a penalty under section 272A(2)(c) of the IT Act for the assessment year 1992-93. The appellant failed to deduct income-tax at source under section 194C and did not submit the annual return under section 206 of the IT Act on time, leading to the penalty. The Assessing Officer imposed a penalty of Rs. 52,300, which was later revised to Rs. 19,978 by the ld. CIT (Appeals).

The appellant argued that the penalty was unjustified, contending that the Assessing Officer could have initiated penalty proceedings for non-deduction of tax at source under section 194C but not for non-submission of the statement under section 206. However, the Tribunal held that the appellant was required to deduct tax at source under section 194C and submit the statement under section 206, as these were separate obligations. The Tribunal emphasized that the statement under section 206 had to be filed regardless of whether tax at source had been deducted, as it served the purpose of providing details to the Assessing Officer for proper tax assessment.

Regarding the absence of a fixed Principal Officer for the Partnership Firm, the Tribunal clarified that in such cases, any partner could be considered the Principal Officer. The Tribunal found no reasonable cause for the appellant's failure to submit the statement under section 206, as the appellant wrongly failed to deduct tax at source based on the subcontractor's request.

Ultimately, the Tribunal upheld the penalty under section 272A(2)(c), confirming the levy of penalty on the revised amount of Rs. 19,978. The appeal was dismissed, and the penalty was deemed valid based on the appellant's non-compliance with tax deduction and submission requirements under the IT Act.