2008 (12) TMI 333 - HC - Income Tax

Penalty under section 272A Failure to submit certificate of TDS The assessee firm failed to file the certificate in Form 16A of tax deducted at source as required under section 203 for the FY 1997-98. the assessee filed the certificate on December 24 1998, whereas the last date of filing was April 30, 1998, thus penalty imposed under section 272A. Held-that the assessee had not proved that there was reasonable cause for the failure, as a complaint petition was filed impleading the managing partner as accused and it was on November 6, 1998 that the court passed the order for issuance of process for arrest of the managing partner and partners of the assessee firm. The last day for filing of the certificate was 30th April 1998. thus there is no reasonable cause and, therefore, the Tribunal was justified in affirming the penalty imposed under section 272A(2)(g).

Issues Involved:
1. Imposition of penalty under section 272A(2)(g) of the Income-tax Act.
2. Whether the assessee was prevented by reasonable cause from filing the certificate in time.
3. Nature of the breach (whether venial or technical) and its impact on penalty imposition.

Detailed Analysis:

1. Imposition of Penalty under Section 272A(2)(g) of the Income-tax Act:
The appellant, a partnership firm, failed to file the certificate in Form No. 16A as required under section 203 of the Income-tax Act within the prescribed time for the financial year 1997-98. The certificate was filed with a delay of 237 days. The Assessing Officer issued a notice under section 272A of the Act and imposed a penalty of Rs. 29,525, later reduced to Rs. 23,700 by the Commissioner of Income-tax (Appeals). The Tribunal upheld the penalty, stating that the assessee did not show a reasonable cause for the delay. The High Court concurred, affirming that the assessee failed to furnish the certificate within the prescribed time and thus the penalty was justified.

2. Whether the Assessee was Prevented by Reasonable Cause from Filing the Certificate in Time:
The assessee argued that a criminal case against its managing partner caused the delay. However, the Tribunal and the High Court found that the assessee did not prove that the criminal case was a reasonable cause for the delay. The Court emphasized that "reasonable cause" must have a direct nexus to the failure to comply with the law. The Court concluded that the assessee was not prevented by reasonable cause from filing the certificate on time.

3. Nature of the Breach (Whether Venial or Technical) and its Impact on Penalty Imposition:
The assessee contended that the breach was venial or technical and should not attract a penalty. The High Court rejected this argument, distinguishing the present case from the precedents cited by the assessee. The Court noted that in cases where the breach is bona fide or technical, penalties might not be imposed. However, in this case, the assessee did not act under a bona fide belief that it was not required to file the certificate. The Court held that the failure to file the certificate was a deliberate defiance of the law, and thus, the penalty was justified.

The High Court also addressed the argument that no loss to the Revenue occurred due to the delay. The Court stated that the statutory obligation to file the certificate on time must be fulfilled regardless of any loss to the Revenue. The Court found no merit in the appeal and dismissed it.

Conclusion:
The High Court upheld the imposition of the penalty under section 272A(2)(g) of the Income-tax Act, finding that the assessee failed to show a reasonable cause for the delay and that the breach was not merely technical or venial in nature. The appeal was dismissed without any order as to costs.

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