2016 (5) TMI 1109 - HC - Income Tax

Penalty under Section 272A(2)(k) - non filing of e-TDS statement - e-TDS statements were submitted on 8.2.2013 and 9.2.2013 for the Assessment Year 2008-09 - Held that - It is necessary for the deductor to file e-TDS statements in time so as to enable the processing of the returns in time. The Assessing Authority has also emphasised this aspect in the order dated 22 April 2013. It has been stated that filing of e-TDS statements not only increases the reach of the department but also leads to creation of an audit trial that can be utilized as an effective tool against detection of tax evasion. It is for this reason that stringent action is required to be taken for non-compliance. In such circumstances, it cannot also be urged by learned counsel for the appellant that no penalty could have been imposed for non-filing of the e-TDS statements in time as it has not resulted in any loss to the revenue. We are of the opinion that adequate opportunity had been granted to the appellant but the appellant failed to utilize the opportunities that had been granted. In fact even when the appellant had appeared through a counsel, only an adjournment was sought and even thereafter no explanation was offered before the Assessing Authority. However, an explanation was offered before the Appellate Authority which was taken into consideration and the penalty amount was suitably reduced as the case of the appellant that a regular Principal assumed charge on 25 January 2010 was accepted and the penalty was imposed after that date.

Issues Involved:

1. Justification of penalty under Section 272A(2)(k) for non-filing of e-TDS statements.
2. Consideration of the explanation provided by the College for non-filing of e-TDS statements.
3. Tribunal's rejection of the appeal without considering the merits.
4. Compliance with notice and timing of filing the e-TDS statements.

Issue-wise Analysis:

1. Justification of Penalty Under Section 272A(2)(k):

The High Court examined whether the Income Tax Appellate Tribunal and the authorities below were justified in levying the penalty under Section 272A(2)(k) of the Income Tax Act, 1961, for the non-filing of e-TDS statements. The College had failed to furnish e-TDS quarterly statements online for multiple assessment years, thereby violating the provisions of Section 200(3) of the Act. Despite notices issued on 12 October 2012 and 13 December 2012, the College did not comply. The Assessing Officer imposed a penalty of ?100 per day for the delay, as stipulated under Section 272A(2)(k). The court emphasized that timely filing of e-TDS statements is crucial for efficient tax administration and processing returns.

2. Consideration of Explanation Provided by the College:

The College argued that the delay in filing e-TDS statements was due to the absence of a regular Principal and administrative disruptions. The Commissioner of Income Tax (Appeals) acknowledged this explanation and reduced the penalty, computing it from 1 April 2010, when a regular Principal assumed charge. However, the Tribunal found that no satisfactory explanation was provided for the delay after 1 April 2010, and upheld the penalty. The High Court concurred, noting that the College had ample opportunity to provide an explanation but failed to do so adequately.

3. Tribunal's Rejection of the Appeal Without Considering the Merits:

The College contended that the Tribunal rejected the appeal outright without considering the merits. The Tribunal noted that the College had been deducting tax but not filing the e-TDS statements timely, and sufficient time was granted to furnish a reasonable cause. The High Court supported the Tribunal's decision, stating that the College did not utilize the opportunities provided to explain the delay.

4. Compliance with Notice and Timing of Filing the e-TDS Statements:

The College filed the e-TDS statements on 8 February 2013 and 9 February 2013, after the final notice dated 13 December 2012. The High Court highlighted that despite the application for an extension submitted on 16 January 2013, the College did not furnish the statements or an explanation within the requested time. The court emphasized that the requirement to file e-TDS statements on time is critical for the tax administration system's efficiency and that non-compliance warranted stringent action.

Conclusion:

The High Court dismissed the appeal, concluding that the substantial questions of law did not arise for consideration. The court affirmed that adequate opportunities were provided to the College, but it failed to utilize them. The penalty imposed was justified due to the College's non-compliance and the necessity of timely e-TDS statement filing for effective tax administration.

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