2016 (8) TMI 508 - HC - Income Tax

Penalty under section 272A(2)(k) - technical default in filing returns late on the part of the appellant - non reasonable cause - Held that - here was a delay of nearly five years in filing the deduction of tax at source returns/statements as is discernible from the perusal of Form No. 26Q reproduced above for the financial year 2008-09 relating to the assessment year 2009-10. No plausible explanation had been tendered by the assessee for filing the tax deducted at source returns belatedly and, therefore, the benefit under section 273B of the Act could not be given. Moreover, the authorities below had noticed that the appellant was supposed to mandatorily file the tax deducted at source returns within the prescribed time as provided under rule 31A(2) of the Rules. Since the appellant had failed to do so, it had rightly been treated to be in default for not filing the tax deducted at source returns within the prescribed period. Further, it had also been recorded that the penalties under section 272A(2)(k) of the Act have rightly been imposed upon the appellant in all the three financial years. The assessee had failed to explain that there was any reasonable cause or failure to comply with the provisions of law and the authorities below had concurrently concluded that there was delay in filing the tax deducted at source returns without any justifiable reason or cause. - Decided against assessee

Summary

Issues:
- Interpretation of penalty under section 272A(2)(k) of the Income-tax Act
- Compliance with filing requirements for tax deducted at source returns
- Justification for delay in filing returns
- Application of the concept of "no loss of revenue" in penalty imposition

Interpretation of Penalty under Section 272A(2)(k) of the Income-tax Act:
The judgment concerns a bunch of three appeals where the main issue revolves around the penalty imposed under section 272A(2)(k) of the Income-tax Act. The appellant contested the penalty of Rs. 4,84,945, arguing it was unwarranted, citing provisions of the Act and reasonable cause for the delay in filing tax deducted at source returns. The court examined the relevant statutory provisions, emphasizing the importance of timely filing of tax returns to facilitate proper assessment by the tax department.

Compliance with Filing Requirements for Tax Deducted at Source Returns:
The case involved the appellant filing TDS returns late for multiple quarters, leading to penalties imposed under section 272A(2)(k) of the Act. The court highlighted the mandatory nature of filing TDS returns within prescribed periods, as per Rule 31A of the Income-tax Rules. The appellant's failure to provide a plausible explanation for the delays led to the dismissal of claims for benefits under section 273B of the Act.

Justification for Delay in Filing Returns:
The appellant's arguments regarding reasonable cause for the delay in filing TDS returns were scrutinized by the court. Despite referencing judgments from various High Courts, the court maintained that the penalties were rightfully imposed due to the appellant's failure to comply with filing requirements within the specified timelines. The court emphasized the legislative intent behind penal provisions and the necessity of enforcing legal obligations to ensure proper tax assessment.

Application of the Concept of "No Loss of Revenue" in Penalty Imposition:
The court rejected the appellant's contention of "no loss of revenue" as a basis for canceling the penalties. It clarified that penalties under section 272A(2)(k) were not solely linked to direct revenue loss but aimed at enforcing compliance with filing obligations. The court upheld the penalties, noting that delayed filing could impact deductees and hinder proper revenue assessment. The judgment concluded that the penalties were rightly imposed, dismissing the appeals for lack of merit and finding no substantial question of law for consideration.