2017 (6) TMI 234 - AT - Income Tax

Levy penalty u/s 272A(2)(K) - failure to deliver a copy of the statement within the time specified in section 200(3) or proviso to section 206C (3) - Held that - In the instant case, there is no such factual situation before us rather there is a delay in filing of quarterly e-TDS returns which is covered under the provisions of section 272A(2)(C) of the Act. Hence, on this ground itself, where the Assessing Officer is not clear about basis of the charge, the levy of penalty cannot be sustained. The taxes have deducted and deposited at the prescribed rate with delay of few days. Hence, there is no loss to the Revenue which is caused due to the delay in filing of the e-TDS returns which is totally unintentional. Further, our attention was drawn to the decision of the Coordinate Benches in case of Collector Land Acquisition 2012 (5) TMI 50 - ITAT CHANDIGARH , UCO Bank (2013 (11) TMI 205 - ITAT CUTTACK) and SBI (2013 (10) TMI 1461 - ITAT CUTTACK) wherein non availability of PAN was held to be a reasonable cause for delay in filing of the e-TDS return. Given the pecularity of the facts in the present case where there was a change effected in the IT system for mandatory requirement of PANs of all deductees before the returns can be validated and uploaded, the fact that there were large number of deductees spread throughout the country and efforts were made by the assessee to obtain their PANs numbers, the fact that taxes have been deducted and deposited, hence no loss to the Revenue, we find that assessee has a reasonable cause for delayed filing of its e-TDS returns in terms of section 273B and the penalty under section 272(A)(K) is hereby deleted. - Decided in favour of assessee.

Issues Involved:
1. Levy of penalty under Section 272A(2)(K) of the Income Tax Act.
2. Delay in filing quarterly e-TDS returns.
3. Reasonable cause for the delay in filing e-TDS returns.
4. Interpretation of Section 273B regarding reasonable cause for failure.

Issue-wise Detailed Analysis:

1. Levy of Penalty under Section 272A(2)(K):
The assessee challenged the imposition of a penalty amounting to ?1,02,400/- under Section 272A(2)(K) for the delay in filing quarterly e-TDS returns. The Assessing Officer (AO) had imposed this penalty due to the delayed submission of the returns, with delays ranging from 97 to 401 days across four quarters.

2. Delay in Filing Quarterly e-TDS Returns:
The AO noted that the assessee had delayed filing the e-TDS returns for a total of 1024 days. The CIT(A) upheld the penalty, emphasizing that the delay was significant and indicated a willful attempt to avoid compliance with statutory provisions. The CIT(A) asserted that the penalty was mandatory under Section 272A(2)(K) unless reasonable cause for the delay was proven.

3. Reasonable Cause for the Delay in Filing e-TDS Returns:
The assessee argued that the delay was due to changes in the filing requirements introduced by the CBDT notification dated 31.5.2010, which mandated 100% valid PANs in the TDS returns. Given that the assessee was in its second year of incorporation and had a large number of deductees scattered across the country, collecting all PANs was challenging. The assessee contended that this constituted a reasonable cause under Section 273B, which should exempt them from the penalty.

4. Interpretation of Section 273B Regarding Reasonable Cause for Failure:
The assessee cited various precedents where delays in filing e-TDS returns due to non-availability of PANs were considered reasonable causes, and penalties were deleted. The cases included Branch Manager, State Bank of India v. ACIT, Collector Land Acquisition vs ACIT, and others. The assessee also pointed out that the taxes were deducted and deposited with only minor delays, causing no loss to the Revenue.

Tribunal's Decision:
The Tribunal noted that the penalty was incorrectly levied under Section 272A(2)(K) instead of Section 272A(2)(C), which pertains to the failure to deliver a copy of the statement within the specified time. On merits, the Tribunal acknowledged the changes in the e-TDS filing requirements and the difficulties faced by the assessee in collecting PANs from numerous deductees. The Tribunal also recognized that the taxes were deducted and deposited, and there was no loss to the Revenue. Given these circumstances, the Tribunal concluded that the assessee had a reasonable cause for the delay and deleted the penalty under Section 272(A)(K).

Conclusion:
The appeal filed by the assessee was allowed, and the penalty imposed under Section 272A(2)(K) was deleted. The Tribunal emphasized the reasonable cause for the delay, the lack of willful negligence, and the absence of any loss to the Revenue. The decision was pronounced in the open court on 24/05/2017.

← Previous Next →