2018 (5) TMI 342 - AT - Income Tax

Levy of penalty u/s 272A(2)(k)/ 274 r.w.s. 200(3) - late filing of TDS statements / returns - eligible reasons for delay - Held that - As the case of the assessee before us is that because of the requirement of e-TDS furnishing of TDS statement arising for the first time in assessment year 2011-12, there were problems faced by the assessee and hence, the delay in filing quarterly TDS return late and though the assessee had deposited tax at source in time, we hold that the assessee had reasonable cause in not furnishing the same in time and in view of the provisions of section 273B we hold that the assessee is not liable to levy of penalty under section 272A(2)(k) of the Act. AO is directed to delete the same. - Decided in favour of assessee.

Summary

Issues Involved:

1. Levy of penalty under section 272A(2)(k) of the Income-tax Act, 1961.
2. Applicability of section 273B in providing relief from penalty.
3. Reasonableness of the cause for delay in filing e-TDS returns.
4. Overlapping defaults and restriction of penalty to the first quarter.

Issue-wise Detailed Analysis:

1. Levy of Penalty under Section 272A(2)(k):

The primary issue in the appeal is the levy of penalty amounting to ?53,200 under section 272A(2)(k) of the Income-tax Act, 1961 for the third quarter of the assessment year 2011-12. The penalty was imposed due to the late filing of TDS statements, despite timely payment of TDS. The CIT(A) upheld this penalty, stating that section 273B does not cover section 272A(2)(k), thus mandating the penalty despite reasonable cause.

2. Applicability of Section 273B:

The Tribunal referred to the case of Nav Maharashtra Vidyalaya Vs. Addl. CIT (TDS) Range, where it was established that section 273B does indeed cover section 272A(2)(k). This section provides relief from penalty if the assessee can demonstrate a reasonable cause for the failure. The Tribunal reversed the CIT(A)'s finding that section 273B does not apply, emphasizing that reasonable cause can exempt the assessee from penalties under section 272A(2)(k).

3. Reasonableness of the Cause for Delay:

The Tribunal acknowledged the assessee's argument that the delay was due to the first-time implementation of e-TDS filing requirements in the assessment year 2011-12, coupled with technical difficulties and lack of support. The Tribunal noted that the system had 18 amendments to make it user-friendly, indicating inherent complications. Given these circumstances, the Tribunal found the assessee's cause reasonable, aligning with section 273B, and thus ruled that no penalty should be imposed.

4. Overlapping Defaults and Restriction of Penalty:

In cases where quarterly returns for the same assessment year were filed on the same date, the Tribunal agreed with the assessee's argument that penalties should be restricted to the first quarter's default. For overlapping defaults, no additional penalties should be levied. The Tribunal directed the Assessing Officer to verify and adjust the penalties accordingly, ensuring fair treatment.

Conclusion:

The Tribunal concluded that the assessee had a reasonable cause for the delay in filing e-TDS returns due to the initial implementation challenges and technical issues. Therefore, under section 273B, the penalty under section 272A(2)(k) should not be levied. The Tribunal directed the Assessing Officer to delete the penalty and allowed the appeal in favor of the assessee.