2018 (9) TMI 1740 - AT - Income Tax

Levying penalty u/s 272A(2)(k) for late filing of TDS returns - Person Responsible - reasonable cause for the failure as provided u/s 273B - Held that - In the absence of any specific order to deduct tax at source, refrained from doing so, presuming that it was being continued to be done by PCDA(WC) and it was only when ITO-TDS, issued notice to it requiring it to file TDS return vide letter dated 9.1.2014 that they come to know of the default and hence the delay. Copies of all correspondence in this regard were also placed. No infirmity in these facts have been pointed out to us by the Revenue. It is therefore abundantly clear that the Person Responsible had a bonafide reason for the delay in filing TDS returns. Being required to comply with the TDS requirements and compliances for the first time and that too not being specifically intimated to do so by the authority who was earlier doing it, the Person Responsible s belief that the authority was continuing to do so was a bonafide and reasonable belief. Filing of TDS return later on, only on being required to do so by the ITO TDS, automatically resulted in delay on account of a reasonable cause. There is no merit in the contention of the CIT(Appeals) that the penalty was justified considering the huge period of delay. The assessee having duly explained the cause for the delay. Person Responsible cannot be held responsible for the delay nor can be said to have consciously disregarded the obligation cast upon him. We hold that the assessee having shown reasonable cause for the delay in filing TDS return, no penalty u/s 272A(2)(k) of the Act is leviable and the same is, therefore directed to be deleted. - Decided in favour of assessee.

Summary

Issues:
- Appeal against penalty imposed under section 272A(2)(k) for late filing of TDS returns.

Analysis:
1. The appeal was filed against the penalty imposed under section 272A(2)(k) of the Income Tax Act for late filing of TDS returns for the assessment year 2012-13. The jurisdictional Assessing Officer observed a significant delay in filing the quarterly TDS statements by the assessee, ranging from 660 to 945 days beyond the due dates specified in the Act.

2. The assessee contended that the delay was due to the transition of TDS responsibilities from PCDA WC, Chandigarh to the assessee. The assessee claimed that they were only informed to obtain separate TAN, DDO Registration No., and other details on 27.03.2012, and they believed that PCDA WC was handling the TDS filings until they received a notice from ITO (IDS), Patiala.

3. The Joint Commissioner of Income Tax, TDS, Chandigarh, rejected the assessee's explanation and levied a penalty of ?1,61,390 under section 272A(2)(k). The CIT(Appeals) upheld the penalty, stating that the delay showed a conscious disregard of statutory obligations.

4. The ITAT Chandigarh, after hearing both parties and reviewing the submissions, found merit in the assessee's contentions. The tribunal held that the assessee had demonstrated a reasonable cause for the delay in filing the TDS returns. It was noted that the assessee acted promptly upon receiving the notice from ITO-TDS and there was a genuine belief that PCDA WC was handling the TDS compliance.

5. Consequently, the ITAT Chandigarh allowed the appeal, ruling that no penalty under section 272A(2)(k) was leviable due to the reasonable cause shown by the assessee. The tribunal emphasized that the delay was not due to any contumacious conduct but rather a genuine misunderstanding regarding TDS responsibilities. Hence, the penalty was directed to be deleted, and the appeal of the assessee was allowed.