2020 (1) TMI 1051 - AT - Income Tax

Penalty u/s.272A(2)(k) - no reasonable explanation for huge delay in filing the TDS Returns i.e. 24Q and 26Q statements by assessee - HELD THAT - The assessee is paying salary to his employees and he should have asked to the deductee for furnishing PAN before making salary payments. Assessee could not demonstrate that the assessee has furnished any reasonable cause for non-furnishing of PAN by the deductee so as to enable him to get the benefit of Section 273B and he has deducted TDS and deposited to the Government within the time with the prescribed authority. We understand that the MCL is a big company wherein tax experts are also working and this also not the first time scheme for filing return. TDS has been deducted and paid to the Government but in case of refund the exchequer suffers loss by way of interest on refund which has paid by the Income Tax Department to the deductee. The assessee could have asked to his employees to furnish their PAN by way of in writing so that it can be considered that there was a reasonable cause for not filing of PAN by the deductee, however, no such instance has been provided by the ld. AR of the assessee before us. The assessee was also not prevented by any reasonable cause for delay in filing the 24Q 26Q statements as required by the Act for all the quarters in a financial year. Quarterly filing TDS return has been introduced by the Government since 2003 which requires the quarterly submission of the TDS return with NSDL or other approved agencies by the Income Tax Departemnt. The assessee cannot escape himself for non-filing quarterly TDS merely stating that the PAN of the employees are not available . The penalty is provided in the Income Tax provisions u/s.272A(2)(k) is mandatory in nature except in case of reasonable cause proved by the assessee, which is lack in this case. Lower authorities are justified to impose the penalty as per the provisions of Section 272A(2)(k) - there is huge delay for filing the quarterly TDS return. - Decided against assessee.

Summary

Issues Involved:
Confirmation of penalty under section 272A(2)(k) of the Act for non-filing of TDS returns within the stipulated time.

Analysis:

Issue 1: Penalty under section 272A(2)(k) of the Act
The appeals were filed by the assessee against the CIT(A)'s orders for the assessment years 2008-2009, 2009-2010, and 2011-2012. The appeals were heard together and disposed of by a consolidated order. The primary issue in all the appeals was the confirmation of the penalty imposed by the Assessing Officer under section 272A(2)(k) of the Income Tax Act.

Issue 2: Reasonable Cause for Non-Filing of TDS Returns
The assessee, a public sector undertaking, argued that there was a reasonable cause for the delay in filing the TDS returns due to non-availability of PAN of the deductee. The assessee contended that there was no mens rea involved, and the tax was duly deducted and deposited within the stipulated time, causing no loss to the exchequer. The assessee sought immunity under Section 273B of the Act, citing a judgment of a coordinate bench of the Tribunal in a similar case.

Issue 3: Adjudication of Reasonable Cause
The Department, however, contended that the assessee failed to establish a reasonable cause for the delay in filing the TDS returns. It was highlighted that the penalty was primarily imposed for non-filing the quarterly TDS return for salary payments, where the PAN of the deductee should have been provided. The Department argued that the case law relied upon by the assessee was not applicable to the current scenario.

Issue 4: Tribunal's Decision
After considering the arguments from both sides and reviewing the case details, the Tribunal observed that the assessee did not furnish PAN of the deductee for salary payments, which was essential for filing TDS returns. The Tribunal noted that the assessee did not provide any reasonable cause for the delay or non-furnishing of PAN by the deductee. It was emphasized that quarterly TDS filing requirements had been in place since 2003, and the penalty under section 272A(2)(k) was mandatory unless a reasonable cause was proved, which was lacking in this case. The Tribunal upheld the lower authorities' decision to impose the penalty, as there was a significant delay in filing the TDS returns without a valid reason. Consequently, the appeals of the assessee for all the assessment years were dismissed.

In conclusion, the Tribunal upheld the penalty imposed by the lower authorities under section 272A(2)(k) of the Act for non-filing of TDS returns within the stipulated time, as the assessee failed to establish a reasonable cause for the delay.