2020 (10) TMI 647 - AT - Income Tax

Penalty u/s 272A(2)(k) - delay in furnishing quarterly returns/statements - penalty restricted for the period from the date of payment of TDS where the tax was paid late up to the date of filing of TDS statement, since before the payment of TDS, e-TDS return could not be furnished - HELD THAT - In the instant case, assessee was in acute shortage of money, as the real estate business was in recession and it had hit the cash flow of the assessee. Assessee incurred huge loss from financial year 2008-09 onwards. For the assessment year 2008-09, assessee had incurred a loss of ₹ 36.21 crores and ₹ 363.93 crores for the financial year 2009-10. These losses continued to pile up for the subsequent financial years also. Due to this assessee company could not pay TDS on time. The e-TDS statement u/s 200(3) of the Act can only be filed after paying the taxes to the Central Government. Quarterly return of the TDS requires filling of date relating to payment of taxes. Therefore, such returns could be filed only after paying the tax to the Central Government account - Default in non-paying the taxes to the Central Government account in time or for non-deducting the tax at source, there are other provisions for ensuring compliance. In case the assessee fails to deduct tax at source or after deducting fails to pay the same to the Central Government account, the assessee is deemed to be in default u/s 201(1). Assessee is also liable to pay interest for the period of default till the payment of tax u/s 201(1A) of the Act. The assessee is also liable for penalty u/s 271C of the Act and prosecution u/s 276B - Therefore, the period levying the penalty has to be counted from the date of payment of tax because the delay in filing the return till the date of payment of tax was already explained on the ground that the assessee could not pay the taxes for which separate penal provisions exist. We direct the A.O. to levy penalty u/s 272(2)(k) of the Act from the date of payment of TDS up to the date of filing of e-TDS statements, since e-TDS statement cannot be filed without payment of TDS to the credit of the Central Government account.

Summary

Issues:
- Whether the CIT(A) was justified in confirming the penalty imposed u/s 272A(2)(k) of the Income-tax Act, 1961.

Analysis:
1. The appeals were directed against two orders of CIT(A) for the assessment years 2010-11 & 2012-13. The common issue raised was whether the penalty imposed under section 272A(2)(k) of the Act was justified.

2. The penalty was imposed by Jt. CIT(TDS) for delayed filing of quarterly returns/statements. The Jt. CIT(TDS) relied on a Delhi High Court judgment, stating that non-furnishing of prescribed statements within the due date affects tax credit for TDS, justifying the penalty.

3. The CIT(A) upheld the penalty, emphasizing the technical nature of the requirement under section 200(3) and its impact on deductees' tax credit claims. The delay in filing caused difficulties for assessing officers, leading to justifiable penalties.

4. The assessee appealed to the Tribunal, arguing that the penalty should be restricted from the date of TDS payment to the filing date of the statement. The Tribunal referred to precedents from Cuttack and Pune Benches, modifying penalties based on payment dates.

5. The Tribunal considered the financial difficulties faced by the assessee, leading to delayed TDS payments. It noted that penalties should align with the date of TDS payment to the Central Government, as separate provisions exist for non-payment defaults.

6. Relying on judicial pronouncements, the Tribunal directed the Assessing Officer to levy penalties from the date of TDS payment up to the filing of e-TDS statements, as filing without payment is not feasible. The appeals were partly allowed based on this reasoning.