2021 (8) TMI 218 - AT - Income Tax

Levy of penalty u/s. 272A(2)(k) - belated filing of TDS returns u/s. 200(3) r.w.r. 31A of the IT Rules, 1962 for the various quarters of A.Y. 2008-09 - HELD THAT - There is a delay in filing of quarterly returns by the assessee, the same in the peculiar facts and circumstances of the instant case, would only amount to technical venial breach committed by the assessee. The very purpose of filing of quarterly TDS returns within time is only to ensure that the deductees are given due credit of TDS in their respective returns of income. In the instant case, the assessee had also submitted before the CIT(A) that deductees had indeed claimed credit for TDS in their returns of income. We hold that assessee was prevented from reasonable cause in not filing its TDS returns within prescribed time and in any case had not created any loss to the exchequer by way of delayed remittance of TDS. There is only a mere procedural delay of electronically filing its TDS returns. In our considered opinion, no penalty could be levied for a mere technical venial breach on the part of the assessee. Reliance in this regard is also placed on the decision of the Hon'ble Madras High Court in the case of CIT vs. Arunachalam 1994 (1) TMI 65 - MADRAS HIGH COURT We hereby direct the ld. AO to delete the penalty levied u/s. 272A(2)(k) of the Act in the peculiar facts and circumstances of the case. Accordingly, the grounds raised by the assessee are allowed.

Summary

Issues: Whether the levy of penalty u/s. 272A(2)(k) of the Income Tax Act, 1961 was justified in the case of delayed filing of TDS returns by the assessee for A.Y. 2008-09.

Analysis:
The Appellate Tribunal ITAT Mumbai heard the appeal regarding the imposition of a penalty under section 272A(2)(k) of the Income Tax Act, 1961 for the assessment year 2009-10. The main issue was whether the Commissioner of Income Tax (Appeals) was correct in confirming the penalty in the given circumstances. The assessee, an individual, had complied with tax deduction provisions except for the delayed filing of TDS returns for A.Y. 2008-09. The delay led to a penalty of ?1,47,668 imposed by the assessing officer. The assessee explained that due to changes in data structure for e-TDS statements, collecting PANs of all parties became cumbersome, resulting in delayed filing. However, all deducted taxes were duly remitted to the government on time, causing no loss to the exchequer. The Tribunal found the delay to be a technical venial breach, emphasizing that the purpose of timely TDS returns is to ensure deductees receive credit. The Tribunal referred to a decision by the Madras High Court to support its conclusion. Consequently, the penalty was deemed unjustified, and the assessing officer was directed to delete it, allowing the appeal of the assessee.

In conclusion, the Tribunal held that the delay in filing TDS returns by the assessee, despite being a technical breach, did not result in any loss to the government. The Tribunal emphasized the importance of ensuring deductees receive credit for TDS and concluded that the penalty under section 272A(2)(k) was unwarranted in the peculiar circumstances of the case. The decision was based on the principle that penalties should not be levied for minor technical breaches that do not harm the exchequer. The Tribunal directed the assessing officer to delete the penalty and allowed the appeal of the assessee.