2021 (9) TMI 622 - AT - Income Tax

Levy of penalty u/s.272A(2)(k) - assessee-deductor had not filed quarterly TDS statements in Form No.24Q and 26Q for all the four quarters of the F.Y.2008-09 within the time prescribed by the I.T. Act - HELD THAT - We find from the penalty order that the assessee has not filed TDS returns in the prescribed forms 24Q and 26Q for all the quarters within the stipulated time and, therefore, the AO levied penalty @ 100/- per day for delay in default for filing of TDS returns. Further, we find from the orders of authorities below that the entire tax along with interest thereon had been deposited in to Govt. account and later, the assessee filed quarterly TDS returns for all the quarters. The issue in dispute is squarely covered by the decision of MAHARASHTRA JEEVAN PRADHIKARAN WORKS DIVISION 2021 (5) TMI 584 - ITAT PUNE we set aside the order of the CIT(A) and direct the AO to delete the penalty levied u/s 272A(2)(k) in the hands of the assessee. Accordingly the grounds raised by the assessee on this issue are allowed.

Issues Involved:
1. Justification of penalty for late filing of TDS returns.
2. Consideration of reasonable cause for delay under section 273B.
3. Applicability of penalty for quarters with no transactions.
4. Treatment of procedural lapses and technical breaches.

Issue-wise Detailed Analysis:

1. Justification of Penalty for Late Filing of TDS Returns:
The assessee was penalized under section 272A(2)(k) of the Income Tax Act, 1961, for failing to file TDS quarterly returns in Forms 24Q and 26Q within the prescribed time for the financial year 2008-09. The AO observed that the assessee did not file the returns within the stipulated dates, leading to a calculated penalty of ?7,76,270/-. The CIT(A) upheld this penalty, leading to the assessee’s appeal before the ITAT.

2. Consideration of Reasonable Cause for Delay under Section 273B:
The ITAT examined whether the delay in filing TDS returns could be attributed to a reasonable cause, as per section 273B of the Act, which provides relief from penalties if a reasonable cause is established. The Tribunal referenced the decision in Maharashtra Jeevan Pradhikaran Vs. JCIT, where it was held that procedural lapses causing no loss to the revenue should not attract penalties. The Tribunal noted that the taxes were deducted and deposited in time, and the delay was only in filing the returns, which was a procedural lapse. The Tribunal emphasized that the provisions of section 272A(2)(k) are subject to section 273B, allowing for reasonable cause to be considered.

3. Applicability of Penalty for Quarters with No Transactions:
The assessee argued that penalties for non-filing of Form 24Q for quarters where no transactions occurred should not be imposed. The Tribunal acknowledged this argument, noting that penalties should not be levied where no TDS was required to be filed due to the absence of transactions.

4. Treatment of Procedural Lapses and Technical Breaches:
The Tribunal highlighted various judicial precedents where penalties were waived for procedural lapses that did not result in revenue loss. The Tribunal cited the case of Hindustan Steels Vs State of Orissa and other relevant cases, emphasizing that penalties should not be imposed for technical or venial breaches. The Tribunal concluded that the delay in filing TDS returns was a technical lapse, and since the taxes were already deposited, no prejudice was caused to the revenue.

Conclusion:
The ITAT set aside the CIT(A)’s order and directed the AO to delete the penalty levied under section 272A(2)(k) for all the assessment years under consideration. The Tribunal’s decision was based on the principle that procedural lapses causing no revenue loss should not attract penalties, and reasonable cause for delay should be considered under section 273B. The appeals were allowed, and the penalties were ordered to be deleted.

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