2024 (9) TMI 14 - AT - Income Tax

Levy of penalty u/s 272A(2)(g) - Period of limitation to issue penalty notice - not issuing the TDS certificate in Form 16A to the deductees in time - whether the limitation would have to be reckoned from 2.6.2015 (being the date of reference made by ld. ACIT to JCIT) or from 30.11.2015 (being the date of issuance of show cause notice by JCIT to the assessee)? - HELD THAT - This issue is no longer res integra in view of the decision of Sunil Dandriyal 2023 (11) TMI 1283 - ITAT DELHI wherein held where the AO has initiated the penalty proceedings in his/her assessment order, the said date is to be taken as the relevant date as far as the section 275(1)(c) is concerned - quantum proceedings were completed by the AO on 17th/18th December, 2008, and the AO initiated the penalty proceedings in December, 2008, thus, the last date by which the penalty order could have been passed is 30th June, 2009. The six months from the end of the month from which action of imposition of penalty was initiated would expire on 30th June, 2009. In this case, admittedly, the penalty order(s) were passed on 29th September, 2009, and therefore, the ITAT rightly concluded that the order(s) were barred by limitation. Consequently, we answer the question of law against the Revenue and in favour of the Assessee by holding that, in the facts and circumstances of the present appeals, the ITAT was correct in law in deleting the penalty imposed by the ACIT, under section 271D on the ground that the penalty order(s) dated 29th September, 2009, was passed beyond the time period prescribed by Section 275(1)(c). In view of the aforesaid observations and respectfully following the judicial precedent relied upon hereinabove, we hold that the penalty order passed on 27.5.2016 is barred by limitation and hence quashed. Even on merits, the issue is covered by the decision of Dhir Global Industries (P) Ltd. 2008 (7) TMI 6 - HIGH COURT DELHI wherein it was held as examined Form 16-A, which is a form in which the TDS certificate is to be issued in terms of rule 31(1)(b) of the Income-tax Rules, 1962. It is apparent from an examination of the said form that the TDS certificate can only be issued after the TDS amount is deposited with the Central Government in the bank. The details of the challan through which the deposit has been made are also required to be filed in the said certificate. Therefore, it cannot be said that the issuance of the TDS certificate is independent to the making of the TDS deposit. Once the explanation of delay in making the deposit has been accepted, there is no reason as to why the same cannot be used for the purposes of delay in the issuance of the TDS certificate. These appeals are dismissed. Hence the penalty levied u/s 272A(2)(g) is hereby deleted. Accordingly, the grounds raised by the assessee are allowed.

Summary

Issues Involved:
1. Justification of penalty under Section 272A(2)(g) of the Income-tax Act, 1961.
2. Limitation period for passing the penalty order under Section 275(1)(c) of the Income-tax Act, 1961.

Issue 1: Justification of Penalty under Section 272A(2)(g) of the Act

The primary issue in this appeal is whether the Commissioner of Income Tax (Appeals) [CIT(A)] was justified in confirming the levy of penalty under Section 272A(2)(g) of the Income-tax Act, 1961. The penalty in question is imposed for not issuing the TDS certificate in Form 16A to the deductees within the stipulated time. The appellant argued that due to financial crunch, there was a delay in remitting the TDS amounts to the Central Government, which subsequently delayed the issuance of Form 16A. The fact that the assessee was facing financial difficulties was not disputed by the revenue. It was also noted that no adverse action was taken against the assessee for the delayed remittance of TDS with interest. Given that the TDS remittance details and challan numbers must be reflected in Form 16A, the delay in issuing the certificates was due to a reasonable cause.

Issue 2: Limitation Period for Passing the Penalty Order under Section 275(1)(c) of the Act

A crucial aspect of the case is whether the penalty order passed on 27.05.2016 by the Joint Commissioner of Income Tax (JCIT) was barred by limitation as per Section 275(1)(c) of the Act. The dispute revolves around whether the limitation period should be reckoned from 02.06.2015 (the date of reference by the Assistant Commissioner of Income Tax (ACIT) to JCIT) or from 30.11.2015 (the date of issuance of the show-cause notice by JCIT). The appellant contended that the penalty order should have been completed by 31.01.2016, while the respondent argued that the order passed on 27.05.2016 was within the statutory time limit when reckoned from 30.11.2015.

This issue was addressed by referring to a precedent set by the Tribunal in the case of Sunil Dandriyal vs JCIT, which established that the limitation period should be reckoned from the date the ACIT made the reference to the JCIT, not the date of issuance of the show-cause notice. According to Section 275(1)(c), the penalty order should be passed within six months from the end of the month in which the penalty proceedings were initiated. In this case, the reference was made on 02.06.2015, making the deadline for passing the penalty order 30.11.2015. Therefore, the penalty order passed on 27.05.2016 was barred by limitation.

Conclusion:

In light of the above observations and judicial precedents, the Tribunal held that the penalty order passed on 27.05.2016 was barred by limitation and thus quashed it. Additionally, on merits, the issue was covered by the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs Dhir Global Industries (P) Ltd, which stated that the issuance of the TDS certificate is dependent on the deposit of TDS amounts. Since the delay in depositing TDS was accepted, the delay in issuing the TDS certificate was also justified. Consequently, the penalty levied under Section 272A(2)(g) was deleted, and the appeal of the assessee was allowed. The order was pronounced in the open court on 13/02/2024.