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TMI Blog2000 (2) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... om public share holders through the broker. The broker is assigned the job of collection of FD as well furnishing of declarations in Form No. 15H where they are so required. In the year under appeal, the assessee was required to furnish 288 Forms 15H in respect of the parties on whose income the tax payable was nil. Shri RC Singh, the broker apprised the company that the necessary forms would be submitted in time. Since these were not given, they could not be submitted in time to the department. The broker gave the aforesaid certificates on12th August 1988 and they in turn were submitted on 13th August to CIT, the default occurred at the end of the broker who admitted it as per the affidavit given. Neither in the earlier assessment year nor in subsequent assessment year the assessee committed such a default. It only occurred in the year under consideration. Nevertheless, the CIT(A) while levying the default ignored the proviso to section 272A(1) which states that amount of penalty for failure in relation to a declaration mentioned in section 197A shall not exceed the amount of tax deductible or collectible as the case may be. Thus, this could not have exceeded an amount of Rs.1,74, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating to tax deduction at source and to counter the same. In case a lenient view is adopted the purpose for which the provisions are brought on the statute would fall. As regards proviso referred to by the learned AR, the same is not retrospective in effect and as such cannot be invoked for restricting the penalty. Responding to the arguments of the learned DR Shri Dinodia submitted that while he is supported in his contention by the various decisions of the Benches of the ITAT in regard to the proviso being of clarificatory in nature, there are number of judgments to the effect as under: 1. Mfg. Impex (P.) Ltd. v. Dy. CIT [1994-95] 26 BCAJ (Bom.) 961. 2. Superintending Engineer v. ITO [1996] 86 Taxman (Jp.-Trib.) 40. 3. Motisagar Estate (P.) Ltd. v. Dy. CIT [1993] 47 ITD 72 (Pune). 4. CIT v. Poddar Cement P. Ltd. [1997] 226 ITR 625/92 Taxman 541 (SC). 5. Allied Motors P. Ltd. v. CIT [1997] 224 ITR 677 /91 Taxman 205 (SC). 3. As the matter relates to the procedure, the same has to be interpreted being retrospective in nature. 4. We have carefully considered the rival submissions and have also gone through the decisions referred to by the learned AR. Admittedly, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its broker was ignorant about the provisions of law. On the other hand, the very fact that in the earlier as well in the subsequent assessment years, the assessee has complied with the provisions of law show that being fully aware of the provisions, the delay occurred at its hand. Accordingly, the decision rendered in the case of Sudharshan Auto General Finance does not help the assessee. So would be the decision in the case of Bansal Bros. where it was shown that there was a bona fide belief on the part of the assessee that no obligation to file return under section 206 of the Act existed. Similarly, the facts available in the case of Mahendra Sharaf are different from that of the assessee. In the aforesaid case, the late deposit of return under section 206 was on account of late receipt of TDS book. In the circumstances, since the assessee could not furnish the reasonable cause on its part. The minimum penalty does become impossible. This would, however, work out to Rs.13,300. This also would be in fitness with the default committed by the assessee. As regards the proviso to section 272A(2) inserte w.e.f.1-10-1991, we agree wit the assessee's counsel that this is merely clarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required to furnish 288 Forms No. 15H in respect of parties on whose income the tax payable was nil. The company engaged the services of one Shri R.C. Singh, the broker, who arranged F.Ds. assured the assessee-company that the necessary forms would be submitted in time. But he could not do so and as these forms were not given by the said broker so the assessee-company could not submit these forms to income-tax department within the prescribed time. However, the broker gave these Forms No. 15H on 12th August, 1988 and they were submitted on 14th August, 1988 to CIT, Rohtak, who is the concerned CIT and default occurred at the end of the broker, who admitted it as per his affidavit which was filed in penalty proceedings before CIT and copy placed at page 15 of the paper book. It was also submitted by learned counsel for the assessee that neither in the earlier assessment year nor in the subsequent assessment years, the assessee committed any such default and it only occurred in the year under consideration for which there was a reasonable cause which was shown to ld. CIT in response to show-cause notice. It was further contended that while taking action for default of the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a reasonable cause and the penalty levied deserves to be cancelled. In the case of assessee, the default if at all was there that lay on the part of the broker for which the assessee could not furnish Form No. 15H in time. Further assessee's counsel relied upon various decisions of ITAT as in Bansal Bros.' case Mahendra Sharaf's case and Mahavir Agency. It was also submitted that there is absolutely no motive or vested interest and deliberate attempt to evade the responsibilities under section 197A. The learned counsel further submitted that provisions of section 272A(2)(f) covers only a case where there is total failure on the part of the assessee to deliver the declarations in the prescribed Form No. 15H and would not cover within its ambit case of delayed submission of Form No. 15H. It was also submitted that provisions of section 197A(1) prescribed that no deduction of tax at source under section 194A shall be made if such person (the recipient of the interest) furnishes to the person responsible for paying any income of the nature referred to in section 194A, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause shown by the assessee-company was found to be sufficient or reasonable learned Commissioner of Income-tax was justified in imposing the impugned penalty and same deserves to be confirmed. As regards proviso referred to by learned AR in his arguments is concerned, it was submitted that same is not retrospective in effect and as such cannot be invoked in restricting the penalty. As on the date of commission of default, there was no such proviso so penalty is imposable as has been proposed. 5. To counter the submissions of learned Departmental Representative, Shri Pradeep Dinodia, learned counsel for the assessee submitted that so far as retrospectivity of proviso to the said section is concerned, he is supported in his contention by the various decisions of the Tribunal and other judgments of Hon'ble Supreme Court as detailed below: 1. Manufacturing Impex (P.) Ltd's case 2. Superintending Engineer's case 3. Motisagar Estate (P.) Ltd.'s case 4. Poddar Cement (P.) Ltd.'s case 5. Allied Motors (P.) Ltd.'s case 6. It was thus pleaded by learned counsel for the assessee that as matter relates to procedure the same has to be interpreted being retrospective in nature as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and facts and circumstances and are of the view that firstly, this is a case where assessee has pleaded of reasonable cause in furnishing Form No. 15H late and in support filed affidavit of the agent, who was assigned the job of collecting amounts of FD's and collecting Form 15H wherever required and owing to his difficulties, submission of these forms got delayed, and revenue authority has neither summoned the broker nor held the contents of the affidavit to be incorrect. 9. After looking into the plea taken, affidavit filed and facts and circumstances, I am of the view that provisions of section 273B are fully applicable to this case as assessee had bona fide reason which constitutes sufficient cause for having filed the declarations in Form 15H late, therefore, penalty as imposed is not imposable in this case and while accepting the appeal of the assessee, I order deletion of entire penalty. 10. Since there is difference of opinion between both the Members, constituting the Bench, on the point as to whether there was a reasonable and sufficient cause for delay in submission of declaration in Form 15H or not, so matter now shall be referred to Third Member under section 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I will like to reproduce relevant portion of sections 197A(1) and 272A(2)(f) as under: "Section 197A(1A) - Notwithstanding anything contained in section 194A or section 194K, no deduction of tax shall be made under either of the said sections in the case of a person (not being a company or a firm), if such person furnishes to the person responsible for paying any income of the nature referred to in section 194A or section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax included in computing his total income of the previous year in which such income is to be included in computing his total income will be nil. (2) The person responsible for paying any income of the nature referred to in sub-section (1) or sub-section (1A) shall deliver or cause to be delivered to the Chief Commissioner or Commissioner one copy of the declaration referred to in sub-section (1) or sub-section (1A) on or before the seventh day of the month next following the month in which the declaration is furnished to him. 272A(2).--If any person fails (a) to comply with a notice issued under sub-section (6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT v. National Taj Traders [1980] 121 ITR 535 and in the case of Orissa State Warehousing Corpn. v. CIT[1999] 103 Taxman 623 (SC). While concurring with the view of learned CIT I uphold his action for imposing penalty to be worked out by taking default for period of 133 days in respect of each of 288 Forms 15H as all these forms were filed late but so far as restricting the amount of penalty to the extent of tax payable in view of proviso to section 272A(2) of the Act is concerned, I am fully in agreement with the plea of the assessee's representative that penalty could not exceed total amount deductible. No doubt the amendment to this effect was carried out by Finance No. (2) Act of 1998 w.e.f. 1-4-1999 but since this insertion which is applicable w.e.f. 1-4-1999 is clarificatory in nature and same can be safely interpreted to have retrospective effect and for this proposition, the decision as cited by learned counsel for the assessee fully supports it wherein their Lordships of Hon'ble Supreme Court in the case of Allied Motors (P.) Ltd. and Poddar Cement (P.) Ltd's case that provisions which are clarificatory and procedural in nature to be applied retrospectively. To my mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te rest of penalty. 15. As a result, assessee gets relief of Rs.36,55,368 (Rs.38,30,400 - Rs.1,74,032) and its appeal is accepted in part, in second situation as stated above. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Since in the above captioned appeal we have difference of opinion on the following point, the matter is submitted to the Hon'ble President for reference to the Third Member:-- On the facts and in the circumstances of the case whether penalty order of the Accountant Member or Judicial Member is to be upheld?" ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Since in the above captioned appeal, we have difference of opinion on the following points, the matter is submitted to the Hon'ble President for reference to the Third Member: "1. Whether, in view of facts and circumstances, the order, restricting the penalty to Rs.13,300 @ Rs.100 per day ignoring number of forms not furnished in place of Rs.38,30,400 imposed by CIT by rejecting the contention of the assessee that it was prevented by sufficient and reasonable cause, is justified or order deleting the entire penalty accepting the plea of the assessee about reasonable and suffici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is estimated total income of the previous year in which such income was to be included in computing his total income was nil then to pay the interest payable to him without deducting tax at source. The person responsible for paying interest to the depositor was required as per the provisions of sub-section (2) of section 197A to deliver or cause to be delivered to the Chief Commissioner or Commissioner one copy of the declaration in Form No. 15H on or before the 7th day of the month next following month in which the declaration was furnished to him. 5. On perusal of the record, in the Department, the CIT found that the assessee furnished the declaration in Form No. 15H in respect of 288 depositors on17-8-1998. He issued a show-cause asking the assessee to explain why penalty under section 272A(2)(f) be not levied for late submission of the Form 15H. In reply filed to the show-cause notice, it was stated that the delay in submitting Form No. 15H had occurred because: "(i) M/s. EFAL had invited deposits from the public and appointed broker to assist in this effort. The company's deposits are mainly from Faridabad/Delhi and have been obtained through the active assistance of broke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Form 15H were furnished by the depositor before 31-3-1998, those forms had been received in the Department on 17-8-1998 against due date of 7-4-1998 which was in contravention of the provisions of law. The CIT therefore held that the assessee was liable to penalty under section 272A(2)(f) and accordingly he levied penalty of Rs.38,30,400 for the delay of 133 days in respect of each of the 188 forms. 7. Aggrieved by the assessee preferred appeal before this Tribunal. 8. It was submitted on behalf of the assessee before the Division Bench that the penalty levied was unwarranted and uncalled for because the broker Shri R.C. Singh could give the declaration in Form 15H to the assessee on 12th August, 1998 and they were submitted by the assessee to the CIT on 17th August, 1998. It was contended that the default had occurred at the end of the broker who had admitted it under affidavit given. Neither in the earlier assessment nor in subsequent assessment year the assessee had committed such a default. It was further submitted that the assessee had asked the broker to give From 15H in time and the broker had promised to do the same in time. However, since the depositors could not sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s: (1) Mfrs. Impex (P.) Ltd's case (2) Superintending Engineer's case (3) Motisagar Estate (P.) Ltd's case (4) Poddar Cement (P.) Ltd's case (5) Allied Motors (P.) Ltd's case. He contended that as the matter relates to the procedure, the same has to be interpreted as being retrospective in nature. 14. The ld. AM after due consideration of the materials on the file and the submissions of the rival parties, came to the view that there was no reasonable cause for the delay in submitting Form 15H. Nowhere in his affidavit the broker had given the reasons for furnishing the declaration in Form 15H late to the assessee. It was the duty of the assessee to collect Form 15H from the broker who was his agent in time. The circumstances in which the assessee could not collect the declaration in Form 15H in time and the difficulty if any felt in collection of the same had not been detailed before the Division Bench. The decisions relied upon by the assessee were distinguishable on the facts of the present case. 15. However, she accepted the assessee's contention that the proviso to section 272A(2) inserted w.e.f.1-10-1991was of clarificatory nature and had retrospective effect. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons made before the Division Bench which have been elaborately discussed in the proposed order of the ld. AM and in the dissent note of the ld. JM. The submissions and contentions of the rival parties have also been discussed in this order as above. I do not consider it necessary to repeat the same again here. However ld. DR. raised one new point that assessee had committed default in not deducting tax from interest when Form 15H had not been filed by depositors by31-3-1998. 20. I would first take up the points of difference proposed by the ld. AM and by the ld. JM separately to be referred to Third Member and decide which of the two is relevant for consideration for deciding the issue in question. The ld. AM proposed the point of difference in a broader manner which could cover all the points of difference between them, inasmuch as, according to her the finding should be obtained from Third Member whether the proposed order of the ld. AM was correct or the view of the ld. JM was to be upheld. 21. The ld. JM on the other hand proposed two points for consideration of the Third Member. In point No. 1. He raised the issue whether the ld. AM was correct in reducing the penalty to R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollect necessary Form 15H and furnish the same to the company. However, this was done only at the time of filing of return in Form 26A when the complete reconciliation of interest paid etc. was carried out. The broker had then proceeded to collect the forms and filed with the company. On receipt of the forms they were immediately filed with the Department on17th August, 1998. It was further explained to the CIT in the course of penalty proceeding that the delay in delivery of forms to the company was caused owing to the difficulties faced by the broker at his end. Affidavit from the broker in this regard was enclosed. It was contended that the delay in submission of forms if any was only for reasons beyond the control of the company. It was further contended that there was no intent on the part of the company to delay submission of the form or deduction of tax. I am of the view that the CIT himself should have felt convinced in the course of penalty proceedings that there was reasonable cause for the delay in submitting Form 15H by the assessee. It had been abundantly explained that the circumstances under which the Forms 15H were received by the broker from the depositors late wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en he gave them to the assessee. The assessee submitted the same to the CIT on14-8-1998and thus there was no default for which the assessee could be liable to penalty under section 272A(2)(f). There was no cause for action under section 272A(2)(f) as the assessee had not committed default under section 197(2). In this view of the matter also penalty under section 272A(2)(f) was not exigible in the case. 26. In the above view of the matter, I would subscribe to the view of the ld. JM that there was reasonable cause for the delay in submitting Form 15H and hence no penalty was exigible in the case. After holding as above that there was reasonable cause for the delay and hence penalty under section 272A(2)(f) was not exigible in the case, there remains no need to go into the difference between the ld. AM and the ld. JM regarding the quantum of penalty. However, since the reference to me for opinion as Third Member covered the difference on quantum of penalty also, I would like to dwell upon it also and give my opinion. 27. It will be seen that there was agreement between the ld. AM and the ld. JM on the issue that the proviso to section 272A(2) was clarificatory in nature and hen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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