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TMI Blog2018 (10) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... iling system of filing TDS returns. The onus and burden was on revenue to provide necessary infrastructure so that tax-payer did not face any inconvenience in filing e-TDS returns. But as it is emerging from the historical factual matrix, the public at large faced lot of inconvenience in initial stage of switchover from manual to e-filing system of TDS returns due to several glitches. We have also noted the conduct of the assessee for subsequent periods wherein the TDS returns were e-filed in form no. 24Q, 26Q as well 27Q by the assessee mostly in time for financial year 2012-13, 2013-14 and 2014-15 and DR did not controvert the above filing of TDS such returns - Penalty not sustainable in the eyes of law as the assessee has shown a reasonable cause falling within parameters of Section 273B - Decided against revenue. - I.T.A. No.1999/Mum/2017 - - - Dated:- 5-10-2018 - Shri Mahavir Singh, Judicial Member And Shri Ramit Kochar, Accountant Member For the Assessee : Shri. Nitesh Joshi Shri. Anil Sathe For the Revenue : Shri. D.G Pansari , DR ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by assessee, being ITA No. 1999/Mum/2017, is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16.12.2011 :- TDS Return Periodicity Due date Date of filing Delay by days TDS amount Penalty (in Rs.) 24Q Q1 15.07.2010 7.3.2011 235 2324013 23500 24Q Q2 15.10.2010 9.03.2011 145 3357245 14500 24Q Q3 15.01.2011 9.03.2011 53 6236068 5300 24Q Q4 15.05.2011 13.06.2011 29 9662026 2900 46200 4. Aggrieved by the penalty of ₹ 46,200/- levied by the AO u/s. 272A(2)k) of the 1961 Act, the assessee filed first appeal with learned CIT(A) . Before the Ld. CIT(A) , the assessee submitted that not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS return was new at that stage which has led to these delays in filing of quarterly TDS returns in form no. 24Q with Revenue beyond the prescribed time. Attention was drawn to second reply date 03.11.2017 which is in continuation of the first reply again dated 03.01.2017 placed in paper book filed with the tribunal, wherein the assessee has explained that for financial year 2012-13, 2013-14 and 2014-15 which are subsequent to impugned year under consideration before the tribunal , the delay in filing of quarterly TDS return in form no 24Q/26Q as well 27Q has almost been eliminated and TDS returns was filed mostly in time . It s submitted that income-tax which were deducted at source were all paid in time to the credit of Central Government even in this year under consideration before the tribunal and no prejudice has been caused to the Revenue because of this late filing of TDS return which was claimed to be merely due to the new system of e-filing of the TDS return which was at the initial stages and several technological modifications were carried out by Revenue from time to time in enabling software for filing these e-returns causing lot of technical glitches, confusion and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46200 We have observed that the assessee has given explanation as to late filing of statement of quarterly TDS returns in form 24Q for the year under consideration as having employed more than 200 employees spread all over several locations across country making it difficult to collate the information to prepare these quarterly returns in time as these employees were travelling on official duties . It is also claimed that the PAN of all the employees was made mandatory in e-filing of statement of quarterly TDS returns without which the said e-TDS returns could not be filed/uploaded onto the Revenue s server/system. Secondly, it is also explained that due to new system of e-filing of TDS returns in form no. 24Q introduced by Department which was in the initial stages and in which several modifications in the formats/software s/system of e-filing of quarterly TDS return were made by Revenue from time to time apart from technical glitches in the working of Revenue s software/servers which caused these delays in filing of quarterly TDS returns in form no 24Q for financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Under Chapter XVII of the Act, duty is upon the person making certain payments to deduct tax at source under the respective sections. The said tax deducted at source is due to be the income received by the deductee as per section 198 of the Act. Section 199 of the Act further provides that where any deduction is made under the Chapter and paid to the Central Government, then the same is to be treated as payment of tax on behalf of the person from whose income such deduction is made. 18. Section 200 of the Act lays down the duty of the person deducting tax, which reads as under:- 200. (1) Any person deducting any sum in accordance with the foregoing provisions of this Chapter shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs. (2) Any person being an employer, referred to in sub-section (1A) of section 192 shall pay, within the prescribed time, the tax to the credit of the Central Government or as the Board directs. (2A) In case of an office of the Government, where the sum deducted in accordance with the foregoing provisions of this Chapter or tax referred to in sub-section (1A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities, or to the person authorized by such authority, statement in such form, verified in such manner, setting forth such particulars within such time as may be prescribed. Under section 200(3) of the Act, similar responsibility is on any person deducting any sum on or after first day of April, 2005 in accordance with foregoing provisions of the Chapter, including any person as an employer referred to in section 192(1A) of the Act. The onus is upon such person that he shall after paying the tax to the credit of Central Government within prescribed time, prepare such statement for such period as may be prescribed and deliver or cause to be delivered to the prescribed income tax authority or any person so authorized, such statement in such form and verified in such manner and setting forth such particulars and within such time as may be provided. The duty is upon a person deducting any sum in accordance with various provisions under the Chapter and also upon an employer who is making deduction out of the payments made to the employees, then sub-section (3) requires that the deductor is to prepare a statement for such period as may be prescribed, which is to be delivered to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has pointed out that there were about 18 amendments / corrections in this regard. In the present set of appeals before us admittedly, there was default in furnishing e-TDS statements late for the respective quarters by different assessee, but all relating to assessment year 2011-12. The question which arises for adjudication before us is whether in such cases where e-TDS was made compulsory for the instant assessment year and where the software was not user-friendly and required amendments at the end of the Government itself from time to time and the compliance being a complex procedure introduced for the first time and where originally the deductors were not in default in depositing the paper TDS returns, does the assessee deductor have reasonable cause for not furnishing the said e-TDS returns in time. In this regard, reference is to be made to the provisions of section 273B of the Act, where it has been provided that in case a person establishes or proves that he had reasonable cause for the failure to comply with the provisions of various sections provided in section 273B of the Act, then no penalty shall be imposable on such person for the said failure. Reading of section 273 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Bench of Tribunal in Central Scientific Instruments Organization's case (supra). One last aspect pointed out by the learned Authorized Representative for the assessee was that the CIT(A) has acknowledged that there was reasonable cause in not furnishing e-TDS returns in time. However, no benefit of the same was given to the assessee because the CIT(A) was of the view that the provisions of section 273B of the Act do not cover penalty leviable under section 272A(2)(k) of the Act. 23. First of all, we shall deal with the last submission of the assessee that under the provisions of section 273B of the Act, the provisions of section 272A(2)(k) of the Act are referred and in case the person establishes its case of reasonable cause, then no penalty is to be leviable for such defaults. The case put up by the assessee was that where tax was deducted at source and merely because e-TDS statements / returns were not filed in time does not result in any loss of revenue and hence, no merit in levy of penalty under section 272A(2)(k) of the Act. The claim of deduction of tax deducted at source, its payment to the Treasury to the Government and thereafter, the credit to be allowed to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late issue of tax deduction certificate, there was no loss to the Revenue and the delay in furnishing the tax deduction certificate was held to be merely technical or venial in nature and penalty levied under section 272A(2)(k) of the Act was deleted. It may be clarified herein that earlier under section 272A(2)(k) of the Act, penalty was leviable where the tax deduction certificate was not issued in time. However, by Finance (No.2) Act, 2004 w.e.f. 01.04.2005, it has been provided that where a person fails to deliver or cause to be delivered copy of statement within time specified in section 200(3) of the Act or the proviso to section 206C(3) of the Act, then he shall pay by way of penalty sum of ₹ 100/- for every day of default. It is further provided under the said sub-section that the amount of penalty for failure shall not exceed the amount of tax deductible or collectable, as the case may be. It is further provided that no penalty shall be levied under clause (a) for failure to furnish the statement under section 200(3) of the Act or proviso to section 206C(3) of the Act, on or after first day of July, 2012. 25. The learned Departmental Representative for the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 26. Applying the said ratio laid down by the Hon'ble Allahabad High Court in Raja Harpal Singh Inter College's case (supra), there is no merit in the plea of the learned Departmental Representative for the Revenue that the Hon'ble High Court has laid down the proposition that in every case of default in filing the e-TDS statements in time, penalty under section 272A(2)(k) of the Act is leviable. The Hon'ble High Court in an appeal filed by the assessee dismissed the plea of assessee that no penalty is leviable but has upheld the orders of authorities below, wherein the CIT(A) had restricted the levy of penalty from the date of 1st April, 2010 in respect of e-TDS statements to be filed for assessment years 2008-09 to 2012-13, since the assessee had explained that regular Principal had assumed charge on 25.01.2010. In other words, the Hon'ble High Court has accepted the explanation offered by the assessee regarding reasonableness of cause of delay in furnishing e-TDS returns late partially. Admittedly, the default in filing the said e-TDS returns have not been accepted in full but taking into consideration the reasonableness of explanation, the penalty char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there was practical difficulty on the part of assessee to comply with newly introduced requirement of e-TDS filing of TDS statements, being technical delay and not venial in nature, merits to be considered as reasonable cause for non-levy of penalty as per the requirements of section 273B of the Act. We hold so. In this bunch of appeals, there are cases where the assessee has defaulted in not depositing tax deducted at source in time, in such cases, the returns were delayed because of default on behalf of the deductor. In such cases, penalty under section 272A(2)(k) of the Act is leviable. However, the same is to be restricted from the date of payment of TDS to the date of filing e-TDS statements since e-TDS statements cannot be filed without payment of TDS to the credit of Central Government. Similar ratio has been laid down by the Chandigarh Bench of Tribunal in Ashirwad Complex case (supra). Accordingly, we hold so. 29. Another issue raised in some of the appeals is that where all quarterly returns relating to assessment year 2011-12 were filed on one date i.e. there was default in furnishing the returns for each of the quarters late, the case of the assessee was that bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Coordinate Benches in case of Collector Land Acquisition (supra), Branch Manager (TDS), UCO Bank (supra) and Branch Manager SBI (supra) wherein non availability of PAN was held to be a reasonable cause for delay in filing of the e-TDS return. Given the pecularity of the facts in the present case where there was a change effected in the IT system for mandatory requirement of PANs of all deductees before the returns can be validated and uploaded, the fact that there were large number of deductees spread throughout the country and efforts were made by the assessee to obtain their PANs numbers, the fact that taxes have been deducted and deposited, hence no loss to the Revenue, we find that assessee has a reasonable cause for delayed filing of its e-TDS returns in terms of section 273B and the penalty under section 272(A)(K) is hereby deleted. The Hon ble Lucknow-tribunal in the case of Punjab National Bank(supra) also deleted the penalty levied by Revenue u/s 272A(2)(k) of the 1961 Act appreciating the difficulties faced by the tax-payer in e-filing of TDS returns, by holding as under: 4. I have heard the rival submissions and have also perused the materials availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the assessee further pointed out that knowing the statutory requirement of PAN, the assessee tried his best and contacted personally with the deductees and after collecting the PAN filed the e-TDS statements in Form Nos. 24Q and 26Q. According to the learned counsel for the assessee, there was sufficient cause which prevented the assessee from filing the e-TDS return within the limitation period. Even otherwise, default committed by the assessee was technical and venial for which no penalty should have been imposed. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 . 4.1 There is no dispute that the quarterly statements were filed, of course, late by certain days. There is also no dispute that the tax was deducted and was paid to the credit of Government in time. I find substance in the above submissions of Shri R.N. Shukla, learned counsel for the assessee that quarterly statements could not be filed for the reasons which were beyond the control of the assessee. The act of the assessee cannot be said to be intentional or wilful and therefore, penalty should not have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there was no justification in imposing the penalty under s. 272A(2)(k) of the Act on the assessee and therefore, I cancel the same. 5. In the result, the appeal is allowed. There are several other appeals decided by tribunal wherein under similar circumstances, the penalty levied by Revenue u/s 272A(2)(k) stood deleted. The provisions of Section 272A(2)(k) are subject to provisions of Section 273B of the 1961 Act and the cause shown by the assessee as outlined above in the instant case before us is a reasonable cause. It is undisputed that the income-tax so deducted at source by the assessee on the salaries paid to employees was deposited in time to the credit of Central Government . The statement of income-tax deducted at source i.e. quarterly TDS return in form no. 24Q for all the four quarters of the financial year 2010-11 were filed late beyond time stipulated under law. We are fully aware that Hon ble High Court s have upheld the constitutional validity of late fee as prescribed u/s. 234E of the Act for delay in filing of TDS returns as it is a fee paid to Revenue for extra work been done in giving credit to those tax-payers who suffers because of non filing of TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FILING DUE DATE DATE OF FILING DUE DATE DATE OF FILING Ql 15/07/2013 13/07/2013 15/07/2013 13/07/2013 15/07/2013 13/07/2013 Q2 15/10/2013 15/10/2013 15/10/2013 15/10/2013 15/10/2013 15/10/2013 Q3 15/01/2014 13/01/2014 15/01/2014 13/01/2014 15/01/2014 13/01/2014 Q4 15/05/2014 15/05/2014 15/05/2014 15/05/2014 15/05/2014 15/05/2014 24Q 26Q 27Q ..... X X X X Extracts X X X X X X X X Extracts X X X X
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