9911796707
TMI Blog2025 (3) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... DS after the same is deducted by the assessee, under section 271C. Apex Court also referred to CBDT Circular No.551 dated 23.1.1998 and noted that it talked about the levy of penalty on failure to deduct TDS and noted that even the CBDT has taken note of the fact that no penalty is envisaged under section 271C of the Act for belated remittance of TDS. Considering all of the above, the Hon'ble Apex Court categorically held that no penalty under section 271C of the Act is leviable for default of not depositing TDS deducted. Penalty u/s 272A(2)(g) for the delayed filing of quarterly TDS returns in Forms 24Q and 26Q - When the matter was ultimately heard on 25th February 2025 both the parties admitted to the position of law noted by us that no penalty was leviable for the default in non/ delayed filing of TDS returns u/s 272A(2)(k) in the impugned year. That the same was leviable u/s 271H and the quantum of penalty also was at variance as against that provided u/s 272A(2)(g) of the Act. Accordingly, since admittedly the penalty for default in furnishing of quarterly returns has been levied by invoking the provision of law which was not applicable in the impugned year at all, the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ahd/2017A.Y 2015-16 - 271C 5. The facts relating to the issue, as noted in the order of the ld.CIT(A), is that the assessee is a company incorporated under the Companies Act, 1956 and is engaged in the profession of spreading higher education by running management institute. During the year under appeal, the assessee had incurred expenditure referred to in sections 194C, 194H, 194-I, 194J and 192B and defaulted in complying with the TDS provisions. A survey operation under section 133A of the Act was carried out at the business premises of the assessee on 30.11.2015 by the Income Tax Authority of TDS Range, Ahmedabad. During the course of survey, it was observed by the survey team that the assessee had defaulted in deposit of TDS amounting to the tune of Rs. 26,33,867/- to the Government account. The DCIT(TDS), Ahmedabad passed an order under section 201(1)/201(1A) of the Act on 11.3.2016 whereby the assessee-company was treated as assessee-in-default for total sum of Rs. 31,11,556/-, for the unpaid TDS amount of Rs. 26,33,867/- and Rs. 4,77,689/- being interest under section 201(1A) of the Act. After considering the payment already made by the assessee, a demand of Rs. 9,72,910/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the fact that in the entire amount of TDS together with interest has been subsequently deposited by the assessee to the credit of the government account. Therefore, the impugned penalty is not sustainable in the eyes of law. 5. The learned CIT (A) has erred in law and on facts in confirming the impugned penalty order in utter disregard to the fact that there has been no failure to deduct tax at source as per the provisions contained in Chapter XVIIB of the Income Tax Act but there was only a delay in depositing the amount of the TDS to the credit of the Central Government Account. Therefore, the impugned penalty is not sustainable in the eyes of law. 6. The learned CIT (A) has grossly erred in law and on facts in confirming in impugned penalty order in utter disregard to the legal position that penalty under Section 271C is leviable only in a case where there is failure to deduct tax at source under the provisions of Chapter XVIIB or to pay the whole or any part: or tax under Sub Section (2) of Section 115-0 or second proviso to Section 194B. In the instant case, there has been no tax liability u/s. 115-O or Section 194B of the I.T. Act. Therefore, imposition of the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order in utter disregard to the provisions of Section 273B of the Income Tax Act which provides that no penalty is leviable if the default is on account of good and sufficient reason. The appellant submits that the default is attributable to reasonable cause within the meaning of Section 273B of the I.T. Act and therefore the impugned penalty is bad in law. It is therefore prayed that the impugned order may please be cancelled. 7. On the facts of the case as well as in law, learned CIT (A) grossly erred in confirming the impugned penalty order without appreciating the fact that the demand notice u/s. 156 of the I.T. Act was not issued and signed by the Additional CIT who has passed the penalty order u/s. 272A(2)(g) but was signed by the ACIT, IDS Circle, Ahmedabad. It is therefore prayed that the impugned penalty order u/s. 272A(2)(g) may please be cancelled." 8. During the course of hearing before us, the ld.counsel for the assessee raised common contentions against the levy of both the penalties and filed brief submission in writing in this regard, which are reproduced hereunder: > Issues involved in the captioned appeal pertain levy of penalty u/s 272A(2)(g) and 271C of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on decision of Hon'ble the Apex Court in the case of "Hindustan Steel Ltd. vs. State of Orissa - (1972) 83 ITR 26 (SC)". If there is "reasonable cause" for dfault, penalty should not be levied: S.273B provides that in case reasonable cause is shown, penalty u/s 272A(2)/271C must not be levied. Assessee could not deposit TDS with the Govt. treasury within the prescribed time limit owing to financial crunch. Thus, there was a reasonable cause for default. Under such circumstances, no case is made out for levy of penalty. Reliance is placed on "CIT vs. Eli Lilly And Co. (India) P. Ltd. - 321 ITR 225 (SC)". Once assessee is subjected to penalty u/s. 271C, question of levy of penalty u/s. 272A(2)(g) does not arise at all: It is well settled that once an assessee is subjected to penalty u/s 271C, question of levy of penalty u/s 272A(2)(g) does not arise at all. Reliance is placed on following decisions: Sri Ram Memorial Education Promotion Society - 287 ITR 155 (All.) Sri Ram Memorial Education Promotion Society -152 Taxman 257 (All.) 4 Sahara India Mutual Fund Benefit Co. Ltd. -157 Taxman 52 (All.); In view of the above, penalty u/s 272A(2)(g) and 271C of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had relied for levy of penalty in the case of the assessee under section 271C of the Act in the case of US Technologies (supra), has since been reversed by the Hon'ble Apex Court. He was unable to point out any distinguishing facts in relation to the said decision before us. 14. We have heard both the parties and also gone through the orders of the Revenue authorities and also various decisions cited before us. As noted above, the issue for adjudication is the levy of penalty under section 271C of the Act and default for which the penalty has been levied, is delayed remittance of TDS deducted by the assessee. These facts are on record, and there is no dispute about the said two facts. 15. Having noted so and going through the decisions of the Hon'ble Apex Court in US Technologies (supra) we see no reason to disagree with the ld.counsel for the assessee that the Hon'ble Apex Court has categorically held that default for delayed remittance of TDS does not attract any penalty under section 271C of the Act. The issue before the Hon'ble Apex Court was identical, wherein it noted the question posed for consideration of the Court as to the meaning and scope of the word "failure to deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,867/- u/s 271C of the Act is directed to be deleted. Appeal of the assessee in ITA No 2679/A/2017 is accordingly allowed. 17. We shall now take up the issue of levy of penalty under section 272A(2)(g) of the Act challenged in ITA No.2678/Ahd/2017 18. The order levying penalty reveals that the penalty was levied for delayed filing of quarterly returns of TDS in Form No.24Q and 26Q for the financial year 2014-15, and the delayed returns pertained to TDS which the assessee had deducted, but failed to deposit with the Government in time, for which penalty u/s 271C of the Act was also levied and which has been dealt with by us in assessee's appeal in ITA No.2679/Ahd/2017 above. The delay was noted to be of, in all, 2580 days, and as provided under section 272A(2)(g) of the Act, penalty of Rupees hundred per day, totaling to Rs. 2,58,000/- was levied on the assessee. 19. It is pertinent to first consider the default, which attracts the levy of penalty in terms of section 272A(2)(g) of the Act. Therefore, it is relevant to reproduce the said sub-clause as under: 272A. (1) If any person,- (2) If any person fails- .... .... .... .... .... .... .... .... (g) to furnish a certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 200 or the proviso to sub-section (3) of section 206C; he shall pay, by way of penalty, a sum of one hundred rupees for every day during which the failure continues: 23. Even considering that the AO had inadvertently mentioned incorrect section for levy of penalty, we find that no penalty was leviable u/s 272A(2)(k) of the Act also in the impugned year. We have noted that as per the second proviso to the section no penalty was leviable u/s. 272A(2)(k) if the failure occurred on or after 1ST July 2012. The second proviso to the section reads as under: Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc. 272A. (2) If any person fails,- .... .... ..... ..... ..... Provided further that no penalty shall be levied under this section for the failure referred to in clause (k), if such failure relates to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012. In the impugned case before us t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 272A(2)(k) of the Act. Further, the second provisio to the section states that no penalty under section 272A(2) (k) of the Act is to be levied, if the failure occurs on or after 1st July, 2012. In the impugned case before us, the failure is stated to have occurred in financial year 2014-15 and 2015-16. As per the provisions of law, therefore, no penalty is leviable on the default committed by the assessee of delayed filing of quarterly returns. Penalty, however, we have noted, for this default is leviable under section 271H of the Act after 1.7.2012. Both the parties are directed to come up before us with their contentions on this observation regarding the position of law on the issue noted by us above. The impugned appeals are accordingly fixed for seeking the above clarification on 13th February, 2025. 26. Thereafter when the matter was ultimately heard on 25th February 2025 both the parties admitted to the position of law noted by us that no penalty was leviable for the default in non/ delayed filing of TDS returns u/s 272A(2)(k) of the Act in the impugned year. That the same was leviable u/s 271H of the Act and the quantum of penalty also was at variance as ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
