Superintending Engineer (B&R), Jalandhar V. The Joint Commissioner of Income Tax,(TDS), Ludhiana

ITA 109/ASR/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0673 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 18-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISRA
• Assessee Lawyers: DINESH SARNA
• Keywords: Bonafide belief; Retrospective amendment; Reasonable cause
• Section: 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (CAMP AT JA LANDHAR ) BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NOS.105 TO 107(ASR)/2016 ASSESSMENT YEARS: 2008-09 TO 2010-11 I.T.A NOS.108 TO 111(ASR)/2016 ASSESSMENT YEARS: 2006-07 TO 2009-10 SUPERINTENDING ENGINEER (BSR),MUNICIPAL CORPORATION, JALANDHAR. PAN: JLDS05030A VS. INCOME TAX OFFICER TDS, LUDHIANA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. DINESH SARNA (ADV. ) RESPONDENT BY: SH. A.N.MISRA (DR) DATE OF HEARING: 20.06. 2016 DATE OF PRONOUNCEMENT: 22.06.2016 ORDER PER BENCH: THIS IS A BUNCH OF SEVEN APPEALS RELATING TO PENALT Y IMPOSED BY ASSESSING OFFICER U/S 272A(2)(K), OF THE ACT. 2. THESE APPEALS HAS BEEN FILED AGAINST TWO SEPARAT E ORDERS OF LEARNED CIT(A), LUDHIANA, BOTH DATED 10.12.2015. THE APPEAL S IN ITA NOS. 105 TO 107 HAS BEEN SEPARATELY DEALT WITH BY LD. CIT(A) WH EREAS APPEALS IN ITA NO.108 TO 111 HAS BEEN SEPARATELY DEALT WITH BY THE LD. CIT(A). HOWEVER, THE ISSUE IN THESE APPEALS IS SIMILAR AND THE APPEA LS WERE HEARD TOGETHER, THEREFORE, FOR THE SAKE OF CONVENIENCE A COMMON AND CONSOLIDATED ORDER IS BEING PASSED. ITA NOS .105 TO 107(ASR)/2016 ASST. YEARS: 2008-09 TO 2010-11 ITA NOS. 2008-11(ASR)/2016 ASST. YEARS: 2006-07 TO 2009-10 2 3. THE BRIEF FACTS OF THE CASES ARE THAT THE ASSESS EE IS A GOVT. DEPARTMENT AND HAD DEDUCTED TAX AT SOURCE ON VARIOU S PAYMENTS BUT HAD FAILED TO FILE QUARTERLY TDS RETURNS WITHIN THE PRESCRIBED PERIOD OF TIME, THEREFORE, ASSESSING OFFICER IMPOSED PENALTY U/S 272A(2)(K) OF THE ACT AT THE RATE OF RS.100 PER DAY FOR EACH DAY OF D EFAULT. 4. AGGRIEVED WITH THE ORDER THE ASSESSEE FILED APPE ALS BEFORE LD. CIT(A) AND SUBMITTED THAT THE RETURNS COULD NOT BE FILED W ITHIN THE PRESCRIBED PERIOD AS THE ASSESSEE WAS NOT HAVING TECHNICAL STA FF AND IT WAS DEPENDENT UPON OUTSIDE AGENCY TO FILE THE RETURNS A ND THEREFORE, THERE WAS A REASONABLE CAUSE FOR LATE FILING OF THE RETUR NS. THE ASSESSEE ALSO RELIED UPON VARIOUS CASE LAWS BEFORE THE LD. CIT(A) BUT LD. CIT(A) DID NOT AGREE WITH THE CONTENTIONS OF ASSESSEE AND UPHELD T HE ACTION OF ASSESSING OFFICER. 5. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. AR, AT THE OUTSET, SUBMITTED THAT ASSESS EE WAS A GOVT. DEPARTMENT AND DUE TO LACK OF TECHNICAL STAFF IT WA S DEPENDENT UPON THE OUTSIDE AGENCY FOR THE PREPARATION AND FILING OF RE TURNS. THE LD. AR SUBMITTED THAT TDS WAS PAID WITHIN PRESCRIBED PERIO D AND THEREFORE, NO LOSS HAD OCCURRED TO THE REVENUE AND THE DELAY IN F ILING OF RETURNS WAS A TECHNICAL BREACH OF LAW. THE LD. AR IN THIS RESPECT RELIED UPON THE CASE ITA NOS .105 TO 107(ASR)/2016 ASST. YEARS: 2008-09 TO 2010-11 ITA NOS. 2008-11(ASR)/2016 ASST. YEARS: 2006-07 TO 2009-10 3 LAWS RELIED BEFORE THE LD. CIT(A) AND IT WAS PRAYED THAT THE PENALTY SUSTAINED BY LD. CIT(A) BE DELETED. 7. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT A.O HAS IMP OSED PENALTIES FOR DEFAULTS IN LATE FILING OF TDS RETURNS IN VARIOUS Q UARTERS FOR VARIOUS F.YS. THE CONTENTIONS OF THE ASSESSEE THAT IT WAS NOT HAV ING TECHNICAL STAFF AND WAS DEPENDENT UPON THE OUTSIDE AGENCY FOR FILING OF RETURNS WAS NOT ACCEPTED BY THE LD. CIT(A). WE FIND THAT ASSESSEE H AD DEDUCTED THE TAX AND HAD DEPOSITED THE SAME WITH CENTRAL GOVT. WITHI N THE STIPULATED PERIOD AND NEITHER GOVT. NOR THE PAYEE SUFFERED ANY LOSS. THE MISTAKE COMMITTED BY ASSESSEE IS A TECHNICAL ONE AND MOREOV ER THE ASSESSEE BEING A GOVT. DEPARTMENT DO FACES PROBLEMS DUE TO L ACK OF TECHNICAL STAFF TO DEAL WITH THE FILING OF TDS RETURNS. THE PENALTY U/S 272A(2)(K) IS NOT A MANDATORY PENALTY AND BEFORE IMPOSING OF PENALTY TH E REVENUE AUTHORITIES MUST EXAMINE THE FACTS AND CIRCUMSTANCE S FOR COMMITTING THE MISTAKE. WE FURTHER FIND THAT VIDE FINANCE ACT. 2012 W.E.F., 01.07.2012 THE LEGISLATURE ITSELF HAS REMOVED THIS PENALTY PROVISION BY ADDING A PROVISO TO SECTION 272A(2)(K). THE PENAL P ROVISIONS ALONG WITH AMENDMENT PROVISIONS W.E.F., 1.07.2012 ARE REPRODU CED ITA NOS .105 TO 107(ASR)/2016 ASST. YEARS: 2008-09 TO 2010-11 ITA NOS. 2008-11(ASR)/2016 ASST. YEARS: 2006-07 TO 2009-10 4 SECTION 272A (2) (K) (2) IF ANY PERSON FAILS- (A) TO COMPLY WITH A NOTICE ISSUED UNDER SUB-SECTION (6 ) OF SECTION 94; OR (B) TO GIVE THE NOTICE OF DISCONTINUANCE OF HIS BUS INESS OR PROFESSION AS REQUIRED BY SUB-SECTION (3) OF SECTION 176; OR (C) TO FURNISH IN DUE TIME ANY OF THE RETURNS, STAT EMENTS OR PARTICULARS MENTIONED IN SECTION 133 OR SECTION 206 [.] [FOR SECTION 206C] OR SECTION 285B; OR (D) TO ALLOW INSPECTION OF ANY REGISTER REFERRED TO IN SECTION 134 OR OF ANY ENTRY IN SUCH REGISTER OR TO ALLOW COPIES OF SUCH REGISTERED OR OF ANY ENTRY THEREIN TO BE TAKEN; OR (E) TO FURNISH THE RETURN OF INCOME WHICH HE IS REQ UIRED TO FURNISH UNDER SUB- SECTION (4A) OR SUB-SECTION (4C) OR SECTION 139 OR TO FURNISH IT WITHIN THE TIME ALLOWED AND IN THE MANNER REQUIRED THOSE SUB-SECTIO N; OR (F) TO DELIVER OR CAUSE TO BE DELIVERED IN DUE TIME A COPY OF THE DECLARATION MENTIONED IN SECTION 197A; OR (G) TO FURNISH A CERTIFICATE AS REQUIRED BY SECTION 203 [OR SECTION 206C] OR (H) TO DEDUCT AND PAY TAX AS REQUIRED BY SUB-SECTIO N (2) OF SECTION 226; (I) TO FURNISH A STATEMENT AS REQUIRED BY SUB-SECTI ON (2C) OF SECTION 192;] [(J) TO DELIVER OR CAUSE TO BE DELIVERED IN DUE TIM E A COPY OF THE DECLARATION REFERRED TO IN SUB-SECTION (1A) OF SECTION 206C;] ([(K) TO DELIVER OR CAUSE TO BE DELIVERED A COPY OF THE STATEMENT WITHIN THE TIME SPECIFIED IN SUB SECTION (3) OF SECTION 200 OR THE PROVISO TO SUB-SECTION (3) OF SECTION 206C;] [ 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-SE CTION (3) OF SECTION 206C WHICH IS TO BE DELIVERED OR CAUSED TO BE DELIVERED FOR TAX D EDUCTED AT SOURCE OR TAX COLLECTED AT SOURCE, AS THE CASE MAY BE, ON OR AFTER THE 1 ST DAY OF JULY, 2012.] 9. FROM THE ABOVE PROVISIONS AMENDMENT W.E.F., 1.7. 2012 WE FIND THAT FINDING THIS PROVISION HARSH THE LEGISLATURE I TSELF HAS REMOVED THIS PENALTY. THE REMOVAL OF THIS PENALTY BEING BENEFICI AL TO THE ASSESSEE CAN BE HELD TO APPLICABLE WITH RETROSPECTIVE EFFECT AND THEREFORE, THE PENALTIES FOR THESE YEARS ARE NOT IMPOSABLE. FURTHER WE FIND THAT PENALTY IS NOT AUTOMATIC AND IS NOT MANDATORY FOR EVERY TECHNICAL BREACH OF PROVISIONS PENALTY CANNOT BE IMPOSED. ITA NOS .105 TO 107(ASR)/2016 ASST. YEARS: 2008-09 TO 2010-11 ITA NOS. 2008-11(ASR)/2016 ASST. YEARS: 2006-07 TO 2009-10 5 10. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF HINDUSTAN STEEL LTD. (1972) 83 ITR 26 HAS HELD AS UNDER: AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN C ONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PE RFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERC ISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EV EN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE P ENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNIC AL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. 11. IN VIEW OF THE FACTS AND CIRCUMSTANCES AND IN V IEW OF THE ABOVE JUDICIAL PRECEDENTS, WE DO NOT HAVE ANY HESITATION IN DELETING THE PENALTIES CONFIRMED BY LEARNED CIT(A). 12. IN VIEW OF THE ABOVE, THE ABOVE ALL THE APPEAL S FILED BY ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JUNE, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22.06.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER