THE Executive Engineer (STM), Electricity Board, Dewas V. THE CTO (OSD) (TDS), Indore

ITA 109/IND/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5890 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 11-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Keywords: Opportunity of being heard; Reasonable cause; Ignorance of law
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER THE EXECUTIVE ENGINEER, (STM) M.P.ELECTRICITY BOARD, DEWAS PAN: BPLE-00581A VS. CIT (OSD)(TDS), INDORE APPELLANT RESPONDENT APPELLANT BY NONE RESPONDENT BY SHRI MOHD. JAVED, SR. DR DATE OF HEARING 01.08.2016 DATE OF PRONOUNCEMENT 01.08.2016 O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS), UJJAIN,[HEREI NAFTER REFERRED TO AS THE CIT(A)] DATED 11.12.2015 AND PERTAINS TO ASSESSMENT YEAR 2008-09 AS AGAINST PENALTY ORDER PASSED BY THE CIT (OSD) (TDS) U/S 272A(2)(K) OF THE INCOME-TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A DIVISION OF MADHYA PRADESH VIDHYUT VITRAN COMPANY L IMITED, A I.T.A. NO. 109/IND/2016 ASSESSMENT YEAR: 2008-09 THE EXECUTIVE ENGINEER (STM) MP ELECTRICITY BOARD, DEWAS VS. CIT (OSD)(TDS), INDORE I.T.A.NO. 109/IND/2016 A.Y. 2008-09 PAGE 2 OF 7 2 STATE GOVERNMENT UNDERTAKING. THE TAX HAS BEEN DEDU CTED BY THE ASSESSEE ON THE PAYMENT OF SALARY MADE TO EMPLOYEES AND IS DEPOSITED BY THE ASSESSEE WITHIN TIME IN THE ACCOUNT OF CENTRAL GOVERNMENT. THE TDS RETURN WAS UN-INTENTIONALLY DELA YED. THE DELAY WAS DUE TO THE REASON THAT THERE WAS MISUNDERST ANDING THAT THE RETURNS HAVE ALREADY BEEN FILED, BUT LATER WHEN THE ASSESSEE CAME TO KNOW ABOUT NON-FILING OF RETURN, THE ASSESSE E HAS DEPOSITED THE RETURN. THERE WAS NO INTENTION OF THE ASSESSEE NOT TO COMPLY WITH ANY PROVISIONS OF THE INCOME-TAX ACT, 1 961. THE ASSESSEE WAS REQUIRED TO DEDUCT THE TDS ON THE PAYME NT MADE AND DEPOSIT THE SAME IN THE GOVERNMENT ACCOUNT. THE ASS ESSEE WAS ALSO REQUIRED TO FILE THE QUARTERLY TDS RETURN. THE ASSESSEE FURNISHED THE FIRST QUARTER STATEMENT LATE BY 1530 DAYS, SECOND QUARTER STATEMENT LATE BY 1436 DAYS, THIRD STATEMEN T LATE BY 1346 DAYS AND FOURTH QUARTER STATEMENT LATE BY 1225 DAYS . ON THE ABOVE DELAY, THE AO IMPOSED THE PENALTY OF RS. 1,50,700/- U/S 272A(2)(K) OF THE INCOME-TAX ACT, 1961. THE ASSESSEE WENT IN A PPEAL BEFORE CIT(A). 3. DURING APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTE D THAT THE ASSESSEE HAS DEDUCTED AND DEPOSITED THE TAX IN TIME AND THERE WAS NO REVENUE LOSS TO THE DEPARTMENT. THE DEFAULT WA S NOT WILLFUL THE EXECUTIVE ENGINEER (STM) MP ELECTRICITY BOARD, DEWAS VS. CIT (OSD)(TDS), INDORE I.T.A.NO. 109/IND/2016 A.Y. 2008-09 PAGE 3 OF 7 3 AND ASSESSEE WAS NOT HAVING ANY INTENTION OF NON-FIL ING OF TDS RETURN. THE ASSESSEE WAS UNABLE TO FILE THE RETURN AS ONLY ELECTRONIC AND COMPUTERIZED RETURN WERE ACCEPTABLE THROUGH NSDL AND STAFF WAS NOT TRAINED FOR USE OF COMPUTER. THE ASSESSEE HA D TO DEPEND ON OUTSIDE AGENCY FOR SUCH FILING AND NO SUCH AGENC Y WAS APPOINTED. THE FACILITY OF FILING WAS NOT PROPERLY A VAILABLE IN DEWAS DISTRICT AND THE ASSESSEE HAD TO VISIT NEARBY DISTR ICT I.E. UJJAIN FOR FILING E-TDS RETURN. THE DEPARTMENT HAS NOT PROVIDE D ANY INFORMATION OF NON-FILING AND THE LEVY OF PENALTY U /S 272A(2)(K). THE PENALTY WAS IMPOSED IN A MECHANICAL MANNER. NO PROPE R OPPORTUNITY OF BEING HEARD WAS GIVEN EVEN AFTER REQU EST. THE LD. CIT(A) CONFIRMED THE PENALTY. 4. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIE S. WE HAVE ALSO PERUSED THE RECORDS AVAILABLE ON RECORD. WE FIND TH AT THE ASSESSEE HAS DEDUCTED AND DEPOSITED THE TAX AND THERE IS NO REVENUE LOSS TO THE DEPARTMENT. THE DEFAULT WAS NOT WILLFUL AND THE A SSESSEE HAD NO INTENTION OF NON-FILING OF TDS RETURN. THUS, WE A RE OF THE VIEW THAT THE ASSESSEE HAS REASONABLE CAUSE FOR NOT FILI NG TDS RETURNS IN TIME. IDENTICAL ISSUE WAS DECIDED BY I.T.A.T., INDOR E TRIBUNAL IN I.T.A.NOS. 762 TO 766/IND/2014 ETC. IN THE CASE OF DISTRICT MINING THE EXECUTIVE ENGINEER (STM) MP ELECTRICITY BOARD, DEWAS VS. CIT (OSD)(TDS), INDORE I.T.A.NO. 109/IND/2016 A.Y. 2008-09 PAGE 4 OF 7 4 OFFICER, KHARGONE VS. JCIT-TDS, INDORE, WHEREIN FOLL OWING THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CAS E OF CIT VS. SUPERINTENDING ENGINEER, 260 ITR 641, I.T.A.T., IND ORE TRIBUNAL HAVE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES. THE HON'BLE RAJASTHAN HIGH COURT HAS HELD AS UNDER :- A PLAIN READING OF THE PROVISO TO S. 272A(2) CLEARLY SHOWS THAT IF ONLY PROVIDES AN OUTER LIMIT OF THE PENALTY. THE WORDS 'DEDUCTIBLE' OR 'COLLECTIBLE' HAVE BEEN USED ONLY WITH REFERENCE TO THE PENALTY TO BE LEVIED. IF THE VIEW OF THE TRIBUNAL IS ACCEPTED, THE PROVISO WILL DEFEAT THE VERY PURPOSE OF THE SUBSTANTIVE PROVISION UNDER S. 272A(2)(C). THE PURPOSE OF LEVY OF PENALTY UNDER S. 272(2)(C) APPEARS TO BE TO PUT PRESSURE ON THE THOUGHTLESS AND INEFFICIENT OFFICER S TO PERFORM THEIR DUTY PUNCTUALLY IN THE PUBLIC INTEREST, BUT A TAX AUTHORITY CANNOT INFLICT PENALTY IN THOUGHTLESS OR ROUTINE MANNER. THE LEGISLATURE MAY CREATE AN OFFENCE OF 'A STRICT LIABILITY WHERE MENS REA IS WHOLLY OR PARTLY NOT NECESSARY. THE QUESTION WHETHER THE OFFENCE INVOLVES THE EXISTENCE OF MENS REA AS AN ESSENTIAL ELEMENT OF IT OR WHETHER THE STATUTE DISPENSES WITH IT AND CREATES STRICT LIABILITY, ARE THE EXECUTIVE ENGINEER (STM) MP ELECTRICITY BOARD, DEWAS VS. CIT (OSD)(TDS), INDORE I.T.A.NO. 109/IND/2016 A.Y. 2008-09 PAGE 5 OF 7 5 QUESTIONS WHICH HAVE TO BE ANSWERED ON A TRUE CONSTRUCTION OF THE STATUTE. THE PENALTY UNDER S. 272(2)(C) CANNOT BE LEVIED IN A ROUTINE MANNER. THE DISCRETION VESTED WITH THE AUTHORITY IS TO BE EXERC ISED JUDICIOUSLY ON CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. A BONA FIDE BREACH CANNOT LEAD TO A PENALTY UNDER S. 272A(2)(C). IN THE INSTANT CASE, THOUGH IT IS TRUE THAT THE IGNORANCE OF LAW IS NO EXCUSE BUT STILL THE PRESCRIBED AUTHORITY WAS REQUIRED TO EXAMINE ALL THE RELEVANT FACTS AND CIRCUMSTANCES OF THE CASE AND TO ASCERTAIN IF IT WAS A DELIBERATE OR NEGLIGENT OR AN INADVERTENT DEFAULT. IN CASE OF NEGLIGENCE, IT WOULD BE A SOUND EXERCISE OF DISCRETION, TO INFLICT MINIMUM OR NOMINAL PENALTY BUT IN CASE O F INADVERTENT OFFICE MISTAKE, IT WOULD NOT BE A SOUND EXERCISE OF JUDICIAL OR QUASI-JUDICIAL POWER TO INF LICT A PENALTY ON THE HEAD OF THE PUBLIC OFFICE. IN SUCH CASES, THE TAX AUTHORITIES SHOULD ALSO EVOLVE A METHOD OF ADVISING THE HEAD OF OFFICE BY WAY OF NOT ICE OR REMINDER PROVIDING AN OPPORTUNITY TO COMPLY WITH THE PROVISIONS, THE BREACH OF WHICH MAY LEAD TO LEV Y OF PENALTY. IF THE HEAD OF OFFICE DOES NOT ACT EVEN AFTER. SUCH A NOTICE, IT WILL BE OPEN FOR THE TAX THE EXECUTIVE ENGINEER (STM) MP ELECTRICITY BOARD, DEWAS VS. CIT (OSD)(TDS), INDORE I.T.A.NO. 109/IND/2016 A.Y. 2008-09 PAGE 6 OF 7 6 AUTHORITIES TO SAY THAT IT WAS NOT A CASE OF INADVERTENT MISTAKE. THE TRIBUNAL WAS JUSTIFIED IN CANCELLING THE PENALTY IMPOSED UNDER S. 272(2)(C), THOUGH FOR DIFFERENT REASONS AS GIVEN IN THE PRECED ING PARAS. - HINDUSTAN STILL LTD. VS. STATE OF ORISSA ( 1973) 83 ITR 26 (SC) : TC 49R.330 APPLIED.' 4. FOLLOWING THE ABOVE DECISION, WE DIRECT THE AO TO VERIFY WHETHER THE ASSESSEES HAVE DEPOSITED THE TAX TO THE GOVERNMENT TREASURY AND IF THE TAX IS PAID THEN PENALTIES ARE DIRECTED TO BE DELETED. 5. IT IS SEEN THAT THE TAX AT SOURCE WAS DEDUCTED IN T IME AND WAS DEPOSITED IN TIME. THERE IS DELAY IN FILING OF TDS RETURN AS ONLY ELECTRONIC AND COMPUTERIZED RETURNS WERE ACCEPTABLE THROUGH NSDL AND STAFF WAS NOT TRAINED FO R USE OF COMPUTER. THE ASSESSEE HAD TO DEPEND ON OUTSIDE AGE NCY FOR SUCH FILING AND NO SUCH AGENCY WAS APPOINTED. THE FACILIT Y OF FILING WAS NOT PROPERLY AVAILABLE IN DEWAS DISTRICT AND THE ASS ESSEE HAD TO VISIT NEARBY DISTRICT I.E. UJJAIN FOR FILING E-TDS RETURN. IN THE LIGHT OF ABOVE, THERE IS REASONABLE CAUSE FOR NON-FILING OF TDS RETURN IN TIME. MOREOVER, THE ISSUE IS COVERED BY THE DECISIO N OF THIS BENCH CITED SUPRA. ACCORDINGLY, THE PENALTY LEVIED U/S 27 2A(2)(K) OF THE INCOME-TAX ACT, 1961, IS HEREBY CANCELLED. THE EXECUTIVE ENGINEER (STM) MP ELECTRICITY BOARD, DEWAS VS. CIT (OSD)(TDS), INDORE I.T.A.NO. 109/IND/2016 A.Y. 2008-09 PAGE 7 OF 7 7 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 1 ST AUGUST , 2016. SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED : 1 ST AUGUST, 2016. CPU* COPY TO: 1. THE ASSESSEE. 2. THE A.O. CONCERNED. 3. THE LD. PCIT CONCERNED 4. THE LD. CIT(A) 5. THE D.R., INDORE 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., INDORE