M/s A.K. Vidyamandir Pvt. Ltd., Chandigarh V. JCIT (TDS), Chandigarh

ITA 115/CHANDI/2015

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9780 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 02-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Reasonable cause
• Section: 273B; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NOS. 115, 116, 117/CHD/2015 ASSESSMENT YEARS:2009-10, 2011-12, 2012-13 M/S A.K. VIDYAMANDIR PVT. LTD., VS. THE JCIT(TDS) SCO 214, SECTOR 36-D CHANDIGARH CHANDIGARH PAN NO. AADC8308D (APPELLANT) (RESPONDENT) APPELLANT BY : SH. TEJ MOHAN SINGH RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 08/04/2015 DATE OF PRONOUNCEMENT : 10/04/2015 ORDER PER T.R.SOOD, A.M. THE APPEALS BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16/12/2014 PASSED BY THE CIT(A)-2, CHANDIGARH . ITA NO. 115/CHD/2015 2. IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUNDS WHICH ARE AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE IMPOSITION OF PENALTY OF RS. 4,72,400/- UNDER SECTION 272A(2)(K) R.W.S 274 OF TH E ACT WHICH IS ARBITRARY AND UNJUSTIFIED. 2. THAT CASE OF THE ASSESSEE IS COVERED UNDER THE P ROVISIONS OF SECTION 273B AS THERE WAS A REASONABLE CAUSE FOR NOT BEING ABLE TO COMPLY WITH THE PROVISIONS OF SECTION 272(2)(K) WHICH HAS NOT BEEN CONSIDERED IN THE CORRECT PERSPECTIVE BY THE COMMISSIONER OF INCOME T AX (APPEALS). 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT JOIN T COMMISSIONER TDS CHANDIGARH RECEIVED INFORMATION FROM DCIT TDS CHAND IGARH THAT ASSESSEE HAS FAILED TO FILE THE QUARTERLY RETURN IN TIME, THE DA TE OF FILING AND DUE DATE WAS 2 NOTED BY HIM FOR VARIOUS QUARTERS. ASSESSEE WAS ISS UED A SHOW CAUSE NOTICE FOR LEVY OF PENALTY UNDER SECTION 272A(2)(K). IN RESPON SE TO THE SHOW CAUSE NOTICE IT WAS MAINLY STATED THAT ASSESSEE HAD DEPOSITED TDS A LONG WITH INTEREST AS WELL AS COMPOUNDING FEE FOR FINANCIAL YEAR 2009-10. SINCE A SSESSEE ALREADY PAID THE INTEREST AND COMPOUNDING FEE THEREFORE NO PENALTY S HOULD BE LEVIED. HOWEVER THE JOINT COMMISSIONER DID NOT AGREE WITH THE SAME AND OBSERVED THAT RETURN WERE REQUIRED TO BE FILED WITH IN PARTICULAR TIME U NDER SECTION 200 OF THE ACT THEREFORE HE LEVIED PENALTY AMOUNTING TO RS. 4,72,4 00/- CALCULATED @ RS. 100/- PER DAY. 4. ON APPEAL IT WAS MAINLY SUBMITTED THAT SINCE TAX WAS PAID LATE AND THE RETURN COULD NOT BE FILED WITHOUT DEPOSIT OF TAX TH EREFORE PENALTY IF ANY SHOULD BE LEVIED ONLY FROM THE DATE OF DEPOSIT OF TAX AND IN THIS REGARD RELIANCE WAS PLACED ON THE DECISION OF MUMBAI BENCH OF TRIBUNAL IN CASE OF M/S PORWAL CREATIVE VISION P. LTD. VS. ADDL. CIT(TDS)-ITA NOS. 5556 & 5557 / MUM/2009 DT. 18.03.2011. THE LD. CIT(A) EXAMINED THE SUBMISSIONS AND OBSERVED THAT ASSESSEE HAS NOT EXPLAINED AS TO WHY HE COULD NOT PAY THE TD S IN TIME AND IN THIS BACKGROUND CONFIRMED THE LEVY OF PENALTY. 5. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WERE FINANCIAL DIFFICULTIES AND THAT IS WHY TDS COULD NOT BE DEPOS ITED. SINCE ASSESSEE DEPOSITED TDS LATE AND ALSO PAID INTEREST AS WELL AS COMPOUND ING FEE, NO PENALTY SHOULD HAVE BEEN LEVIED. IN ANY CASE THE PENALTY SHOULD HA VE BEEN LEVIED FROM THE DATE OF DEPOSIT OF TDS TILL THE TIME OF FILING OF R ETURNS. 6. ON THE OTHER HAND LD. DR STRONGLY RELIED ON THE ORDER OF LD. CIT(A). 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULL Y WE FIND FORCE IN THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE. IT IS NOT DISPUTED THAT ASSESSE HAS ALREADY PAID INTEREST AS WELL AS COMPOUNDING FEE. S INCE TDS WAS DEPOSITED LATE FOR WHICH ASSESSEE HAS ALREADY BEEN PENALIZED. THE RETURN COULD HAVE BEEN FILED ONLY AFTER DEPOSIT OF SUCH TDS. THE MUMBAI BE NCH OF TRIBUNAL IN CASE OF M/S PORWAL CREATIVE VISION P. LTD. VS. ADDL. CIT(TDS)-I TA NOS. 5556 & 5557 / MUM/2009 DT. 18.03.2011 HAS ADJUDICATED THIS ISSUE VIDE PARA 5 TO 7 WHICH ARE AS UNDER: 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING LEV Y OF PENALTY UNDER SECTION 272A(2)(C)(K). THE PENALTY HAS BEEN LEVIED FOR NOT SUBMITTING THE QUARTERLY RETURNS 3 FOR TAX DEDUCTED AT SOURCE (TDS) WITHIN THE PRESCRI BED TIME LIMIT. WE HAVE GONE THROUGH THE RELEVANT LEGAL PROVISIONS. THE LEARNED AR FOR THE ASSESSEE HAS RIGHTLY POINTED OUT THAT CLAUSE (C) OF SECTION 272A(2) IS N OT APPLICABLE AS THE SAME RELATES TO RETURN/STATEMENT UNDER SECTION 272A(2) I S NOT APPLICABLE AS THE SAME RELATES TO RETURN/ STATEMENT UNDER SECTION 133,206 AND 206C. THE SECTION 206 WAS IN FORCE ONLY UP TO 31.03.2005 AND THEREFORE IS NOT APPLICABLE IN CASE OF THE ASSESSEE. THE SECTION 206 RELATED TO COLLECTION OF TAX AND NOT TDS WHEREAS SECTION 133 WAS ALSO UNRELATED TO TDS AND THEREFORE THESE S ECTIONS ARE NOT APPLICABLE. THE CLAUSE (K) OF SECTION 272A(2) IS HOWEVER FOUND APPLICABLE IN CASE OF THE ASSESSEE WHICH REQUIRES A PERSON TO DELIVER OR CAUS ED TO BE DELIVERED COPY OF THE STATEMENT AS SPECIFIED UNDER SECTION 200(3). UNDER THE PROVISIONS OF SECTION 200(3) R.W.R.31A A PERSON DEDUCTING TAX AT SOURCE IS REQUI RED TO PREPARE A STATEMENT IN THE PRESCRIBED FORM BEING THE FORM NO. 26 Q AND DEL IVER THE SAME TO THE PRESCRIBED INCOME-TAX AUTHORITIES AFTER PAYING THE TAX DEDUCTED TO THE CREDIT OF CENTRAL GOVERNMENT. THE SAID SECTION 200(3) IS REPR ODUCED BELOW AS A READY REFERENCE. 200(3) ANY PERSON DEDUCTING ANY SUM ON OR AFTER TH E FIRST DAY OF APRIL, 2005 IN ACCORDANCE WITH THE FOREGOING PROVISIONS OF THIS CHAPTER OR AS THE CASE MAY BE, ANY PERSON BEING AN EMPLOYER REFERRED TO IN SUB SECTION (1A) OF SECTION 192 SHALL AFTER PAYING THE TAX DEDUCTED TO THE CREDIT O F THE CENTRAL GOVERNMENT WITHIN THE PRESCRIBED TIME, PREPARE SUCH STATEMENT FOR SUCH PERIOD AS MAY BE PRESCRIBED AND DELIVER OR CAUSED TO BE DELIVERED TO THE PRESCRIBED INCOME TAX AUTHORITY OR THE PERSON AUTHORIZED BY SUCH AUTHORIT Y SUCH STATEMENT IN SUCH FORM AND VERIFIED IN SUCH MANNER AND SETTING FORTH SUCH PARTICULARS AND WITHIN SUCH TIME AS MAY BE PRESCRIBED. 6. THUS UNDER THE PROVISIONS OF SECTION 200(3) AFOR ESAID R.W.R. 31A A QUARTERLY STATEMENT OF TDS IN FORM NO. 26Q IS REQUIRED TO BE FILED BY THE ASSESSEE BY 15 TH JULY, 15 TH OCTOBER, 15 TH JANUARY AND 15 TH JUNE(LAST QUARTER OF THE YEAR). IN THIS CASE THERE HAS BEEN DELAY IN BOTH THE YEARS AS INDICATED BY THE AO IN THE TABLE REPRODUCED AT PAGE 2 OF THIS ORDER. THE PENALTY HAS THEREFORE BEEN LEVIED @ RS. 100/- PER DAY OF DEFAULT IS STARTING FROM THE DUE D ATE TO THE DATE OF FILING THE QUARTERLY RETURN. THE CASE OF THE ASSESSEE IS THAT IT HAD DEDUCTED THE TDS AT THE TIME OF CREDITING AMOUNTS IN THE BOOKS OF ACCOUNT A ND THE PAYMENT COULD NOT BE MADE DUE TO FINANCIAL DIFFICULTIES AND SINCE THE PAYMENTS HAD NOT BEE MADE THE TDS RETURNS COULD NOT BE FILED AS THE SAME REQU IRED DATA RELATING TO PAYMENT OF TDS. THE LEARNED AR HAS ALSO ARGUED THAT PENALTY UNDER S ECTION 272A(2)(K) COULD BE LEVIED ONLY FROM THE DATE OF PAYMENT OF TA X AS THE STATEMENT UNDER SECTION 200(3) IS REQUIRED TO BE FILED ONLY AFTER P AYMENT OF TAX TO THE CENTRAL GOVERNMENT. WE FIND FORCE IN THE ARGUMENT ADVANCED BY THE LEARNED AR. SECTION 200(3) WHICH HAS BEEN REPRODUCED EARLIER CL EARLY PROVIDES THAT AFTER PAYING THE TAX DEDUCTED TO THE CREDIT OF CENTRAL GO VERNMENT WITHIN THE PRESCRIBED TIME, THE ASSESSEE SHALL PREPARE A STATE MENT AS PRESCRIBED AND SUBMIT TO THE AUTHORITY CONCERNED WITHIN THE PRESCRIBED TI ME LIMIT . THE ASSESSEE THEREFORE CAN FILE THE RETURN ONLY AFTER PAYING THE TAX TO TH E CENTRAL GOVERNMENT. THE QUARTERLY RETURNS OF TDS REQUIRING FILLING OF DATA RELATING TO PAYMENT OF TAXES AND THEREFORE SUCH RETURNS COULD BE FILED ONLY AFTER PA YING THE TAX TO THE CENTRAL GOVERNMENT. THEREFORE IN OUR VIEW PENALTY HAS TO BE LEVIED FOR THE DELAY ONLY FROM THE DATE OF PAYING THE TAX TO THE CENTRAL GOVE RNMENT. WE FIND FORCE IN THE ARGUMENT ADVANCED BY THE LEARNED AR. SECTION 200(3) WHICH HAS BEEN REPRODUCED EARLIER CLEARLY PROVIDES THAT AFTER PAYI NG THE TAX DEDUCTED TO THE CREDIT OF CENTRAL GOVERNMENT WITHIN THE PRESCRIBED TIME, THE ASSESSEE SHALL PREPARE A STATEMENT AS PRESCRIBED AND SUBMIT TO THE AUTHORITY CONCERNED WITHIN THE PRESCRIBED TIME LIMIT. THE ASSESSEE THEREFORE C AN FILE THE RETURN ONLY AFTER PAYING THE TAX TO THE CENTRAL GOVERNMENT. THE QUART ERLY RETURNS OF TDS REQUIRE FILLING OF DATA RELATING TO PAYMENT OF TAXES AND TH EREFORE SUCH RETURNS COULD BE FILED ONLY AFTER PAYING THE TAX TO THE CENTRAL GOVE RNMENT. THEREFORE IN OUR VIEW PENALTY HAS TO BE LEVIED FOR THE DELAY ONLY FROM TH E DATE OF PAYING THE TAX TO THE CENTRAL GOVERNMENT. 6.1 AS REGARDS THE DEFAULT IN NOT PAYING THE TAX TO THE CENTRAL GOVERNMENT IN TIME OR FOR NON DEDUCTING THE TAX AT SOURCE, THERE ARE OTHER PROVISIONS FOR ENSURING COMPLIANCE. IN CASE THE ASSESSEE FAILS TO DEDUCT TH E TAX AT SOURCE OR AFTER DEDUCTING FAILS TO PAY THE SAME TO THE CENTRAL GOVE RNMENT THE ASSESSEE IS DEEMED TO BE IN DEFAULT UNDER SECTION 201(1) AND IS LIABLE FOR PENALTY. THE ASSESSEE IS ALSO LIABLE TO PAY INTEREST FOR THE PER IOD OF DEFAULT TILL THE PAYMENT OF 4 TAX UNDER SECTION 201(1A). THEREFORE IN OUR VIEW TH E PERIOD FOR LEVYING THE PENALTY HAS TO BE COUNTED FROM THE DATE OF PAYMENT OF TAX B ECAUSE THE DELAY IN FILING THE RETURN TILL THE DATE OF PAYMENT OF TAX IS ALREA DY EXPLAINED ON THE GROUND THAT THE ASSESSEE COULD NOT PAY THE TAXES FOR WHICH SEPA RATE PENAL PROVISIONS EXIST. THE ASSESSEE HAS ALSO EXPLAINED THE REASONS FOR NOT PAYING THE TAX TO THE CENTRAL GOVERNMENT IN TIME WHICH WAS BECAUSE OF FINANCIAL D IFFICULTIES. THE ASSESSEE HAS FILED THE COPIES OF P&L ACCOUNT AND BALANCE SHEET T O SUBSTANTIATE THE CLAIM THAT IT WAS INCURRING LOSSES AND THERE WERE SUBSTANTIAL LIABILITIES ON ACCOUNT OF CREDITORS. THE ASSESSEE HAS PLACED RELIANCE ON SOME DECISIONS OF THE TRIBUNAL IN WHICH FINANCIAL DIFFICULTIES HAVE BEEN ACCEPTED AS REASON ABLE CAUSE FOR DEFAULT IN PAYMENT OF TAX. THE MADRAS BENCH OF THE TRIBUNAL IN CASE OF R. KARUPPASWAMY VS 2 ND ITO(9TTJ 442) HAD CANCELLED THE PENALTY LEVIED FOR DEFAULT IN PAYMENT OF SELF ASSESSMENT TAX ON THE GROUND PAUCITY OF FUNDS. SIMI LARLY THE BOMBAY BENCH OF THE TRIBUNAL IN CASE OF 3 RD ITO VS BOMBAY CABLE CO. PVT. LTD. (11TTJ 386) HAD UPHELD THE DROPPING OF PENALTY PROCEEDING AND DELET ION OF INTEREST LEVIED UNDER SECTION 201(1A) FOR FAILURE TO DEPOSIT THE TDS WITH CENTRAL GOVERNMENT ON THE GROUND OF FINANCIAL DIFFICULTIES. ONCE THE DELAY IN PAYMENT OF TAX IS EXPLAINED SATISFACTORILY, PENALTY UNDER SECTION 272A(2)(K) FO R THE PERIOD TILL PAYMENT OF TAXES, CANNOT BE LEVIED IN OUR OPINION. 7. IN VIEW OF THE FOREGOING DISCUSSION WE HOLD THAT PENALTY UNDER SECTION 272A(2)(K) SHALL BE LEVIED ONLY FOR THE DELAY FROM THE PAYMENT OF TAXES BY THE ASSESSEE. THE ORDER OF CIT(A) IS MODIFIED ACCORDING LY. THE HIGHLIGHTED PORTION OF PARA 6 CLEARLY SHOWS THA T RETURN COULD HAVE BEEN FILED ONLY AFTER PAYING TAXES AS REQUIRED BY SECTION 200( 3). THEREFORE, FOLLOWING THIS DECISION WE SET ASIDE THE ORDER OF LD. CIT(A) AND D IRECT AO TO LEVY PENALTY ONLY FROM THE DATE OF DEPOSIT OF TAX TILL THE DATE OF FI LING OF RETURN. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. ITA NO. 116 & 117 /CHD/2015 9. IN BOTH THESE APPEALS FACTS AND ISSUES RAISED AR E IDENTICAL WHICH HAVE BEEN ADJUDICATED BY US FOR ASSESSMENT YEAR 2009-10 IN ITA NO. 115/CHANDI/2015. THEREFORE, FOLLOWING THAT ORDER WE SET ASIDE THE ORDER OF LD. CIT(A) IN THESE TWO CASES ALSO AND DIRECT AO TO LEV Y PENALTY ONLY FROM THE DATE OF DEPOSIT OF TDS TILL THE DATE OF FILING OF RETURN . 10. IN THE RESULT ALL THREE APPEALS ARE PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/04/2015 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10/04/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR