D.R.K. Construction, Satara V. Additional Commissioner of Income-tax,

ITA 1151/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9190 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 30-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Keywords: Bonafide belief; Retrospective amendment; Reasonable cause
• Section: 273B; 27

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1151/PUN/2016 / ASSESSMENT YEAR : 2011-12 D.R.K. CONSTRUCTION, M.NO.1505, SHERE, TAL. KARAD, SATARA 415110. PAN : AAFFD3148K. . / APPELLANT V/S ADDL.COMMISSIONER OF INCOME TAX, (TDS) RANGE, PUNE. . / RESPONDENT ASSESSEE BY : NONE. REVENUE BY : SHRI VIVEK AGGARWAL. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) PUNE, 10 DT.02.03.2016 FO R THE ASSESSMENT YEAR 2011-12. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- 2.1 ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN CONSTRUCTION BUSINESS. IT WAS NOTICED THAT ASSESSEE HA D FILED RETURN OF TDS U/S 200(3) OF THE ACT IN FORM NO.26Q FOR THE 1 ST QUARTER OF F.Y. 2010-11 ON 25.10.2011. THE DUE DATE OF FILING OF SUCH RETU RN WAS / DATE OF HEARING : 12.03.2018. / DATE OF PRONOUNCEMENT: 15.03.2018 2 15.07.2010 BUT ASSESSEE FILED THE QUARTERLY RETURN AFTER THE DELAY OF 467 DAYS. ASSESSEE WAS ISSUED SHOW CAUSE NOTICE U/S 2 72A(2)(K) / 274 R.W.S. 200(3) OF THE ACT TO EXPLAIN THE DELAY. AO NOT ED THAT NO SUBMISSIONS WERE FILED BY THE ASSESSEE NOR ANYBODY ATTEN DED ON BEHALF OF ASSESSEE. AO THEREFORE CONCLUDED THAT ASSESSEE HAS NOTHING TO SAY IN THE MATTER AND THAT THE ASSESSEE HAS NOT ESTABLISHED ANY REASONABLE CAUSE FOR DELAY IN FILING E-TDS RETURN IN FORM-26Q FOR 1 ST QUARTER OF F.Y. 2010-11. HE THEREFORE HELD THAT AS PER PROVISIONS OF SECTION 272A(2)(K) / 274 R.W.S. 200(3), THE ASSESSEE WAS LIABLE FOR PENA LTY OF RS.100/- PER DAY FOR THE DELAY OF SUBMISSION OF FORM NO.26 Q. HE ACCORDINGLY WORKED OUT THE PENALTY AT RS.100/- PER DA Y AND LEVIED PENALTY OF RS.46,700/-. AGGRIEVED BY THE ORDER OF AO, ASSE SSEE CARRIED THE MATTER (IN APPEAL NO.PN/CIT(A)10/ADDL.CIT(TDS)/297/14-15 ) BEFORE LD.CIT(A), WHO UPHELD THE LEVY OF PENALTY BY HOLDING AS UNDER : 5 . I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT. IT IS UNDISPUTED THAT THERE WAS A SUBSTA NTIAL DELAY IN FILING THE TDS QUARTERLY STATEMENT WITHIN THE ST IPULATED TIME BY THE APPELLANT DEDUCTOR, WHICH ULTIMATELY WO ULD HAVE DELAYED THE PROCESSING OF RETURNS OF DEDUCTEES AND ISSUE OF REFUNDS ETC. IF ANY, WOULD HAVE AROSE ON ACCOUNT OF THE IMPUGNED DELAY ETC. THE PURPOSE AND INTENTION OF PE NALTY UNDER SECTION 272A(2)(K) OF I.T. ACT HAS BEEN TO PE NALIZE THE DEDUCTOR SO AS TO AVOID FURTHER HARDSHIPS TO THE NU MEROUS DEDUCTEES, WHOSE CLAIM OF REFUNDS ETC. DEPEND ON TH E TIMELY FURNISHING OF STATEMENT BY THE DEDUCTORS. ALTHOUGH, THE A PPELLANT HAS ENUMERATED SEVERAL REASONS BEHIND T HE I MP U GN E D D E L A Y AND SO M E ARE GENUIN E, HOWEVER, THE S AI D REASONS MAY NO T HELP ON SIMPLE GROUND THAT THE BENEFIT OF REASONABLE CAUSE A S E NV IS AG E D U/ S. 2 73B HAS NOT BE E N EX TEND ED T O D E F A ULTED D E DUCTOR S. HERE , I T IS RELEVANT TO HIGHLIGHT THE PROVISIONS OF SECTION 273B, WHICH PRO VIDES AN ESCAPE TO THE TAXPAYERS FROM THE LEVY OF THE PENALT Y IMPOSED UNDER SEV E RAL S E CTIONS AS ENUMERATED IN SECTION 273B. SECTION 273B INSERTED W.E.F. 10.09.1986 BY TAXATION LAWS (AMENDMENT AND MISCELLANEOUS PROVISIONS) ACT, 1986, AS SUBSEQUENTLY AMENDED ENACTS PROVISIONS OF THE OVERR IDING NATURE AND PROVIDES THAT NOTWITHSTANDING ANYTH I NG CONTAINED I N T HE PROVISIONS OF [CLAUSE (B) OF SECT I ON 271B [SECTION - 271BA] [SECTION 271BB] SECT I ON 271C , [SECTION 271CA,] SECT I ON 271D , SECTION 271E, [271F,SECTION 271FA,] [SECTION 271FAB ] [SECTIO N 3 271FB] [SECTION 271G)) [SECT I ON 271GA] [SECTION 271H,] [SECTION 271 -I ] CLAUSE (C) OR CLAUSE (D) OF SUB - SECT I ON (1) OR SUB- SECTION (2) OF SECTION 272A, SUB-SECTION (1) OF SEC TION 272AA] OR [SECTION 27 2 B OR] [SUB - SECTION ( 1 ) [OR SUB - SECTION (1A)] OF SECTION 2 72BB OR][SUB - SECTION(1) OF SECTION 272BBB OR] CLAUSE (B) OF SUB - SECTION (1) OR CLAUSE (B) OR CLAUSE (C) OF SUB - SECTION (2) OF SECTION 273, NO PENALTY SHALL BE IMPOSABLE O N THE PERSON OR THE ASSESSEE, AS THE CASE M A Y BE, FOR ANY FAILURE REFERRED T O IN THE SAID PROVI S ION , I F H E P R OV ES THAT THER E WAS RE ASONABLE CAU S E FOR THE SAID FAILURE . F ROM T H E READING OF SEC T IO N 273B I T IS CLEAR THA T NO PENALTY SHALL B E IM POSABLE I F THE ASSESSEE SHOWS SUFFICIENT CAUSE FO R BELATED F I L I NG OF THE R E TU RN J STATEM E N T ETC . THIS SEC T ION E NV I SAG ES A NON OBSTANTE CLAUSE AS AGAINST SEC T IONS ENUMERA T ED I N I MPUGNED S E C T ION; IT IS PERM IS SIBLE FOR AN ASSESSE E T O S UB S TANTIAT E REASONABL E CAUSE FOR HIS FAILURE TO C OMPLY WITH T H E P R OVI S ION S ON TH E B AS I S WHER E OF P E N A LTY I S S OUGHT TO BE IMPOSED UPON HIM , HOWEVER, FOR A PENALTY IMPOSED U/S. 2 7 2 A(2)(K) . THE OV E RRIDING EFFECTS O F SECTION 27 3B DOE S NOT A PPL Y A S T H E SAID P E N A LTY HAS NOT FOUND A PLACE IN SECTION 2 7 3B O F I . T . ACT , AND ONLY PENAL T Y IMPOSABLE U/ S . 272A(2)(C) AND (D) HAVE FOUND A PLACE, ACCORDINGLY, THE APPELLANT CANNOT G E T THE BENEFIT OF S EC TION 273B, EVEN IF, THERE ARE REASONABLE GROUND S TO EXPLAIN THE RE A SON BEHIND I NORDINAT E DELAY IN FILING TH E QUARTERLY TDS STATEMENT AS ENVISAGED U/S . 200(3) OF I . T. ACT . FURTHER, THE ENACTMENT OF SECOND PROV I SO TO SECTION 272A C LEARLY ESTABLISH THAT NO PENALTY U/S . 272A(2)(K) OF I.T . ACT IS LEVIABLE IF SUCH FAILURE RELATES TO STATEMENT TO BE FILED FOR THE PE R I OD COMMENCING ON OR AFTER 01 . 07.2012. IN VIEW OF THE A BOVE PROVISO (DUE TO PROSPECTIVE AMENDMENT) , ALTHOUGH, NO PENALTY WILL BE LEVIABLE FOR THE FAILURE TO BE COMMITTED AF TER THE PERIOD 1 .7 . 20 1 2 , STILL , DEFAULTER HAS TO PAY FOR THE FAILURE F OR THE PERIOD PRIOR TO 01 . 07 . 2012. MOREOVER , SECTION 273B OF I . T . ACT HAS NOT EXTENDED IT'S BENEFIT TO THE PENALTY LEVIED U/S . 272A(2)( K ) OF I . T . ACT . FURTHER, AS REGARDS THE APPELLANT'S CONTENTION THAT I T WAS NOT REQUIRED TO DEDUCT TAX U/S. 40(A)(IA) OF I . T . ACT , THE IMPUGNED CONTENTION HAS NO MEANING AS THE APPELLANT ITSELF FILED ITS QUARTER STATEMENT AFTER A GAP OF 467 DAYS . THE ACT I ON OF APPELLANT APPAR E NTLY SHOWS THAT THE DEDUCTION WAS R E QUIR E D TO BE DONE FOLLOWED BY FILING OF QUARTERLY STATEMENT AS PER THE EXISTING PROVISIONS OF I.T . ACT . T H E C A SE L AW S R E LI E D UP ON BY TH E A PPELL A NT HAVE NOT DEALT TH E ISSUE WITH REFEREN C E TO TH E OBS E RVATION S GIVEN IN ABOVE P A R AS , HENCE , ARE NOT APPLICABLE . HENCE, CONSIDERING THE ABOVE L EGA L POS I TION ON THIS I SS UE, THE AO H AS CORRECTLY LEVI E D TH E PENALTY. ACCORDINGLY, THE APPEAL FILED DESERVES T O BE DISMISSED. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD . CIT(A) WAS NOT JUSTIF I ED IN DISMISSING THE APPEAL OF THE ASSESSEE. THE ORDER OF THE LD CIT(A) BE SET ASIDE. 4 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE LEGAL POSITION AFTER THE RETROSPECTIVE AMENDMENT MADE BY INSERTING 2 ND PROVISO IN S. 40(A)(IA) OF THE ACT. THE AMENDED 2 ND PROVISO IS APPLICABLE TO THE APPELLANT HEREIN SINCE THE DEDUCTEE HAD SHOWN THE E NTIRE INCOME RECEIVED FROM THE DEDUCTOR AND PAID THE TAX THEREON AS DECLARED IN THE RETURN. THE ASSESSEE HAD NO OBLIGATION TO DE DUCT ANY TAX. THE PROVISIONS OF S. 272A(2)(K) OF THE ACT ARE NOT APPLICABLE. THE ASSESSEE-APPELLANT WAS NOT OBLIGED TO FILE F. 26Q OF THE RULES. THE PENALTY, THEREFORE, WAS NOT LEVIABLE ON THE ASSESSE E . THE PENALTY BE DELETED . 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) WAS NOT JUSTIFIED IN OBSERVING THAT INSPITE OF THIS THE ASSESSEE PAID THE DEDUCTED TAX TO THE CREDIT OF THE CENTRAL GOVT. AND THEREFORE, WAS LIABLE FOR PENALTY. THE ORDER OF THE LD. CIT(A) IS NOT IN CONSONANCE WITH THE PROVISIONS OF LAW . THE PENALTY LEVIED AND CONFIRMED BY LD. CIT(A) BE QUASHED. 3. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED. WE FIND THAT TH E BENCHES AT PUNE HAVE DECIDED IDENTICAL ISSUE IN THE PAST. WE THER EFORE PROCEED TO DISPOSE OF THE APPEAL EX-PARTE QUA THE ASSESSEE. 4. BEFORE US, LD.D.R. TOOK US THROUGH THE ORDER OF LOWER A UTHORITIES AND SUBMITTED THAT SINCE THE ASSESSEE HAS NOT EXPLAINED THE DELAY IN FILING FORM 26Q, AO WAS FULLY JUSTIFIED IN LEVYING PENALTY. HE TH US SUPPORTED THE ORDER OF AO. 5. WE HAVE HEARD THE LD.D.R. AND PERUSED THE MATERIAL O N RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO LEVY OF PENALTY U/S 272(2)(K) / 274 R.W.S. 200(3) OF THE ACT OF DELAY IN FILING OF E-TD S RETURN FOR 1 ST QUARTER OF F.Y. 2010-11. WE FIND THAT BEFORE LD.CIT(A) AS SESSEE HAS MADE SUBMISSIONS TO THE EFFECT THAT HE WAS UNDER B ONAFIDE BELIEF THAT ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS BUT LATE R ON BY WAY OF ABUNDANT CAUTION, HE DEDUCTED AND DEPOSITED THE TAX TO THE CREDIT OF 5 CENTRAL GOVERNMENT. WE FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED BY CO-ORDINATE BENCH OF THE PUNE TRIBUNAL IN THE CASE OF C IT VS. KRANTI LIQUORS IN ITA NO.1038/PUN/2016 ORDER DT.28.02.2018 WHER EIN, IT AFTER RELYING ON THE DECISION OF CO-ORDINATE BENCH OF TH E TRIBUNAL IN BUNCH OF APPEALS, LEAD CASE BEING NAV MAHARASHTRA VIDYALAY A VS. ADDL. COMMISSIONER OF INCOME TAX (TDS) RANGE, PUNE IN ITA NO. 832/PN/2016 ORDER DT. 07-10-2016 HELD THAT WHEN THE A SSESSEE HAS BEEN ABLE TO EXPLAIN REASONABLE CAUSE FOR THE FAILURE TO FILE RETURN IN TIME, PENALTY CAN BE DELETED AS PER THE PROVISIONS OF SECT ION 273B OF THE ACT. IN THE PRESENT CASE, WE FIND THAT ASSESSEE W AS UNDER THE BONAFIDE BELIEF THAT IT BEING NOT LIABLE TO DEDUCT THE TDS BU T SUBSEQUENTLY, IT DEDUCTED THE TDS AND DEPOSITED IT TO T HE ACCOUNT OF GOVERNMENT AND THE BELIEF OF THE ASSESSEE THAT IT WAS NO T LIABLE TO PAY TAX IS NOT FOUND TO BE WRONG. WE FURTHER FIND THAT HONBLE APEX COURT IN THE CASE OF HINDUSTAN STEEL LTD., VS. STATE OF O RISSA (1972) 83 ITR 26 HAS INTER-ALIA HELD THAT PENALTY WILL NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. IT FURTHER HELD THAT EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE B REACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. IN VIEW OF THE AFORE SAID FACTS, AFTER FOLLOWING THE DECISIONS OF PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF KRANTI LIQUORS (SUPRA) AND HONBLE APEX COURT IN THE CASE OF HINDUSTAN STEEL LTD (SUPRA), WE ARE OF THE VIEW THAT LD. CIT(A) HAS ERRED IN UPHOLDING THE LEVY OF PENALTY. WE THEREFORE DIRECT THE DELETION 6 OF THE PENALTY LEVIED U/S 272A(2)(K) OF THE ACT. THUS, THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 15 TH DAY OF MARCH, 2018. SD/- SD/- ( VIKAS AWASTHY ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 15 TH MARCH, 2018. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-5, PUNE / CIT(A) CONCERNED. CIT(TDS), PUNE. / CIT CONCERNED. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER // TRUE COPY // // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.