ITO (TDS)-2(3), MUMBAI V. MORAJ BUILDING CONCEPTS P. LTD, MUMBAI

ITA 1232/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7879 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 23-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 15-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Assessee Lawyers: PRADEEP KAPASI
• Keywords: Reasonable cause; TDS
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, J, MUMBAI BEFORE SHRI R V EASWAR, PRESIDENT AND SHRI B RAMAKOTAIAH, ACCOUNTANT MEMBER I T A NO: 1232/MUM/2010 (ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER (TDS) RANGE 2(3) APPELLANT MUMBAI VS M/S MORAJ BUILDING CONCEPTS PVT. LTD. RESPONDENT NAVI MUMBAI (PAN: AABCM8573A) APPELLANT BY: SHRI SUMEET KUMAR RESPONDENT BY: SHRI PRADEEP KAPASI O R D E R R V EASWAR, PRESIDENT: THIS APPEAL IS BY THE REVENUE AND IT RELATES TO TH E ASSESSMENT YEAR 2006-07. THE ONLY GROUND TAKEN IS THAT THE CIT(A) ERRED IN CANCELLING THE PENALTY OF ` 2,14,550/- IMPOSED ON THE ASSESSEE UNDER SECTION 272A(2)(C) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY. IT W AS BOUND TO DEDUCT TAX FROM CERTAIN PAYMENTS MADE BY IT. THE T AX WAS DULY DEDUCTED. HOWEVER, THE ASSESSEE FAILED TO COMPLY W ITH SECTION 206 / 206C OF THE ACT. UNDER SECTION 206, PERSONS DEDU CTING TAX ARE LIABLE TO FURNISH PRESCRIBED RETURNS WITHIN A PARTI CULAR TIME LIMIT. THE TIME LIMIT WAS FIXED BY THE INCOME TAX RULES. THE ASSESSEE FAILED TO FURNISH THE RETURNS WITHIN THE TIME PRESCRIBED B Y THE RULES IN RESPECT OF THE FOUR QUARTERS COMPRISED IN THE FINAN CIAL YEAR 2005-06. THESE DETAILS ARE GIVEN IN THE FORM OF A TABLE IN T HE PENALTY ORDER ITA NO: 1232/MUM/2010 2 AND ARE NOT REPRODUCED FOR THE SAKE OF BREVITY. TH E DELAY RANGES FROM 733 DAYS TO 1031 DAYS AND THE TOTAL PENALTY LE VIED IS ` 2,14,550/-. APPARENTLY, THE EXPLANATION ADDUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS NOT ACCEPTED AS CO NSTITUTING REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE ACT. THE CIT(A), HOWEVER, CANCELLED THE PENALTY, AGAINST WHICH THE REVENUE IS IN APPEAL. 3. THE ONLY QUESTION TO BE CONSIDERED IS WHETHER TH ERE WAS ANY REASONABLE CAUSE FOR THE ASSESSEE FOR THE DELAY. T HE CIT(A) HAS ENTERED THE FOLLOWING FINDINGS: - (A) SECTION 200(3) IS THE APPLICABLE PROVISION AND THIS PROVISION WAS INSERTED WITH EFFECT FROM 01.04.2005 BY THE FINANCE (NO.2) ACT, 2004. THIS WAS THE FIRST YEAR AFTER THE INTRODUCTION OF THE PROVISION. (B) UNDER RULE 31A OF THE INCOME TAX RULES, THE ASSESSEE HAS TO OBTAIN PERMANENT ACCOUNT NUMBERS FROM THE DEDUCTEES. SINCE THE DEDUCTEES WERE SMALL TIME LABOURERS, THERE WAS DIFFICULTY IN COLLECTING THOSE DETAILS FROM THEM. (C) THE NATURE OF THE CONTRACT WAS SUCH THAT THE ASSESSEE HAD TO EMPLOY LABOUR CONTRACTORS FROM MANY UNORGANIZED SECTORS, WHICH MADE IT ITA NO: 1232/MUM/2010 3 MORE DIFFICULT TO COLLECT THE PERMANENT ACCOUNT NUMBERS. (D) THE CHIEF ACCOUNTANT OF THE ASSESSEE COMPANY, WHO WAS WORKING WITH IT FOR THE PAST TEN YEARS AND WAS LOOKING AFTER OF THE TDS AND IT RELATED COMPLIANCES, RESIGNED. HE WAS REPLACED BY ANOTHER ACCOUNTANT, WHO ALSO RESIGNED AND HAD TO BE REPLACED. (E) EVERY CORPORATE ASSESSEE HAS FACED SIMILAR DIFFICULTIES IN PREPARING THE STATEMENTS OR IN FILING THEM IN ELECTRONIC FORM. (F) DESPITE ALL THE DIFFICULTIES, THE QUARTERLY TDS RETURNS ULTIMATELY WERE FILED BY THE ASSESSEE VOLUNTARILY WITHOUT BEING PROMPTED BY ANY NOTICE FROM THE DEPARTMENT. (G) THERE IS NO REVENUE LOSS SINCE THE TAX HAS BEEN DEDUCTED AND PAID TO THE GOVERNMENT. ONLY THE PAPER WORK WAS DELAYED, WHICH IS ONLY A TECHNICAL BREACH. 4. THE ABOVE FINDINGS, IN OUR OPINION, ALSO CONSTIT UTE REASONABLE CAUSE FOR THE DELAY. WE MAY CLARIFY THA T THOUGH THE PENALTY ORDER REFERS TO SECTION 206 / 206C, THE DEF AULT, AS FOUND BY THE CIT(A) AND AS EXPLAINED BEFORE US, IS UNDER SEC TION 200(3) OF THE ACT. IT MAY ALSO BE ADDED THAT THE PENALTY ORD ER SEEMS TO BE IN ITA NO: 1232/MUM/2010 4 A CYCLOSTYLED FORM WITHOUT REFERRING EVEN TO THE AP PROPRIATE SECTION. THIS MAY SHOW NON-APPLICATION OF MIND. BE THAT AS IT MAY, THE ONLY QUESTION BEFORE US IS WHETHER THE ASSESSEE WAS PREV ENTED BY REASONABLE CAUSE BY FILING THE RETURNS IN TIME, WIT HIN THE MEANING OF SECTION 273B OF THE ACT. ON THE FINDINGS RECORDED BY THE CIT(A), WHICH ARE NOT DISPUTED BEFORE US BY THE REVENUE, WE ARE UNABLE TO SAY THAT THE ASSESSEE WAS NOT PREVENTED BY REASONAB LE CAUSE. WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) CANCELLI NG THE PENALTY AND DISMISS THE APPEAL FILED BY THE REVENUE WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH 2011. SD/- SD/- (B RAMAKOTAIAH) (R V EASWAR) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED 18 TH MARCH 2011 SALDANHA COPY TO: 1. M/S MORAJ BUILDING CONCEPTS PVT. LTD. C-7, BIG SPLASH, 1 ST FLOOR, TURBHE ROAD VASHI, NAVI MUMBAI 400 705 2. ITO (TDS) RANGE 2(3), MUMBAI 3. CIT-(TDS), MUMBAI 4. CIT(A)-14, MUMBAI 5. DR J BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI