ACIT (TDS), TDS Circle-1(1), Hyderabad, Hyderabad V. Greater Hyderabad Municipal Corporation, Central Zone, Hyderabad, Hyderabad

ITA 159/HYD/2015

• Counselvise Citation: 15922514 RSA 2015
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-07-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 19-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRABHAT KUMAR GUPTA
• Assessee Lawyers: S RAMA RAO
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHE A (SMC) : HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER ITA.NO. A.Y. APPELLANT RESPONDENT 155/H/2015 2011- 2012 ACIT (TDS), TDS CIRCLE 1(1), HYDERABAD. GREATER HYDERABAD MUNICIPAL CORPORATION, NORTH ZONE, SECUNDERABAD. 156/H/2015 GREATER HYDERABAD MUNICIPAL CORPORATION, SOUTH ZONE, HYDERABAD. 157/H/2015 GREATER HYDERABAD MUNICIPAL CORPORATION, EAST ZONE, HYDERABAD. 158/H/2015 GREATER HYDERABAD MUNICIPAL CORPORATION, WEST ZONE, HYDERABAD. 159/H/2015 GREATER HYDERABAD MUNICIPAL CORPORATION, CENTRAL ZONE, HYDERABAD. 160/H/2015 GREATER HYDERABAD MUNICIPAL CORPORATION, HEAD OFFICE, HYDERABAD. 2 ITA.NOS.155 TO 160/HYD/2015 GHMC, SECUNDERABAD & HYDERABAD. FOR REVENUE : MR. PRABHAT KUMAR GUPTA FOR ASSESSEE : MR. S. RAMA RAO DATE OF HEARING : 2 3 .07.2015 DATE OF PRONOUNCEMENT : 12 .0 8 .2015 ORDER THESE SIX APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER OF LD. CIT(A)-II, HYDERABAD DATED 14.11.2014 WHEREBY HE CANCELLED THE PENALTIES IMPOSED BY THE A.O. UNDER SECTION 272A(2) (K) IN THE CASE OF ALL THE SIX ASSESSEES. 2. THE ASSESSEES IN THE PRESENT CASE ARE THE HEAD OFFICE AND ZONAL OFFICES OF THE GREATER HYDERABAD MUNICIPAL CORPORATION (IN SHORT GHMC). AS NOTICED BY THE A.O., THERE WAS A FAILURE ON THE PART OF THE AS SESSEES TO FILE THE QUARTERLY RETURNS OF TDS IN FORM 24Q AN D 26Q FOR THE YEAR UNDER CONSIDERATION WITHIN THE STIPULA TED TIME AS REQUIRED BY SUB-SECTION (3) OF SECTION 200 READ WITH RULE 31A(2) OF THE I.T. RULES, 1962. HE THEREF ORE, INITIATED PENALTY PROCEEDINGS AND ISSUED NOTICES UN DER SECTION 274 REQUIRING ALL THE SIX ASSESSEES TO SHOW CAUSE AS TO WHY PENALTY UNDER SECTION 272A(2)(K) SHOULD N OT BE IMPOSED FOR THEIR FAILURE TO FILE THE TDS RETURNS W ITHIN THE STIPULATED TIME. IN RESPONSE TO THE SAID NOTICES, T HE FOLLOWING EXPLANATION WAS OFFERED BY THE ASSESSEE. A) THAT THE DEDUCTEES DID NOT SUBMIT THE REQUIRED INFORMATION IN TIME TO GHMC. 3 ITA.NOS.155 TO 160/HYD/2015 GHMC, SECUNDERABAD & HYDERABAD. B) THAT EACH ZONE HAS SEVERAL CIRCLES AND THERE HAS BEEN DELAY IN RECEIVING INFORMATION FROM ONE OR THE OTHER CIRCLE. C) THAT GHMC WAS BUSY IN ATTENDING TO SEVERAL OTHER GOVERNMENT PROGRAMS LIKE PENSION TO OLD AGE PEOPLE, SUBMISSION OF REPORTS TO GOVERNMENT ETC., D) THAT SHORTAGE OF MANPOWER IS ONE OF THE MAIN REASONS FOR DELAY IN FILING TDS RETURNS. E) THAT GHMC, BEING A LOCAL BODY, BEING A GOVERNMENT ORGANIZATION, DOES NOT HAVE ANY MALAFIDE INTENTION IN LATE FILING OF TDS RETURNS. A S SUCH THE TAX WAS DEDUCTED AND PAID TO GOVERNMENT ACCOUNT. THERE IS NO REVENUE LOSS TO THE INCOME TAX DEPARTMENT NOR THERE IS ANY REVENUE GAIN TO GHMC IN LATE FILING OF TDS RETURNS. THEREFORE, IT WAS REQUESTED NOT TO LEVY PENALTY U/S.272A(2)(K). 2.1. THE ABOVE EXPLANATION OFFERED BY THE ASSESSEE S WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. ACCORDING TO HIM, THERE WAS NO REASONABLE CAUSE HIGHLIGHTED BY THE ASSESSEES FOR THE DELAY ON THEIR PART IN FILING THE RELEVANT TDS RETURNS AND IN THE ABSENCE OF SUCH REASONABLE CAUSE PUT-FORTH BY THE ASSESSEES THEY WE RE LIABLE TO PAY PENALTIES UNDER SECTION 272A(2)(K) OF THE ACT. ACCORDINGLY, PENALTIES UNDER SECTION 272A(2)(K) WER E IMPOSED BY THE A.O. ON ALL THE SIX ASSESSEES UNDER SECTION 272A(2)(K) AS UNDER : GHMC (HO) F.Y. 2010-2011 TOTAL PENALTY (IN RS.) FORM 26Q 24,100 FORM 24Q 3,94,100 TOTAL 4,18,200 GHMC (EAST ZONE) F.Y.2010 - 11 TOTAL PENALTY 4 ITA.NOS.155 TO 160/HYD/2015 GHMC, SECUNDERABAD & HYDERABAD. (IN RS.) FORM 26Q 68,000 FORM 24Q 3,43,900 TOTAL 4,11,900 GHMC (CENTRAL ZONE) F.Y. 2010-2011 TOTAL PENALTY (IN RS.) FORM 26Q 47,900 FORM 24Q 4,35,200 TOTAL 4,83,100 GHMC (NORTH ZONE) F.Y. 2010-2011 TOTAL PENALTY (IN RS.) FORM 26Q 32,400 FORM 24Q 63,000 TOTAL 95,400 GHMC (WEST ZONE) F.Y. 2010-2011 TOTAL PENALTY (IN RS.) FORM 26Q 27,500 FORM 24Q 3,99,500 TOTAL 4,27,000 GHMC (SOUTH ZONE) F.Y. 2010-2011 TOTAL PENALTY (IN RS.) FORM 26Q 61,200 FORM 24Q 71,500 TOTAL 1,32,700 2.2. THE PENALTIES IMPOSED BY THE A.O. UNDER SECTION 272A(2)(K) WERE CHALLENGED BY ALL THE SIX A SSESSEES IN THE APPEALS FILED BEFORE THE LD. CIT(A). DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT( A), THE FOLLOWING SUBMISSIONS WERE MADE ON BEHALF OF THE ASSESSEES IN SUPPORT OF THEIR CASES THAT THE PENALT IES IMPOSED BY THE A.O. UNDER SECTION 272A(2)(K) WERE N OT SUSTAINABLE. (A) THE ASSESSEE WAS NOT SUPPORTED BY THE COMPETENT STAFF HAVING THE REQUIRED EXPERTISE AND KNOWLEDGE OF FILING THE ONLINE QUARTERLY ETDS RETURNS. 5 ITA.NOS.155 TO 160/HYD/2015 GHMC, SECUNDERABAD & HYDERABAD. (B) THE ASSESSEE COULD NOT GET THE PAN DETAILS OF THE DEDUCTEES IN SPITE OF ALL ITS EFFORTS. (C) THE DELAY CAUSED IN FILING OF THE E- TDS RETURNS WAS PURELY BEYOND THE CONTROL OF THE ASSESSEE AND THERE WAS NO INTENTION WHATSOEVER TO DELAY THE FILING OF THE QUARTERLY RETURNS, WHEN THE TDS WAS VERY MUCH REMITTED FROM TIME TO TIME. (D) LEARNING ASSESSING OFFICER HAS IGNORED THE FACT THAT IN THE PRESENT CASE LEVY OF PENALTY UNDER S.272A(2)(K) IS NOT JUSTIFIED FOR MERE FAILURE TO F ILE THE TDS RETURNS WITHIN THE PRESCRIBED TIME OWING TO IGNORANCE OF STATUTORY PROVISIONS AS THE APPELLANT DID NOT DERIVE ANY BENEFIT WHATSOEVER BY NOT FILING THE QUARTERLY TDS STATEMENTS IN TIME, AND WHEREIN THE APPELLANT WHO IS' A LOCAL BODY (PUBLIC OFFICE) HAD DISCHARGED ITS OBLIGATION BY DEDUCTING TAX AT SOURCE AND DEPOSITED IT WITHIN THE CENTRAL GOVT. EXCHEQUER. 3. AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEES AND KEEPING IN VIEW THE VAR IOUS JUDICIAL PRONOUNCEMENTS CITED ON BEHALF OF THE ASSE SSEES, THE LD. CIT(A) HELD THAT ALL THE ASSESSEES BEING GOVERNMENT ORGANIZATION, THERE WAS NO MALAFIDE INTE NTION IN FILING TDS RETURNS BELATEDLY. HE ALSO HELD THAT THE TAX AT SOURCE HAVING BEEN DEDUCTED AND PAID BY THE ASSE SSEES AS PER THE RELEVANT PROVISIONS OF THE ACT, THE DELA Y IN FILING THE TDS RETURNS WAS ONLY A TECHNICAL DEFAULT AND TH ERE BEING NO LOSS TO THE REVENUE OR ANY MONETARY GAIN T O THE ASSESSEES, THE PENALTIES IMPOSED BY THE A.O. UNDER SECTION 272A(2)(K) IN CASE OF ALL THE SIX ASSESSEES WERE NOT JUSTIFIED. ACCORDINGLY, THE PENALTIES IMPOSED BY TH E A.O. UNDER SECTION 272A(2)(K) IN CASE OF ALL THE SIX ASS ESSEES 6 ITA.NOS.155 TO 160/HYD/2015 GHMC, SECUNDERABAD & HYDERABAD. WERE CANCELLED BY THE LD. CIT(A). AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE HAS PREFERRED THESE APP EALS BEFORE THE TRIBUNAL. 4. THE LEARNED D.R. CONTENDED THAT THERE WAS NO REASONABLE CAUSE ESTABLISHED BY THE ASSESSEES FOR T HE DELAY ON THEIR PART IN FILING THE RELEVANT TDS RETU RNS. HE CONTENDED THAT THIS VITAL ASPECT HOWEVER WAS COMPLE TELY OVERLOOKED BY THE LD. CIT(A) AND THE PENALTIES IMPO SED BY THE A.O. UNDER SECTION 272A(2)(K) WERE CANCELLED BY HIM ON THE GROUND THAT THE ASSESSEES HAVING DEDUCTED AN D PAID THE TAX AS PER THE RELEVANT PROVISIONS OF THE ACT, THE DELAY IN FILING THE TDS RETURNS WAS ONLY A TECHNICA L DEFAULT. HE CONTENDED THAT THE REQUIREMENT OF FILIN G THE TDS RETURNS ITSELF IS A TECHNICAL REQUIREMENT INVOL VING NO REVENUE IMPLICATION AND IF THE BASIS GIVEN BY THE L D. CIT(A) FOR CANCELLING THE PENALTIES IS ACCEPTED, TH E RELEVANT PROVISIONS OF SECTION 272A(2)(K) WOULD BECOME REDUN DANT. HE CONTENDED THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) CANCELLING THE PENALTIES IMPOSED BY THE A.O. UNDER SECTION 272A(2)(K) IN CASE OF ALL THE SIX ASSESSEES THUS IS NOT WELL FOUNDED AND THE SAME IS LIABLE TO SET ASID E. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, STRONGLY SUPPORTED THE IMPUGNED ORDER OF THE LD. CIT(A) CANCELLING THE PENALTIES IMPOSED BY THE A.O. UNDER SECTION 272A(2)(K) IN CASE OF ALL THE SIX ASSESSEES . BESIDES RELYING STRONGLY ON THE BASIS GIVEN BY THE LD. CIT( A) IN HER IMPUGNED ORDER FOR CANCELLING THE PENALTIES, HE ALS O 7 ITA.NOS.155 TO 160/HYD/2015 GHMC, SECUNDERABAD & HYDERABAD. RAISED A TWO FOLD CONTENTION. FIRSTLY, HE RELIED ON THE SECOND PROVISO TO SECTION 272A TO CONTEND THAT NO P ENALTY CAN BE LEVIED UNDER CLAUSE (K) OF SUB-SECTION (2) T O SECTION 272A ON OR AFTER 1 ST DAY OF JULY, 2012 FOR THE FAILURE ON THE PART OF THE ASSESSEES TO DELIVER OR CAUSED TO B E DELIVERED A COPY OF THE STATEMENT WITHIN THE TIME S PECIFIED IN SUB-SECTION (3) OF SECTION 200. SECONDLY, HE CON TENDED THAT THE REASONABLE CAUSE WHICH PREVENTED THE ASSES SEES FROM FILING THE RELEVANT TDS RETURNS WITHIN THE STI PULATED TIME WAS PLEADED BY THE ASSESSEES BEFORE THE A.O. A S WELL AS BEFORE THE LD. CIT(A) BY POINTING OUT THAT THERE WAS A DELAY ON THE PART OF THE DEDUCTEES IN FURNISHING TH EIR PAN DETAILS WHICH RESULTED IN THE DELAY IN FILING THE T DS RETURNS BY THE ASSESSEES. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS RI GHTLY CONTENDED BY THE LEARNED D.R., THE REQUIREMENT OF F ILING THE TDS RETURNS AS PER THE PROVISIONS OF SUB-SECTIO N (3) OF SECTION 200 ITSELF IS TECHNICAL IN THE SENSE THAT I T DOES NOT INVOLVE ANY REVENUE IMPLICATION AND THEREFORE, PENA LTY LEVIABLE UNDER SECTION 272A(2)(K) FOR NOT COMPLYING WITH SUCH REQUIREMENT CANNOT BE HELD TO BE UNSUSTAINABLE ON THE GROUND THAT THE DELAY IN FILING THE TDS RETURNS IS ONLY A TECHNICAL DEFAULT. IN MY OPINION, THE IMPUGNED OR DER OF THE LD. CIT(A) CANCELLING THE PENALTIES BY THE A.O. UNDER SECTION 272A(2)(K) ON THIS GROUND THUS IS NOT WELL FOUNDED. 8 ITA.NOS.155 TO 160/HYD/2015 GHMC, SECUNDERABAD & HYDERABAD. 7. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUPPORTED THE IMPUGNED ORDER OF THE LD . CIT(A) CANCELLING THE PENALTIES IMPOSED BY THE A.O. UNDER SECTION 272A(2)(K) BY CONTENDING THAT SUCH PENALTIE S CANNOT BE IMPOSED ON OR AFTER 1 ST DAY OF JULY, 2012 AS PER THE SECOND PROVISO TO SECTION 272A(2) INSERTED IN T HE STATUTE BY THE FINANCE ACT, 2012 W.E.F. 01.07.2012. THE SAID PROVISO READS AS UNDER : PROVIDED FURTHER THAT NO PENALTY SHALL BE LEVIED UNDER THIS SECTION FOR THE FAILURE REFERRED TO IN C LAUSE (K), IF SUCH FAILURE RELATES TO A STATEMENT REFERRE D TO IN SUB-SECTION (3) OF SECTION 200 OR THE PROVISO TO SU B- SECTION (3) OF SECTION 206C WHICH IS TO BE DELIVERE D OR CAUSED TO BE DELIVERED FOR TAX DEDUCTED AT SOURCE O R TAX COLLECTED AT SOURCE, AS THE CASE MAY BE, ON OR AFTER THE 1 ST DAY OF JULY, 2012. 7.1. A CAREFUL READING OF THE ABOVE PROVISO MAKES IT CLEAR THAT EVEN THOUGH THE SAME COVERS THE FAILURE RELATING TO A STATEMENT REFERRED TO IN SUB-SECTION (3) OF SE CTION 200 AS INVOLVED IN THE PRESENT CASES, IT IS APPLICABLE TO SUCH A STATEMENT WHICH HAS TO BE DELIVERED OR CAUSED TO BE DELIVERED FOR TAX DEDUCTED AT SOURCE OR TAX COLLECT ED AT SOURCE, AS THE CASE MAY BE, ON OR AFTER THE 1 ST DAY OF JULY, 2012. IN THE PRESENT CASES, THE RELEVANT TDS RETURN S WERE TO BE DELIVERED OR CAUSED TO BE DELIVERED BY THE AS SESSEES BEFORE THE 1 ST DAY OF JULY, 2012 AND THIS BEING THE UNDISPUTED POSITION, I AM OF THE VIEW THAT THE SECO ND PROVISO TO SECTION 272A(2) IS NOT APPLICABLE IN THE PRESENT CASES. THE RELIANCE OF THE LD. COUNSEL FOR THE ASSE SSEE ON THE SAID PROVISO TO SUPPORT THE IMPUGNED ORDER OF T HE LD. 9 ITA.NOS.155 TO 160/HYD/2015 GHMC, SECUNDERABAD & HYDERABAD. CIT(A) CANCELLING THE PENALTIES IMPOSED UNDER SECTI ON 272A(2)(K) THUS IS CLEARLY MISPLACED. 7.2. AS REGARDS THE SECOND CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE REASONABLE CAUSE, WHICH PREVENTED THE ASSESSEES FROM FILING THE RELEVANT TD S RETURNS WITHIN THE STIPULATED TIME, WAS PLEADED BEF ORE THE A.O. AS WELL AS BEFORE THE LD. CIT(A) BY POINTING O UT THAT THERE WAS A DELAY ON THE PART OF THE CONCERNED DEDU CTEES IN FURNISHING THE REQUIRED PAN DETAILS, IT IS OBSER VED THAT NEITHER THE A.O. NOR THE LD. CIT(A) HAS APPRECIATED AND CONSIDERED THE SAME ON MERIT BY VERIFYING THE RELEV ANT DETAILS. AT THE TIME OF HEARING BEFORE ME ALSO, LD. COUNSEL FOR THE ASSESSEE HAS NOT FURNISHED THE RELEVANT DET AILS AND DOCUMENTS TO SUPPORT AND SUBSTANTIATE THE CASE OF T HE ASSESSEES THAT THE DELAY ON THE PART OF THE CONCERN ED DEDUCTEES IN FURNISHING DETAILS RESULTED INTO THE D ELAY IN FILING THE RELEVANT TDS RETURNS BY ALL THE ASSESSEE S. HE HOWEVER HAS CONTENDED THAT THE ASSESSEES ARE IN THE POSITION TO PRODUCE ALL THESE RELEVANT DETAILS AS W ELL AS DOCUMENTARY EVIDENCE BEFORE THE A.O. TO ESTABLISH T HAT THERE WAS A DELAY ON THE PART OF THE CONCERNED DEDU CTEES TO FURNISH THEIR PAN DETAILS AND THE SAME CONSTITUT ED A REASONABLE CAUSE WHICH PREVENTED THE ASSESSEES FROM FILING THE RELEVANT TDS RETURNS WITHIN THE STIPULAT ED TIME. HE THEREFORE HAS URGED THAT ONE OPPORTUNITY MAY BE GIVEN TO THE ASSESSEES BY SENDING THE MATTER BACK TO THE A.O. FOR THIS PURPOSE. I CONSIDER IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO ACCEPT THIS CONTENTION OF TH E LD. 10 ITA.NOS.155 TO 160/HYD/2015 GHMC, SECUNDERABAD & HYDERABAD. COUNSEL FOR THE ASSESSEE AND SINCE THE LEARNED D.R. HAS ALSO NOT RAISED ANY OBJECTION IN THIS REGARD, I SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) AND RESTORE THE MA TTER TO THE FILE OF THE A.O. WITH A DIRECTION TO DECIDE THE ISSUE RELATING TO IMPOSITION OF PENALTY UNDER SECTION 272 A(2)(K) AFRESH, AFTER GIVING THE ASSESSEES PROPER AND SUFFI CIENT OPPORTUNITY TO SUPPORT AND SUBSTANTIATE THEIR CASE OF REASONABLE CAUSE BY PRODUCING RELEVANT DETAILS AND DOCUMENTARY EVIDENCE. 8. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.08.2015. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER DATED 12 TH AUGUST, 2015 VBP/- COPY TO 1. ACIT (TDS), TDS CIRCLE 1(1), B BLOCK, 4 TH FLOOR, INCOME TAX TOWERS, A.C. GUARDS, MASAB TANK, HYDERABAD 500 004. 2 TO 7. GREATER HYDERABAD MUNICIPAL CORPORATION, HE AD OFFICE, TANK BUND, HYDERABAD, GHMC, NORTH ZONE SECUNDERABAD, GHMC, SOUTH ZONE, HYDERABAD, GHMC, EAST ZONE, HYDERABAD, GHMC, WEST ZONE, HYDERABAD, GHMC CENTRAL ZONE, HYDERABAD. 8 . CIT(A) - II , HYDERABAD. 9 . CIT (TDS), HYDERABAD. 1 0 . D.R. ITAT A (SMC) BENCH, HYDERABAD. 1 1 GUARD FILE