M/s Corporation Bank, Chandigarh V. JCIT (TDS), Chandigarh

ITA 161/CHANDI/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1595 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-08-2015
• Assessment Year: 2012-2013
• Appeal Filed On: 12-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Bonafide belief; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L. KARWA, HONBLE VICE PRESIDENT AND MRS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO.161/CHD/2015 ASSESSMENT YEAR:2012-13 CORPORATION BANK, VS. JCIT (TDS) SCO 493-494 CHANDIGARH SECTOR 35-C CHANDIGARH PAN NO. AAACC7245E (APPELLANT) (RESPONDENT) APPELLANT BY : SH. TEJ MOHAN SINGH RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 09/09/2015 DATE OF PRONOUNCEMENT :15/09/2015 ORDER PER ANNAPURNA MEHROTRA, A.M THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (APPEALS)-2 CHANDIGARH, DT. 28/11/2014. 2. THE ONLY ISSUE IN THE PRESENT APPEAL RELATES TO LEVY OF PENALTY OF RS. 19,100/- UNDER SECTION 272A(2)(K) OF THE INCOME TAX ACT, 1961. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE IMPUGNED YEAR THE ASSESSEE HAD FAILED TO FILE THE QUARTERLY TDS RETUR N IN FORM NO. 26Q FOR THE SECOND QUARTER BY THE DUE DATE AND THERE WAS A DELA Y OF 191 DAYS IN FILING THE SAME. DURING PENALTY PROCEEDINGS, IN RESPONSE TO SH OW CAUSE NOTICE, THE ASSESSEE STATED THAT NO PENALTY UNDER SECTION 272A( 2)(K) SHOULD BE LEVIED SINCE THE DELAY IN FILING RETURN WAS ON ACCOUNT OF SYSTEM S ERROR AND DUE TO DELAY IN FILING OF RETURN BY CHARTERED ACCOUNTANT ON ACCOUNT OF MISMATCH IN DATA FILES. IT WAS FURTHER STATED THAT THE TDS HAD BEEN DEPOSITED IN TIME BUT DUE TO AFORESTATED REASONS DELAY HAD OCCURRED IN FILING F ORM NO. 26Q FOR THE SECOND QUARTER. THE AO FOUND THE REASON FOR DELAY INSUFFIC IENT / UNREASONABLE AND THEREFORE, LEVIED PENALTY UNDER SECTION 272A(2)(K) AMOUNTING TO RS. 19,100/-. 4. BEFORE THE LD. CIT(A) THE ASSESSEE REPEATED THE ARGUMENTS MADE BEFORE THE AO AND STATED THAT SINCE TDS DEDUCTED HAD BEEN DULY DEPOSITED WITHIN THE TIME LIMIT NO PENALTY OUGHT TO BE LEVIED. THE ASSES SEE RELIED UPON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF M/S HINDUS TAN STEEL LTD. VS. STATE OF ORISSA [1972] 83 ITR 26 AND THE JUDGMENT OF THE JUR ISDICTIONAL HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. EXECUTIVE E NGINEER [2010] 320 ITR 494 AND VARIOUS OTHER JUDGMENTS IN SUPPORT OF ITS CONTE NTION. THE LD. CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE AND UPHELD THE LEVY OF PENALTY UNDER SECTION 272A(2)(K). 5. AGGRIEVED BY THE SAME THE ASSESSEE FILED THE PRE SENT APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE PENALTY OF RS. 19 ,100/- LEVIED U/S 272A(2)(K) WHICH IS ARBITRARY AND UNJUSTIFIED. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS FAILED TO CONSIDER THE REASONABLE CAUSE PLEADED IN THE CORRECT PERSPEC TIVE WHICH LEAD TO THE DEFAULT AND AS SUCH THE UPHOLDING OF THE PENALTY IS ARBITRARY AND UNJUSTIFIED. 6. BEFORE US THE LD. AR OF THE ASSESSEE ARGUED THAT THERE WAS NO CASE FOR LEVY OF PENALTY U/S 272A(2)(K) BECAUSE THE ASSESSE E HAD A REASONABLE CAUSE FOR NOT FILING THE RETURN IN TIME, BEING ON ACCOUNT OF SYSTEMS ERROR AND TECHNICAL FAULT. THE LD. AR STATED THAT AS PER THE PROVISIONS OF SECTION 273 B NO PENALTY WAS LEVIABLE IN THE EVENT OF THERE BEING A REASONABLE C AUSE EXPLAINING THE FAILURE FOR WHICH PENALTY WAS SOUGHT TO BE LEVIED. MOREOVER THE LD.AR RELIED UPON THE JUDGMENT IN THE CASE OF SUSHMA TIWARI VS. DEPARTMEN T OF INCOME TAX IN ITA NO. 54/LKW/2011, ROYAL METAL PRINTERS PVT. LTD. VS. ADD L. CIT(TDS)IN ITA NO. 6840/MUM/2008, AND THE COLLECTOR LAND ACQUISITION V S. ADDL. CIT(TDS) IN ITA NOS. 1226 TO 1229/CHANDI/2011 IN SUPPORT OF HIS CONTENTI ON THAT FOR A TECHNICAL AND VENIAL BREACH NO PENALTY WAS LEVIABLE UNDER SECTION 272A(2)(K) . 7. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF LD. CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE MATERIAL AVAILABLE ON RECORD. 9. WE FIND THAT THE ASSESSEE HAD EXPLAINED TO THE A UTHORITIES BELOW THE REASON FOR THE DELAY AS BEING ON ACCOUNT OF SYSTEMS ERROR AND DELAY IN FILING RETURN BY CHARTERED ACCOUNTANT ON ACCOUNT OF DATA M ISMATCH. ALL THAT THE LD. JOINT COMMISSIONER FOUND WAS THAT THE REASON WAS IN SUFFICIENT / UNREASONABLE. THE EXPLANATION OF THE ASSESSEE WAS NOT CONTROVERTE D. SUCH UNCONTROVERTED EXPLANATION OF THE ASSESSEE CONSTITUTES REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B, WHICH PROVIDES THAT NO PENALTY SHALL BE LEVIED IF REASONABLE CAUSE FOR THE FAILURE IS ESTABLISHED BY THE ASSESSEE. THE REFORE THE PENALTY COULD NOT BE LEVIED U/S 272A(2)(K) OF THE ACT. 10. MOREOVER IT IS AN ADMITTED FACT THAT THE TAX DE DUCTED AT SOURCE, TO WHICH THE F.NO. 26 Q PERTAINED, WAS PAID WITHIN THE PRESC RIBED TIME. NO LOSS AS SUCH HAS THEREFORE BEEN CAUSED TO THE REVENUE. IN SUCH C IRCUMSTANCES, THE DELAY IN FILING RETURN IS AT BEST A TECHNICAL OR VENIAL BREA CH OF LAW AND NO CONTUMACIOUS CONDUCT CAN BE ATTRIBUTED TO THE ASSESSEE. 11. THE HONBLE SUPREME COURT IN THE CASE OF HINDUS TAN STEEL LTD. (1972) 83 ITR 26 HAS HELD AS UNDER : AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDING, AND P ENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIB ERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED MERELY BECAUS E IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PE RFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERC ISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EV EN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE P ENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNIC AL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FRO M A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE LD. CIT(A) W AS FULLY JUSTIFIED IN CANCELING THE PENALTY. WE, THEREFORE, UPHOLD HIS ORDER AND DI SMISS THE APPEAL. IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEAR THAT T HE DELAY IN FILING THE RETURN WAS SUPPORTED BY REASONABLE CAUSE AND IN ANY CASE WAS O NLY A TECHNICAL AND VENIAL BREACH OF THE PROVISIONS OF LAW. UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT NO PENALTY CAN BE VALIDLY L EVIED AND HENCE CANCEL THE PENALTY LEVIED OF RS. 19,100/- U/S 272A(2)(K) OF TH E ACT. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 15/09/2015 SD/- SD/- (H.L. KARWA) (ANNAPURNA MEHROTRA) VICE PRESIDENT ACCOUNTANT MEMBER DATED :15/09/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR