M/s Global Ventures Inc, Bangalore V. Additional Commissioner of Income Tax (TDS), Range-16, Bangalore

ITA 1871/BANG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4809 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 18-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH
• Keywords: Reasonable cause; Ignorance of law
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE S HRI N.V. VASUDEVAN , JUDICIAL MEMBER AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER I.T . A. NO. 1871 /BANG/20 17 (ASSESSMENT YEAR : 20 11 - 12 ) M/S. GLOBAL VENTURES INC. 75 & 76, III FLOOR, J ANSONS BUILDING, COMMERCIAL STREET, BANGALORE - 560 0 0 1 . . APPELLANT. VS. ADDL. COMMISSIONER OF INCOME TAX (TDS) , RANGE 16 , BANGALORE. .. RESPONDENT. APPELLANT BY : SHRI RAVI SHANKAR, ADVOCATE. R E SPONDENT BY : SHRI B.R. RAMESH, JCIT (D.R) DATE OF H EARING : 1 6 .05.2018. DATE OF P RONOUNCEMENT : 18 .05 .201 8 . O R D E R PER SHRI INTURI RAMA RAO , A .M . : THIS A PPEAL FILED BY THE A SSESSEE COMPANY IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 1 3 , BANGALORE DT. 1.9. 2017 FOR THE ASSESSMENT YEAR 20 1 1 - 1 2 CONFIRMING THE LEVY OF PENALTY UNDER CLAUSE (K) OF SUB - SECTION (2) OF SECTION 272A OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2 IT A NO. 187 1 /BANG/201 7 2. THE APPELLANT RAISED THE FOLLOWING GROUNDS OF APPEAL : - 3. BRIE FLY THE FACTS OF THE CASE ARE THAT THE APPELLANT IS A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF DEALING IN READY GARMENTS / TEXTILES. DURING THE F.Y. 2011 - 12, IT WAS UNDER OBLIGATION TO DEDUCT TAX AT SOURCE UNDER THE PROVISIONS OF SEC. 19 4I ON THE PAYMENT OF RENT . THE APPELLAN T COMPANY HAD DEDUCTED TDS ON RENT PAYMENT AND REMITTED THE TDS AMOUNT TO THE GOVT. ACCOUNT BELATEDLY , WHERE THERE IS A DELAY IN THE REMITTANCE OF THE AMOUNT, IT IS STATED THAT THE APPELLANT HAD VOLUNTARILY 3 IT A NO. 187 1 /BANG/201 7 PAID THE INTEREST O N THE BELATED REMITTANCES MADE TO THE GOVERNMENT ACCOUNT. BUT A DMITTEDLY THE APPELLANT IS IN DEFAULT IN FILING PRESCRIBED QUARTERLY RETURNS OF TDS AS PRESCRIBED UNDER SUB - SECTION (3) OF SECTION 200 OF THE ACT WITHIN THE PRESCRIBED TIME. HENCE THE ADDL. CIT (TDS) , RANGE 16, BANGALORE HAD ISSUED SHOW CAUSE NOTICE DT.11.10.2012 PROPOSING TO LEVY OF PENALTY UNDER CLAUSE (K) OF SUB - SECTION(2) OF SECTION 272A OF THE ACT FOR THE DELAY IN SUBMISSION OF THE QUARTERLY RETURNS IN FORM 26Q. IN RESPONSE TO THE S AID SHOW CAUSE NOTICE, IT WAS SUBMITTED THAT THE DELAY IN SUBMISSION OF THE PRESCRIBED QUARTERLY RETURNS IS CAUSED ON ACCOUNT OF THE IGNORANCE OF LAW ON THE PART OF THE APPELLANT COMPANY WHICH IS NEWLY SET UP. T HE TDS OFFICER HAD BRUSHED ASIDE THE SAID EXPLANATION OF THE APPELLANT AND PROCEEDED TO LEVY PENALTY VIDE ORDER DT. 4.2.2013 PA S SED UNDER SECTION 272A OF THE ACT FOR AN AMOUNT OF RS.94,300 . BEING AGGRIEVED BY THE SAID ORDER, APPEAL WAS PREFERRED BEFORE THE CIT (APPEALS) WHO HAD CONFIRMED THE LEV Y OF PENALTY VIDE THE IMPUGNED ORDER BY HOLDING AS UNDER : - 4 IT A NO. 187 1 /BANG/201 7 BEING AGGRIEVED, THE APPELLANT IS IN APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE APPELLANT VEHEMENTLY SUBMITTED THAT THE DELAY IN FILING THE PRESCRIBED QUARTERLY RETURNS IS CAUSED ON ACCOUNT OF (I) DELAYED REMITTANCE OF THE TAX DEDUCTED AMOUNT TO GOVT. ACCOUNT AND (II) THE APPELLANT IS IGNORANT PROVISIONS OF LAW ON THE SUBJECT AS IT IS 5 IT A NO. 187 1 /BANG/201 7 NEWLY SET UP . ACCORDING TO THE LD. COUNSEL IT CONSTITUTES A REASONABLE CAUSE FOR NOT SUB MITTING THE PRESCRIBED QUARTERLY RETURNS IN TIME. IN SUPPORT OF THIS, HE PLACED RELIANCE ON THE DECISION OF CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF HTSL CO MMUNITY SERVICE TRUST VS. JDIT (EXEMPTIONS) 20 TAXMANN.COM 4 AND HON BLE ALLAHABAD HIGH COURT IN THE CASE OF BUDHAN SINGH & SONS VS. CIT 142 ITR 180 (ALL) . 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT LEVY OF PENALTY U/S. 272A IS NOT A DISCRETIONARY POWER BUT MANDATORY AND PENALTY HAS TO BE IMPOSED IR RESPECTIVE OF THE FACT THAT IT HAS NOT RESULTED ANY LOSS TO THE REVENUE AND IN SUPPORT OF HIS CONTENTION PLACED RELIANCE ON THE DECISION OF HON BLE PUNJBA & HARYANA HIGH COURT IN THE CASE OF CENTRAL SCIENTIFIC INSTRUMENTS ORGANISATION VS. CIT (TDS) 385 I TR 617 AND IN THE CASE OF RAJA HARPAL SINGH INTER COLLEGE VS. PRIN. CIT 386 ITR 327 (ALL) . 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE IN THE PRESENT APPEAL IS WHETHER THE PENALTY IS LEVIABLE UNDER THE CL AUSE (K) OF SUB - SECTION (2) OF SECTION 272A OF THE ACT HAVING REGARD TO THE FACTS OF THE PRESENT CASE. UNDISPUTEDLY, THERE IS A 6 IT A NO. 187 1 /BANG/201 7 DELAY IN FILING THE PRESCRIBED QUARTERL Y RETURNS AND THE APPELLANT DEDUCTED THE TAX AT SOURCE ON THE PAYMENTS OF RENT AND R EMITTED THE AMOUNT TO THE ACCOUNT OF GOVERNMENT OF INDIA BELATEDLY . THE DELAY WAS EXPLAINED TO THE TDS OFFICER STATING THAT THE DELAY HAD OCCURRED ON ACCOUNT OF DELAY IN REMITTANCE OF TAX DEDUCTED AMOUNT TO THE GOVT. ACCOUNT AND IGNORANCE OF THE PROVISION S OF LAW ON THE SUBJECT. THIS EXPLANATION WAS FOUND TO BE NOT PLAUSIBLE BY BOTH THE TDS OFFICER AS WELL AS THE CIT (APPEALS). WE NOTE THAT THE PROVISIONS OF SECTION 272A HAS TO BE READ WITH THE PROVISIONS OF SECTION 273B OF THE INCOME TAX ACT, 1961 WHIC H PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (2) OF SECTION 272A OF THE ACT, NO PENALTY SHALL BE IMPOSABLE FOR THE FAILURE REFERRED TO IN THE SAID PROVISIONS, IF IT IS PROVED THAT A REASONABLE CAUSE IS ESTABLISHED FOR THE SAID FAILURE. THEREFORE THE STATUTE PROVIDES THAT IF THERE IS REASONABLE CAUSE FOR THE FAILURE, THE PENALTY UNDER THE PROVISIONS OF SUB - SECTION (2) OF SECTION 272A OF THE ACT CANNOT BE LEVIED. THEN THE ISSUE THAT COME S UP FOR CONSIDERATION IS WHETHER THE EXPLANATION TENDERED BY THE APPELLANT IN SUPPORT OF DELAY IN SUBMISSION OF QUARTERLY RETURNS CAN BE CONSIDERED TO BE PLAUSIBLE. THE EXPLANATION THAT THE DELAY WAS CAUSED ON ACCOUNT OF DELAYED REMITTANCE 7 IT A NO. 187 1 /BANG/201 7 OF TAX DEDUCTED AMOUNT TO THE GOVT. ACCOUNT AND THE IGNORANCE O F THE PROVISIONS OF LAW ON THE ISSUE AS THE COMPANY WAS NEWLY SET UP CAN BE CONSIDERED TO BE REASONABLE HAVING REGARD TO THE RATIO LAID DOWN BY THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF BUDHAN SINGH & SONS (SUPRA) WHEREIN IT WAS HELD THAT WHEN THE ASSESSEE IS IN THE FIRST YEAR OF BUSINESS OPERATIONS, IGNORANCE OF PROVISIONS OF LAW CAN BE HELD TO BE REASONABLE CAUSE FOR NON - COMPLIANCE OF THE PROVISIONS OF LAW. FURTHER THE COLUMNS OF FORM 26Q ALSO CONTAINS COLUMNS RE QUIRING THE DETAILS AS TO THE DATE OF THE DEPOSIT OF THE TDS AMOUNT IN THE GOVT. ACCOUNT. THEREFORE, WHEN THERE IS A DELAY IN REMITTANCE OF THE TDS AMOUNT IN THE GOVT. ACCOUNT, THIS WOULD CONSTITUTE A REASONABLE CAUSE FOR NOT FILING THE PRESCRIBED RETURNS WITHIN THE DUE DATE. THE STATU TE ALSO PRESCRIBES DIFFERENT PENAL PROVISIONS FOR DELAY IN REMITTING THE TDS AMOUNT TO THE GOVT ACCOUNT. THUS IN THE LIGHT OF THE ABOVE FACTS, THE EXPLANATION TENDERED BY THE ASSESSEE CANNOT BE TERMED AS UNREASONABLE OR UNPLAUS I BLE. THEREFORE WE ARE OF THE CONSIDERED OPINION THAT THE CASE ON HAND IS NOT A FIT CASE FOR LEVY OF PENALTY U/S. 272A OF THE ACT. THE DECISIONS RELIED ON BY THE LD. DR IN THE CASE OF CENTRAL SCIENTIFIC INSTRUMENTS ORGANISATION (SUPRA) & RAJA HARPAL SINGH INTER COLLEGE (SUPRA) A RE NOT APPLICABLE , IN AS MUCH AS , 8 IT A NO. 187 1 /BANG/201 7 THE DECISIONS WERE RENDERED CONSIDERED THAT THE EXPLANATION TENDERED BY THE ASSESSEE IN SUPPORT OF BELATED SUBMISSIONS OF THE RETURNS W AS FOUND TO BE NOT PLAUSIBLE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 18TH DAY OF MAY, 201 8 . SD/ - (N.V. VASUDEVAN) JUDICIAL MEMBER SD/ - ( INTURI RAMA RAO ) ACCOUNTANT MEMBER BANGALORE, DT. 18 .05.2018. *REDDY GP COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL BANGALORE.