I-Serve Systems Pvt.Ltd., Gandhinagar V. Income Tax Officer(TDS), Gandhinagar

ITA 2013/AHD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94707 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 07-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR
• Assessee Lawyers: TUSHAR HEMANI
• Section: 2

Judgement Text

ITA NO S . 2012 & 2013 / AHD/ 20 1 5 ASSESSMENT YEAR S : 2 0 13 - 14 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH , SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM ] ITA NO S . 2012 & 2013 / AHD / 2 0 1 5 ASSESSMENT YEAR S : 20 13 - 14 I - SERVE SYSTEMS PVT. LTD., ....... .. . ..... APPELLANT 201/202, INFO TOWER - 1, INFOCITY COMPL EX, GANDHINAGAR. [PAN A A A CI 9567 M ] VS. INCOME TAX OFFICER (TDS) , .... .................. .... .. RESPONDENT GANDHINAGAR. APPEARANCES BY: TUSHAR HEMANI FOR THE APPELLANT ANIL KUMAR FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : SEPTEMBER 1 5 TH , 201 5 DATE OF PRONOUNCING THE ORDER : NOVEMBER 16 TH , 2015 O R D E R 1. THESE TWO APPEALS PERTAIN TO THE SAME ASSESSEE, INVOLVE SOME INTERCONNECTED ISSUES, WERE HEARD TOGETHER. AS A MATTER OF CONVENIENCE, THEREFORE, BOTH THE APPEALS ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. 2. IN ITA NO.2012/AHD/2015, THE ASSESSEE HAS CHALLENGED CORRECTNESS OF LEARNED CIT(A) S ORDER DATED 24 TH APRIL, 2015 UPHOLDING PENALTY OF RS.1,00,000/ - IMPOSED UNDER SECTION 271H R.W.S. 274 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 201 3 - 14 . ITA NO S . 2012 & 2013 / AHD/ 20 1 5 ASSESSMENT YEAR S : 2 0 13 - 14 PAGE 2 OF 4 3. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THERE WAS A DELAY IN FILING QUARTERLY TDS STATEMENT (24Q) FOR QUARTER I OF FINANCIAL YEAR 2012 - 13. IN RESPONSE TO ASSESSING OFFICER S REQUISITION TO SHOW CAU SE AS TO WHY PENALTY UNDER SECTION 271H NOT BE IMPOSED ON THESE FACTS, THE ASSESSEE, INTER ALIA, SUBMITTED AS FOLLOWS : - IN THIS CONNECTION, WE HAVE T O SUBMIT THAT IT IS NOT IN DISPUTE THAT THE DUE DATE FOR FILING TH E STATEMENT IN FORM NO.24Q FOR THE FIRS T QUARTER PERTAINING TO A.Y. 2012 - 13 WAS DUE ON OR BEFORE 15.7.12 AS PER THE TIME LIMIT PRESCRIBED U/S.200 OF THE I.T. ACT. IT I S ALSO NOT IN DISPUTE THAT THE S AID STATEMENT IN FORM NO.24Q COULD NOT BE FILED EVEN AFTER COMPLETION OF ONE YEAR I.E. 15.7.13. THERE WAS REASONABLE AND SUFFICIENT CAUSE FOR NOT FURNISHING THE S AID STATEMENT IN FORM NO.24Q WHICH IS EXPLAINED HEREUNDER : THAT ONE MR. VISHAL PATEL WHO WAS EMPLOYED IN THE CAPACITY AS MANGER ACCOUNTS SINCE JUNE , 2011 AND WAS REQUIRED TO ATTEND THE WO RK OF ACCOUNTS , TAXATION , TDS SERVICE TAX AND STPL OF THE C OMPANY. HOWEVER, IN THE MONTH OF JULY, 2013 WHEN INCOME TAX REGULAR DEMAND RECOVERY NOTICE WAS RECEIVED BY T HE C OMPANY AND ON DETAILED INVESTIGATION, IT IS FOUND THAT THE SAID MR. VISHAL PA T EL MAN AGER ACCOUNTS COMMITTED HUG E CASH DEFALCATION RUNNING SOME WHERE AROUND RS.40 LACS OF THE C OMPANY DURING HIS EMPLOYMENT TENURE. DUE TO SUCH CRIMINAL ACTIVITY, THE SAID MR. VISHAL PATEL, MANAGER ACCOUNTS DID NOT PAY ATTENTION TO TH E REGULAR GOVERNMENT TAX C OMPLIANCES AND NOTICES AS WELL AS FILING OF REGULAR TDS STATEMENTS BEFORE DUE DATES. HOWEVER, WITH THE EMPLOYMENT OF NEW MANAGER ACCOUNTS VIZ. MITHIL SHAH FROM JULY, 2013, ALL SUCH PENDING PROCEDURAL WORK RELATING TO GOVT . AND SEMI - GOVT . AS WELL AS FILING OF REQUIRED STATEMENT ETC. AND PAYMENT OF TAXES ETC. W ERE COMPLIED BY HIM. ULTIMATELY, T HE SA ID MR. VISHAL PA T EL WAS REMOVED FROM THE EMPLOYMENT IN T HE MONTH OF FEBRUARY, 2014 AFTER HIS ADMISSION OF CRIMINAL ACT AND HIS PAYING OVER THE DEFAULTED CASH AMO UNTS. IN VIEW OF THE ABOVE REFERRED RE AS ONABLE AND SUFFICIENT CAUSE , YOU ARE REQUESTED NOT TO PROCEED WITH THE LEVY OF PENALTY U/S.271 - H AS ALSO, THERE WAS NO INTENTION ON THE PART OF THE C OMPANY TO COMMI T SUCH DEFAULT. AT THE MOST, IT MAY BE CONSIDERED A S TECHNICAL AND VENIAL DEFAULT AS THE SAID PROVISION IS NEWLY INSERTED WITH EFFECT FROM 1.7.12 AND, THEREFORE, IN VIEW OF THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL L T D., THE PENALTY INITIATED IS REQUESTED TO BE DROPPED. 4. THE ABOVE EXPLANATION WAS DULY SUPPORTED BY AN AFFIDAVIT BUT THE ASSESSING OFFICER REJECTED THE SAME BY OBSERVING THAT NO PRUDENT BUSINESSMAN WILL ALLOW A PERSON WHO COMMITTED SUCH A HUGE DEFALCATION RUNNING SOMEWHERE AROUND RS.45 LAKHS ITA NO S . 2012 & 2013 / AHD/ 20 1 5 ASSESSMENT YEAR S : 2 0 13 - 14 PAGE 3 OF 4 TO CONTINUE IN THE SAM E OFFICE FOR A FURTHER PERIOD OF 15 MONTHS . IT WAS ALSO OBSERVED THAT TDS RETURNS WERE SIGNED BY SUNIL PINDORA AND, THEREFORE, EXPLANATION ABOUT VISAHL B. PATEL IS NOT GOOD ENOUGH. THE ASSESSING OFFICER THUS PROCEEDED TO IMPOSE PENALTY OF RS.1,00,000/ - UNDER SECTION 271H. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE ME. 5. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONS IDERED THE FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 6. I FIND THAT THE ASSESSEE HAS GIVEN A REASONABLE EXPLANATION ABOUT THE CIRCUMSTANCES LEADING TO THIS LAPSE. WHILE SUNIL PANDORA MIGHT BE SIGNING THE RETURNS, THE ACTUAL PREPARA TION WORK WAS CLAIMED TO HAVE BEEN DONE BY VISHAL PATEL AND THERE IS NOTHING TO CONTROVERT THIS POSITION. AS TO WHAT SHOULD HAVE HAPPENED IN AN IDEAL SITUATION DOES NOT GOVERN THE CONSIDERATIONS IMPOSING THE PENALTY. THE DOUBTS EXPRESSED BY THE ASSESSING OFFICER CANNOT OBLITERATE EXPLANATION OF THE ASSESSEE. I AM OF THE VIEW THAT IT WAS A REASONABLE EXPLANATION AND THE AUTHORITIES BELOW OUGHT TO HAVE ACCEPTED THE SAME. I, THEREFORE, DELETE THE IMPUGNED PENALTY. 7. IN THE RESULT, ITA NO.2012/AHD/2015 IS ALLOWED. ITA NO S . 2012 & 2013 / AHD/ 20 1 5 ASSESSMENT YEAR S : 2 0 13 - 14 PAGE 4 OF 4 8. AS FOR ITA NO. 2013/AHD/2015, ALL THE MATERIAL FACTS AND CIRCUMSTANCES INCLUDING THE QUANTUM OF PENALTY, ARE THE SAME AND THE ONLY DIFFERENCE IS THAT THIS PENALTY IS IN RESPECT OF DELAY IN FLING OF 26Q TDS STATEMENT. 9. LEARNED REPRESENTATIVE S FAIRLY AGREE THAT WHATEVER I DECIDE IN ITA NO.2012/AHD/2015, WILL APPLY MUTATIS M UTANDIS IN THIS APPEAL AS WELL. FOR THE DETAILED REASONS SET OUT IN MY ORDER ON ITA NO.2012/AHD/2015, THIS APPEAL MUST ALSO TO BE ALLOWED. I DIRECT SO AND DELETE THIS PENAL TY OF RS.1,00,000/ - AS WELL. 10. IN THE RESULT, ITA NO.2013/AHD/2015 IS ALSO ALLOWED. 11. TO SUM UP, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF NOVEMBER , 2015. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) AHMEDABAD, THE 16 TH DAY OF NOVEMBER , 2015 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDE R ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD