ITO, New Delhi V. M/s Amcon Engineers (P) Ltd., New Delhi

ITA 2253/DEL/2011

• Counselvise Citation: 225320114 RSA 2011
• Duration Of Justice: 1 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-04-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Reasonable cause
• Section: 133A; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NOS. 2253 & 2254/DEL/11 A.Y. 2009-10 & 2006-07 INCOME-TAX OFFICER, VS. AMCON ENGINEERS (P) LTD., WARD-49(1), NEW DELHI. 308, ASHOK BHAWAN, 93, NEHRU PLACE, NEW DELHI. PAN/ GIR NO. DELA 07331C ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI A.K. SINGH SR. DR RESPONDENT : SHRI O.P. SAPRA O R D E R PER R.P. TOLANI, J.M: : THESE ARE TWO APPEALS FILED BY THE REVENUE AGAINST SEPARATE ORDERS OF CIT(A), ASSAILING DELETION OF PENALTIES LEVIED U/S 272A(2)K) OF RS. 9,50,400/- FOR A.Y. 2006-07 AND U/S 271-C OF RS. 5, 61,421/- FOR A.Y. 2009- 10. BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BE ING DISPOSED OF BY A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. RES PECTIVE EFFECTIVE GROUNDS ARE AS UNDER: ITA NO. 2254/DEL/11 ( U/S 272A(2)(K) : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY IMPOSED U/S 272A(2)(K) OF RS. 9,50,400/- ON THE GROUND THAT THERE WAS NO LOSS TO REVENUE WIT H THE LATE FILING OF THE RETURNS AND THERE WERE BONAFIDE REASO NS FOR DELAY IN FILING RETURNS AS IT IS IN CONTRAVENTION TO THE PROVISIONS OF THE I.T. ACT. 2 ITA NO. 2253/DEL/11 (PENALTY U/S 271C): ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN 1) DELETING THE PENALTY IMPOSED U/S 271C OF RS. 5,6 1,421/- ON THE GROUND THAT THE ASSESSEE WAS HAVING REASONAB LE CAUSE FOR NON-DEDUCTION/ SHORT DEDUCTION OF TDS ON PAYMENTS MADE UNDER DIFFERENT HEADS DUE TO ILLNESS OF THE ACCOUNTANT AND ABSENCE OF THE DIRECTOR OF THE COMPA NY FOR MANAGING 25 SITES OUTSIDE DELHI. 2) IGNORING THE DETAILED FINDINGS RECORDED BY THE A DDL. CIT IN THE PENALTY ORDER AND ADMITTING AND CONSIDERING THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE DURING THE APPELLANT PROCEEDINGS U/R 46A AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 2. BRIEF FACTS FOR PENALTY LEVIED U/S 272A(2)(K) RE LATING TO A.Y. 2006- 07, ARE: DURING THE COURSE OF SURVEY U/S 133A OF TH E I.T. ACT, CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 12-8-08, IT WAS NOT ICED THAT ASSESSEE FAILED TO FILE E-TDS QUARTERLY RETURNS IN FORM NO. 24Q & 26Q FOR F.Y. 2005-06 WITHIN THE PRESCRIBED TIME LIMIT. MATTER WAS REFERRED TO A DDL. CIT, RANGE-49, NEW DELHI FOR INITIATING PENALTY PROCEEDINGS U/S 272A(2 )(K) OF THE I.T. ACT. IN PENALTY PROCEEDINGS ASSESSING OFFICER NOTICED TOTA L DELAY OF 6018 DAYS IN FILING FORM NO. 26Q & 24Q. ASSESSING OFFICER REQUI RED THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY U/S 272A(2)(K) BE NOT IMP OSED FOR LATE FILING OF QUARTERLY RETURNS IN FORM NOS. 24Q & 26Q. IN RESPON SE, ASSESSEE EXPLAINED THAT LATE FILING WAS DUE TO PAUCITY OF FUNDS, DUE TO WHICH THE TDS WERE DEPOSITED LATE, ON WHICH THE ASSESSEE HAS ALREADY PAID INTEREST. AS THE TDS RETURNS MENTION THE DATE OF DEPOSIT OF TDS SUCH RET URNS COULD ONLY BE FILED 3 AFTER THE TDS WAS DEPOSITED, THE E-RETURNS WERE DEL AYED. REJECTING THE EXPLANATION FURNISHED BY THE ASSESSEE, ASSESSING OF FICER LEVIED PENALTY @ 100/- PER DAY FOR DELAY IN FILING QUARTERLY RETURN S IN FORM NOS. 26Q AND 24Q. 2.1. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WH ERE CIT(A) DELETED THE PENALTY OBSERVING AS UNDER: 4. I HAVE GONE THROUGH THE GROUNDS ON WHICH PENALT Y WAS LEVIED BY ADDL. CIT AND ALSO SUBMISSIONS GIVEN BY T HE COUNSEL FOR THE APPELLANT. ONE OF THE GROUNDS TAKEN BY THE APPELLANT IS THAT THE PENALTY PROCEEDINGS HAD BECOME BARRED BY L IMITATION WHICH COULD NOT BE PROVED BY THE APPELLANT AND HENC E IS REJECTED. AS REGARDS OTHER GROUNDS TAKEN BY THE APP ELLANT IT IS NOTED THAT THE TDS (ON THE BASIS OF WHICH PENALTY W AS LEVIED) HAS BEEN DEPOSITED WITH INTEREST. IT IS FURTHER NOT ED THAT THE APPELLANT COMPANY IS MANAGED BY SH. MUKESH LAAD WHO IS A QUALIFIED ENGINEER BUT HAS NO KNOWLEDGE ABOUT ACCO UNTS, INCOME TAX AND TDS MATTERS AND THE COMPANY HAS NOT EMPLOYED ANY QUALIFIED CHARTERED ACCOUNTANT OR INC OME TAX CONSULTANT FOR TDS MATTERS. IT HAS BEEN BROUGHT TO MY NOTICE THAT THE APPELLANT HAD ABOUT 25 SITES OUTSIDE DELHI AND THE ONLY WORKING DIRECTOR HAS TO REMAIN OUT OF DELHI TO MANA GE SUCH SITES AS THE COMPANY HAD ABOUT 3000 LABOURERS INCLU DING DIRECTLY EMPLOYED WORKERS. IT HAS ALSO BEEN BROUGHT TO MY NOTICE THAT SUCH DEFAULTS OF TDS HAVE BEEN COMMITTE D FOR THE FIRST TIME. THE PAYMENT OF TDS (ALONG WITH INTEREST ) ON SALE OF EMPTY CEMENT BAGS AS DEMANDED BY THE SURVEY TEAM SH OWS IGNORANCE OF THE APPELLANT REGARDING TDS MATERS AS SECTION 206C DID NOT APPLY TO SUCH SCRAP. 3. FOR A.Y. 2009-10 THE ASSESSING OFFICER INITIATE D PENALTY PROCEEDINGS U/S 271C OF THE ACT FOR NOT DEDUCTING TDS U/S 194A, 194C, 194I AND 194J ON THE AMOUNT OF INTEREST, CONTRACTUAL PAYMENT, REN T AND PROFESSIONAL CHARGES PAID TO VARIOUS PARTIES. REJECTING THE EXPLANATION FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER VIDE ITS CONSOLIDATED ORDER F OR F.Y. 2005-06 TO 2008- 4 09, IMPOSED PENALTY OF RS. 5,61,421/- FOR F.Y. 200 8-09 ( A.Y. 2009-10)U/S 271C OF THE ACT. 3.1. IN FIRST APPEAL, THE CIT(A) DELETED THE PENAL TY, OBSERVING AS UNDER: 4.2. FOR NON DEDUCTION OF TAX AT SOURCE OF RS. 27 5620/- IN FINANCIAL YEAR 2008-09 FROM MAY TO AUGUST 2008 ON P AYMENT OF SALARY U/S 192 OR ON CONTRACT PAYMENT OF RS. 281 983/- (263525+18458) U/S 194C THE APPELLANT HAS FILED MED ICAL CERTIFICATE FROM A ORTHOPEDIC SURGEON TO PROVE THE ACCOUNTANTS (MR. S.D. THAKUR) ABSENCE FROM OFFICE FROM MAY TO 8 TH AUGUST, 2008 ON ACCOUNT OF FRACTURE OF SHOULDER. IN THE ABO VE PERIOD MR. MUKESH LAAD ONLY WORKING DIRECTOR INCHARGE WAS OUT OF STATION TO DIFFERENT SITES AND CONSEQUENTIALLY THER E WAS NOBODY IN THE OFFICE TO LOOK AFTER TDS MATTERS AND ARRANGE /WITHDRAW FUNDS FOR PAYMENT OF TDS. FURTHER FOR ARITHMETICAL ERROR OF RS. 687/- OR SHORT DEDUCTION OF TAX AT SOURCE OF RS. 28 9917/- (16.83% IN PLACE OF 22.44%) ON HIRE CHARGES U/S 194 -I THE REASONABLE AND SUFFICIENT CAUSE HAS BEEN PROVED BY THE APPELLANT. THE TDS RATE OF 22.44% WAS APPLICABLE TO COMPANIES WHEREAS THE RATE OF 16.83% WAS APPLICABLE TO NON CORPORATE CLIENTS. THE APPELLANT MADE DEDUCTION OF TAX AT SOURCE AT 16.83% ON COMPANIES UNDER A GENUINE AND BONA FID E BELIEF AND THERE WAS NO MALAFIDE INTENTION. THE FOLLOWING DECIDED CASES ALSO SUPPORT THE APPELLANTS VIEW. DELHI HIGH COURT IN CIT VS. DEWAN CHAND 178 TAXMAN 173. ITO V. DISHERGARH POWER SUPPLY CO. LTD. [2001] 71 T TJ(CAL.) 725. PUNJAB STATE ELECTRICITY BOARD V. ITO 920020 121 TA XMAN 367 (ITAT)(CHD.)(MAG.) DCIT VS. SMS INDIA LTD. 7 SOT 424. THE ABOVE BEING SUFFICIENT AND REASONABLE CAUSE FOR NOT DEDUCTING AND DEPOSITING TDS PENALTIES AMOUNTING TO RS. 852025/- (275620+3818+281983+289917+687) FOR SUCH DEFAULTS ARE DELETED. 5 4. LD. DR RELIED ON THE ORDER OF ASSESSING OFFICER AND CONTENDS THAT FROM THE APPEAL ORDER IT APPEARS THAT SOME ADDITION AL EVIDENCE WAS CONSIDERED BY CIT(A) IN A.Y. 2009-10. 5. LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER H AND CONTENDS THAT IN THESE TWO YEARS NO ADDITIONAL EVIDENCE WAS FILED BY THE ASSESSEE. THERE IS NO REFERENCE TO EITHER ANY APPLICATION FOR ADDITIONAL EVIDENCE OR ORDERS TO THIS EFFECT. THEREFORE, THIS GROUND OF THE REVENUE IN A. Y. 2009-10 IS MIS-PLACED. 5.1. APROPOS MERITS, LD. COUNSEL CONTENDS THAT IN A.Y. 2006-07, ASSESSEE HAD PAID THE TAXES ALONG WITH INTEREST. DUE TO THE EXIGENCIES AS MENTIONED IN THE REPLY ONLY THE E-RETURN OF E-TDS COULD NOT BE F ILED IN TIME, THERE IS NO LOSS OF REVENUE, THUS THE PENALTY BECOMES TECHNICAL / VENIAL IN NATURE. THE PENALTY SHOULD NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. RELIANCE IS PLACED ON HONBLE SUPREME COURT JUDGMENT IN THE CASE OF HINDUSTAN STEELS LTD. VS. STATE OF ORISSA 83 ITR 26. 5.2. APROPOS PENALTY FOR A.Y. 2009-10 IT IS PLEADED THAT IN RESPECT OF DEDUCTION FROM SALARIES, THE DELAY WAS EXPLAINED FO R ABSENCE OF ACCOUNTANT DUE TO MEDICAL REASONS AND THE WORKING DIRECTOR SHR I MUKESH LAAD BEING A TECHNICAL PERSON, NOT WELL VERSED WITH THE TAX MATT ERS. ALL THESE ARGUMENTS HAVE BEEN CONSIDERED BY THE CIT(A) AND THE PENALTI ES HAVE BEEN DELETED ON JUST AND PROPER CONSIDERATION. HIS ORDERS ARE RELIE D ON. 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE PERUSAL OF T HE RECORD IT IS DOES NOT EMERGE THAT ANY ADDITIONAL EVIDENCE WAS ACCEPTED BY CIT(A) IN A.Y. 2009- 10. THEREFORE, THIS GROUND OF THE REVENUE BECOMES I NFRUCTUOUS. 6 6.1. APROPOS DELETION OF PENALTY FOR LATE FILING OF QUARTERLY E-TDS RETURNS, IT HAS NOT BEEN DISPUTED THAT ASSESSEE PAID THE DUE TAX AND INTEREST THEREON. DUE TO DELAYED TDS PAYMENTS, THE E-RETURNS GOT CONS EQUENTLY DELAYED. THE LATE FILING OF E-RETURN ASSUMES A CHARACTER OF TECH NICAL DEFAULT AND DELAY IN FILING SUCH RETURN WITHOUT ANY LOSS OF REVENUE CANN OT BE A HELD A DELIBERATE DEFAULT LOOKING AT THE FACTS AND CIRCUMSTANCES AND PLEAS RAISED BY THE ASSESSEE. CIT(A) HAS RIGHTLY CONSIDERED IT TO BE A REASONABLE CAUSE. HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEE LS LTD. (SUPRA) HAS EMPHATICALLY HELD THAT PENALTY SHOULD NOT BE IMPOSE D MERELY BECAUSE IT IS LAWFUL TO DO SO AND TECHNICAL AND VENIAL BREACHES S HOULD NOT BE VISITED WITH THE PENALTIES. WE UPHOLD THE ORDER OF CIT(A) ON TH IS ISSUE. 6.2. APROPOS PENALTY FOR A.Y. 2009-10 ALSO WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) WHO HAS CONSIDERED THE REASONS PUT FORTH BY THE ASSESSEE I.E. INCAPACITY AND ABSENCE OF THE ACCOUNTANT AND T HE DIRECTOR BEING NOT AWARE OF THE INTRICACIES. CONSEQUENTLY, WE UPHOLD T HE ORDERS OF CIT(A) DELETING PENALTIES LEVIED U/S 272A(2)(K) FOR A.Y. 2 006/07 AND U/S 271C FOR A.Y. 2009-10. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE STAND DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29-6-2012. SD/- SD/- ( K.G. BANSAL ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29-6-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 7