MANCARE PHARMACEUTICALS PRIVATE LIMITED, MUMBAI V. ADDL. COMMISSIONER OF INCOME TAX TDS RANGE, THANE

ITA 2402/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5354 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 19-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AWADHESH KUMAR
• Keywords: Reasonable cause; TDS; Set aside
• Section: 234E

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 2402/MUM/2018 ASSESSMENT YEAR: 2009-10 MANCARE PHARMACEUTICALS PVT. LTD., PLOT NO. 59, 60, 85, 86, DHOWALI VILLAGE, VASAI MUNICIPAL INDUSTRIAL ESTATE, VASAI (WEST), PALGHAR- 401207. VS. ADDL. COMMISSIONER OF INCOME TAX, TDS RANGE THANE. PAN NO. AACCM4296R APPELLANT RESPON DENT ASSESSEE BY : MR. AWADHESH KUMAR, AR REVENUE BY : MS. JOTHILAKSHMINAYAK, DR DATE OF HEARING : 26/09/2019 DATE OF PRONOUNCEMENT : 25/10/2019 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2009-10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-2, PUNE [IN SHORT CIT(A )] AND ARISES OUT OF THE PENALTY LEVIED U/S 272A(2)(K) OF THE INCOME TAX ACT 1961, (THE ACT). ITA 2402/MUM/2018/A.Y. 209-10 MANCARE PHARMACEUTICALS PVT. LTD 2 2. THE GROUND OF APPEAL FILED BY THE ASSESSEE READS AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING PENALTY ORDER U/S 272A(2)(K )/274 R.W.S. 200(3) OF THE IT ACT, 1961 OF RS.1,30,503/-. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE APPELLANT-DEDUCTOR DID NOT FILE ITS QUARTERLY TDS RETURNS WITHIN THE P RESCRIBED TIME LIMIT AND THERE WAS DELAY IN FILING QUARTERLY STATEMENT O F TDS U/S. 200(3) AS PROVIDED UNDER RULE 31A OF THE INCOME TAX RULES (TH E RULES). THE ASSESSING OFFICER (AO) ISSUED SHOW CAUSE NOTICE TO THE APPELLANT FOR EXPLAINING THE DELAY. AFTER CONSIDERING THE REPLY F ILED BY THE DEDUCTOR, THE ADDL. CIT (TDS) LEVIED PENALTY OF RS.1,30,503/- U/S.272A(2)(K) BY OBSERVING THAT THE REASONS WERE GENERAL AND THERE W AS NO REASONABLE CAUSE FOR THE SAID DELAY. HE FURTHER HELD THAT DUE TO DELAY IN FILING OF THE TDS RETURNS BY THE DEDUCTORS, THE DEDUCTEES HAVE TO SUFFER, AS THEY DO NOT GET CREDIT OF TDS TILL THE TIME TDS STATEMENTS ARE UPLOADED. 4. AGGRIEVED BY THE ORDER OF THE ADDL. CIT (TDS), T HE APPELLANT FILED AN APPEAL BEFORE THE LD. CIT(A), WHO OBSERVED THAT THERE IS SUBSTANTIAL DELAY OF 123 TO 458 DAYS IN FILING THE QUARTERLY ST ATEMENT. FURTHER, IT IS OBSERVED BY HIM THAT THE ASSESSEE IS A COMPANY AND HAVING WELL- ORGANIZED SET UP AND IT SHOULD HAVE BEEN WELL-PREPA RED FOR FILING THE QUARTERLY RETURNS IN TIME. THUS, HOLDING THAT THE A PPELLANT CANNOT TAKE THE PLEA THAT THE DELAY OCCURRED DUE TO AUDITORS M ISTAKE, THE LD. CIT(A) CONFIRMED THE ABOVE PENALTY OF RS.1,30,503/-. ITA 2402/MUM/2018/A.Y. 209-10 MANCARE PHARMACEUTICALS PVT. LTD 3 5. BEFORE US, THE LD. COUNSEL FOR THE APPELLANT SUB MITS THAT THE ASSESSEE MADE TDS AND PAID THE AMOUNT ALONG WITH IN TEREST, THUS THERE WAS NO LOSS TO THE REVENUE. HOWEVER, THE QUARTERLY RETURNS WERE FILED LATE. IT IS STATED THAT THE MATTER WAS BEING LOOKED AFTER BY THE STATUTORY AUDITOR OF THE COMPANY, BUT DUE TO THEIR FAILURE TH E QUARTERLY TDS RETURN TO BE FILED U/S.200(3) R.W. RULE 31A WERE FILED BEL ATEDLY. IT IS THUS EXPLAINED THAT THERE WAS NO REVENUE LOSS AND DELAY IN FILING QUARTERLY RETURNS WAS A TECHNICAL DEFAULT. FURTHER, IT IS ARG UED BY THE LD. COUNSEL THAT THE PENALTY COULD NOT HAVE BEEN LEVIED ONLY FO R TECHNICAL AND VENIAL BREACH OF PROVISIONS WHICH WAS NOT DUE TO CONSCIOUS DISREGARD OF THE STATUTES. IT IS THEREFORE SUBMITTED BY THAT THE PEN ALTY OF RS.1,30,503/- LEVIED BY THE AO BE DELETED. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTA TIVE (DR) SUBMITS THAT THE REASONS GIVEN BY THE APPELLANT FOR THE DELAY ARE GENERAL NATURE. FURTHER, RELYING ON THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF RASHMIKANT KUNDALIA V. UOI (2015) 373 ITR 268, THE LD. DR SUBMITS THAT THE ORDER PASSED BY THE CIT(A) BE CONFIRMED. IN REJOINDER, THE LD. COUNSEL SUBMITS THAT IN THE ABOVE DECISION, THE HONBLE BOMBAY HIGH COURT HAS EMPHASIZED THE NECESS ITY OF FILING E-TDS STATEMENT IN TIME. IT IS STATED BY HIM THAT IN THE INSTANT CASE THE APPELLANT HAS COMMITTED THE MISTAKE FOR THE FIRST T IME AND THE SAME MAY BE CONDONED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE TECH NICAL DEFECT WAS COMMITTED BY THE APPELLANT FOR THE FIRST TIME AND T HEREAFTER THERE IS NO ITA 2402/MUM/2018/A.Y. 209-10 MANCARE PHARMACEUTICALS PVT. LTD 4 RECORD THAT IT MADE ANY DELAY IN FILING THE QUARTER LY STATEMENTS OF TDS. THE APPELLANT HAD MADE THE SAME SUBMISSION BEFORE T HE CIT(A) ALSO. IN RASHMIKANT KUNDALIA (SUPRA), BY FILING WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, THE PETIT IONERS HAVE CHALLENGED THE CONSTITUTIONAL VALIDITY OF SECTION 234E OF THE ACT. SECTION 234E SEEKS TO LEVY A FEE OF RS.200/- PER DAY (SUBJECT TO CERTA IN OTHER CONDITIONS AS SET OUT THEREIN) INTER ALIA ON A PERSON WHO DEDUCTS TAX AT SHOWS (TDS) AND THEN FAILS TO DELIVER OR CAUSE TO BE DELIVERED THE TDS RETURNS/STATEMENTS TO THE AUTHORITIES WITHIN THE PR ESCRIBED PERIOD. IN THAT CONTEXT, THE HONBLE BOMBAY HIGH COURT HELD TH AT SECTION 234E DOES NOT VIOLATE ANY PROVISION OF THE CONSTITUTION AND IS THEREFORE INTRA VIRES CONSTITUTION OF INDIA. IN THE INSTANT CASE, WE FIND THAT THE TECHNICAL DE FECT WAS THERE FOR THE FIRST TIME AND THEREAFTER, THERE IS NO RECORD T HAT THE APPELLANT COMPANY HAS MADE ANY DELAY IN FILING OF THE RETURNS . CONSIDERING THE FACT THAT THE ABOVE TECHNICAL DEFECT WAS COMMITTED BY THE APPELLANT FOR THE FIRST TIME, WE SET ASIDE THE ORDER OF THE LD. C IT(A) AND DELETE THE PENALTY OF RS.1,30,503/- LEVIED U/S.272A (2)(K)/274 R.W.S. 200(3) OF THE ACT, BY THE ADDL. CIT, TDS RANGE, THANE. 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.10.2019 SD/- SD/- (C.N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNT ANT MEMBER ITA 2402/MUM/2018/A.Y. 209-10 MANCARE PHARMACEUTICALS PVT. LTD 5 MUMBAI; DATED: 25/10/2019 SUBHANKAR SAMANTA, P.S.(ON TOUR) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (ASSISTANT REGISTRAR) ITAT, MUMBAI