State Bank of India, Cuttack V. JCIT (TDS), Bhubaneswar, Bhubaneswar

ITA 262/CTK/2014

• Counselvise Citation: 26222114 RSA 2014
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 20-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D S JETHI
• Keywords: Principle of natural justice; Bonafide belief; Reasonable cause
• Section: 273B; 10; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK BEFORE SHRI P. K. BABNSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 261 & 262 / CTK /2014 (ASST. YEAR S : 20 1 0 - 1 1 & 2011 - 12 ) STATE BANK OF INDIA, TULSIPUR BRANCH, CUTTACK. VS. JCIT(TDS) , BHUBANESWAR . PAN NO. BBNSO 0452 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.S. JETHI A.R. DEPARTMENT BY : SHRI ANIL SHARMA - D.R. DATE OF HEARING : 06 / 0 2 /2015 . DATE OF PRONOUNCEMENT : 1 3 / 0 3 /201 5 . O R D E R PER D.T. GARASIA , J .M TH E S E APPEAL S BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S OF LD. CIT (A) - 1 , BHUBANESWAR EACH DATED 19 /0 3 /201 4 FOR THE A.Y S . 20 1 0 - 1 1 & 2011 - 12 . THE ISSUE INVOLVED IN THESE APPEALS IS COMMON, SO THESE ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORD ER . 2. IN I.T.A.NO. 261/CTK/ 2014, T HE FOLLOWING GROUNDS ARE RAISED : - 01. FOR THAT THE ORDER OF THE FORUM BELOW IS ILLEGAL, ARBITRARY, UNJUST AND EXCESSIVE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 02. FOR THAT THE LEARNED ADDL. CIT (TDS), BHUBANESWAR HAS NOT AFFORDED REASONABLE OPPORTUNITY OF HEARING TO THE APPELLANT BUT PASSED THE ORDER HASTILY ON 19/03/2014 IMPOSING PENALTY AT RS.80,960/ - FOR THE FINANCIAL YEAR: - 2009 - 10 RELEVANT TO THE ASSESSMENT YEAR: - 2009 - 10, WHICH IS NOT ONLY ARBITRARY BUT ALSO ILLEGAL, BEING VIOLATIVE OF NATURAL JUSTICE, HENCE THE ORDER PASSED IS LIABLE TO BE QUASHED. 03. FOR THAT THE IMPOSITION OF PENALTY IS A QUASI - CRIMINAL PROCEEDING. THE FORUM BE LOW FAILED TO ESTABLISH THAT THE APPELLANT HAS NOT DELIBERATELY AND CONSCIOUSLY DEPOSITED THE TDS AMOUNT IN TIME, HENCE THE ORDER PASSED IMPOSING PENALTY U/S.272A(2)(K) OF THE ACT IS LIABLE TO BE QUASHED. 04. FOR THAT THERE BEING REASONABLE CAUSE FOR DELAY IN FILING THE RETURNS / STATEMENTS ETC., THE SAME SHOULD HAVE BEEN CONSIDERED AND THE DELAY SHOULD HAVE BEEN CONDONED, BUT IMPOSITION OF PENALTY WITHOUT APPLICATION OF MIND IS ILLEGAL AND LIABLE TO BE CANCELL ED. 04. FOR THAT THE CALCULATION OF PENALTY U/S.272A (2)(K) HAS NOT BEEN MADE PROPERLY, HENCE THE ORDER PASSED IS LIABLE TO BE QUAS HED. IN I.T.A.NO. 262/CTK/2014, THE FOLLOWING GROUNDS HAVE BE E N RAISED : - 01. FOR THAT THE ORDER OF THE FORUM BELOW IS ILLEGAL, ARBITRARY, UNJUST AND EXCESSIVE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 02. FOR THAT THE LEARNED ADDL. CIT (TDS), BHUBANESWAR HAS NOT AFFORDED REASONABLE OPPORTUNITY OF HEARING TO THE APPELLANT BU T PASSED THE ORDER HASTILY ON 19/03/2014 IMPOSING PENALTY AT RS. 6 0 ,166 / - FOR THE FINANCIAL YEAR: - 20 1 0 - 1 1 RELEVANT TO THE ASSESSMENT YEAR: - 20 1 1 - 1 2 , WHICH IS NOT ONLY ARBITRARY BUT ALSO ILLEGAL, BEING VIOLATIVE OF NATURAL JUSTICE, HENCE THE ORDER PASSED IS LIABLE TO BE QUASHED. 03. FOR THAT THE IMPOSITION OF PENALTY IS A QUASI - CRIMINAL PROCEEDING. THE FORUM BELOW FAILED TO ESTABLISH THAT THE APPELLANT HAS NOT DELIBERATELY AND CONSCIOUSLY DEPOSITED THE TDS AMOUNT IN TIME, HENCE THE ORDER PASSED IMPOSING PENALTY U/S.272A(2)(K) OF THE ACT IS LIABLE TO BE QUASHED. 3 04. FOR THAT THERE BEING REASONABLE CAUSE FOR DELAY IN FILING THE RETURNS / STATEMENTS ETC., THE SAME SHOULD HAVE BEEN CONSIDERED AND THE DELAY SHOULD HAVE BEEN CONDONED, BUT IMPOSITION OF PENALTY WITHOUT APPLICATION OF MIND IS ILLEGAL AND LIABLE TO BE CANCELL ED. 04. FOR THAT THE CALCULATION OF PENALTY U/S.272A (2)(K) HAS NOT BEEN MADE PROPERLY, HENCE THE ORDER PASSED IS LIABLE TO BE QUASHED. 3. SHORT FACTS OF THE CASE ARE AS UNDER: - IN BOTH THE CASES, THE ASSESSEE HAS FILED THE QUARTERLY E - TDS STATEMENTS IN FORM NOS. 24Q & 26Q FOR DIFFERENT QUARTE R S FOR THE F.Y. 2009 - 10 & 2010 - 11 . SINCE, THERE WAS NO REASONABLE EXPLANATION FOR DELAY IN FILING 24Q/26Q STATEMENTS, THE JCIT (TDS) IMPOSED THE PENALTY U/S. 272A(2)(K) OF THE INCOME TAX ACT, 1961 (HER EINAFTER REFERRED TO AS THE 'ACT', FOR SHORT) . THE TOTAL DELAY CALCULATED BY JCIT FOR ALL EITHER QUARTERLY STATEMENTS COMES TO 388 8 DAYS IN A.Y. 20 10 - 1 1 & IN A.Y. 201 1 - 1 2 THE DELAY OF 2995 DAYS . THEREFORE, THE JCIT HAS LEVIED THE PENALTY OF RS. 80,960/ - FOR THE A.Y. 201 0 - 1 1 AND RS. 60,166/ - FOR THE A.Y. 2011 - 12 BY FOLLOWING TABLES: - FORM TYPE QUARTER DUE DATE DATE OF FILING DELAY IN DAYS AMOUNT OF TDS INVOLVED AMOUNT OF PENALTY 24Q 1 ST 15.7.2009 31.7.2012 1112 12,797 12,977 24Q 2 ND 15.10.2009 - DO - 1020 1,933 1,933 24Q 3 RD 15.1.2010 - DO - 928 16,600 16,600 24Q 4TH 15.6.2010 - DO - 777 44,530 44,530 26Q 1 ST 15.7.2010 1.8.2009 17 10,70,607 1,700 26Q 2 ND 15.10.2009 6.11.2009 22 3,23,55,638 2,200 26O 3 RD 1 5 .1. 2010 27.1.2010 12 7,42,210 1,200 26Q 4TH 15.6.2010 20.5.2010 0 1,10,13,441 0 GRAND TOTAL 3888 4,52,57,756 80,960 4 FORM TYPE QUARTER DUE DATE DATE OF FILING DELAY IN DAYS AMOUNT OF TDS INVOLVED AMOUNT OF PENALTY 24Q 1 ST 15.7.20 1 0 31.7.2012 747 0 0 24Q 2 ND 15.10.20 1 0 - DO - 655 0 0 24Q 3 RD 15.1.2011 - DO - 563 0 0 24Q 4TH 30.5.2011 - DO - 428 0 0 26Q 1 ST 15.7.2010 23.8.2010 39 3,866 3,866 26Q 2 ND 15.10.20 1 0 5.8.2011 294 1,73,233 29,400 26O 3 RD 1 5 .1. 2011 - DO - 202 94,889 20,200 26Q 4TH 15.6.2011 - DO - 67 2,19,608 6,700 GRAND TOTAL 2995 4,91,596 60,166 4 . THE MATTER WAS CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEALS. THEREFORE, ASSESSEE IS IN APPEAL BEFORE U/S. 5. LEARNED AR SUBMITTED BEFORE U/S. THAT THE ISSUE STANDS COVERED BY THE DECISION OF ITAT , CUTTA C K BENCH IN THE CASE OF GARRISION ENGINEER (I) R & D VS. ACIT (TDS) IN I.T.A.NO. 69/CTK/2013 , THEREFORE THE PENALTY PROVISIONS CANNOT PRECEDE THE CONSIDERATION OF REASONABLE CAUSE U/S. 273B OF THE ACT. ASSESSEE HAD MADE TECHNICAL DEFAULT FOR NOT FILING THE QUARTERLY STATEMENTS PERTAINING TO ON TIME DEDUCTION OF TAX AT SOURCE AND ON TIME SUBMISSION S OF TDS CERTIFICATE S TO THE DEDUCTEE S LEADING TO NO LOSS OF REVENUE , T HEREFORE , PENALTY MAY BE DELETED. 6. ON THE OTHER HAND, LEARNED DR RELIED UPON THE ORDER OF THE LD. CIT(A). 5 7. WE HAVE HEARD THE CONTENTIONS OF THE RIVAL PARTIES AT LENGTH. WE DO FIND THAT THE PENALTY SO LEVIED BY THE AO AND CONFIRMED BY THE LEARNED CIT(A) APPEARS TO BE LEANING MORE ON HOLDING ASSESSEE IN DEFAULT FOR SUCH PENALTY AS A MECHANICAL/ AUTOMATIC LEVY INSOFAR AS IT IS THE DEPARTMENT ITSELF, WHO HAS INSISTED THE E - FILING OF SUCH RETURNS AS LATE AS MAKING THE ASSESSEE LITERATE ABOUT THE DATA TO BE UPLOADED ON THE BASIS OF TAX DEDUCTED AT SOURCE ALREADY GIVEN CREDIT TO BY THE I.T. DEPARTMENT ON THE BASIS OF TDS CERTIFICATES FURNISHED BY THE ASSESSEE NAMELY THE DEDUCTEE. THE BONAFIDE IS ESTABLISHED BEYOND DOUBT WHEN THE VERY FACT THAT THE QUARTERLY RETURNS FOR MORE THAN FOUR QUARTERS AND LESS THAN EIGHT QUARTERS WERE FILED SIMUL TANEOUSLY ON THE SAME DATE WHEN ASSUMING BUT NOT ACCEPTING THAT THE ASSESSE E IN DEFAULT BECOME SUDDENLY COMPUTER LITERATE. WE HAVE ALSO CONSIDERED THE SUBMISSIONS OF THE LEARNED DR THAT THE FILING OF QUARTERLY STATEMENT WAS IN FAVOUR OF THE ASSESSEE ON THE BASIC CONNOTATION THAT THE DEDUCTEE WOULD ONLY BE GIVEN CREDIT TO SUCH DEDUCTION OF TAX AT SOURCE ONCE THE E - FILING BY THE DEDUCTOR WAS ON - TIME NOT REQUIRING PENALTY @RS. 100 PER DAY AS HAVE BEEN PUT FORTH BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEAR NED CIT(A) INDICATING THAT THE PROVISIONS OF SUCH DEFAULT IS LIBERAL TO THE EXTENT THAT THE AMOUNT SO DEDUCTED AND CREDITED TO THE GOVERNMENT ACCOUNT WAS NOT TO BE MORE THAN THE PENALTY SO LEVIED. THIS CLEARLY INDICATES THAT THE 6 CASE - LAWS AS SUBMITTED BY THE LEARNED COUNSEL OF THE ASSESSEE BEFORE US INDICATES THAT THERE IS NO LESS TO THE REVENUE FOR ATTRACTING OR LEVY OF SUCH PENALTY. ITAT, CUTTACK BEN CH, IN THE CASE CITED ABOVE, HAD CLEARLY HELD THAT ONCE THE AMOUNT IS DE DUCTED BY IDENTIFYING THE DEDUCTEE IT WAS ON THE BASIS OF OBTAINING THE PAN OF THE DEDUCTEE WITHOUT WHICH THE INFORMATION COULD NOT BE UPLOADED IN THE ELECTRONIC MEDIA WHICH SOFTWARE WAS ONLY AVAILABLE TO THE FRANCHISEES OUTSOURCED BY THE DEPARTMENT OR THE NSDL BEING THE APEX NODAL AGENCY. THE LEARNED DR HAS INSISTED THAT THE PROVISO TO RULE 31 - A OF THE I.T.RULES CLEARLY INDICATE THAT THE PENALTY WAS RIPE FOR LEVY NOT BECAUSE THE INSISTENCE OF THE DEPARTMENT ON ASSESSEE TO E - FILE IT ON A PARTICULAR DATE FOR CALCULATING NUMBER OF DAYS THE DE FAULT CONTINUES. WE ARE UNABLE TO CONSIDER THE PROPOSITION OF THE LEARNED DR INSOFAR AS THE DEPARTMENT ITSELF WAS HANDICAPPED AS THE BONAFIDE OF THE ASSESSEE HAS BEEN ESTABLISHED IN THE NEGATIVE WAY AS THEY WOULD HAVE FILED THE HARD - COPY OF THE QUARTERLY STATEMENTS WHICH THE DEPARTMENT REFUSED TO ACKNOWLEDGE. THEREFORE, THE COMPUTER GENERATED NUMBER FOR ACKNOWLEDGING SUCH RECEIPT OF SUCH STATEMENTS WAS NOT IN THE HANDS OF THE ASSESSEE INSOFAR AS THE GENERATION OF THAT NUMBER WOULD HAVE NEVER OCCURRED TILL SUCH TIME THE PANS AND THE INFORMATION AVAILABLE ON AS - 26 WOULD HAVE BEEN TALLIED BY THE COMPUTER SYSTEM ITSELF. WE HAVE BEEN SUBMITTED THAT IT WAS NOT THE 7 CA SE THAT THE ASSESSEE WAS IN DEFAULT NOT BEING COMPUTER LITERATE THEIR PRINCIPAL OFFICERS WHO HAVE BEEN HELD RESPONSIBLE FOR SUCH LATE FILING OF THE QUARTERLY STATEMENTS WAS AN ADMINISTRATIVE GLITCH. IT WAS NOT IN THE INTEREST OF THE GOVERNMENT EMPLOYEE TO HOLD BACK THE INFORMATION WHICH THEY HAVE ALREADY GATHERED INSOFAR AS THEY ARE NOW BEING GOVERNED BY THE COMPUTER WHICH SO FTWARE HAS ITS OWN FILTERS FOR ACCEPTING THE QUARTERLY STATEMENTS FOR WHICH THE ASSESSEE IN DEFAULT HAVE NOT MAINTAINED ANY RECORD TO ESTABLISH THAT EFFORTS WERE MADE BY THEM TO REDUCE THE TIME DELAY IN FILING SUCH STATEMENTS . CONCLUDING, WE OBSERVE THAT IT I S ONLY A QUESTION OF DELAYED FILING OF THE E - TDS QUARTERLY RETURN, WHICH WAS ENTRUSTED TO AN AUTHORIZED SERVICE PROVIDER AND THE DE LAY HAS OCCURRED UNINTENTIONALLY. THE ASSESSEE DEDUCTOR IS LAW COMPLIANT AND THE DELAY OCCURRED ONLY DUE TO THE REASON THAT THE ASSESSEE DEDUCTOR IS DEPENDENT ON INFORMATION OF TDS AND ITS DEPOSIT FROM THE SUB TREASURY OF THE GOVERNMENT AND FILING OF E - RET URN THROUGH THE DESIGNATED SERVICE PROVIDER OF INCOME - TAX DEPARTMENT. THE ASSESSEE DEDUCTOR HA S NO TECHNICAL COMPETENCY TO FILE THE RETURN BY ITSELF WITHOUT EXTERNAL AID. THE ASSESSEE I S ALSO NOT COMPETENT TO DO SO BY ITSELF AS PER RULE 37B AND 'FILING OF RETURN OF TAX DEDUCTED AT SOURCE' SCHEME 2003, WHICH REQUIRES THE SUBMISSION OF QUARTERLY STATEMENT THROUGH NSDL OR OTHER APPROVED AGENCIES I.E THIRD PARTY, 8 NOT UNDER THE CONTROL OF THE ASSESSEES. THERE IS NEITHER ANY WILLFUL NE GLIGENCE NOR ANY MALAFIDE ON THE PART OF THE ASSESSEE IN THE MATTER OF COMPLIANCE AND THE DELAY WAS DUE TO REASONABLE CAUSE, THE DEFAULT BEING BEYOND THE CONTROL OF THE ASSESSEE DEDUCTOR. IT IS AT BEST A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE ASSESSEE IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. THE PENALTY U/S 272 (A)(2) CANNOT BE LEVIED IN A ROUTINE MANNER. LAW IS WELL SETTLED THAT A BONAFIDE BREACH CANNOT LEAD TO A PENALTY U/S. 272(A) [HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (1972) 83 ITR 26 (SC)]. IN THE PRESENT CASE OF THE ASSESSEE , EITHER GOVERNMENT BOD IES OR AIDED BY GOVT ., ARE PUBLIC OFFICE AND SINCE THE TAX DEDUCTION AND PAYMENT ARE MADE BY TREASURY AND THERE IS UNDISPUTEDLY NO DEFAULT. THERE ARISES, NO REASON FOR NON - FILING OF TDS RETURN WITH AN INTENTIONAL ACT OR WILLFUL ACT TO AT TRACT A QUASI - CRIMINAL, IMPO SITION OF PEN ALTY. THE ASSESSEE HA S RELIED ON THE D ECISIONS OF THE HONORABLE HIGH COURT OF RAJ A STHAN IN THE CASE OF CIT VRS. SUPERINTENDENT ENGINEER [2002] 177 CTR (RAJ) 586 AND THE DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF ROYAL METAL PRINTERS PVT. LTD. VRS. ASST CIT [2010] 37 SOT 139(MUM) AND THE DECISION OF ITAT, CUTTACK BENCH IN THE CASE OF GARRISION ENGINEER (I) R & D, CHANDIPUR, BALASORE VRS. THE ADDL. COMMISSIONER OF INCOME TAX 9 (TDS), BHUBA NESWAR ( SUPRA), WHEREIN IT HAS BEEN CLEARLY HELD THAT FOR SUCH TECHNIC AL OR V ENIAL BREACH SUPPORTED BY REASONABLE CAUSE, PENALTY UNDER SEC . 272(A)(2) IS NOT LEVIABLE AND IMPOSITION OF PENALTY IS NOT JUSTIFIED FOR THE REASON T HAT IT WAS FOR THE FIRST TIME THE REQUIREMENT TO CONVERT THE HARD - COPY INTO SOFT - COPY WAS TO BE LEARN T BY RESPECTIVE GOVERNMENT DDOS FROM THE DEPARTMENT OFFICIALS. THERE IS REASONABLE CAUSE FOR DELAY IN FILING ETDS RETURN U/S 273B. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASES IN ITS ENTIRETY, WE ARE OF THE CONSIDERED VIEW THAT THE PENALTY SO LEVIE D IN THE CASE OF THE ASSESSEE I S NOT ALL JUSTIFIED. WE, THEREFORE, CANCEL THE PENALTY LEVIED U/S.272A(2)(K) FOR THE A SSESSE E FOR THE RESPECTIVE AYS AS CAPTIONED IN THE CAUSE TITLE OF THIS ORDER BY ALLOWING THE APPEALS UNDER CONSIDERATION. 8 . IN THE RESULT, BOTH THE APPEALS FOR THE RESPECTIVE ASSESSMENT YEARS ARE ALLOWED. ORDER PRONOUNCED IN PURSUANCE OF RULE 34(4) OF ITAT RULES, 1963 BY PUTTING ON NOTICE BOARD OF THE BENCH AT CUTTACK S D / - S D / - (P.K. BANSAL) (D.T. GARASIA) ACC OUNTANT MEMBER JUDICIAL MEMBER DATED : 1 3 T H MARCH , 201 5 . VR/ - 10 COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., CUTTACK.