M/s JAS Telecom Pvt Ltd , Bangalore V. Additional Commissioner of Income Tax Range-16 , Bangalore

ITA 3251/BANG/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8816 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-06-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 04-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJEET SINGH
• Keywords: Reasonable cause; TDS
• Section: 201; 274; 271B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI. B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.3251 & 3252/BANG/2018 ASSESSMENT YEARS : 2010-11 & 2011-12 M/S JAS TELECOM PVT. LTD., NO.26-H, VEERSANDRA INDUSTRIAL ESTATE AREA, HOSUR ROAD, ELECTRONIC CITY, BANGALORE. PAN AABCJ 1569 K VS. THE ADDL. COMMISSIONER OF INCOME-TAX, RANGE-16, BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI RAVISHANKAR, ADVOCATE RESPONDENT BY : SHRI MANJEET SINGH, ADDL.CIT DATE OF HEARING : 18-06-2020 DATE OF PRONOUNCEMENT : 27-07-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEALS ARE FILED BY ASSESSEE AGAINST ORDER DATED 28/09/2018 PASSED BY LD.CIT(A)-13, BANGALORE FOR ASSESSMENT YEAR 2010-11 AND 2011-12 AGAINST PENALTY UPHELD, UNDER SECTION 272A(2)(K), READ WITH SECTION 200(3) OF THE ACT. 2. LD.AO NOTICED THAT, THERE WAS FAILURE ON PA RT OF ASSESSEES TO FILE QUARTERLY RETURNS OF TDS IN FORM 24Q AND 26Q FOR THE YEARS UNDER CONSIDERATION WITHIN THE ST IPULATED PAGE 2 OF 9 ITA NOS.3251 & 3252/BANG/2018 TIME, REQUIRED BY SUB-SECTION (3) OF SECTION 200 R. W. RULE 31A(2) OF THE I.T. RULES, 1962. HE THEREFORE, INIT IATED PENALTY PROCEEDINGS AND ISSUED NOTICES UNDER SECTION 274 DA TED 17/12/2010, REQUIRING ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY UNDER SECTION 272A(2)(K) SHOULD NOT BE IMPO SED FOR THEIR FAILURE TO FILE TDS RETURNS WITHIN STIPULATE D TIME. IN RESPONSE TO THE SAID NOTICES, THE FOLLOWING EXPLANA TION WAS OFFERED BY THE ASSESSEE. IT WAS BEEN SUBMITTED THAT ASSESSEE DEDUCTED TDS FOR VARIOUS QUARTERS, DURING FINANCIAL YEARS 2009-10 AND 2010-11, BUT SUBMITTED QUARTERLY STATEM ENTS IN FORM 24Q & 26Q BEYOND DUE DATES, AND UPLOADED TD S STATEMENTS ON 16/08/2010, 02/05/2011 AND 03/11/2011 RESPECTIVELY. 3. BEFORE LD.AO ASSESSEE SUBMITTED THAT, DELAY IN DEPOSITING TDS AMOUNT FOR YEARS UNDER CONSIDERATION WAS DUE TO ILL-HEALTH OF THE MANAGING DIRECTOR. IT WAS SUBMITTED BY ASSESSEE VIDE LETTER DATED 30/01/2013 THAT, ASSE SSEE DEPOSITED PAYMENTS WITH INTEREST ON 31/03/2010 FOR A.Y:2010-11 AND 2011-12. IT WAS SUBMITTED THAT ASSE SSEE WAS NOT ABLE TO MOBILISE OF FUNDS FOR BUSINESS ACTI VITY, DUE TO THE HEALTH OF MANAGING DIRECTOR WHO WAS LOOKING OVER FINANCE AND STATUTORY PAYMENTS. ASSESSEE ALSO SUBMI TTED THAT, HEALTH OF MANAGING DIRECTOR DID NOT STABILISE UP TO 2012, AND IT WAS DURING THE MONTH OF MARCH 2012, DU E TO KIDNEY TRANSPLANT SURGERY, HE COULD NOT ATTEND OFFI CE TO TAKE NECESSARY STEPS/ACTIONS IN THIS REGARD. IT WAS SUBM ITTED THAT ASSESSEE DEPOSITED TDS WITH INTEREST DEDUCTED FOR PAGE 3 OF 9 ITA NOS.3251 & 3252/BANG/2018 FINANCIAL YEARS 2009-10 AND 2010-11, FOR ALL QUARTE RS WITH INTEREST TILL THE DATE OF DEPOSIT. 4. ACCORDING TO LD.AO, THERE WAS NO REASONABLE CAUS E HIGHLIGHTED BY ASSESSEE AS PER SEC. 271B FOR DELAY IN FILING TDS RETURNS FOR RELEVANT QUARTERS IN TIME AND IN AB SENCE OF SUCH REASONABLE CAUSE PUT-FORTH BY ASSESSEE, THEY W ERE LIABLE TO PAY PENALTIES UNDER SECTION 272A(2)(K)OF THE ACT. PENALTIES UNDER SECTION 272A(2)(K) WERE THUS IMPOSE D BY LD.AO FOR YEARS UNDER CONSIDERATION AS UNDER : FORM NUM PERIODICITY TDS AMOUNT DELAY (DAYS) PENALTY AMOUNT 24Q Q1 25,73,760 387 39,700 24Q - Q2 27,92,527 305 30,500 24Q Q3 27,92,527 213 21,300 24Q Q4 27,92,527 63 6,200 26Q Q1 3,36,058 385 38,500 26Q Q2 3,36,058 293 29,300 26Q Q3 3,36,058 201 20,100 26Q Q3 3,57,088 50 5,000 TOTAL RS. 1,90,600/- PAGE 4 OF 9 ITA NOS.3251 & 3252/BANG/2018 5. AGGRIEVED BY PENALTY IMPOSED BY LD.AO, ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A). 6. LD.CIT(A) WHILE UPHOLDING PENALTY, OBSERVED AS UNDER: IT CAN BE SEEN FROM SEC. 200(3) THAT THE DUTIES OF THE PERSON DEDUCTING TAX AND REMITTING TO THE GOVERNMENT ACCOU NT HAS THE SUBSEQUENT RESPONSIBILITY OF PREPARING AND FURNISHI NG THE STATEMENTS OF TAX DEDUCTED TO THE INCOME TAX AUTHOR ITY WITHIN THE PRESCRIBED TIME. THE DEDUCTOR IN FACT IS ACTING IN A FIDUCIARY CAPACITY AS AN AGENT OF THE REVENUE, THE AMOUNT OF TAX DEDUCTED BELONGS TO THE REVENUE. NON-SUBMISSION OF THE SAID STATEMENTS AND FAILURE TO UPLOAD THE SAME RESULT IN NON-ALLOWA NCE OF CREDIT OF TDS/TCS TO THE GENUINE TAX PAYERS AND AVOIDABLE LITIGATIONS FOR NO FAULT OF THE TAX PAYERS ON THE ONE HAND AND ON THE OTHER THAT OF REVENUE DUE TO MISMATCHES IN TDS/TCS AND NO N-GRANT OF CREDIT OF TDS TO DEDUCTEES, LOOKING AT THE MAGN ITUDE OF THE PROBLEM THAT CAN BE CAUSED TO THE TAX PAYER DUE TO DELAY OR DEFAULT IN UPLOADING THE CORRECT STATEMENTS, IT WIL L BE DIFFICULT TO HOLD THAT NON-FURNISHING OF THE PRESCRIBED STATEMEN TS U/S 200(3) WITHIN THE DUE DATES IS A VENIAL BREACH OF THE PROV ISIONS. IN THE INSTANT CASE, THE DEDUCTOR HAS RELIED ON THE FINANC IAL & ADMINISTRATIVE DIFFICULTIES, FOR DUE COMPLIANCE WIT H THE PROVISIONS, OBLIVIOUS OF THE RESULTANT MAGNITUDE OF THE HARDSHIP TO THE TAX PAYERS AND RESULTANT LITIGATIONS. THE AP PELLANT HAD ALSO FAILED TO FURNISH SUFFICIENT PROOF TO SUBSTANT IATE HIS CLAIM TO INVOKE THE GOVERNING PROVISIONS OF SEC.271B OF THE INCOME TAX FORM NUM PERIODICITY TDS AMOUNT DELAY (DAYS) PENALTY AMOUNT 24Q Q1 5,89,680 476 47,600 24Q - Q2 5,89,680 384 38,400 24Q Q3 5,89,680 292 . , 29,200 24Q Q4 5,89,680 172 17,200 26Q Q1 1,92,872 291 29,100 26Q Q2 2,55,372 199 19,900 26Q Q3 255,372 107 10,700 TOTAL RS. 1,92,100/- PAGE 5 OF 9 ITA NOS.3251 & 3252/BANG/2018 ACT. IDENTICAL ISSUE, HOWEVER, HAS BEEN DECIDED BY THE MUMBAI ITAT IN THE CASE OF DR. KHAN INDUSTRIAL CONSULTANTS (P) LTD., VS. ADDL. COMMISSIONER OF INCOME-TAX (TDS), RANGE THANE [2017} 81 TAMANN.COM 219 (MUMBAI - TRIB.17.) 7. AGGRIEVED BY ORDER OF LD.CIT(A), ASSESSEE IS IN APPEAL BEFORE US NOW. 8. ADMITTEDLY, ASSESSEE DEPOSITED TDS AMOUNT TO THE CREDIT OF GOVERNMENT WITH INTEREST AS ON 31/03/2010 AND 04/08/2010 FOR ASSESSMENT YEAR 2010-11, AND FOR A.Y:2011-12 ON 12/04/2011, 10/09/2011 AND 29/09/201 1. IT IS ALSO AN ADMITTED FACT THAT ASSESSEE FILED ALL FOUR QUARTERLY RETURNS ON 04/08/2010 AND 16/08/2010 FOR A.Y:2010-11, AND FOR A.Y:2011-12 ON 02/05/2011 AND 03/11/2011. COPIES OF TDS DEPOSIT CHALLAN AND FILIN G OF QUARTERLY RETURNS FOR ASSESSMENT YEARS UNDER CONSID ERATION HAS BEEN PLACED AT PAGES 31-53 OF PAPER BOOK. 9. LD.AR SUBMITTED THAT EVEN AFTER DEPOSITING TDS AMOUNT TO CREDIT OF GOVERNMENT, ASSESSEE WAS NOT IN A POSITION TO FILE RETURNS IMMEDIATELY, AS THERE WAS NO ACCOUNTANT WITH ASSESSEE, SINCE 28/02/2009. HE PLAC ED RELIANCE ON PAGE 141 OF PAPER BOOK WHEREIN RESIGNAT ION LETTER OF THE ACCOUNTANT EMPLOYED WITH ASSESSEE WAS PLACED. IT WAS BEEN SUBMITTED THAT ON 15/08/2010 ANOTHER ACCOUNTANT WAS APPOINTED. LD.AR PLACED ELIANCE ON P AGE 145 IN SUPPORT. LD.AR RELIED ON DECISION OF ITAT PUNE BENCH IN CASE OF NAV MAHARASHTRA VIDYALAYA VS.ACIT(TDS) REPORTED IN (2016) 74 TAXMANN.COM240, WHEREIN IN SIMILAR CIRCUMSTANCES PENALTY WAS RESTRICTED TO FIRST QUART ER WHICH PAGE 6 OF 9 ITA NOS.3251 & 3252/BANG/2018 IS IN DEFAULT AND FOR OVERLAPPING DEFAULT NO PENALT Y WAS DIRECTED TO BE LEVIED. 10. LD.SR.DR SUBMITTED THAT, FACTS ARE DIFFERENT SI NCE IN PRESENT CASE, ASSESSEE DID NOT DEPOSIT TDS FOR ALL QUARTERS ON SAME DAY. AS WELL AS, QUARTERLY RETURNS WERE AL SO UPHELD ON DIFFERENT DATES. HE OBJECTED FOR THE ACCOUNTANT NOT AVAILABLE WITH ASSESSEE, DATE OF APPOINTMENT OF NEW ACCOUNTANT WAS 15/08/2020. ASSESSEE FAILED TO UPLO AD THE TDS RETURNS IMMEDIATELY AFTER IT WAS DEPOSITED WITH GOVERNMENT. HE THUS PLACED RELIANCE ON VIEW TAKEN BY LD.CIT(A). 11. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. 12. ADMITTEDLY, PENALTY HAS BEEN LEVIED ONLY FOR LA TE FILING OF TDS RETURNS, AND DELAY CANNOT BE CONSIDERED TO B E TECHNICAL. REASON FOR DELAY IN FILING THE RETURNS W AS NON AVAILABILITY OF ACCOUNTANT. FROM DOCUMENTS PLACED A T PAGE 35- 53, FOR ASSESSMENT YEAR 20010-11, ASSESSEE FILE D 26Q RETURN OF 04/08/2010 AND 24Q RETURN WAS FILED ON 16/08/2010. FOR ASSESSMENT YEAR 2011-12, 26Q RETUR NS WAS FILED ON 05/05/2011 AND 24Q WAS FILED ON 03/11. 2011. FROM LETTER PLACED AT PAGE 145, IT IS CRYSTAL CLEAR THAT, NEW ACCOUNTANT TOOK CHARGE WITH ASSESSEES OFFICE ON 15/08/2010. THEREFORE, REASONING THAT, ASSESSEE WAS UNABLE TO FILE RETURNS, DUE TO NON AVAILABILITY OF ACCOUNT ANT CANNOT BE ACCEPTED ATLEAST FOR ASSESSMENT YEAR 2011-12. 13. HOWEVER, CONSIDERING THE ILLNESS OF MANAGING DI RECTOR, DURING RELEVANT PERIOD, ALTERNATE SUBMISSION OF LD. AR TO PAGE 7 OF 9 ITA NOS.3251 & 3252/BANG/2018 RESTRICT PENALTY TO BE COMPUTED FROM DATE OF PAYMEN T OF TDS AMOUNT TO THE CREDIT OF GOVERNMENT COULD BE ACCEPTE D. ACCORDINGLY LD.AR WAS DIRECTED TO FILE A CHART BY C OMPUTING PENALTY FROM THE DATE OF MAKING PAYMENT FOR BOTH YE ARS UNDER CONSIDERATION WHICH IS, REPRODUCED HEREIN BE LOW: AY 2010-11 26Q 24Q DATE OF PAYMENT OF TDS (PAGE 31-34) DATE OF FILING TDS RETURN (PAGE 19) DELAY IN DAYS PENALTY NO. OF MONTHS SINCE ORDER OF PENALTY - MAY 2013 UPTO JAN 2019 INTEREST U/S 220 TOTAL PENALTY 31/03/2010 04/08/2010 126 12,60 0 69 8,694 21,294 04/08/2010 16/08/2010 12 1,200 69 828 2,028 23,322 AY 2011- 12 26Q 24Q DATA OF , PAYMENT OF TDS (PAGE 47 - 49) DATE OF FILING TDS RETURN (PAGE 20) DELAY IN DAYS PENALTY NO. OF MO,-- - IS SINCE ORDER OF PENALTY - MAY 2013 UPTO JAN 2019 INTEREST U/S 220 TOTAL PENALTY 12/04/2011 02/05/2011 20 2,000 69 1,380 3,380 10/09/2011 AND '29/09/2011 03/11/2011 54 5,400 69 3,726 9,126 12,506 TOTAL PENALTY 21,200 14,628 35,828 PAGE 8 OF 9 ITA NOS.3251 & 3252/BANG/2018 14. LD.AO IS DIRECTED TO VERIFY THE SAME AND RESTRI CT PENALTY U/S.272(K)(2) TO SUCH AMOUNT AS COMPUTED FROM DATE OF DEPOSIT OF TDS WITH GOVERNMENT. ACCORDINGLY, GROUNDS RAISED BY ASSESSEE IN BOTH APP EALS STANDS ALLOWED PARTLY. IN THE RESULT, APPEALS FILED BY ASSESSEE STANDS ALL OWED PARTLY. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2020 SD/- SD/- (B. R. BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 27 TH JULY, 2020. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL. BANGALORE PAGE 9 OF 9 ITA NOS.3251 & 3252/BANG/2018 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -07-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -07-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -07-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -07-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -07-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -07-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -07-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS