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

ITA 339/CTK/2014

• Counselvise Citation: 33922114 RSA 2014
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 26-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SITAL CHANDRA DAS
• Assessee Lawyers: P C SETHI
• Keywords: 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. 339 & 340 / CTK /2014 (ASST. YEAR S : 20 1 0 - 1 1 & 2011 - 12 ) STATE BANK OF INDIA, LEWIS ROAD , BHUBANESWAR . VS. JCIT(TDS) , BHUBANESWAR . PAN NO. AAACS 8577 K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. SETHI A.R. DEPARTMENT BY : SHRI SITAL CHANDRA DAS - D.R. DATE OF HEARING : 06 / 0 2 /2015 . DATE OF PRONOUNCEMENT : 0 4 / 0 3 /201 5 . O R D E R PER D.T. GARASIA , J .M TH E S E APPEAL S BY THE SAME ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S OF LD. CIT (A) - 1 , BHUBANESWAR EACH DATED 1 0 /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. T HE FOLLOWING GROUNDS ARE RAISED BY THE ASSESSEE: - 1. THAT, THE LEARNED CIT (A) HAS COMMITTED SERIOUS ERROR IN NOT QUASHING THE PENALTY ORDER IMPOSED BY THE LEARNED JOINT COMMISSIONER OF INCOME - TAX (TDS), BHUBANESWAR WHICH IS PER SE ILLEGAL, ARBITRARY, WITHOUT JURISDICTION, CONTRARY TO THE 2 PROVISIONS OF THE ACT AND HAS BEEN MADE IN GROSS VIOLATION TO TNE PRINCIPLES OF NA T URA L JUSTICE. 2. THAT, THE LEARNED CIT (A) HAS COMMITTED SERIOUS ERROR IN NOT QUASHING THE PENALTY ORDER AS THE ORDER PASSED BY THE LEARNED JOINT COM M ISSIONE R OF INCOME - TAX (TDS), BHUBANESWAR U/S 272A(2)(K) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED AS 'THE ACT') IS AGAINST THE LAW AND CONTRARY TO THE EVIDENCE ON RECORD FOR WHICH THE SAID ORDER IS LIABLE TO BE QUASHED. 3. THAT, THE LEARNED CIT (A) HAS COMMITTED SERIOUS ERROR IN NOT DELETING THE PENALTY AMOUNT WHICH HAS BEEN PASSED ARBITRARILY FOR DELAY M FILING THE TDS RETURN WITHOUT GIVING AN OPPORTUNITY TO THE APPELLANT TO SUBMIT THE REPLY OF THE SHOW CAUSE 4. THAT, THE LEARNED CIT (A) HAS COMMITTED SERIOUS ERROR IN NOT CONSIDERING THE DECISION OF THE HON'BLE JURISDICTION OF THE ITAT IN THE CASE OF UCO BANK VRS. ADDL. CIT AND FOR WHICH SAID ORDER OF JOINT COMMISSIONER OF INCOME - TAX (TDS) IS LIABLE TO BE QUASHED. 5. THAT, THE LEARNED CIT (A) HAS COMMITTED SERIOUS ERROR IN NOT QUASHING THE PENALTY AFTER ADMITTING THAT THERE WILL BE A DELAY IN FILING OF FORM NO. 24Q/26Q DUE TO E - TDS STATEMENT WHICH IS UNKNOWN TO THE APPELLANT AND FOR WHICH THE PENALTY OR DER IMPOSED BY THE LEARNED JOINT COMMISSIONER OF INCOME - TAX (TDS) AND CONFIRMED BY THE LEARNED CIT (A) IS LIABLE TO BE QUASHED. 6. THAT, THE APPELLANT MAY ADD, ALTER, DELETE OR MODIFY ANY OF THE GROUNDS AT THE TIME OF HEARING OF THE MATTER WITH THE LEAVE OF THE HON'BLE I.T.A.T. 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 (HEREINAFTER 3 REFERRED TO AS THE 'ACT', FOR SHORT) . THE TOTAL DELAY CALCULATED BY JCIT FOR ALL EIGHT QUARTERLY STATEMENTS COMES TO 6721 DAYS IN A.Y. 20 10 - 1 1 & IN A.Y. 201 1 - 1 2 THE DELAY OF 2 248 DAYS . THEREFORE, THE JCIT HAS LEVIED THE PENALTY OF RS. 95,915 / - FOR THE A.Y. 201 0 - 1 1 AND RS. 9 6, 902 / - 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 31.5 .2012 1050 0 0 24Q 2 ND 15.10.2009 - DO - 958 2,519 2,519 24Q 3 RD 15.1.2010 - DO - 866 0 0 24Q 4TH 15.5 .2010 - DO - 746 0 0 26Q 1 ST 15.7.20 09 29.1.2012 928 0 0 26Q 2 ND 15.10.2009 - DO - 836 17,609 17,609 26O 3 RD 1 5 .1. 2010 - DO - 744 16,487 16,487 26Q 4TH 30 .6.2010 - DO - 593 13,84,567 59,300 TOTAL 6721 14,21,182 95,915 FOR A.Y. 2011 - 12 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 3 0 . 5 .2012 685 60 60 24Q 2 ND 15.10.20 1 0 - DO - 593 16,138 16,138 24Q 3 RD 15.1.2011 - DO - 501 33,804 33,804 24Q 4TH 15 .5.2011 - DO - 381 2,28,023 38,100 26Q 1 ST 15.7.2010 2 9 .8.2010 45 61,315 4,500 26Q 2 ND 15.10.20 1 0 27 . 11 .201 0 43 44,504 4,300 26O 3 RD 1 5 .1. 2011 15.1.2011 0 6,916 0 26Q 4TH 30 . 5 .2011 30.5.2011 0 1,45,710 0 GRAND TOTAL 2248 5,36,470 96,902 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. 4 5. LEARNED AR SUBMITTED BEFORE US 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). 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 - FI LING 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 5 ESTABLISHED BEYOND DOUBT WHEN THE VERY FACT THAT THE QUARTERLY RETURNS FOR MORE THAN FOUR QUARTERS AND LESS THAN EIGHT QUARTERS WERE FILED SIMULTANEOUSLY 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 SOU RCE 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 LEARNED 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 CASE - LAWS AS SUBMITTED BY THE LEARNED COUNSEL OF THE A SSESSEE 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 OBTA INING 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 6 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 DEF AULT 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 ST ATEMENTS 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 SU CH 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 CASE THAT THE ASSESSEE WAS IN DEFAULT NOT BEING COMPUTER LITERATE THEIR PRINCIPAL OFFICERS WHO HAVE BE EN 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 7 STATEMENTS . CONCLUD ING, 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 DELAY 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 - RETURN 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 REQUI RES THE SUBMISSION OF QUARTERLY STATEMENT THROUGH NSDL OR OTHER APPROVED AGENCIES I.E THIRD PARTY, NOT UNDER THE CONTROL OF THE ASSESSEES. THERE IS NEITHER ANY WILLFUL NEGLIGENCE 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 T O 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. 8 272(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 (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 LEARNT 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 9 LEVIED 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) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 4 / 0 3 / 201 5 . VR/ - 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.