Sub Treasury Officer, Trivandrum V. Additional Commissioner of Income Tax, Trivandrum

ITA 41/COCH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52215 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 19-07-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 23-01-2009
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

1 IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NOS. 41 & 42/COCH/2009 ASSESSMENT YEARS: 2002-03 & 2001-02 SUB TREASURY OFFICER, SUB TREASURY OFFICE, VELLAYAMBALAM, TRIVANDRUM. [PAN:ADFPB 5624F] VS. THE ADDL.COMMISSIONER OF INCOME TAX, RANGE-2, TRIVANDRUM. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY NONE - WRITTEN SUBMISSIONS REVENUE BY MS. S. VIJAYAPRABHA, DR O R D E R PER SANJAY ARORA, AM: THESE ARE A SET OF TWO APPEALS BY THE A SSESSEE, A GOVERNMENT DEPARTMENT, ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INC OME-TAX (APPEALS)-III, KOCHI (CIT(A) FOR SHORT) DATED 17.11.2008 FOR THE TWO C ONSECUTIVE YEARS, BEING A.Y. 2001-02 AND A.Y.2002-03. THE SAME, RAISING A COMMON ISSUE, DECIDED PER A COMMON ORDER BY THE LD. CIT(A), WERE HEARD TOGETHER AND ARE, ACCORDINGL Y, BEING DISPOSED OF BY A COMMON, CONSOLIDATED ORDER. 2. THE ONLY ISSUE ARISING IN APPEAL IS THE MAINTAIN ABILITY OF THE PENALTY LEVIED U/S. 272A(2)(C) OF THE INCOME-TAX ACT, 1961 ('THE ACT' H EREINAFTER) AT THE STIPULATED RATE OF ` 100 PER DAY ON THE DELAYED FILING OF THE ANNUAL RET URN OF TDS U/S. 206 OF THE INCOME-TAX ACT, 1961 (`THE ACT HEREINAFTER) BY THE ASSESSEE. THE MATRIX EXHIBITING THE DUE DATE/S AND OTHER FACTUAL PARTICULARS IS AS UNDER:- 2 SL.NO. ASSESSMENT YEAR DUE DATE RETURN FILED DELAY A) 2001-02 31.05.2001 08.01.2002 221 DAYS B) 2002-03 31.05.2002 16.10.2002 137 DAYS 3. THE BRIEF FACTS OF THE CASE ARE THAT IN VIEW OF THE ADMITTED DELAY IN FILING THE TDS RETURN FOR BOTH THE YEARS, THE ASSESSEE WAS SHOW CA USED IN ITS RESPECT BY THE ASSESSING OFFICER (AO) VIDE NOTICE. THE ASSESSEE RESPONDED V IDE ITS LETTER DATED 19.05.2003, STATING OF SHORTAGE OF STAFF; HEAVY WORKLOAD; AND STRIKE BY THE GOVERNMENT EMPLOYEES, AS THE REASONS FOR THE DELAY. THE SAME WAS NOT FOUND ACCE PTABLE BY THE AO AS THE ASSESSEE, BEING ONE OF THE HEAVIEST TREASURY OFFICE IN THE ST ATE, EVEN AS CLARIFIED BY IT PER ITS REPLY, WAS, ON THE CONTRARY, EXPECTED TO ADHERE TO THE PRO VISIONS OF THE ACT. AS REGARDS THE GROUND OF THE STRIKE OF THE GOVERNMENT EMPLOYEES, T HE SAME WAS ONLY DURING FEBRUARY- MARCH, 2002, SO THAT IN ONE CASE (A.Y. 2001-02), TH E RETURN WAS FILED MUCH EARLIER THERE- TO, WHILE IN THE SECOND CASE (FOR AY 2002-03), THE RETURN WAS FILED MUCH LATER, BEING ONLY DUE BY 31.5.2002. SHE, THEREFORE, LEVIED THE PENAL TY FOR BOTH THE YEARS. IN APPEAL, THE LD. CIT(A) WAS OF THE VIEW THAT THE EXPLANATION BY THE ASSESSEE FOR THE ADMITTED DEFAULT WAS NEITHER COGENT NOR PLAUSIBLE; AS APPEARING FROM THE EXPLANATION, THE TROUBLE WITH THE ASSESSEE IS DEEP ROOTED, LEADING TO THE OFFICE OF T HE ACCOUNTANT GENERAL BEING SEIZED OF THE MATTER, AND COULD NOT SIMPLY BE ATTRIBUTABLE TO THE STRIKE. ACCORDINGLY, THE PENALTY ORDERS WERE CONFIRMED. 4. BEFORE US, WHILE THE ASSESSEE RELIED ON THE WRIT TEN SUBMISSIONS, THE LD. DR VEHEMENTLY ARGUED THAT THE STRIKE, FOR WHICH NO DAT ES WERE FURNISHED, CAN HARDLY BE A VALID GROUND; STRIKES BEING A REGULAR FEATURE OF PU BLIC LIFE IN KERALA. 5. WE HAVE HEARD THE PARTY, BEFORE US, AND PERUSED THE MATERIAL ON RECORD. 5.1 THE DELAY IN FILING THE ANNUAL TDS RETURN U/S. 206 BEING ADMITTED, THE ONLY QUESTION, IN SO FAR AS THE IMPOSITION OF PENALTY U/ S. 272A(2)(C) IS CONCERNED, IS THE 3 EXISTENCE OR OTHERWISE OF A REASONABLE CAUSE, WHICH ONLY COULD SAVE THE SAME; THE LEVY OF PENALTY BEING SUBJECT TO S. 273B OF THE ACT PROVIDI NG FOR THE SAME. IN THIS REGARD, WE FIND THE LETTER DATED 19.5.2003 (EXHIBIT I TO THE A SSESSEES PAPER-BOOK) TO BE THE ONLY MATERIAL FURNISHED BY THE ASSESSEE. THE SAME IS BY THE SUB TREASURY OFFICER, WHO EXPLAINED THAT WHEN HE JOINED THE TREASURY, I.E., I N AUGUST 2001, THERE WAS NEARLY 4 MONTHS DELAY IN RENDITION OF DAILY ACCOUNTS TO THE ACCOUNTANT GENERAL. HE WAS, THEREFORE, REGULARLY CALLED ON BY THE SAID OFFICE, AND WAS FULLY ENGAGED IN UPDATING THE ACCOUNTS. THE FINALISATION OF THE TDS STATEMENTS W AS ONLY POSSIBLE AFTER THE RENDITION OF THE ACCOUNTS. THIS EXPLAINS THE DELAY FOR THE FIRS T YEAR (A.Y. 2001-02), FOR WHICH THE RETURN WAS FILED ONLY ON 8.1.2002. WITH REGARD TO THE SECOND YEAR, I.E., AY 2002-03, IT STATES THAT LAGGING OF DAILY ACCOUNTS CONTINUED, AN D WAS FOLLOWED BY AN INDEFINITE STRIKE BY THE GOVERNMENT EMPLOYEES, LEADING TO THE DELAY; THE OFFICE BEING ALREADY UNDERSTAFFED. 5.2 WE SHALL TAKE UP THE ISSUES SEPARATELY. OUR FIRST OBSERVATION IN THE MATTER IS THAT NONE OF THE FACTS STATED IN THE EXPLANATION, EXCEPT FOR THE STRIKE DURING FEBRUARY-MARCH, 2002 - BEING AN ADMITTED FACT - HAS BEEN SUBSTANTIA TED. SO HOWEVER, WE FIND THAT THE REVENUE HAS NOT EITHER DOUBTED OR EVEN CALLED UPON THE ASSESSEE TO DO SO. AS SUCH, OUR ADJUDICATION WITH RESPECT TO THE `REASONABLE CAUSE WOULD BE BASED ON THE SAME. THE VERY FACT THAT THE TREASURY OFFICER WAS APPOINTED I N AUGUST, 2001, EVEN THOUGH IT IS TREASURY OFFICE, A GOVERNMENT DEPARTMENT, AND NOT A PERSON IN HIS INDIVIDUAL CAPACITY, WHO HAS COMMITTED THE DEFAULT, WOULD BEAR OUT THE F ACT THAT THE ACCOUNTS OF THE TREASURY WERE IN A BAD SHAPE. AS SUCH, ALLOWING FOR SOME TI ME IN REGULARISING THE SAME CAN ONLY BE CONSIDERED AS A REASONABLE REQUIREMENT UNDER THE CIRCUMSTANCES. IN THIS CONTEXT, IT NEEDS TO BE BORNE IN MIND THAT ONCE THE TDS HAS BEE N DEDUCTED AND DEPOSITED WITH THE CENTRAL GOVERNMENT, THE DEPARTMENT WOULD OTHERWISE HAVE NO REASON NOT TO FILE THE RETURN, AND IT IS APPARENT THAT THE DELAY HAS OCCUR RED ON ACCOUNT OF IMPROPER MAINTENANCE OF RECORDS BY THE ASSESSEE, WHICH COULD BE FOR THE REASON OF VOLUME COUPLED WITH A LOWER STAFF. IT IS NOT TO SAY THAT THE DELAY BECOMES JUS TIFIED, BUT ONLY THAT THE DELAY, UNDER THE CIRCUMSTANCES, CAN BE CONSIDERED AS REASONABLY EXPL AINED, PARTICULARLY IF THE DEPARTMENT 4 HAD BEEN FILING ITS RETURN EARLIER IN TIME, SO THAT THE IMPUGNED DELAY IS CAUSED BY THE DISLOCATION OF WORK DUE TO THE EXIGENCIES OF THE SI TUATION, TO ALLEVIATE/RETRIEVE WHICH SINCERE STEPS STAND TAKEN, AND IS THUS REQUIRED TO BE VIEWED LIBERALLY, KEEPING THE BONA FIDES OF THE EXPLANATION IN VIEW. 5.3 FOR THE SECOND YEAR, THE ASSESSEES ONLY EXPLAN ATION IS THE CONTINUED LAGGING OF THE DAILY ACCOUNTS, WITH THE STRIKE AND THE SHORTAGE OF STAFF BEING THE REASONS ADVANCED. WE FIND THE EXPLANATION FOR THE SECOND YEAR AS WHOLLY UNTENABLE. IF THE LAGGING OF DAILY ACCOUNTS PERPETUATED, THE ENTIRE EXERCISE COMES TO A NULLITY, IN-AS-MUCH AS THE REGULARISATION OF THE ACCOUNTS FOR THE EARLIER YEAR IS ONLY AT THE COST OF THE DISLOCATION OR THE NON-MAINTENANCE OF THE ACCOUNTS FOR THE SUBSEQU ENT YEAR. THE DAILY ACCOUNTS NEED TO BE MAINTAINED ON A DAILY BASIS. THE SHORTAGE OF STA FF, IF IT COULD NOT COPE WITH THE WORKLOAD, WOULD BE A PERENNIAL AFFAIR, LEADING TO A CCUMULATION OF WORK AND, CONSEQUENTLY, DELAY IN ALL RESPECTS, INCLUDING COMP LIANCE UNDER THE ACT AS WELL AS OTHER STATUTORY OBLIGATIONS, ON A CONTINUING BASIS; THE T IME LAG RATHER INCREASING WITH TIME. THE STRIKE DURING THE MONTHS OF FEBRUARY AND MARCH02, FOR WHICH NO SPECIFIC DATES HAVE BEEN FURNISHED BY THE ASSESSEE, WOULD, AGAIN, NOT B E TO ANY EFFECT INASMUCH AS THE SAME WAS OVER MUCH BEFORE THE DATE OF THE FILING OF THE RETURN ITSELF, I.E., 31.5.2002, WHILE THE DELAY IS FOR FURTHER PERIOD OF FOUR MONTHS. THE CONTINUING MALADY (OF NON-MAINTENANC E OF DAILY ACCOUNTS) RENDERS THE EXPLANATION AS A GENERALISED ONE, AND A LAME EXCUSE , DISCREDITING TO SOME EXTENT EVEN THE EXPLANATION FOR THE PRECEDING YEAR, WHICH FOUND FAV OUR WITH US ONLY ON THE STRENGTH OF AN OSTENSIBLE COMPLIANT RECORD FOR THE EARLIER YEARS, FOLLOWED BY STRONG, POSITIVE STEPS BEING INITIATED TO REMEDY A WRONG OR AN UNFAVOURABLE STAT E OF AFFAIRS, THAT MAY ARISE - DESPITE BEST EFFORTS - IN THE LIFE OF AN ORGANISATION, WHIC H FUNCTIONS ONLY THROUGH ITS PEOPLE. 6. IN VIEW OF THE FOREGOING, WE CONSIDER THE DELAY FOR THE FIRST YEAR, I.E., A.Y. 2001- 02, AS REASONABLY EXPLAINED, WHILE THAT FOR THE SUB SEQUENT YEAR, I.E., A.Y. 2002-03, AS NOT, JUSTIFYING THE LEVY OF THE IMPUGNED PENALTY FOR THE SAME. WE DECIDE ACCORDINGLY. 5 7. IN THE RESULT, THE ASSESSEES APPEAL FOR AY 2001 -02 (IN I.T.A. NO. 42/COCH/2009) IS ALLOWED, AND THAT FOR AY 2002-03 (IN I.T.A. NO.4 1/COCH/2009) IS DISMISSED. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 19TH AUGUST, 2011 GJ COPY TO: 1. SUB TREASURY OFFICER, SUB TREASURY OFFICE, VELLA YAMBALAM, TRIVANDRUM 695 010. 2. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-2, T RIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, KO CHI. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .