M/s IDEB Projects Private Limited, Bangalore V. JCIT, Bangalore

ITA 44/BANG/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6909 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-09-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 21-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNDAR RAJAN
• Keywords: Reasonable cause; TDS
• Section: 201(1)

Judgement Text

ITA NO.43 & 44/BANG/2016 M/S. IDEB PROJECTS PVT. LTD., BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.43&44/BANG/2016 ASSESSMENT YEAR: 2010-11 & 2012-13 M/S. IDEB PROJECTS PVT. LTD. 10 TH FLOOR, DELTA TOWER SIGMA SOFT TECH PARK OPP VARTHUR LAKE BANGALORE-560 066 PAN NO : AAACI5570N VS. JCIT, (TDS) RANGE-16 BANGALORE APPELLANT RESPONDENT APPELLANT BY : SHRI RAVI SHANKAR, A.R. RESPONDENT BY : SHRI SUNDAR RAJAN, D.R. DATE OF HEARING : 09.09.2020 DATE OF PRONOUNCEMENT : 10.09.2020 O R D E R PER GEORGE GEORGE K., JUDICIAL MEMBER: THESE APPEALS AT THE INSTANCE OF THE ASSESSEE ARE D IRECTED AGAINST TWO ORDERS OF CIT(A), BOTH DATED 5.11.2015. THE RELEVANT ASSESSMENT YEARS ARE 2010-11 & 2012-13. 2. COMMON ISSUE IS RAISED IN THESE APPEALS, HENCE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO NSOLIDATED ORDER. THE SOLITARY ISSUE RAISED IN THIS APPEAL IS WHETHER THE CIT(A) WAS JUSTIFIED IN CONFIRMING THE PENALTY IMPOSED U/S 272 A(2)(K) OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT]. 3. BRIEF FACTS OF THE CASE ARE AS FOLLOWS: ITA NO.43 & 44/BANG/2016 M/S. IDEB PROJECTS PVT. LTD., BANGALORE PAGE 2 OF 6 ASSESSEE HAS DEDUCTED TAX AT SOURCE FOR THE ASSESS MENT YEARS 2010-11 & 2012-13. HOWEVER, THERE WAS A DELAY IN F URNISHING QUARTERLY RETURNS/STATEMENTS. THE DETAILS OF BELAT ED FURNISHED QUARTERLY STATEMENTS FOR THE ASSESSMENT YEARS 2010- 11 & 2012-13 ARE AS FOLLOWS: FOR A.Y. 2010-11: RRR NUMBER FORM NUM PERIODICITY DUE DATE DATE OF FILING DELAY (DAYS) 60510100329615 24Q Q4 15/06/10 29/10/10 136 60510100316831 26Q Q1 15/07/09 29/09/10 441 60510100316842 26Q Q2 15/10/09 29/09/10 349 60510100316816 26Q Q3 15/01/10 29/09/10 257 60510100316820 26Q Q4 15/06/10 29/09/10 106 FOR A.Y. 2012-13: RRR NUMBER FORM NUM PERIODICITY DUE DATE DATE OF FILING DELAY (DAYS) 60510200397474 24Q Q4 15/05/12 28/06/12 44 60510100513192 26 Q Q1 15/07/11 09/07/12 360 60510100513203 26Q Q2 15/10/11 09/07/12 268 60510100513214 26Q Q3 15/01/12 09/07/12 176 60510100513225 26Q Q4 15/05/12 09/07/12 55 4. FOR THE ABOVE CONTRAVENTION OF PROVISION OF SECT ION 200(3) OF THE ACT, PENALTY U/S 272A(2)(K) OF THE ACT WAS IMPO SED BY JT. CIT(TDS) AMOUNTING TO RS.1,28,900/- AND RS.90,300/- FOR ASSESSMENT YEARS 2010-11 & 2012-13 RESPECTIVELY. T HE JT. CIT (TDS) BY REFERRING TO THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF COURT ON ITS OWN MOTION VS. CIT REPORTED IN 210 TAXMAN 452 (DELHI) HELD THAT NON-FURNISHING OF PRESCRIBED STAT EMENT U/S 200(3) OF THE ACT WITHIN THE DUE DATE IS NOT A VENIAL BREA CH OF PROVISION BECAUSE THE TAX PAYER CREDIT FOR THE TDS STATEMENTS CANNOT BE GRANTED ON TIME IF TDS STATEMENTS ARE NOT FILED ON TIME BY THE DEDUCTOR. THEREFORE, IT WAS CONCLUDED BY THE LD. J CIT(TDS) THAT PENALTY HAS TO BE IMPOSED IN THE FACTS OF THE CASE. ITA NO.43 & 44/BANG/2016 M/S. IDEB PROJECTS PVT. LTD., BANGALORE PAGE 3 OF 6 5. AGGRIEVED BY ORDERS OF JT. CIT(TDS) IN IMPOSING PENALTY U/S 272A(2)(K) OF THE ACT FOR ASSESSMENT YEARS 2010-11 & 2012-13, THE ASSESSEE PREFERRED APPEALS BEFORE THE FIRST APPELLA TE AUTHORITY. THE CIT(A) CONFIRMED THE PENALTY IMPOSED BY THE JT. CIT (TDS). THE RELEVANT FINDING OF THE CIT(A) READS AS FOLLOWS: 3.4 I HAVE CAREFULLY CONSIDERED THE APPELLANTS CONTENTIONS/SUBMISSIONS AND ALSO PERUSED THE PENALT Y ORDERS FOR THE ASSESSMENT YEAR IN QUESTION. AS RIGHTLY OB SERVED BY THE A.O., THE REQUIREMENT OF FILING THE TDS RETURNS AS PER THE PROVISIONS OF SECTION 200(3) ITSELF IS TECHNICAL ON LY IN THE SENSE THAT IT DOES NOT INVOLVE ANY REVENUE IMPLICATION A ND, THEREFORE, THE PENALTY LEVIABLE U/S 272A(2)(K) FOR NON- COMPLIANCE WITH SUCH A REQUIREMENT CANNOT BE HELD T O BE UNJUSTIFIABLE ON THE GROUND THAT THE DELAY IN FILIN G THE TDS RETURNS IN TIME IS ONLY A TECHNICAL DEFAULT. WHAT SHOULD BE TAKEN INTO CONSIDERATION IS THE IMPACT THE DELAYED FILING OF THE STATUTORY FORMS HAS ON THE DEDUCTEES WHILE DEALING WITH THEIR CLAIMS FOR CREDIT BEING GIVEN TO THE TAXES DEDUCTED AT SOURCE. AS RIGHTLY OBSERVED BY THE A.O., THE PROBLEMS FACED BY THE A.OS CONCERNED DEALING WITH THE ASSESSMENTS OF DEDU CTEES ARE MANIFOLD BECAUSE, ON THE ONE HAND, THEY ARE UNA BLE TO DENY CREDIT TO THE TDS MADE AS SHOWN IN THE TDS CER TIFICATES PRODUCED BY THEM BEFORE THE A.OS AND, ON THE OTHER, THE AOS ARE UNABLE TO GIVE CREDIT IN THE ABSENCE OF CORROBO RATING EVIDENCE IN THE STATUTORY FORMS VIZ. 24Q AND 26Q AS ALSO DUE TO FAILURE OF THE DEDUCTORS TO UPLOAD THE RELEVANT DATA IN THE COMPUTER SYSTEM. IT IS IN THIS CONTEXT THE DECISIO N OF THE HONBLE HIGH COURT OF DELHI IN COURT ON ITS OWN MO TION V. CIT REFERRED TO AT PARA 3.2 SUPRA BECOMES MOST RELEVANT AS THE INABILITY ON THE PART OF THE AOS DEALING WITH THE C LAIMS OF DEDUCTEES LED TO THE HONBLE HIGH COURT PASSING STR ICTURES. IT IS IN THE LIGHT OF THESE DIFFICULTIES THAT THE PENA LTY LEVIED AS ENVISAGED IN THE SECTION IS JUSTIFIABLE. ACCORDING LY, I UPHOLD THE PENALTY OF RS.1,28,900/- LEVIED ON THE APPELLAN T BY THE A.O. FOR THE ASSESSMENT YEAR 2010-11. 6. AGGRIEVED BY THE ORDERS OF THE CIT(A), ASSESSEE HAS PREFERRED THESE APPEALS BEFORE THE TRIBUNAL. THE LD. A.R. LI MITED SUBMISSION BEFORE THE TRIBUNAL WAS THAT PENALTY U/S 272A(2)(K) OF THE ACT CAN BE LEVIED ONLY FROM THE DATE OF PAYMENT OF TAX AS THE STATEMENT U/S 200(3) OF THE ACT IS REQUIRED TO BE FILED ONLY AFTE R PAYMENT OF TAX TO THE CENTRAL GOVERNMENT. IN THIS CONTEXT, THE LD. A .R. RELIED ON THE ORDER OF THE CUTTACK BENCH OF THE TRIBUNAL IN THE C ASE OF N.K. MEDIA ITA NO.43 & 44/BANG/2016 M/S. IDEB PROJECTS PVT. LTD., BANGALORE PAGE 4 OF 6 VENTURES (P) LTD. VS. JT. CIT (TDS), BHUBANESHWAR R EPORTED IN (2015) 59 TAXMANN.COM 365 (CUTTACK TRIB.). THE LD. D.R. S TRONGLY SUPPORTED THE ORDER PASSED BY THE INCOME TAX AUTHOR ITIES. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY CONTENTION RAISED BY THE A.R. WAS THAT PENALTY, IF ANY SHOULD BE RESTRICTED FOR THE PERIOD FROM THE DATE OF PAYMENT OF TDS WHERE THE TAX WAS PAID LATE UP TO THE DATE OF F ILING OF TDS STATEMENT, SINCE BEFORE THE PAYMENT OF TDS, E-TDS R ETURN COULD NOT BE FURNISHED. IN THIS CONTEXT, WE REFER TO THE ORD ER OF THE CUTTACK BENCH IN THE CASE OF N.K. MEDIA VENTURES (P) LTD. V S. JT. CIT(TDS), BHUBANESHWAR (SUPRA), WHEREIN IT WAS HELD AS FOLLO WS: . 9. AS REGARDS THE DEFAULT IN NOT PAYING THE TAX TO THE CENTRAL GOVERNMENT IN TIME OR FOR NON DEDUCTING THE TAX AT SOURCE, THERE ARE OTHER PROVISIONS FOR ENSURING COMPLIANCE. IN CASE THE ASSESSEE FAILS TO DEDUCT THE TAX AT SOURCE OR AFTER DEDUCTING FAILS TO PAY THE SAME TO THE CENTRA L GOVERNMENT THE ASSESSEE IS DEEMED TO BE IN DEFAULT UNDER SECTION 201(1) AND IS LIABLE FOR PENALTY. THE ASSESSEE IS ALSO LIABLE TO PAY INTEREST FOR THE PER IOD OF DEFAULT TILL THE PAYMENT OF TAX UNDER SECTION 201(1A). THEREFORE IN OUR VIEW THE PERIOD FOR LEVYING THE PENALTY HAS TO BE COUNTED FROM THE DATE OF PAYMENT OF TAX BECAUSE THE DELAY IN FILING THE RETURN TILL THE DATE OF PAYMENT OF TA X IS ALREADY EXPLAINED ON THE GROUND THAT THE ASSESSEE COULD NOT PAY THE TAXES FO R WHICH SEPARATE PENAL PROVISIONS EXIST. THE ASSESSEE HAS ALSO EXPLA INED THE REASONS FOR NOT PAYING THE TAX TO THE CENTRAL GOVERNMENT IN TIM E WHICH WAS BECAUSE OF FINANCIAL DIFFICULTIES. THE ASSESSEE HAS FILED T HE COPIES OF P & L ACCOUNT AND BALANCE SHEET TO SUBSTANTIATE THE CLAIM THAT IT WAS INCURRING LOSSES AND THERE WERE SUBSTANTIAL LIABILITIES ON ACCOUNT OF CR EDITORS. THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF MUMBAI TRIBUNAL IN WHICH FINANCIAL HITCHES HAVE BEEN ACCEPTED AS REASONABLE CAUSE FOR DEFAULT IN PAYMENT OF TAX. ONCE THE DELAY IN PAYMENT OF TAX IS EXPLAINED SATISFACTO RILY, PENALTY U/S. 272A(2)(K) OF THE ACT CANNOT BE LEVIED FOR THE PERI OD TILL PAYMENT OF TAX. HENCE, WE MODIFY THE ORDER OF THE ASSESSING OFFICER. THE A SSESSING OFFICER IS DIRECTED TO LEVY THE PENALTY U/S. 272A(2)(K) OF THE ACT ONLY FOR THE DELAY IN PAYMENT OF TAX BY THE ASSESSEE. THE ORDER OF LD. CIT(A) IS MOD IFIED ACCORDINGLY. 8. SIMILAR VIEW WAS HELD BY THE PUNE BENCH OF THE I TAT IN THE CASE OF NAVA MAHARASHTRA VIDHYALAYA VS. ADDL. CIT P UNE REPORTED IN (2016) 74 TAXMANN.COM 240 (PUNE TRIB.) THE RELEVAN T FINDING OF THE TRIBUNAL READS AS FOLLOWS: PARA 28 IN THIS BUNCH OF APPEALS, THERE ARE CASES WHERE THE ASSESSEE HAS DEFAULTED IN NOT ITA NO.43 & 44/BANG/2016 M/S. IDEB PROJECTS PVT. LTD., BANGALORE PAGE 5 OF 6 DEPOSITING TAX DEDUCTED AT SOURCE IN TIME. IN SUCH CASES, THE RETURNS WERE DELAYED BECAUSE OF DEFAULT ON BEHA LF OF THE DEDUCTOR. IN SUCH CASES, PENALTY UNDER SECTION 272A(2)(K) OF THE ACT IS LEVIABLE. HOWEVER, THE SA ME IS TO BE RESTRICTED FROM THE DATE OF PAYMENT OF TDS TO TH E DATE OF FILING E-TDS STATEMENTS SINCE E-TDS STATEMENTS C ANNOT BE FILED WITHOUT PAYMENT OF TDS TO THE CREDIT OF CE NTRAL GOVERNMENT. SIMILAR RATIO HAS BEEN LAID DOWN BY TH E CHANDIGARH BENCH OF TRIBUNAL IN ASHIRWAD COMPLEX CASE (SUPRA). ACCORDINGLY, WE HOLD SO. 9. IN THE INSTANT CASE, ASSESSEE WAS IN ACUTE SHORT AGE OF MONEY, AS THE REAL ESTATE BUSINESS WAS IN RECESSION AND IT HAD HIT THE CASH FLOW OF THE ASSESSEE. CONSEQUENTLY, ASSESSEE INCUR RED HUGE LOSS FROM FINANCIAL YEAR 2008-09 ONWARDS. FOR THE ASSESSMENT YEAR 2008-09, ASSESSEE HAD INCURRED A LOSS OF RS.36.21 CRORES AND RS.363.93 CRORES FOR THE FINANCIAL YEAR 2009-10. THESE LOSSES CONTI NUED TO PILE UP FOR THE SUBSEQUENT FINANCIAL YEARS ALSO. DUE TO THIS A SSESSEE COMPANY COULD NOT PAY TDS ON TIME. THE E-TDS STATEMENT U/S 200(3) OF THE ACT CAN ONLY BE FILED AFTER PAYING THE TAXES TO THE CENTRAL GOVERNMENT. IN OTHER WORDS, THE QUARTERLY RETURN O F THE TDS REQUIRES FILLING OF DATE RELATING TO PAYMENT OF TAX ES. THEREFORE, SUCH RETURNS COULD BE FILED ONLY AFTER PAYING THE TAX TO THE CENTRAL GOVERNMENT ACCOUNT. AS REGARDS THE DEFAULT IN NON- PAYING THE TAXES TO THE CENTRAL GOVERNMENT ACCOUNT IN TIME OR FOR NO N-DEDUCTING THE TAX AT SOURCE, THERE ARE OTHER PROVISIONS FOR ENSUR ING COMPLIANCE. IN CASE THE ASSESSEE FAILS TO DEDUCT TAX AT SOURCE OR AFTER DEDUCTING FAILS TO PAY THE SAME TO THE CENTRAL GOVERNMENT ACCOUNT, THE ASSESSEE IS DEEMED TO BE IN DEFAULT U/S 201(1) OF THE ACT. THE ASSESSEE IS ALSO LIABLE TO PAY INTEREST FOR THE PERIOD OF DEFAULT TI LL THE PAYMENT OF TAX U/S 201(1A) OF THE ACT. THE ASSESSEE IS ALSO LIABL E FOR PENALTY U/S 271C OF THE ACT AND PROSECUTION U/S 276B OF THE ACT . THEREFORE, THE PERIOD LEVYING THE PENALTY HAS TO BE COUNTED FROM T HE DATE OF PAYMENT OF TAX BECAUSE THE DELAY IN FILING THE RETURN TILL THE DATE OF PAYMENT ITA NO.43 & 44/BANG/2016 M/S. IDEB PROJECTS PVT. LTD., BANGALORE PAGE 6 OF 6 OF TAX WAS ALREADY EXPLAINED ON THE GROUND THAT THE ASSESSEE COULD NOT PAY THE TAXES FOR WHICH SEPARATE PENAL PROVISIO NS EXIST. 10. IN THE LIGHT OF THE ABOVE JUDICIAL PRONOUNCEMEN T AND THE AFORESAID REASONING, WE DIRECT THE A.O. TO LEVY PEN ALTY U/S 272(2)(K) OF THE ACT FROM THE DATE OF PAYMENT OF TDS UP TO TH E DATE OF FILING OF E-TDS STATEMENTS, SINCE E-TDS STATEMENT CANNOT BE F ILED WITHOUT PAYMENT OF TDS TO THE CREDIT OF THE CENTRAL GOVERNM ENT ACCOUNT. 11. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH SEPT, 2020 SD/- (B.R. BASKARAN ) ACCOUNTANT MEMBER SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER BANGALORE, DATED 10 TH SEPT, 2020. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.