SEAFARER'S WELFARE FUND SOCIETY, MUMBAI V. ADDL CIT (TDS) RG 3, MUMBAI

ITA 4568/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2305 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 03-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH GAIKWAD
• Assessee Lawyers: N J JAWKER
• Keywords: Charitable institution; Bonafide belief; Reasonable cause; Ignorance of law

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER / I .TA NO. 4568, 4569 & 4570/MUM/2014 ( / ASSESSMENT YEAR:2008-09 TO 2010-11 SEAFARERS WELFARE FUND SCOEITY, COMMERCE HOUSE,1 ST FLOOR, CURIMBHOY ROAD, BALLARD ESTATE, MUMBAI-400 001 / VS. THE ADDL. CIT (TDS), RANGE-3, MUMBAI ./ ./ PAN/GIR NO. AACTS 6282J ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI N.J. JAWKER / RESPONDENT BY: SHRI KAILASH GAIKWAD / DATE OF HEARING : 18.07.2016 ! / DATE OF PRONOUNCEMENT :27.07.2016 / O R D E R PER C.N. PRASAD, JM: THESE THREE APPEALS ARE FILED BY THE ASSESSEE AGAI NST THE ORDER OF THE LD. CIT(A)-14, MUMBAI DATED 9.4.2014 PERTAIN ING TO ASSESSMENT YEAR 2008-09 TO 2010-11 IN CONFIRMING TH E LEVY OF PENALTY U/S. 272A(2)(K) OF THE ACT FOR DELAY IN SUB MISSION OF TDS RETURNS (QUARTERLY). 2. BRIEF FACTS ARE THAT THE ASSESSEE FOR ALL THESE ASSESSMENT YEARS FILED QUARTERLY TDS RETURNS IN FORM NOS. 24Q AND 26 Q BELATEDLY. ITA NOS.4568 TO 4570/M/2014 2 SHOWCASE NOTICE WAS ISSUED TO THE ASSESSEE AS TO WH Y PENALTY U/S. 272A(2)(K) SHOULD NOT BE LEVIED. THE ASSESSEE IN I TS REPLY SUBMITTED THAT THE ASSESSEE SOCIETY HAS DEDUCTED TDS FOR ALL THESE ASSESSMENT YEARS AT THE APPLICABLE RATES AND DEPOSITED THE SAM E WITHIN THE STIPULATED TIME, THEREFORE THE SOCIETY HAS NOT WILL FULLY DELAYED IN FILING THE QUARTERLY RETURNS AND IT IS ONLY FOR THE REASON THAT STAFF WAS NOT AWARE OF THE RULES, THE DELAY IN FILING OF QUAR TERLY RETURNS OCCURRED. HOWEVER, THE ASSESSING OFFICER IMPOSED P ENALTY FOR ALL THESE THREE ASSESSMENT YEARS FOR DELAY IN FILING T HE TDS QUARTERLY RETURNS. 3. ON APPEAL, THE LD. CIT(A) SUSTAINED THE ORDER OF THE ASSESSING OFFICER IN LEVYING PENALTY. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT TH E ASSESSEE HAS DEDUCTED THE TDS AT APPLICABLE RATES AND HAS DEPOSI TED THE SAME WITH THE CONCERNED AUTHORITIES BEFORE THE END OF TH E FINANCIAL YEAR. THE ASSESSEE HAS ALSO FILED THE QUARTERLY TDS RETUR NS BEFORE THE END OF FINANCIAL YEAR. THE LD. COUNSEL FOR THE ASSESSE E FURTHER SUBMITS THAT DELAY IN FILING OF THE RETURNS WAS MAINLY DUE TO NON-AVAILABILITY OF THE COMPETENT STAFF AND IGNORANCE WITH REFERENCE TO COMPLIANCE WITH THE PROVISIONS OF THE I.T. ACT. THE DELAY IN FILING OF THE QUARTERLY RETURN OF TDS WAS NOT INTENTIONAL AND WAS ONLY A PR OCEDURAL DELAY AND IS ONLY A TECHNICAL DEFAULT AND NO PENALTY IS T O BE LEVIED. 4.1. HE FURTHER SUBMITS THAT LEVY OF PENALTY IS NOT MANDATORY IN BONAFIDE CASES. THE LD. COUNSEL FOR THE ASSESSEE R ELIED ON THE DECISION OF MUMBAI HIGH COURT IN THE CASE OF CIT VS SCHELL ITA NOS.4568 TO 4570/M/2014 3 INTERNATIONAL (278 ITR 630) WHEREIN IT WAS HELD THA T, WHERE THE ASSESSEE WAS A FILM PRODUCER, PRODUCED ONLY ONE FIL M, WHICH WAS FAILED AT BOX OFFICE FAILURE TO FILE STATEMENT SINC E ASSESSEE WAS NOT AWARE OF DUTY TO FILE STATEMENT, PENALTY, NEED TO B E IMPOSED. IT WAS ALSO HELD THAT IGNORANCE OF LAW IS NO EXCUSE BUT TH ERE IS NO PRESUMPTION THAT EVERYONE KNOWS THE LAW. WHERE TAX WAS DEDUCTED AT SOURCE AND DEPOSITED IN THE ACCOUNT OF THE GOVER NMENT IN TIME, BUT FORM 26A WAS NOT FILED, THERE EXISTED A BONAFIDE BE LIEF IN THE MATTER OF REQUIREMENT OF FURNISHING FORM 26A, SO THAT IT I S REASONABLE CAUSE. THERE IS NO CASE TO LEVY PENALTY (MAHENDRA PRAKSH S ARRAF VS DCIT (1998) 64 ITD 382 (DEL.). HE FURTHER SUBMITS THAT CONSIDERING THE FACTS OF THE CASE AND DECISIONS CITED ABOVE AND CON SIDERING THE OBJECTIVES OF THE CHARITABLE TRUST FOR WELFARE OF C ROSS SECTION OF SEAFARER, THE PENALTY LEVIED FOR ALL THESE ASSESSME NT YEARS ARE UNJUSTIFIABLE AND REQUESTED TO DELETE THE SAME. 5. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY S UPPORTS THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ADMITTEDLY, IN THIS CASE, T HE ASSESSEE HAS DEDUCTED TDS AND REMITTED THE SAME IN THE GOVERNMEN T ACCOUNT. HOWEVER, THE QUARTERLY RETURNS WERE FILED BELATEDLY . THE ASSESSEE IS A CHARITABLE ORGANIZATION ESTABLISHED FOR WELFARE O F SEAFARERS REGISTERED UNDER MUMBAI PUBLIC TRUST ACT, 1950 AND ALSO REGISTERED UNDER SOCIETIES REGISTRATION ACT, 1860. IT WAS EST ABLISHED FOR THE PURPOSE OF WELFARE OF RETIRED SEAMEN WIDOWS AND THE IR DEPENDENTS AND HIS HEAD BY DIRECTOR GENERAL OF SHIPPING AS EX- OFFICIO CHAIRMAN. THE ASSESSEE CONTENTS THAT THERE WAS NO WILLFUL DEL AY IN SUBMISSION ITA NOS.4568 TO 4570/M/2014 4 OF TDS QUARTERLY RETURNS AND THE STAFF WAS NOT AWAR E OF THE I.T. RULES. WE FIND THAT THERE IS NO REVENUE LOSS SINCE THE ASS ESSEE HAS REMITTED THE TDS IN TIME TO THE GOVERNMENT ACCOUNT. PENALTY CANNOT BE IMPOSED FOR DELAY IN FILING OF RETURNS AS THERE IS REASONABLE CAUSE. THE DELAY IN FILING THE RETURN IS AT BEST A TECHNIC AL OR VENIAL BREACH OF LAW AND NO CONTUMACIOUS CONDUCT CAN BE ATTRIBUTED T O THE ASSESSEE. THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD (83 ITR 26) HELD AS UNDER: AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMI NAL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE IMPO SED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIO US OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS O BLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHO ULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTYORY OBLIGAT ION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCIS ED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVA NT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCR IBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THATR THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN CANCELLING THE PE NALTY. WE, THEREFORE, UPHOLD HIS ORDER AND DISMISS THE APPEAL . 7. IN VIEW OF WHAT IS STATED ABOVE, WE HOLD THAT DE LAY IN FILING THE RETURN WAS SUPPORTED BY REASONABLE CAUSE AND IN ANY CASE, THERE WAS ONLY A TECHNICAL AND VENIAL BREACH OF THE PROVISION S OF LAW. HENCE, WE DELETE THE PENALTY LEVIED U/S. 272A(2)(K) FOR ALL T HESE ASSESSMENT YEARS. ITA NOS.4568 TO 4570/M/2014 5 8. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2016. SD/- SD/- (RAJENDRA) (C.N. PRASAD ) ' / ACCOUNTANT MEMBER $ %' /JUDICIAL MEMBER MUMBAI; (' DATED 27 TH JULY, 2016 . % . ./ RJ , SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ , %%-. , -.! , / DR, ITAT, MUMBAI 6. , /01 / GUARD FILE. / BY ORDER, *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI