State Bank of Bikaner & Jaipur, Chandigarh V. Addl. CIT (TDS), Chandigarh

ITA 476/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81058 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-11-2014
• Assessment Year: 2011-2012
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Bonafide belief; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 476/CHD/2014 ASSESSMENT YEAR: 2011-12 STATE BANK OF BIKANER & JAIPUR V THE ADDL.CIT (TDS), SCO 106-107-108, CHANDIGARH. SECTOR 17-D, CHANDIGARH. PAN: AADCS4750R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGA L RESPONDENT BY : SHRI J.S. NAGAR DATE OF HEARING : 27.11.2014 DATE OF PRONOUNCEMENT : 09.12.2014 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(APPEALS) CHANDIGARH DATED 11.07.2013 FOR ASSESS MENT YEAR 2011-12 (FINANCIAL YEAR 2010-11) CHALLENGING THE LE VY OF PENALTY UNDER SECTION 272(2)(K) OF THE INCOME TAX A CT. 2. ACCORDING TO THE OFFICE OF THE TRIBUNAL, APPEAL IS TIME BARRED BY 208 DAYS. THE ASSESSEE HAS FILED AFFIDAV IT OF BRANCH MANAGER OF STATE BANK OF BIKANER & JAIPUR BRANCH FO R CHANDIGARH STATING THEREIN THAT ASSESSEE WAS UNDER THE IMPRESSION THAT NO APPEAL COULD BE FILED AGAINST TH E ORDER OF LD. CIT(APPEALS) AND NOW THEY CAME TO KNOW FROM REL IABLE SOURCES THAT APPEAL COULD BE FILED BEFORE TRIBUNAL AGAINST 2 ORDER OF THE LD. CIT(APPEALS). IT WAS, THEREFORE, STATED THAT DELAY MAY BE CONDONED. 3. THE LD. DR OPPOSED THE REQUEST OF CONDONATION OF DELAY. 4. CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES, WE ARE OF THE VIEW THAT DELAY CAN BE CONDONED IN FILING TH E APPEAL BEFORE THE TRIBUNAL. IT APPEARS FROM THE EXPLANATI ON OF THE ASSESSEE THAT ASSESSEE WAS UNDER BONAFIDE BELIEF TH AT NO APPEAL CAN BE FILED BEFORE THE TRIBUNAL, THEREFORE ON LATER LEGAL ADVICE, THE ASSESSEE CAME TO KNOW THAT ORDER OF THE LD. CIT(APPEALS) IS APPEALABLE BEFORE THE TRIBUNAL. TH E ISSUE INVOLVED IN THE ASSESSEE'S APPEAL IS VERY TECHNICAL IN NATURE AND CONSIDERING THE EXPLANATION OF THE ASSESSEE IN THE LIGHT OF THE FACTS OF THE CASE, WE ARE SATISFIED THAT ASSESS EE WAS PREVENTED BY SUFFICIENT CAUSE FROM FILING THE APPEA L ON TIME BEFORE THE TRIBUNAL. THEREFORE, DELAY IN FILING AP PEAL IS CONDONED. 5. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE PERS ON RESPONSIBLE HAD FAILED TO FILE QUARTERLY TDS RETURN BY DUE DATE. THE ASSESSING OFFICER, THEREFORE, LEVIED PENALTY OF RS. 41,200/- UNDER SECTION 272A(2)(K) OF THE ACT. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT TAXATION SYSTEM WAS CE NTRALIZED BY THE HEAD OFFICE AND THE BRANCH WAS NOT AWARE THAT T HE RETURN WAS TO BE FILED AT THE BRANCH LEVEL AND ON CLARIFIC ATION FROM THE HEAD OFFICE, TDS RETURNS HAVE BEEN FILED. THE LD. CIT(APPEALS), HOWEVER, NOTED THAT RETURNS IN THE PR ESCRIBED FORM HAVE TO BE FILED BY DUE DATE AND ASSESSEE HAS NOT FILED TDS RETURNS BY DUE DATE AS PRESCRIBED BY THE RULES. THE LD. 3 CIT(APPEALS) NOTED THAT SINCE NO EVIDENCE OF CENTRA LIZATION OF TAXATION SYSTEM WITH THE HEAD OFFICE HAS BEEN FILED , THEREFORE, PENALTY HAS TO BE LEVIED AND ACCORDINGLY, APPEAL OF THE ASSESSEE WAS DISMISSED. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIA L AVAILABLE ON RECORD. IN THIS CASE, THE ASSESSING O FFICER NOTED THAT ASSESSEE HAS FAILED TO FILE E-TDS RETURNS FOR FIRST AND SECOND QUARTER WITH DELAY OF 252 DAYS AND 160 DAYS, HOWEVER THE AMOUNT OF TDS HAS BEEN PAID BY ASSESSEE WHICH I S NOTED IN THE PENALTY ORDER. THE ASSESSEE HAS CONTENDED B EFORE LD. CIT(APPEALS) THAT SINCE THE TAXATION SYSTEM WAS CEN TRALIZED BY THE HEAD OFFICE AND THE BRANCH WAS NOT AWARE THAT R ETURNS WERE TO BE FILED AT THE BRANCH LEVEL, THEREFORE, ON CLARIFICATION FROM THE HEAD OFFICE, THE TDS RETURNS HAVE BEEN FIL ED. SECTION 273B OF THE INCOME TAX ACT PROVIDES THAT NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE AS THE CASE MAY BE FOR ANY FAILURE REFERRED TO IN SECTION 272A(2) OF THE I NCOME TAX ACT IF HE PROVES THAT THERE WAS REASONABLE CAUSE FO R THE SAID FAILURE. IN THIS CASE, THE ASSESSEE EXPLAINED THAT THERE WAS A REASONABLE CAUSE FOR FAILURE TO COMPLY WITH THE ABO VE REQUIREMENT BECAUSE THEY WERE NOT AWARE OF THE FACT THAT RETURN WAS TO BE FILED AT THE BRANCH LEVEL. IT IS ADMITTED FACT THAT THE TDS AMOUNT WAS DEDUCTED ON TIME AND PAID T O THE REVENUE DEPARTMENT AND THE NECESSARY RETURN WAS ALS O FILED LATER ON, THEREFORE, NO LOSS OF REVENUE HAD OCCURRE D ON ACCOUNT OF LATE FILING OF THE RETURN. THUS, THE PENALTY WA S MERELY TECHNICAL IN NATURE BECAUSE THE REVENUE HAS NOT SUF FERED ANY LOSS ON ACCOUNT OF LATE FILING OF THE RETURN. THE ISSUE, 4 THEREFORE, WOULD BE COVERED BY DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF H.M.T. LTD. TRACT ORS DIVISION VS CIT 274 ITR 544 IN WHICH IT WAS HELD AS UNDER : THE ASSESSEE HAD DEDUCTED TAX AT SOURCE OUT OF PAYM ENTS MADE TO EIGHT CONTRACTORS. UNDER THE PROVISIONS OF SECTIO N 203 OF THE INCOME TAX ACT 1961, READ WITH RULE 31 OF THE INCOME -TAX RULES, 1962, IT WAS REQUIRED TO ISSUE TAX DEDUCTION CERTIFICAT E IN FORM NO. 16A TO THE SAID PARTIES WITHIN THE PRESCRIBED TIM E. HOWEVER, THE SAID FORMS WERE ISSUED LATE. THE ASSESSEE WAS A B RANCH OF A GOVERNMENT OF INDIA UNDERTAKING HAVING THOUSANDS OF E MPLOYEES. IT HAD TO ISSUE TAX DEDUCTION CERTIFICATES NOT ONLY I N RESPECT OF PAYMENTS TO EIGHT CONTRACTORS, BUT ALSO TO ITS EMPLO YEE AND CREDITORS IN RESPECT OF TAX DEDUCTED OUT OF SALARY A S WELL AS INTEREST. THE ASSESSEE STATED THAT THE DEFAULT WAS M ERELY TECHNICAL IN NATURE AS THERE WAS NO LOSS OF REVENUE INVOLVED AT ALL AND EVEN THE CONTRACTORS HAD NOT RAISED ANY GRIE VANCE ABOUT LATE ISSUE OF THE CERTIFICATES. THIS EXPLANATION DID N OT FIND FAVOUR WITH THE ASSESSING OFFICER, WHO LEVIED A PENALTY OF R S. 1,03,900 WHICH WAS EQUAL TO RS. 100 PER DAY FOR FAILURE OF 10 39 DAYS. THE COMMISSIONER (APPEALS) CANCELLED THE PENALTY BUT TH E ORDER WAS RESTORED BY THE TRIBUNAL. ON APPEAL TO THE HIGH COU RT : HELD, THAT THE TAX DEDUCTED AT SOURCE HAD BEEN PAID IN TIME AND THE NECESSARY RETURN IN RESPECT THEREOF WAS DUL Y FILED IN TIME WITH THE INCOME-TAX DEPARTMENT. NO LOSS O F REVENUE HAD OCCURRED ON ACCOUNT OF LATE ISSUE OF TA X DEDUCTION CERTIFICATES. NONE OF THE CONTRACTORS HAD RAISED ANY GRIEVANCE ON ACCOUNT OF LATE SUPPLY OF THE CERT IFICATES. KEEPING IN VIEW THESE FACTS AND ESPECIALLY THAT THE D EFAULT WAS MERELY TECHNICAL OR VENIAL IN NATURE, PENALTY COU LD NOT BE IMPOSED. 7. CONSIDERING THE MATERIAL ON RECORD, WE ARE OF TH E VIEW THAT SINCE LEVY OF PENALTY IS NOT MANDATORY IN EACH AND EVERY CASE AND DEPENDS UPON FACTS OF THE CASE, THEREFORE, CONS IDERING 5 EXPLANATION OF THE ASSESSEE IN THE LIGHT OF THE FAC TS OF THE CASE AND JUDGEMENT OF HON'BLE PUNJAB & HARYANA HIGH COUR T ABOVE, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND CA NCEL THE PENALTY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH DECEMBER,2014. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9 TH DECEMBER,2014. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH