M/S ATASHA ASHIRWAD BUILDERS, Nagpur V. A.C.I.T (TDS) RANGE 1, Nagpur

ITA 480/NAG/2016

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The case involves M/s. Atasha Ashirwad Builders, a partnership firm engaged in works contractorship, appealing against the penalty imposed by the Addl. CIT (TDS) for delayed filing of TDS statements. The Tribunal examined whether the penalty under section 272A(2)(k) of the Income Tax Act was justified, considering that the TDS payments to sub-contractors were made timely but the quarterly statements were filed late. The Tribunal referenced previous decisions and the technical nature of the delay to conclude that no penalty should be imposed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128851 (ITAT-NAGPUR)
• Duration Of Justice: 6 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-07-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 25-08-2016
• Other Referred Cases: Maharashtra Jeevan Pradhikaran Works Division in ITA No. 2410/PUN/2017, HMT Ltd. v. CIT [2005] 274 ITR 544/[2004] 140 Taxman 606, Raja Harpal Singh Inter College's case, Central Scientific Instruments Organization's case, Ashirwad Complex case
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 273B

Judgement Text

आयकर अपीलीय अधिकरण न्यायपीठ नागपूर में । IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR (Through Virtual Court) BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.480/NAG/2016 धनिाारण वर्ा / Assessment Year : 2009-10 M/s. Atasha Ashirwad Builders, 144, Ambazari Hill Top, Nagpur – 440010 PAN : AACFA4207H .......अपीलार्थी / Appellant बनाम / V/s. ACIT (TDS), Range-1, Nagpur ......प्रत्यर्थी / Respondent Assessee by : Shri Kapil Hirani Revenue by : Shri Amol Khairnar सुनवाई की तारीख / Date of Hearing : 18-07-2023 घोषणा की तारीख / Date of Pronouncement : 03-08-2023 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : This appeal by the assessee against the order dated 09-05-2016 passed by the Commissioner of Income Tax (Appeals)-II, Nagpur [‘CIT(A)’] for assessment year 2009-10. 2. The assessee raised three grounds of appeal amongst which the only issue emanates for our consideration is as to whether the CIT(A) justified in 2 ITA No. 480/NAG/2016, A.Y. 2009-10 confirming the order passed by the Addl. CIT (TDS) in imposing penalty u/s. 272A(2)(k) of the Act. 3. We note that the assessee is a partnership firm, engaged in works contractorship/commission. According to the Addl. CIT that the payments made to the sub-contractors are exigible to TDS u/s. 194C, 194I, 194J, 194H of the Act and also has an obligation to furnish quarterly statements of TDS in Form No. 26Q within the prescribed due dates. The said details by way of a tabular form is reflected in para 2 of the order of Addl. CIT. We note that the Addl. CIT imposed penalty u/s. 272A(2)(k) of the Act for delay in filing quarterly statements of TDS. The CIT(A) confirmed the order of Addl. CIT ex-parte of the assessee. 4. The ld. AR, Shri Kapil Hirani submits that the assessee deposited the TDS to the concerned Central Government account in time and there was no loss caused to the Revenue. Mere non-filing of TDS statement being merely a technical default no penalty is warranted. He placed on record the order of this Tribunal in the case of Maharashtra Jeevan Pradhikaran Works Division in ITA No. 2410/PUN/2017 and invited our attention to the relevant part. On perusal of the said order the Co-ordinate Bench observed that the delay in furnishing e-TDS return should be liberally construed when there was practical difficulty on the part of assessed to comply with newly introduced requirements of e-TDs filing of TDS statement being technical delay and not venial in nature. In order to come to such conclusion the Co-ordinate Bench relied on many decisions of Hon’ble High Court of Punjab and Haryana and Allahabad. The relevant portion at para 24 to 28 is reproduced here-in-below for ready reference : “24. The Hon'ble Punjab & Haryana High Court in HMT Ltd. v. CIT [2005] 274 ITR 544/[2004] 140 Taxman 606 had held that where the tax deducted 3 ITA No. 480/NAG/2016, A.Y. 2009-10 at source had been paid in time and the necessary returns in respect thereto were filed in time with the Income Tax Department, on mere late issue of tax deduction certificate, there was no loss to the Revenue and the delay in furnishing the tax deduction certificate was held to be merely technical or venial in nature and penalty levied under section 272A(2)(k) of the Act was deleted. It may be clarified herein that earlier under section 272A(2)(k) of the Act, penalty was leviable where the tax deduction certificate was not issued in time. However, by Finance (No.2) Act, 2004 w.e.f. 01.04.2005, it has been provided that where a person fails to deliver or cause to be delivered copy of statement within time specified in section 200(3) of the Act or the proviso to section 206C(3) of the Act, then he shall pay by way of penalty sum of Rs.100/- for every day of default. It is further provided under the said sub- section that the amount of penalty for failure shall not exceed the amount of tax deductible or collectable, as the case may be. It is further I.T.A. No.1999/Mum/2017 provided that no penalty shall be levied under clause (a) for failure to furnish the statement under section 200(3) of the Act or proviso to section 206C(3) of the Act, on or after first day of July, 2012. 25. The learned Departmental Representative for the Revenue has placed strong reliance on the ratio laid down by the Hon'ble Allahabad High Court in Raja Harpal Singh Inter College's case (supra) for the proposition that where the e-TDS statement was not filed in time, then penalty under section 272A(2)(k) of the Act has been held to be leviable. In the facts of the said case before the Hon'ble High Court, the assessee was deducting the tax at source but had not filed the e-TDS returns for five successive assessment years starting from 2008-09 to 2012-13. The assessee failed to furnish any explanation before the Assessing Officer for the said default and only on the last date, it was pointed out that since the Principal of college had joined recently, it would take some time to collect the records for filing the e-TDS statements. The assessee however, failed to comply with notice and the Assessing Officer held the assessee to be liable for levy of penalty under section 272A(2)(k) of the Act. Before the CIT(A), the assessee for the first time offered an explanation that prior to joining regular Principal in the college on 25.01.2010, only officiating Principal had been working, who did not have idea of e-TDS statements and requirement of filing the same. The Tribunal noted that the appellate authority had accepted the explanation offered by the assessee and imposed penalty only from 01.04.2010 though regular Principal had joined the college on 25.01.2010. The Tribunal dismissed the appeal of assessee as no explanation was furnished for non-furnishing TDS statements in time. The Hon'ble High Court thus, in this regard observed that the requirement of filing e-TDS statements in time could not be overlooked. In such circumstances, the Hon'ble High court held that it cannot be urged by the Counsel for the assessee that no penalty could have been imposed for non-filing e-TDS returns in time since it had not resulted in any loss to the Revenue. The Hon'ble High Court further took note of the fact that before the Assessing Officer, no explanation was offered. However, an explanation was offered before the appellate authority, which was taken into consideration and the penalty amount was suitably reduced as the case of appellant that regular Principal assumed charge on 25.01.2010, was accepted and the penalty was imposed after that date. The appeal of the assessee in this regard was thus, dismissed. 26. Applying the said ratio laid down by the Hon'ble Allahabad High Court in Raja Harpal Singh Inter College's case (supra), there is no merit in the plea of the learned Departmental Representative for the Revenue that the Hon'ble High Court has laid down the proposition that in every case of default in filing the I.T.A. No.1999/Mum/2017 e-TDS statements in time, penalty under section 272A(2)(k) of the Act is leviable. The Hon'ble High Court in an appeal filed by the assessee dismissed the plea of assessee that no penalty is leviable but has upheld the orders of authorities below, wherein the CIT(A) had restricted the levy of penalty from the date of 1st April, 2010 in respect 4 ITA No. 480/NAG/2016, A.Y. 2009-10 of e-TDS statements to be filed for assessment years 2008-09 to 2012-13, since the assessee had explained that regular Principal had assumed charge on 25.01.2010. In other words, the Hon'ble High Court has accepted the explanation offered by the assessee regarding reasonableness of cause of delay in furnishing e-TDS returns late partially. Admittedly, the default in filing the said e-TDS returns have not been accepted in full but taking into consideration the reasonableness of explanation, the penalty chargeable under section 272A(2)(k) of the Act has been restricted i.e. suitably reduced in the case of appellant as held by the Hon'ble High Court. 27. Another reliance placed upon by the learned Departmental Representative for the Revenue is on the ratio laid down by the Chandigarh Bench of Tribunal in Central Scientific Instruments Organization's case (supra). In the facts of the said case, the assessee had filed TDS returns in Form No.26Q belatedly after expiry of 10 years from prescribed time limit and the assessee had submitted that he was unaware of provisions of section 200(3) of the Act. The assessee had deposited the tax to the Central Government at relevant time, however, the assessee failed to furnish TDS returns. The delay in filing the returns in prescribed form for all four quarters was 6463 days in assessment year 2009-10 and in assessment year 2010- 11 for all four quarter was 4966 days and in assessment year 2011-12, the delay was 3474 days. In view of the factual aspects of the case, where the delay is so huge and in the absence of any explanation of the assessee, we find no merit in the reliance placed upon on such decision by the learned Departmental Representative for the Revenue. 28. On the other hand, various Benches of Tribunal have time and again held that where there was case of reasonableness, there was no merit in levying the penalty under section 272A(2)(k) of the Act. Thus, in order to adjudicate the issue before us, we accept the case of reasonable cause as relevant to section 273B of the Act put up by the assessee in the respective cases in the appeals before us, which admittedly relate to different quarters of assessment year 2011-12. Where for the first time, there was requirement of e-TDS furnishing of TDS statement and since there were certain complications in e-filing of TDS returns because of system failure, which admittedly, was amended 18 times by the Department, the delay in furnishing the said returns late I.T.A. No.1999/Mum/2017 could not be attributed to the assessee. The onus was upon the authorities to provide platform for easy compliance to newly introduced provisions of the Act. Where such facilities could not be provided by the authorities and the technical support not being available to small assessees, who are in appeal before us, then the delay in furnishing the e-TDS returns late should be liberally construed. Hence, there was practical difficulty on the part of assessee to comply with newly introduced requirement of e- TDS filing of TDS statements, being technical delay and not venial in nature, merits to be considered as reasonable cause for non-levy of penalty as per the requirements of section 273B of the Act. We hold so. In this bunch of appeals, there are cases where the assessee has defaulted in not depositing tax deducted at source in time, in such cases, the returns were delayed because of default on behalf of the deductor. In such cases, penalty under section 272A(2)(k) of the Act is leviable. However, the same is to be restricted from the date of payment of TDS to the date of filing e-TDS statements since e-TDS statements cannot be filed without payment of TDS to the credit of Central Government. Similar ratio has been laid down by the Chandigarh Bench of Tribunal in Ashirwad Complex case (supra). Accordingly, we hold so.” 5 ITA No. 480/NAG/2016, A.Y. 2009-10 5. In the light of the above, we note that there was no delay in deposit of TDS amounts in the concerned account of Central Government and it is only delay in furnishing of TDS statement which is technical in nature, no penalty is warranted in terms of the finding of this Tribunal in the case of Maharashtra Jeevan Pradhikaran Works Division (supra). Thus, the order of CIT(A) is not justified and grounds raised by the assessee are allowed. 6. In the result, the appeal of assessee is allowed. Order pronounced in the open court on 03 rd August, 2023. Sd/- Sd/- (Inturi Rama Rao) (S.S. Viswanethra Ravi) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दिनाांक / Dated : 03 rd August, 2023. रदव आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT(A)-II, Nagpur 4. The CIT (TDS), Nagpur 5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, नागपूर, / DR, ITAT, Nagpur. 6. गार्ड फ़ाइल / Guard File. //सत्यादपत प्रदत// True Copy// आिेशानुसार / BY ORDER, वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune