THE ITO (TDS), WARD - 3(2), Vijayawada V. The Project Director, Khammam

ITA 496/VIZ/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1005 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 21-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S RAVI SANKAR NARAYAN
• Assessee Lawyers: V SIVA KUMAR A RS; E V SRIKRISHNA
• Keywords: Reasonable cause; Ignorance of law
• Section: 273B; 133A; 201(1)

Judgement Text

ITA NOS.495, 496 & 497/VIZAG/2014 THE PROJECT DIRECTOR, DISTRICT WATER MANAGEMENT AGEN CY, KHAMMAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NOS.495 TO 497/VIZAG/2014 ( / ASSESSMENT YEARS: 2009-10, 2010-11 & 2011-12 RESPECTIVELY) ITO(TDS), WARD - 3(2), VIJAYAWADA VS. THE PROJECT DIRECTOR, DISTRICT WATER MANAGEMENT AGENCY KHAMMAM [PAN: HYDDO1097F ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI S. RAVI SANKAR NARAYAN, DR / RESPONDENT BY : SHRI E.V. SRIKRISHNA & SHRI V. SIVAKUMAR, A.RS / DATE OF HEARING : 27.06.2016 / DATE OF PRONOUNCEMENT : 22.07.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THESE APPEALS FILED BY THE REVENUE ARE DIRECTED AG AINST THE COMMON ORDER OF CIT(A), VIJAYAWADA DATED 30.5.2014 FOR THE ASSESSMENT YEARS 2009-10 TO 2011-12. ITA NOS.495, 496 & 497/VIZAG/2014 THE PROJECT DIRECTOR, DISTRICT WATER MANAGEMENT AGEN CY, KHAMMAM 2 2. THE FACTS ARE IN BRIEF THAT A SURVEY WAS CONDUCT ED U/S 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE AC T'), DURING THE COURSE OF THE SURVEY IT WAS NOTICED BY THE A.O. THAT ASSES SEE HAS FAILED TO DEDUCT TAX IN RESPECT OF PAYMENT MADE TOWARDS VEHIC LE HIRE CHARGES, OUTSOURCING PAYMENT, ADVERTISEMENT & AUDIT FEE. AC CORDINGLY, A.O. PASSED AN ORDER U/S 201(1) AND 201(1A) OF THE ACT. SUBSEQUENTLY, A PROPOSAL SUBMITTED BY THE A.O. TO THE ADDITIONAL CO MMISSIONER OF INCOME TAX REQUESTING FOR INITIATION OF PENALTY PRO CEEDINGS U/S 272A(2)(K) OF THE ACT AS THE ASSESSEE HAS FAILED TO FILE THE E-TDS QUARTERLY RETURNS/STATEMENTS U/S 200(3) OF THE ACT WITHIN THE TIME PRESCRIBED IN FORM NO.24Q & 26Q OF THE ACT FOR THE ASSESSMENT YEARS 2009-10, 2010-11 & 2011-12. THE ADDITIONAL COMMISS IONER OF INCOME TAX HAS INITIATED THE PENALTY PROCEEDINGS U/S 272A( 2)(K) OF THE ACT AND LEVIED THE PENALTY BY OBSERVING AS UNDER: I. UNLESS THE APPELLANT FILED E-TDS RETURNS FOR AL L THE QUARTERS IN FORM NOS.24Q/26Q, IT IS NOT POSSIBLE TO KNOW THE ACTUAL POSITION OF TDS I.E. DEDUCTION AND PAYMENT OF TDS INTO GOVT. A/C. THIS DEFAULT OF THE DEDUCTOR HAS THEREFORE PUT A NUMBER OF DEDUCTEES IN TO GREAT HARDSHIP AS THEY WILL NOT BE ABLE TO GET RELEVANT TDS CREDIT. II. THE APPELLANT BEING A GOVERNMENT DEDUCTOR NEEDS TO BE MORE RESPONSIBLE IN FOLLOWING THE RULES AND REGULATIONS OF THE LAW PRESCRIBED BY THE I.T. ACT. THE I.T. ACT NOT ONLY APPLIES TO TH E PRIVATE ASSESSEES, BUT ALSO TO THE GOVERNMENT ASSESSEES. IN FACT GOVT. ASS ESSEES SHOULD IMPLEMENT THE TDS PROVISIONS THOROUGHLY SO AS TO LE AD AN EXAMPLE TO THE PRIVATE ASSESSEES FOR IMPLEMENTING THE I.T. ACT. III. IT IS PERTINENT TO MENTION HERE THAT THE INCOME TAX DEPARTMENT HAS BEEN CONDUCTING AWARENESS PROGRAMMES REGARDING TDS PROVISIONS OF I.T. ITA NOS.495, 496 & 497/VIZAG/2014 THE PROJECT DIRECTOR, DISTRICT WATER MANAGEMENT AGEN CY, KHAMMAM 3 ACT IN GUNTUR DISTRICT EVERY YEAR. IT IS FURTHER P OINTED OUT THAT THE IGNORANCE OF LAW CANNOT BE AN EXCUSE FOR FAILURE TO CARRY OUT THE STATUTORY OBLIGATIONS OF THE TDS DEDUCTOR AS PER I.T. ACT. T HE ASSESSEE HAS NOT FILED E-TDS FOR THE CURRENT FINANCIAL YEAR ALSO, WH ICH SHOWS VERY CLEARLY THAT THE ASSESSEE IS A HABITUAL DEFAULTER. IV. MOREOVER, IN THE WRITTEN SUBMISSIONS IN REPONSE TO THIS OFFICE SHOW- CAUSE LETTER 9.7.2012, THE ASSESSEE DID NOT MENTION ANY VALID/ACCEPTABLE REASONS FOR THE DELAY IN LATE FILING/NON-FILING OF QUARTERLY E-TDS STATEMENTS. 3. ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN A PPEAL BEFORE THE CIT(A). IT WAS SUBMITTED BEFORE THE LD. CIT(A) THA T THERE IS A REASONABLE CAUSE FOR NON-FILING OF TDS RETURNS AND EXPLAINED THAT DEFAULT WAS OCCURRED FOR THE FIRST TIME DUE TO NON- AVAILABILITY OF REGULAR GOVERNMENT ACCOUNTS EMPLOYEES AND BECAUSE OF INADVE RTENCE AND IGNORANCE AND NOT BY ANY NEGLIGENT OR DELIBERATE AT TITUDE. 4. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE CANCELLED THE PENALTY BY OBSERVING AS UNDER: 5. THE REASONS PUT FORTH FOR NON-FILING OF TDS RET URNS APPEAR TO BE REASONABLE AND IN MY HUMBLE OPINION THE APPELLANTS CASE WOULD NOT ATTRACT THE IMPUGNED PENALTY UNDER SECTION 272A(2)( K) SINCE THE DEFAULT WAS UNINTENTIONAL AND ALSO OCCURRED FOR THE FIRST T IME. AS PER THE PROVISIONS OF SECTION 273B OF THE ACT, NO PENALTY S HALL BE IMPOSED AS PER THE PROVISIONS OF SUB-SECTION (2) OF SECTION 272A, IF THE PERSON OR THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. THERE IS CONSIDERABLE STRENGTH IN THE SUBMISSION OF THE APPELLANT THAT ACUTE SHORTAGE OF STAFF AND LACK OF KNOWLEDGE IN FI LING OF E-TDS RETURN ON THE PART OF EMPLOYEES OF DISTRICT WATER MANAGEMENT AGENCY, HAVE CAUSED DELAY IN SUBMISSION OF E-TDS RETURNS. IT IS FURTHER SUBMITTED THAT THERE IS NO GROSS NEGLIGENCE OR WILLFUL DEFAULT ON THE PART OF THE APPELLANT IN NON- SUBMISSION OF RETURNS AND IT IS PREVENTED BY REASON ABLE CAUSE IN SUBMISSION OF E-TDS RETURNS WITHIN SCHEDULED TIME F RAME. IT IS WELL- SETTLED LAW THAT AN ORDER IMPOSING PENALTY IS A RES ULT OF QUASI-CRIMINAL PROCEEDINGS AND PENALTY SHOULD NOT ORDINARILY BE IM POSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LA W OR WAS GUILTY OF ITA NOS.495, 496 & 497/VIZAG/2014 THE PROJECT DIRECTOR, DISTRICT WATER MANAGEMENT AGEN CY, KHAMMAM 4 CONDUCT, CONTUMACIOUS OR DISHONEST, OR ACTED IN CON SCIOUS DISREGARD OF ITS OBLIGATION. NO PENALTY SHOULD BE IMPOSED IF THE AP PELLANT WAS ACTING IN HONEST AND GENUINE BELIEF IN A PARTICULAR MANNER. AS HELD BY THE SUPREME COURT IN HINDUSTAN STEEL LIMITED V STATE OF ORISSA, REPORTED IN (1972) 83 ITR 26, PENALTY SHOULD NOT BE IMPOSED MERELY BECAUS E IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORI TY TO BE EXERCISED JUDICIALLY AND ON CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPET ENT TO IMPOSE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE THE PENALTY , WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHEN THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. IN THE CIRCUMSTAN CES, I AM OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN LEVYING PENALTY U/ S 272A(2)(K) FOR ALL THE THREE ASSESSMENT YEARS UNDER CONSIDERATION. ON BEING AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. IN THIS CASE, THE PENALTY IS LEVIED U/S 272A(2)(K) OF THE ACT ON THE GROUND THAT THE ASSESS EE HAS FAILED TO FILE THE TDS QUARTERLY RETURNS WITHIN TIME AS PRESC RIBED BY RULES. THE ASSESSEE HAS EXPLAINED THE REASONS FOR NON-FILI NG OF TDS RETURNS BEFORE THE ADDITIONAL COMMISSIONER OF INCOME TAX AS WELL AS BEFORE THE CIT(A). EVEN BEFORE US, IT IS SUBMITTED THAT T HE DEFAULT COMMITTED BY THE ASSESSEE IS FIRST TIME AND IT IS A LSO SUBMITTED THAT SUFFICIENT REGULAR ACCOUNTS STAFF NOT AVAILABLE WIT H THE ASSESSEE AND HEREINAFTER ASSESSEE HAS STARTED FILING TDS RETURNS REGULARLY AND SUBMITTED THAT PENALTY MAY BE DELETED. WE HAVE GONE THROUGH THE ORDER PASSED BY THE CIT(A). THE LD. CIT(A) HAS CON SIDERED THE EXPLANATION GIVEN BY THE ASSESSEE AND DELETED THE P ENALTY. WE FIND ITA NOS.495, 496 & 497/VIZAG/2014 THE PROJECT DIRECTOR, DISTRICT WATER MANAGEMENT AGEN CY, KHAMMAM 5 THAT THERE IS NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. COMMISSIONER. THUS, THESE APPEALS FILED BY THE REV ENUE ARE DISMISSED. 6. IN THE RESULT, ALL THE APPEALS FILED BY THE REVE NUE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 ND JUL16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 22.07.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO (TDS), WARD-3(2), VIJAYA WADA 2. / THE RESPONDENT THE PROJECT DIRECTOR, DISTRICT WATER MANAGEMENT AGENCY, D.NO.11-10-744/2, BURHANPURAM, KHAMMAM. 3. ) / THE CIT, VIJAYAWADA 4. ) / THE CIT(TDS), HYDERABAD 5. ) ( ) / THE CIT(A), VIJAYAWADA 6. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 7 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM