Addl. CIT, Lucknow V. Smt. Sushma Tiwari, Lucknow

ITA 54/LKW/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48326 (ITAT-LUCKNOW)
• Duration Of Justice: 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-04-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 28-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K B AJAJ
• Assessee Lawyers: VIKAS KUMAR
• Keywords: Reasonable cause; Ignorance of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A - BENCH, LUCKNOW. BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI, ACCOUNTANT MEMBER I.T.A.NO. 54(LKW.)/2011 A.Y. : 2008-09 THE ADDL.CIT(TDS), VS. SMT. SUSHMA TIWARI, LUCKNOW. DIRECTORATE BACKWARD CLASS WELFARE, 10 TH FLOOR, INDIRA BHAWAN, ASHOK MARG, LUCKNOW. . PAN LKND05015D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.K.BAJAJ, SR.D.R. RESPONDENT BY : SHRI VIKAS KUMAR, ADVOCATE O R D E R PER H.L.KARWA, VICE PRESIDENT THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A)-III, LUCKNOW DATED 3.9.2010 IN CANCELING THE PENALTY OF RS.2,12,100 LEVIED UNDER SECTION 272A(2)(K) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) FOR THE ASSESSMENT YEAR 2008-0 9. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E PENALTY WAS IMPOSED UNDER SECTION 272A(2)(K) OF THE ACT ON THE GROUND T HAT THE ASSESSEE DID NOT FILE ITS QUARTERLY TDS STATEMENTS FOR THE FINANCIA L YEAR 2007-08, WHICH WERE MANDATORILY REQUIRED TO BE FILED IN THE PRESCRIBED FORM NO.24Q & 26Q AS PROVIDED UNDER SUB-SECTION (3)OF SECTION 200 OF THE ACT READ WITH RULE 31A 2 OF THE INCOME-TAX RULES, 1962. THE STATEMENT FOR T HE FIRST QUARTER WAS DUE TO BE FILED BY 15.7.2007, BUT IT WAS FILED ON 18.3 .209 AND THUS THERE WAS A DELAY OF 612 DAYS. SIMILARLY, QUARTERLY STATEMENT F OR THE SECOND QUARTER, WHICH WAS DUE BY 15.10.2007, WAS FILED ON 18.3.200 9 IMPLYING THEREBY A DELAY OF 520 DAYS. THE STATEMENT FOR THE THIRD QUAR TER WAS DUE TO BE FILED BY 15.1.2008, BUT WAS FILED ON 18.3.2009. THUS, THERE WAS A DELAY OF 428 DAYS. SIMILARLY, THE STATEMENT FOR THE FOURTH QUARTER WA S DUE TO BE FILED ON 15.6.208, BUT WAS FILED ON 18.3.2009 RESULTING IN A DELAY OF 276 DAYS AND STATEMENT FOR THE FOURTH QUARTER IN FORM NO.26Q WAS DUE TO BE FILED ON 15 TH JUNE,2008,WHICH WAS FILED ON 27.3.2009. THUS, THERE WAS A DELAY OF 285 DAYS. THE ADDL.CIT(TDS), LUCKNOW ISSUED THE SHOW C AUSE NOTICE TO THE ASESSEE AND THE ASSESSEE RESPONDED THAT IT IS A ST ATE GOVERNMENT ORGANISATION AND THE PAYMENT OF SALARY WAS MADE THR OUGH THE TREASURY AND TDS WAS BEING PAID THROUGH TREASURY CHALLANS. THE ASSESSEE WAS NOT AWARE ABOUT FILING OF QUARTERLY TDS STATEMENTS AND ON ACC OUNT OF BEING UNAWARE, THE RETURNS COULD NOT FILED IN TIME. AS SOON AS TH E NOTICES DATED 24 TH FEBRUARY, 2009 AND 4 TH MARCH, 2009 WERE RECEIVED FROM THE INCOME-TAX DEPARTMENT, THE STATEMENTS FOR THE FINANCIAL YEAR 2 007-08 WERE FILED ON 18.3.2009 AND 27.3.2009, WHILE THE QUARTERLY STATEM ENTS FOR THE FINANCIAL YEAR 2008-09 WERE FILED ON 19.3.2009. FOR THE FIRST QUARTER OF THE F.Y. 2008- 09, THE STATEMENTS HAD BEEN FILED ON 28.4.2009 AND 9.6.2009 IN FORMS NO.24Q AND 26Q RESPECTIVELY. FOR THE FIRST QUARTER OF THE FINANCIAL YEAR 2009-10 ALSO, THE STATEMENT IS SAID TO HAVE BEEN FILED ON 15.7.2009. IT WAS ALSO SUBMITTED BY THE ASSESSEE BEFORE THE LD.ADDL.C IT(TDS), LUCKNOW THAT THERE WAS NO DELIBERATE DELAY INFILLING THE RETURN . HOWEVER, THE ADDL.CIT(TDS) DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND HELD THAT IGNORANCE OF LAW IS NO EXCUSE AND IS NOT A SUFFICIE NT AND REASONABLE CAUSE 3 WHICH COULD PREVENT THE ASSESSEE TO FULFILL ITS STA TUTORY OBLIGATION AND HAS IMPOSED PENALTY OF RS.2,12,100 UNDER SECTION 272A(2 )(K) OF THE ACT. 3. ON APPEAL, THE LD.CIT(A) CANCELLED THE PENALTY O BSERVING AS UNDER : 8. I HAVE CONSIDERED THE FACTS OF THE CASE, GROUND S OF APPEAL AND THE ORDER OF THE ASSESSING OFFICER. THE PROVISI ONS RELATING TO FILING OF QUARTERLY RETURNS HAVE BEEN BROUGHT INTO THE STATUTE W.E.F. 01.04.2005. HOWEVER, CONSIDERING THE FACT TH AT THE ASSESSEE IS A STATE GOVT. ORGANIZATION, THE ASSESSI NG OFFICER HAS NOT MENTIONED ANY DEFAULT IN DEDUCTION OF TAX OR PA YMENT OF TAX DEDUCTED AT SOURCE, AND EVEN THOUGH THE PENALTY FOR NOT FILING THE QUARTERLY STATEMENTS LEVIABLE, HOWEVER, CONSIDERING THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE, NO PENA LTY IS IMPOSABLE AS THE DEFAULT, ON THE FACTS OF THE CASE, IS TREATE D AS A TECHNICAL DEFAULT AS THE TAX WAS DEDUCTED AS WELL AS PAID IN TIME AN D EVEN IN CONNECTION WITH THE FILING OF THE QUARTERLY STATEME NTS, THE ASSESSEE HAS COMPLIED WHEN THE DEFAULT WAS BROUGHT TO HIS NOTICE . HENCE, THE PENALTY IMPOSED IS HEREBY CANCELLED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PE RUSED THE MATERIALS AVAILABLE ON RECORD. IT IS APPARENT FROM THE RECORD THAT TDS WAS BEING MADE BY THE TREASURY OFFICER, LUCKNOW. THE AMOUNT OF TDS WAS CALCULATED BY THE DDO AND THE TAX DEDUCTED BY THE TREASURY OFFICE R WAS CREDITED TO THE CENTRAL GOVERNMENT ACCOUNT WITHIN THE PRESCRIBED TI ME. ON RECEIPT OF THE NOTICE, QUARTERLY STATEMENTS WERE FILED ON 19.3.200 9. IT IS ALSO OBSERVED THAT THE TAX WAS DEDUCTED AT SOURCE PROPERLY BY THE TRE ASURY OFFICER AND CREDITED TO THE CENTRAL GOVERNMENT WITHIN THE PRES CRIBED TIME LIMIT, HOWEVER, QUARTERLY STATEMENTS COULD NOT BE FILED B ECAUSE OF LACK OF KNOWLEDGE AND IT CAN NOT BE SAID INTENTIONAL OR WI LFUL, THEREFORE, PENALTY SHOULD NOT HAVE BEEN IMPOSED. IT IS ALSO APPARENT T HAT THE NON-FILING OF THE QUARTERLY STATEMENTS DOES NOT INVOLVE ANY REVENUE LOSS AND IS A MERE 4 TECHNICAL DEFAULT. IT IS AN ADMITTED FACT THAT THE AMOUNT OF TAX DEDUCTED AT SOURCE BY THE ASSESSEE WAS PAID WITHIN THE TIME ALL OWED UNDER THE RELEVANT PROVISIONS OF THE ACT. IN OUR CONSIDERED VIEW, THER E WAS ONLY A TECHNICAL AND VENIAL BREACH OF THE PROVISIONS CONTAINED IN RULE 31A OF THE INCOME- TAX RULES, 1962 REQUIRING THE ASSESSEE TO SUBMIT Q UARTERLY STATEMENTS OF DEDUCTION OF TAX UNDER SUB-SECTION (3) OF SECTION 2 00 OF THE ACT WITHIN THE TIME PRESCRIBED IN THE SAID RULE. THEREFORE, THE PE NALTY LEVIED DESERVES TO BE CANCELLED. EVEN OTHERWISE; THE ASSESSEE DID NOT DER IVE ANY BENEFIT WHATSOEVER BY NOT FILING THE QUARTERLY TDS STATEMEN TS IN TIME AS THE AMOUNT OF TDS WAS DULY DEPOSITED IN THE GOVERNMENT TREASU RY WITHIN THE PRESCRIBED TIME. SUCH DELAY HAS NOT CAUSED ANY LOSS TO THE REVENUE. IN OUR CONSIDERED VIEW, THE LD.CIT(A) HAS CORRECTLY OBSERV ED THAT NO PENALTY IS IMPOSABLE AS THE DEFAULT ON THE FACTS OF THE CASE, IS TREATED AS A TECHNICAL DEFAULT AS THE TAX WAS DEDUCTED AS WELL AS PAID IN TIME AND EVEN IN CONNECTION WITH THE FILING OF THE QUARTERLY STATEME NTS, THE ASSESSEE HAS COMPLIED WHEN THE DEFAULT WAS BROUGHT TO ITS NOTICE . IN OUR CONSIDERED OPINION, IN THE INSTANT CASE, THERE WAS ONLY TECHNI CAL AND VENIAL BREACH OF THE PROVISIONS CONTAINED IN RULE 31A OF THE INCOME-TAX RULES, 1962 AND THEREFORE, NO PENALTY COULD BE VALIDLY LEVIED ON TH E ASSESSEE. WHILE HOLDING SO, WE ARE FORTIFIED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (1972) 83 ITR 26(S.C.), WHEREIN THE HON'BLE SUPREME COURT HELD AS UNDER : AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEE DING, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBL IGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CO NDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF IT S OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFU L TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY 5 OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORI TY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVA NT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHOR ITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE P ROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF T HAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE S TATUTE. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE L D.CIT(A) WAS FULLY JUSTIFIED IN CANCELLING THE PENALTY. WE, THEREFORE, UPHOLD HIS ORDER AND DISMISS THE APPEAL. 5. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 6.4.201 1. SD. SD. (N.K.SAINI) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT APRIL 6TH ,2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R.,ITAT, LUCKNOW. SRIVASTAVA.