BHAGIRATH BEAINGS P.LTD, MUMBAI V. ADDL CIT (TDS)RG 1, MUMBAI

ITA 7095/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1056 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 26-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMARDR
• Assessee Lawyers: P R RAIYANI
• Keywords: Bonafide belief; Reasonable cause
• Section: 273B

Judgement Text

ITA NO. 7095/M/2014 BHAGIRA TH BEARINGS PVT LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, MU MBAI BEFORE SHRI SHAMIM YAHAHA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.7095/MUM/2014 (ASSESSMENT YEAR- 2010-11) BHAGIRAT H BEARINGS PVT. LTD. 6, DR. BHOGILAL BHAVAN, 5 TH MAMLATDAR WADI, MALAD (W), MUMBAI-400064. VS. ADDL. CIT (TDS) RANGE-1, ROOM NO. 801, 8 TH FLOOR, K.G. MITTAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD, MUMBAI-400002 (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. P.R. RAIYANI (AR) REVENUE BY : SH. SUMAN KUMAR-DR DATE OF HEARING : 27.04.2017 DATE OF PRONOUNCEMENT : 05.05.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. CIT (A)-14, MUMBA I DATED 10.10.2014 FOR AY- 2010-11. THE ASSESSEE HAS RAISED A NUMBER OF GROUND S, HOWEVER AS PER OUR CONSIDERED VIEW THE ONLY SUBSTANTIAL GROUND OF APPE AL IS WHETHER THE LEARNED COMMISSIONER (APPEALS) ERRED IN UPHOLDING THE PENAL TY OF RS.1,63,807/- IMPOSED BY ADDITIONAL COMMISSIONER OF INCOME TAX (T DS), UNDER SECTION 272A(2)(K) OF THE ACT. REST OF THE GROUNDS OF APPEAL IS ARGUMENTATIVE OR EXPLANATORY IN NATURE. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSING OFFICER NOTICED THAT THE ASSESSEE FAILED TO FURNISH THE QUARTERLY TDS RETURNS WITHIN TIME, FOR FINANCIAL YEAR 2009- 10 BEFORE THE PRESCRIBED AUTHORITY AS REQUIRED UNDE R SECTION 200(3) OF THE ACT READ WITH RULE 31 OF INCOME TAX RULES. THE ASSESSIN G OFFICER PREPARED THE FOLLOWING STATEMENT ON THE BASIS OF TDS DEPOSITED, DUE DATE OF FILING THE TDS RETURNS, DATE OF FILING THE TDS STATEMENTS AND THE NUMBER OF DELAY. ITA NO. 7095/M/2014 BHAGIRA TH BEARINGS PVT LTD 2 QTR TDS AMOUNT DEPOSITED DUE DATE OF FILING STATEMENTS DATE OF FILING THE RETURN NO. OF DELAY Q-1/26Q 74486 74486 15.07.2009 29.07.2010 544 Q-2/26Q 66,032 66,032 15.10.2009 29.07.2010 422 Q-3/26Q 66,348 66,348 15.01.2009 29.07.2010 356 Q-4/26Q 73,512 73,512 15.06.2010 29.07.2010 209 Q-4/26Q 7,707 7,707 209 THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE DA TED 24 TH OCT 2010 UNDER SECTION 272 A(2)(K) TO THE ASSESSEE. THE ASSESSEE F ILED HIS REPLY. IN THE REPLY OF ASSESSEE CONTENDED THAT REASONS FOR LATE FILING OF RETURNS OF TDS WAS THAT THEIR EXPERIENCED ACCOUNTANT WHO USED TO COMPILE THE DATA FOR QUARTERLY TDS RETURN LEFT SERVICES FROM JULY 2009 AND THE NEW ACCOUNTAN T WHO WAS EMPLOYED THEREAFTER WAS NOT WELL-VERSE WITH THE PROCEDURE OF FILING OF THE RETURNS. THE DIRECTORS OF THE ASSESSEE WERE NOT WELL VERSED EITH ER WITH THE COMPUTER OPERATION OR IN HANDLING THE ACCOUNTS AND WERE DEPE NDENT UPON THE ACCOUNTANTS. THE ASSESSEE ADMIT THAT RETURNS WERE F ILED LATE, HOWEVER TDS WAS PAID FROM TIME TO TIME AND THERE WAS SOME DELAY IN PAYMENT OF TDS. THE ASSESSEE RECEIVED INTIMATION FROM THE DEPARTMENT AB OUT THE SHORT DEDUCTION FOR FEW PAYMENTS AND THE DEMAND WAS RAISED INCLUDING TH E INTEREST ON SUCH SHORT PAYMENTS, UPON RECEIPT OF SUCH INTIMATION AND DEMAN D NOTICE THE ASSESSEE PAID THE BALANCE AMOUNT OF RS. 6,940/-. THE ASSESSEE FUR THER CONTENDED THAT THERE WAS UNINTENTIONAL COMPLIANCE IN FURNISHING THE STAT EMENT OF THE TDS. THE ASSESSEE ALSO CONTENDED THAT THERE WAS NO MALAFIDE INTENTION ON THE PART OF ASSESSEE. THE ASSESSEE NEVER DEFAULTED ON EARLIER O CCASIONS OR IN SUBSEQUENT YEARS. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER CONCLUDED THAT IT IS STATUTOR Y OBLIGATION OF THE ASSESSEE TO DEDUCT TAX WHEREVER DEDUCTIBLE AND PAID TO THE A CCOUNTS OF THE GOVERNMENT, THE ASSESSEE HAS TO ENSURE TIMELY SUBMISSION OF TDS STATEMENT. THE EXCUSE MADE BY THE ASSESSEE FOR GETTING SKILLED STAFF ETC, ARE NOT TENABLE AND REASONABLE CAUSE TO SEE THE BENEFIT UNDER SECTION 2 73B OF THE ACT. THE ASSESSING OFFICER FURTHER CONCLUDED THAT THERE IS A CLEAR-CUT LAXITY ON THE PART OF ASSESSEE WHICH CANNOT BE NOW PUT FORTH AS A REAS ONABLE CAUSE FOR NOT FILING STATEMENT IN TIME. THE ASSESSING OFFICER ON THE BAS IS OF NUMBER OF DELAYS IN FURNISHING THE RETURN LEVIED PENALTY @ RS.100/- PER DAY FOR EACH QUARTERLY ITA NO. 7095/M/2014 BHAGIRA TH BEARINGS PVT LTD 3 STATEMENT AND WORKED OUT THE PENALTY OF RS. 1,63,80 7/-. ON APPEAL BEFORE COMMISSIONER (APPEALS) THE PENALTY WAS SUSTAINED. A GGRIEVED BY THE ORDER OF LEARNED COMMISSIONER (APPEALS), THE ASSESSEE HAS FI LED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD.AR OF THE ASSESSEE AND THE LD. DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN ADDITI ON TO HIS ORAL SUBMISSION, THE LD. AR OF THE ASSESSEE ALSO FILED WRITTEN SYNOPSIS. THE LD AR OF THE ASSESSEE ARGUED THAT SINCE INCEPTION OF THE ASSESSEE-COMPANY , NO PENALTY UNDER SECTION 272A(2)(K) WAS IMPOSED ON THE ASSESSEE. DURING THE FINANCIAL YEAR 2009-10 THE ASSESSEE DEDUCTED TAX AT SOURCE AND IT HAD PAID TAX SO DEDUCTED. QUARTERLY STATEMENTS COULD NOT BE FILED WITHIN TIME PRESCRIBE D AS THE ACCOUNTANT OF THE ASSESSEE WHO WAS LOOKING AFTER THE SAID WORK LEFT H IS JOB ABRUPTLY. THE OFFICIALS OF THE ASSESSEE PERSUADED THE SAID EMPLOYEE TO JOIN THE ASSESSEE AND TO COMPLETE HIS PENDING WORK, HOWEVER DESPITE THE REPE ATED EFFORTS OF THE ASSESSEE THE EMPLOYEE REFUSED TO JOIN THE DUTY AND DUE TO THE SAID REASONS THE NEW STAFF APPOINTED BY ASSESSEE-COMPANY COULD NOT C OMPILE THE STATEMENT AND FURNISHED THE RETURN OF TDS IN TIME. IT WAS ARGUED THAT CERTAINLY THERE WAS DELAY IN FURNISHING THE STATEMENT OF TDS RETURNS, H OWEVER IT WAS NOT INTENTIONAL, BUT IT WAS DUE TO THE BONAFIDE REASONS . IN SUPPORT OF THE SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISIONS OF HONBLE SUPREME COURT IN HINDUSTAN STEEL LTD, VS STATE OF O RISSA 83 ITR 26(SC), CIT VS ELI LILLY AND CO. INDIA PRIVATE LIMITED 312 ITR 225(SC ), CIT VS. HARSIDH CONSTRUCTION PRIVATE LIMITED 244 ITR 147 ( GUJARAT), DECISION OF AHMEDABAD TRIBUNAL IN ACQUAFIL POLYMERS CO. PRIVATE LIMITED (ITA NO. 3246 & 3247/AHD/2015 DATED 03.02.2016, KIRI INDUSTRIES L TD. VS. ACIT (ITA NO. 2733/AHD/2015 DATED 01.01.2016, BR. MANAGER, STATE BANK OF INDIA VS. ACIT [(2014) 41 TAXMANN.COM 268], BRANCH MANAGER PUNJAB NATIONAL BANK [(2014) 140 TTJ 622], ACIT VS. LOK PRAKASHAN LTD. [ITA NO. 2815/AHD /2009 DT. 08.01.2010]. ON THE OTHER HAND THE LEARNED DR FOR T HE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. THE LEARNED DR FURTHER ARGUED THAT THE ASSESSEE HAS NOT SHOWN SUFFICIENT CAUSE FOR DELAY IN FURNISHING THE RETURN OF TDS. THE PLEA ITA NO. 7095/M/2014 BHAGIRA TH BEARINGS PVT LTD 4 OF THE ASSESSEE THAT THE ACCOUNTANT LEFT THE EMPLOY MENT IS THE SELF SERVING STATEMENT OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND GONE THROUGH THE RECORD OF THE CASE. THE ASSESSING OFFICER LEVIED TH E PENALTY SHOOT DELAY IN FILING TDS STATEMENTS WITHIN STATUTORY PERIOD. THERE IS NO DISPUTE THAT ASSESSEE DEPOSITED AMOUNT OF TDS IN EVERY QUARTER. THE ASSES SEE PAID INTEREST FOR DELAY IN DEPOSIT OF TDS. THE ASSESSEE HAD PAID AN INTERES T OF RS. 6,940/-. THE CONTENTION OF ASSESSEE THROUGHOUT THE PROCEEDINGS I S THAT NOT FURNISHING THE STATEMENT/ RETURNS WITHIN STATUTORY PERIOD WAS NEIT HER INTENTIONAL NOR DELIBERATE. THE DELAY IN FURNISHING THE STATEMENT W AS DUE TO THE REASONS THAT THE PERSON WHO WAS LOOKING AFTER FOR FURNISHING THE STA TEMENT OF TDS RETURNS LEFT EMPLOYMENT OF ASSESSEE. THE ASSESSEE MADE THEIR EFF ORT TO BRING THE EMPLOYEE BACK IN THEIR EMPLOYMENT. IN SUPPORT OF THEIR CONTE NTION THE ASSESSEE HAS PLACED ON RECORD THE COPY OF E-MAIL COMMUNICATION WITH THE EMPLOYEE (PAGE 23OFPB). THE LOWER AUTHORITIES HAVE NOT GIVEN ANY F INDING THAT NON-FURNISHING OF TDS RETURNS WAS DELIBERATE OR THE ASSESSEE GOT A NY BENEFIT DUE TO DELAY IN FURNISHING THE STATEMENT. THE HONBLE SUPREME COURT IN HINDUSTAN STEEL LTD VERSUS STATE OF ORISSA SUPRA HELD THAT; AN ORDER IMPOSING PENALTY FOR FAILURE TO CARR Y OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS, AND PEN ALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED, EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHON EST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENAL TY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATT ER OF DISCRETION OF AUTHORITY TO BE EXERCISED JUDICIOUSLY AND ON THE CO NSIDERATION OF ALL RELEVANT CIRCUMSTANCES EVEN IF MINIMUM PENALTY IS PRESCRIBED , THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED I N REFUSING TO IMPOSE PENALTY, WHERE THERE IS TECHNICAL OR VENIAL BREACH OF THE PROVISION OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF T HAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATU E. THE HONBLE APEX COURT FURTHER IN CASE OF CIT VS EL I LILLY AND CO (INDIA)(P) LIMITED(SUPRA) HELD; SECTION 273B STATES THAT NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 271C, NO PENALTY SHALL BE IMPOSED ON THE PERSON OR THE ASSESSEE FOR FAILURE TO DETECT TAX AT SOURCE IF SUCH PERSON OR THE ASSES SEE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE. THEREFORE, T HE LIABILITY TO LEVY PENALTY CAN BE FASTENED ONLY ON ONLY ON THE PERSON WHO DO N OT HAVE A GOOD CASE AND SUFFICIENT REASON FOR NOT DEDUCTING TAX AT SOURCE. ONLY THOSE PERSONS WILL BE ITA NO. 7095/M/2014 BHAGIRA TH BEARINGS PVT LTD 5 LIABLE TO PENALTY WHO DOES NOT HAVE GOOD AND SUFFIC IENT REASON FOR NOT DEDUCTING THE TAX. THE BURDEN, OF COURSE, IS ON THE PERSON TO PROVE SUCH GOOD AND SUFFICIENT REASON. THE COORDINATE BENCH OF AHMEDABAD TRIBUNAL IN ACQUA FILL POLYMERS CO PRIVATE LIMITED (SUPRA) HELD; WHEN ASSESSEE HAS PAID THE TAX WITH INTEREST AND T DS STATEMENTS ARE ALREADY FILED, THOUGH BELATEDLY THERE IS NO LOSS TO THE REV ENUE. TRIBUNAL DELETED THE PENALTY BY RELYING UPON THE DECISION IN ACIT VS KAM LESH AGGARWAL (99 ITD 27 AHD(TM ), CIT VS HARSIDH CONSTRUCTION PRIVATE L IMITED [ 24 ITR 417 (GUJARAT )], GT PL INFONET PVT LTD VS ACIT ( ITA NO .2585&2583/AHD/2015), ITO TDS VS THE ORIENTAL INSURANCE COMPANY LTD (ITA NO. 2906/AHD/2015 ) 5. IN VIEW OF THE ABOVE FACTUAL DISCUSSION AND THE DEC ISION OF SUPERIOR COURT, WE FIND THAT ASSESSEE HAS GIVEN SUFFICIENT EXPLANAT ION FOR DELAY IN FURNISHING THE STATEMENT OF TDS WITHIN THE PRESCRIB ED PERIOD. CONSIDERING THE ABOVE REFERRED DECISION OF HONBLE SUPREME COUR T, WHEN THERE WAS NO CONTEMPTUOUS OR DISHONEST ACT ON BEHALF OF ASSESSEE IN VIEW OF THE EXPLANATION OFFERED BY ASSESSEE, WE ACCEPT THE EXPL ANATION OFFERED BY THE ASSESSEE. THUS, RESPECTFULLY FOLLOWING THE DECISIO N OF AHMEDABAD TRIBUNAL IN THE ACQUAFILL POLYMERS CO PRIVATE LIMIT ED (SUPRA) WE ACCEPT THE GROUND OF APPEAL OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO DELETE THE ENTIRE PENALTY LEVIED UNDER SECTION 272 A(2)(K) OF THE ACT. 6. IN THE RESULT APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 5 TH MAY OF 2017. SD/- SD/- (SHAMIM YAHAHA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 05/05/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT.REGISTRAR) ITAT, MUMBA I 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/