Punjab National Bank, Malerkotla V. JCIT (TDS), Ludhiana

ITA 779/CHANDI/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0039 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 12-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 779/CHD/2015 ASSESSMENT YEAR: 2008-09 THE PUNJAB NATIONAL BANK, VS THE JCIT (TDS), SADAR BAZAR, LUDHIANA. MALERKOTLA. PAN: JLDPO1794C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 28.04.2016 DATE OF PRONOUNCEMENT : 03.05.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-II LUDHIANA DATED 19.08.2015 FOR ASSESSMENT YEAR 2008-09 CHALLENGING THE LEVY OF PENALTY UNDER SECTION 272A(2)(K) OF THE INC OME TAX ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSING OFFICER NOTED THAT ASSESSEE HAD NOT FILED QUARTERLY RETURN OF TDS IN FORM NO. 26Q AS REQUIRED UNDER SEC TION 200(3)/206 OF THE INCOME TAX ACT IN RESPECT OF FINA NCIAL YEAR 2007-08. FURTHER THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE AS TO WHY PENALTY UNDER THE ABOVE PROVISIONS MAY NOT BE IMPOSED. THE ASSESSEE FILED REPLY 2 BUT ASSESSING OFFICER WAS NOT SATISFIED WITH THE CONTENTION OF THE ASSESSEE. THE ASSESSING OFFICER VERIFIED THE RECORDS AND NOTED THAT ASSESSEE HAD COMMITTED A DEFAULT OF NON-FILING OF RETURN WITHIN THE STIPULATED PERIOD, THEREFORE, ASSESSING OFFICER LEV IED THE PENALTY OF RS. 1,44,222/-. 3. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE LD. CIT(APPEALS) AND IT WAS SUBMITTED THAT ASSESSEE BEING A BRANCH OF NATIONALIZED BANK, WAS LIABLE TO DEDUCT TDS ON INTEREST PAID OR PAYABLE ON VARIOUS DEPOSITS OF ITS CUSTOMERS AND TO FILE RETURN OF TDS ACCORDING TO SECTION 206 OF THE INCOME TAX ACT WITH IN THE TIME ALLOWED. THE ASSESSEE HAS DULY COMPLIED W ITH THE STATUTORY REQUIREMENT OF DEDUCTING AND DEPOSITI NG THE TAX DUE ON OR BEFORE THE DUE DATE BUT THE ASSES SEE WAS PREVENTED BY SUFFICIENT CAUSE IN NOT FILING THE RETURN OF TDS WITHIN THE TIME SPECIFIED UNDER SECTI ON 200(3) OF INCOME TAX ACT. THE EXPLANATION IS NOT DOUBTED BY THE ASSESSING OFFICER AND PENALTY WAS IMPOSED FOR NOT FILING THE TDS RETURN WITHIN THE DU E DATE. IT WAS SUBMITTED THAT THE MAIN REASON FOR INABILITY OF THE ASSESSEE TO FILE TDS RETURN ON TIM E WAS THE FACT THAT THOUGH THE ASSESSEE HAD DEDUCTED AND DEPOSITED THE TDS IN TIME, BUT FOR LARGE NUMBER OF ITS CUSTOMERS, THERE PAN NUMBER WAS NOT AVAILABLE WITH THE BANK AND AS PER STATUTORY REQUIREMENTS, THE ASSESSE E SHALL HAVE TO FILE PAN NUMBER AND AS PER PRESS RELE ASE 3 ISSUED BY THE DEPARTMENT, THE E-RETURN WITHOUT PAN NUMBER WOULD NOT BE ACCEPTED UNLESS 70% OF THE PAN NUMBER OF DEDUCTEES HAVE BEEN FILED. THE ASSESSEE DID NOT RECEIVE PAN NUMBER OF MAJOR DEPOSITORS. FURTHER , MINISTRY OF FINANCE, LATER ON, DIRECTED THAT THRESH OLD LIMIT FOR QUOTING PAN WITHOUT WHICH E-RETURN WILL N OT BE ACCEPTED, WAS INCREASED FROM 70% TO 85%. THE BRANC H OF THE ASSESSEE IS LOCATED IN SEMI-RURAL AREA IN MALERKOTLA WHICH IS NOT VERY DEVELOPED CITY AND MOS T OF THE CLIENTS OF THE BANK ARE AGRICULTURISTS AND SMAL L BUSINESSMAN OR FROM UNORGANIZED SECTOR AND THEY DID NOT COMPLY WITH THE REQUIREMENT OF FILING PAN NUMBE R, THEREFORE, THERE WAS A DELAY IN FILING THE TDS RETU RN AS PER THE RULES WITHIN TIME. 3(I) IT WAS, THEREFORE, PLEADED THAT ASSESSEE HAD REASONABLE CAUSE FOR FAILURE TO COMPLY WITH PROVISI ONS OF LAW AND THAT NO LOSS TO THE REVENUE HAVE BEEN CAUSE D. THE LD. CIT(APPEALS), HOWEVER, DID NOT ACCEPT CONTE NTION OF THE ASSESSEE AND OBSERVED THAT PENALTY IS LEVIAB LE IF THE ASSESSEE FAILED TO DELIVER THE STATEMENT WITHIN SPECIFIED TIME UNDER SECTION 200(3) OR PROVISO TO S ECTION 206(3) OF THE ACT. THE LD. CIT(APPEALS), ACCORDINGL Y, CONFIRMED PENALTY AND DISMISSED APPEAL OF THE ASSES SEE. 4. AFTER CONSIDERING RIVAL SUBMISSIONS, WE ARE OF T HE VIEW PENALTY IS NOT LEVIABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS NOT IN DISPUTE TH AT ASSESSEE DEDUCTED TDS ON THE INTEREST AND PAID TO T HE 4 REVENUE DEPARTMENT. THEREFORE, THERE IS NO LOSS CA USED TO THE REVENUE DEPARTMENT. THE PENALTY IS IMPOSED AGAINST ASSESSEE BECAUSE THE TDS RETURN WAS NOT FIL ED WITHIN TIME. THE ASSESSEE EXPLAINED THAT SINCE MOS T OF THE CLIENTS OF THE ASSESSEE BANK DID NOT INTIMATE P AN NUMBER ON TIME, THEREFORE, TDS RETURN COULD NOT BE FILED AS PER RULE WHICH PROVIDES THAT 70% TO 85% PAN NUMBERS SHOULD BE QUOTED IN THE E-RETURN FOR FILING TDS RETURN. THEREFORE, THERE APPEARS REASONABLE CAUSE IN FAVOUR OF THE ASSESSEE FOR FAILURE TO FILE TDS RETU RN WITHIN TIME. IT MAY ALSO BE NOTED HERE THAT PENALT Y ORDER HAS BEEN PASSED ON 25.09.2012 AND ACCORDING T O SECOND PROVISO TO SECTION 272A(2), NO PENALTY SHALL BE LEVIED UNDER THIS SECTION FOR FAILURE REFERRED TO I N CLAUSE (K), IF SUCH FAILURE RELATES TO A STATEMENT REFERRE D TO IN SECTION 200(3) OR THE PROVISO TO SECTION 206(C)(3) WHICH IS TO BE DELIVERED OR CAUSED TO BE DELIVERED FOR TA X DEPOSITED AT SOURCE OR TAX COLLECTED AT SOURCE, AS THE CASE MAY BE ON OR AFTER 01.07.2012. THUS, NO PENAL TY IS LEVIABLE AFTER 01.07.2012 AS IS SPECIFIED IN SECOND PROVISO TO THE AFORESAID SECTION. 5. ITAT CHANDIGARH BENCH IN THE CASE OF BANK OF BIKANER & JAIPUR VS ADDL. CIT (LUDHIANA) IN ITA 476/CHD/2014 VIDE ORDER DATED 09.12.2014 CANCELLED THE PENALTY CONSIDERING REASONABLE CASE IN FAVOUR O F THE ASSESSEE. FINDINGS OF THIS ORDER IN PARA 6 TO 8 ARE 5 REPRODUCED AS UNDER : 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERI AL AVAILABLE ON RECORD. IN THIS CASE, THE ASSESSING O FFICER NOTED THAT ASSESSEE HAS FAILED TO FILE E-TDS RETURN S FOR FIRST AND SECOND QUARTER WITH DELAY OF 252 DAYS AND 160 DAYS, HOWEVER THE AMOUNT OF TDS HAS BEEN PAID BY ASSESSEE WHICH IS NOTED IN THE PENALTY ORDER. THE ASSESSEE HAS CONTENDED BEFORE LD. CIT(APPEALS) THAT SINCE THE TAXATION SYSTEM WAS CENTRALIZED BY THE HEAD OFF ICE AND THE BRANCH WAS NOT AWARE THAT RETURNS WERE TO B E FILED AT THE BRANCH LEVEL, THEREFORE, ON CLARIFICAT ION FROM THE HEAD OFFICE, THE TDS RETURNS HAVE BEEN FILED. SECTION 273B OF THE INCOME TAX ACT PROVIDES THAT NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE AS THE C ASE MAY BE FOR ANY FAILURE REFERRED TO IN SECTION 272A( 2) OF THE INCOME TAX ACT IF HE PROVES THAT THERE WAS REAS ONABLE CAUSE FOR THE SAID FAILURE. IN THIS CASE, THE ASSE SSEE EXPLAINED THAT THERE WAS A REASONABLE CAUSE FOR FAI LURE TO COMPLY WITH THE ABOVE REQUIREMENT BECAUSE THEY WERE NOT AWARE OF THE FACT THAT RETURN WAS TO BE FILED AT TH E BRANCH LEVEL. IT IS ADMITTED FACT THAT THE TDS AMOUNT WAS DEDUCTED ON TIME AND PAID TO THE REVENUE DEPARTMENT AND THE NECESSARY RETURN WAS ALSO FILED LATER ON, THERE FORE, NO LOSS OF REVENUE HAD OCCURRED ON ACCOUNT OF LATE FIL ING OF THE RETURN. THUS, THE PENALTY WAS MERELY TECHNICAL IN NATURE BECAUSE THE REVENUE HAS NOT SUFFERED ANY LOS S ON ACCOUNT OF LATE FILING OF THE RETURN. THE ISSUE, T HEREFORE, 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 SECTI ON 203 OF THE INCOME TAX ACT 1961, READ WITH RULE 31 OF THE INCOM E-TAX RULES, 1962, IT WAS REQUIRED TO ISSUE TAX DEDUCTION CERTIFICATE IN FORM NO. 16A TO THE SAID PARTIES WITHIN THE PRESCRI BED TIME. 6 HOWEVER, THE SAID FORMS WERE ISSUED LATE. THE ASSES SEE WAS A BRANCH OF A GOVERNMENT OF INDIA UNDERTAKING HAVING THOUSANDS OF EMPLOYEES. IT HAD TO ISSUE TAX DEDUCTION CERTIFI CATES NOT ONLY IN RESPECT OF PAYMENTS TO EIGHT CONTRACTORS, BUT ALSO TO ITS EMPLOYEE AND CREDITORS IN RESPECT OF TAX DEDUCTED O UT OF SALARY AS WELL AS INTEREST. THE ASSESSEE STATED THAT THE DEFA ULT WAS MERELY TECHNICAL IN NATURE AS THERE WAS NO LOSS OF REVENUE INVOLVED AT ALL AND EVEN THE CONTRACTORS HAD NOT RAISED ANY GRI EVANCE ABOUT LATE ISSUE OF THE CERTIFICATES. THIS EXPLANATION DI D NOT FIND FAVOUR WITH THE ASSESSING OFFICER, WHO LEVIED A PENALTY OF RS. 1,03,900 WHICH WAS EQUAL TO RS. 100 PER DAY FOR FAILURE OF 1 039 DAYS. THE COMMISSIONER (APPEALS) CANCELLED THE PENALTY BU T THE ORDER WAS RESTORED BY THE TRIBUNAL. ON APPEAL TO THE HIG H COURT : HELD, THAT THE TAX DEDUCTED AT SOURCE HAD BEEN PAID IN TIME AND THE NECESSARY RETURN IN RESPECT THEREOF WAS DULY FILED IN TIME WITH THE INCOME-TAX DEPARTMENT. NO LOSS OF REVENUE HAD O CCURRED ON ACCOUNT OF LATE ISSUE OF TAX DEDUCTION CERTIFICATES . NONE OF THE CONTRACTORS HAD RAISED ANY GRIEVANCE ON ACCOUNT OF LATE SUPPLY OF THE CERTIFICATES. KEEPING IN VIEW THESE FACTS AND E SPECIALLY THAT THE DEFAULT WAS MERELY TECHNICAL OR VENIAL IN NATURE, P ENALTY COULD 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, THER EFORE, CONSIDERING EXPLANATION OF THE ASSESSEE IN THE LIGH T OF THE FACTS OF THE CASE AND JUDGEMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT ABOVE, WE SET ASIDE THE ORDERS O F AUTHORITIES BELOW AND CANCEL THE PENALTY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 6. CONSIDERING THE MATERIAL ON RECORD AND ABOVE DISCUSSION, WE ARE OF THE VIEW THAT SINCE LEVY OF P ENALTY IS NOT MANDATORY IN EACH AND EVERY CASE AND DEPENDS 7 UPON FACTS OF THE CASE, THEREFORE, CONSIDERING EXPLANATION OF THE ASSESSEE IN THE LIGHT OF ABOVE O RDER IN THE CASE OF BANK OF BIKANER & JAIPUR (SUPRA) AND REASONABLE CAUSE IN FAVOUR OF ASSESSEE, WE SET ASID E THE ORDERS OF AUTHORITIES BELOW AND CANCEL THE PENALTY. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/ SD/ ( ANNAPURNA GUPTA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3 RD MAY,2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD