DINESH KUMAR SOMANI HUF, Jaipur V. ADD.CIT, Jaipur

ITA 814/JPR/2014

• Counselvise Citation: 81423114 RSA 2014
• Duration Of Justice: 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 28-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA CIT DHK
• Assessee Lawyers: PC PARWAL
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH IH-DS-CALY] YS[KK LNL; DS LE{K BEFORE: SHRI P.K. BANSAL, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 814/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10. DINESH KUMAR SOMANI (HUF) M/S. JAI ARAVALI INDUSTRIAL, 128, FRONTIER COLONY, ADARSH NAGAR, JAIPUR. CUKE VS. THE ADDL. CIT (TDS), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR/TAN NO.: JPRD02057 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA, ADDL. CIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/11/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 4/11/2015 VKNS'K@ ORDER PER P.K. BANSAL, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A) DATED 26.09.2014 BY TAKING THE FOLLOWING EFFECTIVE GROUND OF APPEAL :- THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE LEVY OF PENALTY OF RS. 75,300/- U/S 272A(2)(K) OF THE INCOME TAX ACT, 1961 IN RESPECT O F DELAY IN FILING OF RETURN OF DEDUCTION OF TAX AT SOURCE IN FORM NO. 26Q. 2. THE BRIEF FACTS OF THE CASE ARE THAT IN THIS CAS E THE AO NOTED THAT THE ASSESSEE HAS DELAYED IN FILING THE TDS RETURN DETAILED AS UN DER :- 2 ITA NO. 814/JP/2014 A.Y. 2009-10. DINESH KUMAR SOMANI HUF VS. ADDL. CIT (TDS) QUARTER ENDED DUE DATE DATE OF FILING NO. OF DAYS DELAY JUNE 08 15.07.2008 23.06.2009 343 SEPTEMBER 08 15.10.2008 23.06.2009 251 DECEMBER 08 15.01.2009 19.06.2009 155 MARCH 09 15.05.2009 19.06.2009 36 (WRONGLY TAKEN BY AO AS 4 DAYS TOTAL DELAY 785 HE, ACCORDINGLY, CALCULATED THE TOTAL NUMBER OF DAY S IN RESPECT OF ALL THE FOUR QUARTERS AND IMPOSED THE PENALTY FOR 753 DAYS @ RS. 100/- AM OUNTING TO RS. 75,300/- UNDER SECTION 272A(2)(K). WHEN THE MATTER WENT BEFORE LD . CIT (A), HE ALSO CONFIRMED THE SAME. 3. I HEARD RIVAL SUBMISSIONS AND CAREFULLY CONSIDER ED THE SAME. I NOTED THAT IN THIS CASE, NO DOUBT, THE ASSESSEE HAS FILED THE TDS RETU RN LATE IN RESPECT OF EACH QUARTER AND FOR EACH QUARTER THERE HAD BEEN DELAY IN FURNIS HING THE RETURN. THE ASSESSEE, WHEN ASKED TO SHOW CAUSE, EXPLAINED THE REASONS THA T THE ASSESSEE HAS FILED THE RETURN PRIOR TO THE ISSUE OF SHOW CAUSE AND HAS DEPOSITED THE TAX AND THERE IS NO DEFAULT ALSO FOR DEPOSIT OF THE TAX IS CONCERNED. THE RETURN CO ULD NOT BE FILED WHEN THE VARIOUS PARTIES DID NOT FIND THE CREDIT FOR THE TDS APPEARI NG IN FORM NO. 26AS. IN THIS REGARD THE AFFIDAVIT OF THE ACCOUNTANT WAS ALSO FILED, COP Y OF WHICH WAS PLACED BEFORE US. I NOTED THAT IMPOSITION OF PENALTY UNDER SECTION 272A (2)(K) IS NOT AUTOMATIC. WHENEVER THERE HAS BEEN DELAY IN FILING OF THE TDS RETURN, T HE PENALTY MAY NOT BE IMPOSED IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 273B WHE RE THE ASSESSEE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE SAME FAILURE. THE P ROVISIONS OF FILING THE TDS RETURN IN FORM NO. 26Q HAS COME FOR THE FIRST TIME AND, THERE FORE, THE ACCOUNTANT COULD NOT BE ABLE TO UNDERSTAND THE INTRICACIES OF THE INCOME TA X ACT AND MADE THE DEFAULT EVEN 3 ITA NO. 814/JP/2014 A.Y. 2009-10. DINESH KUMAR SOMANI HUF VS. ADDL. CIT (TDS) THOUGH THE TAX DUE HAS DULY BEEN DEDUCTED AND PAID TO THE GOVERNMENT. I AM OF THE VIEW THAT NON FILING OF QUARTERLY RETURN AT THE MOS T CAN BE REGARDED TO BE A TECHNICAL BREACH. PENALTY NEED NOT BE IMPOSED IN A ROUTINE MA NNER. THERE IS NO STRICT LIABILITY CREATED FOR THE IMPOSITION OF PENALTY. THE CASE OF THE ASSESSEE, IN MY OPINION, IS DULY COVERED BY THE DECISION OF HONBLE RAJASTHAN HIGH C OURT AS RELIED ON BY THE LD. A/R IN WHICH IT WAS HELD AS UNDER :- COMMISSIONER OF INCOME-TAX V. SUPERINTENDING ENGIN EER, P.W.D., UDAIPUR 260 ITR 0641 (RAJ.) THE PENALTY UNDER SECTION 272A(2) (C) OF THE INCOME -TAX ACT, 1961, CANNOT BE LEVIED IN A ROUTINE MANNER. THE DISCRETIO N VESTED WITH THE AUTHORITY IS TO BE EXERCISED JUDICIOUSLY ON CONSIDE RATION OF ALL THE RELEVANT CIRCUMSTANCES. A BONA FIDE BREACH CANNOT L EAD TO A PENALTY UNDER SECTION 272A(2)(C). THOUGH IT IS TRUE THAT IGNORANCE OF THE LAW IS NO EXCUSE. THE PRESCRIBED AUTHORITY IS S TILL REQUIRED TO EXAMINE ALL THE RELEVANT FACTS AND CIRCUMSTANCES OF THE CASE AND TO ASCERTAIN IF IT WAS A DELIBERATE OR NEGLIGENT OR AN INADVERTENT DEFAULT. IN THE CASE OF NEGLIGENCE, IT WOULD BE A S OUND EXERCISE OF DISCRETION, TO INFLICT THE MINIMUM OR A NOMINAL PE NALTY BUT IN THE CASE OF AN INADVERTENT OFFICE MISTAKE, IT WOULD NOT BE A SOUND EXERCISE OF JUDICIAL OR QUASI-JUDICIAL POWER TO INF LICT A PENALTY ON THE HEAD OF THE PUBLIC OFFICE. IN SUCH CASES, THE TAX A UTHORITIES SHOULD ALSO EVOLVE A METHOD OF ADVISING THE HEAD OF THE OF FICE BY WAY OF NOTICE OR REMINDER PROVIDING AN OPPORTUNITY TO COMP LY WITH THE PROVISIONS, THE BREACH OF WHICH MAY LEAD TO LEVY OF PENALTY. IF THE HEAD OF THE OFFICE DOES NOT ACT EVEN AFTER SUCH A N OTICE, IT WILL BE OPEN FOR THE TAX AUTHORITIES TO SAY THAT IT WAS NO T A CASE OF INADVERTENT MISTAKE. THE PURPOSE OF LEVY OF PENALTY UNDER THIS SECTION IS TO PUT PRESSURE ON THE THOUGHTLESS AND I NEFFICIENT OFFICERS TO PERFORM THEIR DUTY PUNCTUALLY IN THE PUBLIC INTE REST, BUT A TAX AUTHORITY CANNOT INFLICT PENALTY IN A THOUGHTLESS O R ROUTINE MANNER. THE LEGISLATURE MAY CREATE AN OFFENCE OF A STRICT L ABIALITY WHERE MENS REA IS WHOLLY OR PARTLY NOT NECESSARY. THE QUE STION WHETHER THE OFFENCE INVOLVES THE EXISTENCE OF MENS REA AS A N ESSENTIAL ELEMENT OF IT OR WHETHER THE STATUTE DISPENSES WITH IT AND CREATES STRICT LIABILITY, ARE QUESTIONS WHICH HAVE TO BE AN SWERED ON A TRUE CONSTRUCTION OF THE STATUTE. 4 ITA NO. 814/JP/2014 A.Y. 2009-10. DINESH KUMAR SOMANI HUF VS. ADDL. CIT (TDS) COMMISSIONER OF INCOME-TAX V. DEPUTY HOUSING COMMIS SIONER, RAJASTHAN HOUSING BOARD 265 ITR 0686 (RAJ.) IT WAS HELD THAT PENALTY UNDER SECTION 272A(2)(C) C OULD NOT BE LEVIED IN A ROUTINE MANNER. IN THE CASE OF AN INADV ERTENT OFFICE MISTAKE, IT WOULD NOT BE A SOUND EXERCISE OF JUDICI AL OR QUASI-JUDICIAL POWER TO INFLICT A PENALTY ON THE HEAD OF A PUBLIC OFFICE. THE TAX AUTHORITY HAD TO EXERCISE THE DISCRETION JUDICIOUSL Y ON CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. THE TAX AUTHORIT Y SHOULD ALSO EVOLVE A METHOD OF ADVISING THE HEAD OF THE PUBLIC OFFICE BY WAY OF NOTICE OR REMINDER PROVIDING AN OPPORTUNITY TO COMP LY WITH THE PROVISIONS, THE BREACH OF WHICH MIGHT LEAD TO LEVY OF PENALTY. A PENALTY COULD BE LEVIED ONLY IN CASE THE HEAD OF TH E PUBLIC OFFICE DID NOT ACT EVEN AFTER, SUCH A NOTICE. CIT V. SUPERINTE NDING ENGINEER, P.W.D. [2003] 260 ITR 641 (RAJ) FOLLOWED. IT IS NOT A CASE WHERE THE ASSESSEE IS REGULARLY MA KING A DEFAULT IN FILING THE QUARTERLY RETURN. IN MY OPINION, THERE WAS A REASONABLE CAUS E AS THE LAY HAS BEEN AMENDED DURING THE IMPUGNED YEAR AND THIS OBLIGATION HAS BE EN ENTRUSTED FROM THIS YEAR. I, THEREFORE, IN VIEW OF THE DECISION OF JURISDICTIONA L HIGH COURT, SET ASIDE THE ORDER OF LD. CIT (A) AND DELETE THE PENALTY IMPOSED UNDER SECTIO N 272A(2)(K). 4. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4/11/2015 . SD/- IH-DS-CALY ( P.K. BANSAL ) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 4/11/ 2015 DAS/ 5 ITA NO. 814/JP/2014 A.Y. 2009-10. DINESH KUMAR SOMANI HUF VS. ADDL. CIT (TDS) VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- DINESH KUMAR SOMANI HUF, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ADDL. CIT (TDS) JAIPUR. 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 814/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 6 ITA NO. 814/JP/2014 A.Y. 2009-10. DINESH KUMAR SOMANI HUF VS. ADDL. CIT (TDS)