M/s Scan Centre, Chandigarh V. JCIT (TDS), Chandigarh

ITA 989/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73576 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-03-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 15-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S K JAIN
• Keywords: Reasonable cause; Ignorance of law
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.989 /CHD/2012 ASSESSMENT YEAR : 2010-11 M/S SCAN CENTRE, VS. THE J.C.I.T.(TDS), SCO 51, SECTOR 34-A, CHANDIGARH. CHANDIGARH. PAN: ABNFS9221R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.JAIN RESPONDENT BY : SHRI AKHILESH GUPTA, DR DATE OF HEARING : 05.03.2014 DATE OF PRONOUNCEMENT : 20.03.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), CHANDIGARH DA TED 02.07.2013 RELATING TO ASSESSMENT YEAR 2009-10 AGAINST THE PEN ALTY LEVIED UNDER SECTION 272A(2)(K) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, WHEN THE REASONABLE CAUSE IS GIVEN BY THE ASSESSING OFFICER, THE ORDER PASSED BY THE JOINT COMMISSIONER OF INCOME TAX (TDS) ULTRAVIRES T HE PROVISIONS AND SPIRIT OF SECTION 273B OF THE ACT. 2. WHETHER THE IGNORANCE ON THE PART OF THE ASSESSE E (WHO IS MEDICAL PROFESSIONAL) TO FILE TDS RETURN IN TIME, OUT OF SH EER IGNORANCE, IN THE CIRCUMSTANCES WHEN THE TAX DEDUCTED BY THE ASSESSEE HAD ALREADY BEEN PAID BEFORE ISSUE OF ANY NOTICE BY THE ASSESSING OFFICER , COULD ATTRACT PENALTY UNDER SECTION 272A(2)(K)? 2 3. THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE PENALTY LEVIED UNDER SECTION 272A(2)(K) OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT ON THE PERU SAL OF THE E-TDS RETURN FILED IN FORM NO.26Q FOR THE FINANCIAL YEAR 2009-10, THE ASSESSING OFFICER (TDS), CHANDIGARH NOTED THAT THE ASSESSEE HAD FAILED TO FURNISH QUARTERLY RETURNS IN TIME. THE DUE DATE S FOR FILING THE QUARTERLY RETURNS WERE 15.7.2009, 15.10.2009, 15.1. 2010 AND 15.6.2010 AND ALL THE SAID E-TDS RETURNS WERE FILED ON 28.3.2 011. SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE AS TO WHY PENALTY UNDER SECTION 272A(2)(K) R.W.S.274 OF THE ACT SHOULD NOT BE LEVIE D FOR LATE FILING OF THE QUARTERLY RETURNS. IN REPLY THE ASSESSEE SUBMI TTED THAT THE ASSESSEE WAS A DOCTOR BY PROFESSION AND WAS NOT AWARE OF THE REQUIREMENTS OF FILING THE E-TDS RETURNS. THE DEDUCTION ON TAX AT SOURCE WAS MADE OUT OF RENT ACCOUNT AND THE TAXES WERE DULY DEPOSITED A ND TDS CERTIFICATE ISSUED BUT THE E-TDS RETURNS WERE FILED BELATEDLY D UE TO IGNORANCE OF LAW. THE ASSESSING OFFICER REJECTING THE PLEA OF T HE ASSESSEE AS THERE WAS NO REASONABLE CAUSE FOR DELAY, HELD THE ASSESSE E TO HAVE DEFAULTED IN FURNISHING THE SAID QUARTERLY E-TDS RETURNS IN TIME AND COMPUTED THE DELAY IN FILING THE E-TDS RETURNS LATE BY 1871 DAYS AND LEVIED PENALTY OF RS.1,87,100/-. HOWEVER, THE SAID PENALTY WAS RESTR ICTED TO RS.1,69,200 BEING EQUAL TO/LESS THAN THE AMOUNT OF TAX DEDUCTED AT SOUCE IN EACH OF THE QUARTERS OF THE FINANCIAL YEAR 2009-10. 5. THE CIT (APPEALS) UPHELD THE LEVY OF PENALTY UND ER SECTION 272A(2)(K) OF THE ACT OBSERVING THAT IGNORANCE OF L AW COULD NOT BE TAKEN AS AN EXCUSE FOR NOT FILING THE E-TDS RETURNS IN TI ME. 3 6. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT THOUGH THE TAXES WERE PAID BY 31.5.2010 BUT E-TDS RETURNS WERE NOT F ILED DUE TO IGNORANCE OF LAW. FURTHER IT WAS POINTED OUT BY T HE LEARNED A.R. FOR THE ASSESSEE THAT THE SAID TAXES WERE PAID BELATEDLY AS THERE WAS PAUCITY OF FUNDS BUT THE E-TDS RETURNS FOR EACH QUARTER WAS FI LED BEFORE THE ISSUE OF ANY SHOW CAUSE NOTICE TO THE ASSESSEE. 7. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE CIT (APPEALS). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE OUT OF RENT PAYMENTS AGAINST THE PREMISES TAKEN ON LEASE FROM WHICH IT WAS CARRY ING ON IT IS BUSINESS. THE ASSESSEE HAD DEDUCTED TAX AT SOURCE OUT OF SUCH RENT PAYMENTS BUT THE SAID TAXES WERE PAID BY THE ASSESSEE ON 31.5.20 10. THE ASSESSEE FAILED TO FURNISH THE E-TDS RETURNS IN RESPECT OF T HE SAID DEDUCTION OF TAXES AT SOURCE THOUGH THE DUE DATES OF FILING THE E-TDS RETURNS WERE 15.07.2009, 15.10.2009, 15.1.2010 AND 15.6.2010. T HE TDS RETURNS FOR ALL THE QUARTERS WERE FILED ON 28.3.2011. THE ISSU E RAISED IN THE PRESENT APPEAL IS WHETHER IN SUCH CIRCUMSTANCES WHERE THE A SSESSEE HAD FURNISHED RETURNS BELATEDLY WHETHER THE ASSESSEE WA S LIABLE TO LEVY OF PENALTY UNDER SECTION 272A(2)(K) OF THE ACT. UNDER THE PROVISIONS OF SECTION 200(1) OF THE ACT, ANY PERSON DEDUCTING ANY SUM IN ACCORDANCE WITH THE PROVISIONS OF THE ACT IS DUTY BOUND TO PAY WITHIN THE PRESCRIBED TIME THE SUM SO DEDUCTED TO THE CREDIT OF THE CENTR AL GOVERNMENT. UNDER SUB-SECTION(2) TO SECTION 200, ANY PERSON BEI NG AN EMPLOYER IS ALSO DUTY BOUND UNDER THE ACT TO PAY WITHIN THE PRE SCRIBED TIME THE TAX DEDUCTED, TO THE CREDIT OF THE CENTRAL GOVERNMENT. SECTION 200(3) OF THE ACT PROVIDES THAT ANY PERSON DEDUCTING ANY SUM ON O R AFTER THE FIRST DAY OF APRIL, 2005 IN ACCORDANCE WITH THE PROVISIONS OF THE ACT OR ANY 4 EMPLOYER REFERRED TO IN SUB-SECTION (1A) OF SECTION 192 OF THE ACT, SHALL, AFTER DEPOSITING THE TAX DEDUCTED AT SOURCE TO THE CREDIT OF CENTRAL GOVERNMENT WITHIN THE PRESCRIBED TIME, IS TO PREPAR E STATEMENT FOR SUCH PERIOD AS MAY BE PRESCRIBED AND DELIVER THE SAME TO THE PRESCRIBED AUTHORITY IN PRESCRIBED FORM AND VERIFIED IN THE MA NNER PRESCRIBED, WITHIN SUCH TIME AS MAY BE PRESCRIBED. 9. RULE 31A(2) OF INCOME TAX RULES READS AS UNDER: STATEMENTS REFERRED TO IN SUB-RULE(1) FOR THE QUAR TER OF THE FINANCIAL YEAR ENDING WITH THE DATE SPECIFIED IN COLUMN (2) OF THE TABLE BELOW SHALL BE FURNISHED BY THE DUE DATE SPEC IFIED IN THE CORRESPONDING ENTRY IN COLUMN (3)OF THE SAID TABLE : 1. DATE OF ENDING OF THE QUARTER - 30TH JUNE -; DUE DATE OF THE FINANCIAL YEAR - 15TH JULY OF THE FINANCIAL YEAR 2. DATE OF ENDING OF THE QUARTER - 30TH SEPTEMBER - DUE DATE OF THE FINANCIAL YEAR - 15TH OCTOBER OF THE FINANCI AL YEAR 3. DATE OF ENDING OF THE QUARTER - 31ST DECEMBER - DUE DATE OF THE FINANCIAL YEAR - 15TH JANUARY OF THE FINANCIAL YEAR 4. DATE OF ENDING OF THE QUARTER -31ST MARCH - DUE DATE OF THE FINANCIAL YEAR - 15TH MAY OF THE FINANCIAL YEAR IMM EDIATELY FOLLOWING THE FINANCIAL YEAR IN WHICH DEDUCTION IS MADE.' 10. THUS E-TDS RETURNS AS PER RULE 31A(2) OF THE I NCOME TAX RULES HAVE TO BE FILE IN THE PRESCRIBED FORMS BY THE DUE DATES AS MENTIONED IN THE SAID RULE. THE ASSESSEE IN THE PRESENT CASE HA D ADMITTEDLY FILED E- TDS RETURNS BELATEDLY IN FORM NO.26Q, WHICH WERE DU E TO BE FILED BY THE ASSESSEE FOR THE RELEVANT FINANCIAL YEAR 2009-1 0 ON THE UNDERMENTIONED DATES, HAD BEEN FILED BELATEDLY ON 2 8.3.2011 AND DELAY IN DAYS WAS AS UNDER: QUARTER DATE OF FILING OF E-TDS RETURN DUE DATE OF FILING OF E-TDS RETURN DEFAULT IN DAYS 1. 28-MAR-11 15-JUL-09 620 2. 28-MAR-11 15-OCT-09 529 3. 28-MAR-11 15-JAN-10 437 4. 28-MAR-11 15-JUN-10 285 5 11. THE PLEA OF THE ASSESSEE BEFORE US WAS THAT THE RE WAS REASONABLE CAUSE FOR NOT FILING THE E-TDS RETURNS IN TIME AS T HE ASSESSEE WAS NOT AWARE OF THE REQUIREMENTS OF FILING THE E-TDS RETU RNS THOUGH IT HAD DEDUCTED THE TAX AT SOURCE AND DEPOSITED THE SAME B ELATEDLY ON 31.5.2010. IT IS AN ADMITTED POSITION THAT IGNORAN CE OF LAW IS NOT AN EXCUSE SPECIALLY IN CASES WHERE THE ASSESSEE IS A P ROFESSIONAL AND WAS ALREADY AWARE OF LIABILITY TO DEDUCT TAX AT SOURCE OUT OF RENT PAYMENTS. THE ASSESSEE HAD DEDUCTED THE TAX AT SOURCE OUT OF THE RENT PAYMENTS BUT INSTEAD OF DEPOSITING THE TAX DUE WITHIN THE PRESCR IBED PERIOD AND FURNISHING THE E-TDS RETURNS WITHIN THE PRESCRIBED PERIOD, HAD ACCUMULATIVELY PAID THE TAXES ON 31.5.2010 AND HAD FURTHER FILED THE STATEMENTS OF E-TDS RETURNS BELATEDLY ON 28.3.2011 FOR ALL THE QUARTERS. THE ASSESSEE IN THE PRESENT CASE FURTHER CLAIMED TH AT THE TAX DEDUCTED AT SOURCE WAS DEPOSITED ALONGWITH THE INTEREST RETURNS BUT THE SAME DOES NOT JUSTIFY THE DELAY IN FILING THE RETURNS BELATED LY. THE FIRST E-TDS RETURN WAS DUE TO BE FILED BY 15.7.2009 BUT WAS FIL ED ON 28.3.2011 I.E. AFTER A DELAY OF 620 DAYS. THE ASSESSEE IN THE PRE SENT CASE IS LIABLE TO LEVY OF PENALTY UNDER SECTION 272A(2)(K) OF THE ACT FOR THE SAID DEFAULT IN FILING THE E-TDS RETURNS BELATEDLY I.E. AFTER A DELAY OF 620 DAYS AND WE CONFIRM THE LEVY OF PENALTY @ RS.100/- PER DAY T OTALING RS.62,000/-. HOWEVER, IN RESPECT OF FURTHER DELAY FOR OTHER QUAR TERS OF FINANCIAL YEAR 2009-10, THE DELAY IN FILING THE E-TDS RETURNS WAS OVER-LAPPING AND AS THE ASSESSEE HAD NOT FURNISHED E-TDS RETURNS FOR TH E FIRST QUARTER WITHIN THE TIME, THERE WAS BONAFIDE REASONS FOR NOT FILING THE OTHER E-TDS RETURNS WITHIN THE TIME AND THERE IS NO MERIT IN LE VY OF PENALTY UNDER SECTION 272A(2)(K) OF THE ACT FOR OVER-LAPPING PERI OD OF 529 DAYS, 437 DAYS AND 285 DAYS. ACCORDINGLY, WE DIRECT THE ASS ESSING OFFICER TO DELETE THE PENALTY LEVIED UNDER SECTION 272A(2)(K) OF THE ACT FOR LATE FILING OF E-TDS RETURNS WHICH WERE DUE ON 15.10.200 9, 15.1.2010 AND 6 15.6.2010 AND WE DELETE THE PENALTY LEVIED UNDER SE CTION 272A(2)(K) OF THE ACT. HOWEVER, WE UPHOLD THE LEVY OF PENALTY @ RS.62,000/- IN RESPECT OF THE DEFAULT FOR THE PERIOD ENDING 30.6.2 009. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF MARCH, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 TH MARCH, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH