Tax Appellate Tribunal Rejects Penalty Appeal Due to Applicant's Bona Fide Mistake

The application under section 256(2) of the Income-tax Act, 1961 was filed against the order of the Income-tax Appellate Tribunal. The Tribunal rejected the reference application under section 256(1) concerning the cancellation of penalty under section 272A(2)(g) for a technical default. The Tribunal found no mala fide intention, emphasized the applicant's bona fide belief, and highlighted the importance of discretion in penalty imposition for statutory breaches. The application was ultimately found to lack merit and was rejected due to the applicant's bona fide mistake in not furnishing the required certificate within the stipulated period.

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Issues involved: Application u/s 256(2) of the Income-tax Act, 1961 against the order of the Income-tax Appellate Tribunal rejecting the reference application u/s 256(1) regarding cancellation of penalty u/s 272A(2)(g) for technical default.

Summary:
The applicant deducted tax at source (TDS) within the prescribed time, deposited it into the Government account, but failed to furnish the required certificate u/s 203 of the Act within the stipulated period. The Tribunal found no mala fide intention and no loss to revenue, emphasizing the bona fide belief of the applicant. The Tribunal referred to the Hindustan Steel Limited case for not imposing penalty, highlighting the importance of discretion in penalty imposition for statutory breaches.

The Revenue argued for penalty imposition citing a previous apex court decision, emphasizing the need to prove loss of revenue for penalty under section 271(1)(a). The Tribunal considered the bona fide mistake of the applicant in not forwarding the certificate, noting no loss of revenue but only a procedural failure. Referring to the Hindustan Steel Ltd. case, the Tribunal stressed the discretion in penalty imposition for technical breaches or bona fide beliefs.

The Tribunal concluded that the applicant's failure to forward the certificate was a bona fide mistake, supported by the timely deduction and deposit of the tax amount. No complaints of loss due to the delayed certificate were received. Therefore, the application was found to lack merit and was rejected.

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