2013 (11) TMI 205 - AT - Income Tax

Tribunal cancels penalty for late E-TDS filing citing lack of intent

THE BRANCH MANAGER (TDS) UCO Bank Versus ADDL. CIT (TDS) BHUBANESWAR

The Tribunal held that the penalty imposed under Section 272A(2)(k) of the I.T. Act was not justified as the delay in filing E-TDS returns was due to ... Penalty u/s 272A(2)(k) – The exparte order passed by the learned CIT(A) vide order was under the challenge as to the imposition of the Penalty - Held that:- The penalty levied u/s.272A(2)(k) was cancelled for the respective assesses for the respective AYs as captioned in the cause title of this order by allowing the appeals under consideration - In consequence thereof, the respective Stay Petitions become infructuous - penalty levied u/s.272A(2)(k) against the assessee was not justified and as such cancelled the same by allowing the appeal of the assessee – relying upon Royal Metal Printers Pvt. Ltd. Vrs. Asst CIT [2010 (1) TMI 938 - ITAT, Mumbai]. The penalty u/s 272(A)(2) cannot be levied in a routine manner - Law was well settled that a bonafide breach cannot lead to a penalty u/s. 272(A) - Hindustan Steel Ltd. Vrs. State of Orissa 1969 (8) TMI 31 - SUPREME Court - in the present case of the respective assessees either Government bodies or aided by Govt., are public office and since the tax deduction and payment are made by treasury and there is undisputedly no default - There arises no reason for non-filing of TDS return with an intentional act or willful act to attract a quasi-criminal, imposition of penalty. Assessee contended that the penalty was imposed by the Additional CIT (TDS) u/s. 272A{2)(k) of the I.T. Act, 1961 being illegal, arbitrary, uncalled for and against the facts on record and the learned CIT(A) should have quashed the same - the explanation to show cause notice should have been considered by the learned Additional CIT (TDS) judicially and in accordance with law and hence the learned CIT(A) should have considered the same and he was not justified in dismissing the appeal - The taxes having been deposited the authorities below should have taken a liberal view as it is a quasi criminal proceeding and the question of mens rea was involved – Decided in favour of Assessee. Issues Involved:1. Legality of the ex-parte order passed by CIT(A).2. Justification of the penalty imposed under Section 272A(2)(k) of the I.T. Act, 1961.3. Consideration of the explanation provided in response to the show cause notice.4. Inclusion of the statement of facts and grounds of appeal before CIT(A) as part of the grounds of appeal.5. Consideration of the deposit of taxes and the involvement of mens rea in quasi-criminal proceedings.Detailed Analysis:1. Legality of the Ex-parte Order Passed by CIT(A):The appellants contended that the ex-parte order dated 24-12-2012 by CIT(A) was 'illegal, arbitrary, uncalled for and without any basis.' The Tribunal noted that the CIT(A) confirmed the penalty without adequately considering the explanations provided by the assessee, which led to the appeal being brought before the Tribunal.2. Justification of the Penalty Imposed Under Section 272A(2)(k) of the I.T. Act, 1961:The penalty amounting to Rs. 3,00,900/- was imposed by the Additional CIT (TDS) for delays in filing the E-TDS returns. The assessee argued that the penalty was 'illegal, arbitrary, uncalled for and against the facts on record.' The Tribunal noted that the assessee, a Nationalized Bank, faced practical difficulties such as staff shortages and heavy workloads, which led to delays in filing the E-TDS returns. The Tribunal emphasized that the penalty should not be imposed in cases where the default was not deliberate or intentional, citing the principle that penalty proceedings are quasi-criminal in nature and require consideration of mens rea.3. Consideration of the Explanation Provided in Response to the Show Cause Notice:The assessee explained that delays occurred due to practical difficulties, including the lack of PAN numbers from deductees and the heavy workload at the rural branch. The Tribunal observed that the Additional CIT (TDS) did not adequately consider these explanations before imposing the penalty. The Tribunal reiterated that the authority is duty-bound to examine the points raised by the parties and record definite conclusions with supporting reasons.4. Inclusion of the Statement of Facts and Grounds of Appeal Before CIT(A) as Part of the Grounds of Appeal:The Tribunal acknowledged the assessee's request to consider the statement of facts and grounds of appeal before CIT(A) as part of the grounds of appeal. This inclusion was necessary to provide a comprehensive understanding of the assessee's position and the context in which the penalty was contested.5. Consideration of the Deposit of Taxes and the Involvement of Mens Rea in Quasi-Criminal Proceedings:The Tribunal highlighted that the taxes were deposited on time, and the delay was only in filing the E-TDS returns. It emphasized that penalty proceedings are quasi-criminal in nature and require consideration of mens rea. The Tribunal cited the case of Hindustan Steel Ltd. Vs. State of Orissa, stating that penalty should not be imposed unless there is deliberate defiance of law or contumacious or dishonest conduct. The Tribunal concluded that the delay was due to reasonable cause and not due to any malafide intention, and therefore, the penalty should not have been levied.Conclusion:The Tribunal, consistent with similar cases, held that the penalty levied under Section 272A(2)(k) was not justified. It emphasized that the delay in filing the E-TDS returns was due to practical difficulties and not due to any intentional or willful default. The Tribunal allowed the appeal, canceling the penalty imposed on the assessee.