2015 (6) TMI 166 - AT - Income Tax

Tribunal upholds penalties for delayed TDS returns, emphasizing compliance over revenue impact.

Central Scientific Instruments Organization Versus The JCIT (TDS), Chandigarh

Central Scientific Instruments Organization Versus The JCIT (TDS), Chandigarh - TMI Issues Involved:1. Confirmation of penalties under section 272A(2)(k) of the Income Tax Act for delayed filing of TDS returns.2. Whether the assessee had a reasonable cause for the delay in filing TDS returns.3. Relevance of the loss to revenue argument in the context of penalties.4. Applicability of judicial precedents cited by the assessee.Detailed Analysis:1. Confirmation of penalties under section 272A(2)(k) of the Income Tax Act for delayed filing of TDS returns:The appeals were directed against the common order of CIT (Appeals), Chandigarh, which confirmed penalties under section 272A(2)(k) for the assessment years 2009-10, 2010-11, and 2011-12. The Assessing Officer (AO) had noticed that the person responsible (PR) filed quarterly TDS returns in Form No. 26Q after the respective due dates for all four quarters in the mentioned assessment years. The AO, unsatisfied with the assessee's explanations, imposed penalties amounting to Rs. 6,46,300/-, Rs. 4,96,600/-, and Rs. 3,47,400/-, which were later restricted to Rs. 4,84,945/-, Rs. 3,73,264/-, and Rs. 3,27,534/- respectively.2. Whether the assessee had a reasonable cause for the delay in filing TDS returns:The assessee argued that the TDS amounts were deducted and paid to the Government, and the delay in filing the returns was due to a lack of awareness about the requirement to file TDS returns. The CIT (Appeals) rejected this explanation, stating that ignorance of the law is not a valid excuse. The Tribunal upheld this view, noting that the assessee's claim of ignorance was an afterthought and clearly false. The Tribunal emphasized that compliance with sections 200(1) and (2) implies awareness of section 200(3), which mandates the filing of TDS returns.3. Relevance of the loss to revenue argument in the context of penalties:The assessee contended that since there was no loss to the revenue, no penalty should be imposed. The CIT (Appeals) dismissed this argument, stating that the penalty for delay in filing TDS returns is a statutory requirement and not contingent on revenue loss. The Tribunal concurred, highlighting that the legislature's intent was to enforce compliance through penalties, irrespective of any direct revenue loss. The Tribunal also noted that non-filing of TDS returns could result in loss of revenue in the case of deductees.4. Applicability of judicial precedents cited by the assessee:The assessee relied on the Supreme Court's decision in Hindustan Steel Ltd., which held that penalties should not be imposed unless there was deliberate defiance of the law. The Tribunal, however, referred to the Supreme Court's later decision in Dharmendra Textiles Processors, which established that penalty under section 271(1)(c) is a civil liability and does not require proof of willful concealment. The Tribunal found that the case of Hindustan Steel Ltd. was not applicable as it pertained to sales tax and involved different facts. The Tribunal also dismissed the relevance of other precedents cited by the assessee, such as Lok Prakashan Ltd. and Royal Metal Printers Pvt. Ltd., in light of the specific facts and circumstances of the present case.Conclusion:The Tribunal dismissed all the appeals of the assessee, finding no reasonable cause for the delay in filing TDS returns and upheld the penalties imposed by the AO. The Tribunal also noted that the Stay Applications had become infructuous with the disposal of the appeals. The order was pronounced in the open court on 30.4.2015.