Tribunal cancels penalty for late TDS return citing system errors & no loss to Revenue

The tribunal allowed the appellant's appeal, canceling the penalty of Rs. 19,100 imposed under section 272A(2)(k) of the Income Tax Act. The delay in filing the quarterly TDS return was considered reasonable due to system errors and a delay by the Chartered Accountant, with no loss to the Revenue. Emphasizing that penalties should not be imposed for technical breaches, the tribunal upheld the decision to cancel the penalty, citing the case law precedent.

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Issues:
Levy of penalty under section 272A(2)(k) of the Income Tax Act, 1961.

Analysis:
The appellant filed an appeal against the order of Ld. CIT (Appeals)-2 Chandigarh regarding the penalty of Rs. 19,100 imposed under section 272A(2)(k) for a delay in filing the quarterly TDS return in Form No. 26Q. The appellant argued that the delay was due to a system error and a delay by the Chartered Accountant. The Assessing Officer (AO) found the reasons insufficient and imposed the penalty. The appellant cited various judgments to support their contention, including the case of Hindustan Steel Ltd. Vs. State of Orissa [1972] 83 ITR 26. The Ld. CIT(A) upheld the penalty, leading to the appellant's appeal before the tribunal.

The appellant contended that there was a reasonable cause for the delay, citing system errors and technical faults. They relied on Section 273B, which states that no penalty is leviable if a reasonable cause is established. The appellant referenced judgments like Sushma Tiwari Vs. Department of Income Tax and others to support their argument. The Departmental Representative (DR) relied on the Ld. CIT(A)'s order.

The tribunal found that the appellant's explanation for the delay was reasonable, as it was due to system errors and a delay by the Chartered Accountant. The delay did not result in any loss to the Revenue as the TDS was paid on time. Citing the case of Hindustan Steel Ltd., the tribunal emphasized that penalties should not be imposed for technical or venial breaches. Therefore, the tribunal upheld the Ld. CIT(A)'s decision to cancel the penalty of Rs. 19,100 under section 272A(2)(k).

In conclusion, the tribunal allowed the appeal of the assessee, emphasizing that the delay in filing the return was supported by a reasonable cause and was only a technical breach of the law. The penalty imposed under section 272A(2)(k) was canceled as it was deemed unjustified in light of the circumstances.

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