2019 (6) TMI 730 - AT - Income Tax

ITAT cancels penalty under Income Tax Act for TDS return delay, citing reasonable cause

M/s Ashok Heritage Travels Pvt. Ltd. Versus I.T.O., TDS-1, Jaipur.

The ITAT ruled in favor of the assessee, directing the Assessing Officer to delete the penalty imposed under section 272A(2)(k) of the Income Tax Act for ... Penalty u/s 272A(2)(k) - furnishing of quarterly statement of the TDS in the prescribed form beyond time prescribed u/s 206 - reasonable cause U/s 273B - bonafide belief - HELD THAT:- As found from the record that the assessee has deposited due taxes collected and also interest thereon till date of payment. Immediately, after payment of TDS, the assessee has also filed TDS returns. As the assessee was not having PAN number of the deductee, therefore, he has entertained a bonafide belief that the TDS return cannot be filed without PAN number. Accordingly, we found that there was a reasonable cause u/s 273B . See CIT VERSUS SUPERINTENDING ENGINEER, PWD., UDAIPUR. [2002 (5) TMI 13 - RAJASTHAN HIGH COURT], BRANCH MANAGER, PUNJAB NATIONAL BANK VERSUS ACIT [2011 (5) TMI 831 - ITAT LUCKNOW] and THE ORIENTAL INSURANCE COMPANY LTD. [2011 (9) TMI 1184 - ITAT AHMEDABAD ] - Decided in favour of assessee. Issues:Appeal against penalty imposed under section 272A(2)(k) for delay in filing TDS returns.Analysis:The appeal was filed by the assessee against the penalty imposed under section 272A(2)(k) of the Income Tax Act, 1961 for the assessment year 2011-12. The penalty amount was Rs. 43,248, as the assessee failed to furnish quarterly TDS statements within the prescribed time under section 206 of the Act.The ld CIT(A) confirmed the penalty imposed by the Assessing Officer, leading the assessee to appeal before the ITAT. The assessee contended that despite deducting and depositing TDS with interest, the delay in filing the TDS return was due to not receiving PAN numbers of deductees, which was beyond their control.The assessee argued that there was no loss to the revenue as the taxes were paid, and the delay was unintentional. The ITAT Jaipur Bench's decision in a similar case was cited to support the argument that penalty under section 272A(2)(k) should not be imposed for unintentional delays.The assessee further relied on the Supreme Court's decision in Hindustan Steels case, emphasizing that penalties should not be imposed for technical breaches if there is a reasonable cause for the delay, as was the case due to the non-receipt of PAN numbers.On the contrary, the Revenue contended that the penalty was correctly imposed for each quarter's delay in filing TDS returns. However, the ITAT found that the assessee had deposited the due taxes and interest promptly upon collection, followed by filing the TDS returns after obtaining PAN numbers.The ITAT considered the Rajasthan High Court's decision, emphasizing that penalties under section 272A(2)(c) should not be imposed in a routine manner, especially for bona fide breaches. The Lucknow Bench of the ITAT and the Ahmedabad Bench also supported the view that penalties should not be imposed in cases of technical breaches without benefit to the assessee.Based on the legal principles discussed and the specific circumstances of the case, the ITAT concluded that there was no merit in the penalty imposed. Therefore, the ITAT directed the Assessing Officer to delete the penalty, allowing the appeal of the assessee.In conclusion, the ITAT ruled in favor of the assessee, emphasizing that penalties should not be imposed for technical breaches or unintentional delays, especially when there is a reasonable cause for the delay, as in this case due to non-receipt of PAN numbers.