Tribunal cancels penalty for late TDS/TCS returns under Income Tax Act

The Tribunal allowed the appeal, directing the deletion of the penalty imposed under Section 272A(2)(k) of the Income Tax Act, 1961. The Tribunal found that the delay in filing TDS/TCS returns was due to reasonable causes, such as software issues and lack of technical guidance, and did not result in any prejudice to the Revenue. Relying on relevant judicial precedents, the Tribunal concluded that penalties should be waived off in such circumstances where there is no loss to the Revenue.

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Issues Involved:
1. Levying of penalty under Section 272A(2)(k) of the Income Tax Act, 1961.
2. Reasonable cause for the delay in filing TDS/TCS returns.
3. Applicability of judicial precedents on similar issues.

Detailed Analysis:

1. Levying of Penalty under Section 272A(2)(k):
The primary issue is whether the penalty of Rs. 2,55,700/- levied under Section 272A(2)(k) of the Income Tax Act, 1961, for the delay in filing TDS/TCS returns is justified. The Assessing Officer noted that the assessee delayed filing the quarterly TDS statements for the financial year 2010-11 by 564, 472, 380, 452, 564, 472, 380, and 260 days respectively. Consequently, the AO imposed a penalty as the assessee failed to deliver the E-TDS statements within the specified time without any reasonable cause.

2. Reasonable Cause for Delay:
The assessee argued that the delay was due to frequent changes in the software, non-availability of PANs, and a lack of knowledge about electronic filing. The assessee had deducted and paid TDS along with interest, and there was no default in tax deduction and payment to the government account. The Ld. AR cited various judicial precedents where penalties were waived off due to reasonable causes for delays, emphasizing that the delay did not cause any loss to the Revenue.

3. Applicability of Judicial Precedents:
The Tribunal considered several judicial precedents, including:
- Nav Maharashtra Vidyalaya Vs. Addl. CIT: This case elaborated on the issue of levying penalties under Section 272A(2)(k) and the relevance of reasonable cause under Section 273B.
- The Board of Control for Cricket In India Vs. ACIT: This case reiterated the significance of reasonable cause in waiving penalties.
- Haryana Distillery Ltd. Vs. Joint Commissioner of Income Tax: This case supported the argument that no loss to the Revenue due to delayed filing should result in no penalty.

The Tribunal noted that penalties under Section 272A(2)(k) are subject to Section 273B, which provides that no penalty shall be imposed if the assessee proves that there was a reasonable cause for the failure.

Conclusion:
The Tribunal concluded that while there was a procedural lapse, no prejudice was caused to the Revenue as the taxes were deducted and paid on time. The delay in filing the statements was due to reasonable causes, such as software issues and lack of technical guidance. The Tribunal relied on the judicial precedents which supported the waiver of penalties in similar circumstances. Consequently, the Tribunal set aside the order of the Ld. CIT(Appeals) and directed the Assessing Officer to delete the penalty.

Order:
The appeal of the assessee was allowed, and the penalty levied under Section 272A(2)(k) was directed to be deleted. The order was pronounced on 17th May 2021.

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