TDS certificate delay treated as a technical breach, so penalty for late issuance was cancelled.

Penalty for delayed issue of TDS certificates was held unjustified where tax had been duly deducted and deposited in time, no loss was caused to the deductees, and the certificates were eventually issued in consolidated form under a bona fide impression. The obligation to furnish TDS certificates under the statutory TDS framework was treated as procedural, so a technical lapse in the mode or timing of issuance did not amount to a serious or contumacious default. On that basis, penalty under section 272A(2)(g) was cancelled and relief was granted to the assessee.

---

---

Issues: Whether penalty under section 272A(2)(g) of the Income-tax Act, 1961 was justified for delayed issue of TDS certificates when tax was duly deducted and deposited in time.

Analysis: The default related only to the manner and timing of issuing the certificate under the TDS scheme. The tax deducted at source had been deposited within time, no loss was caused to the deductees, and the assessee had issued certificates albeit in consolidated form at year-end under a bona fide impression. The statutory scheme under sections 203, 203A, 194A and 206, read with rules 30 and 31 of the Income-tax Rules, 1962, shows that the obligation to issue certificates is procedural in character, and the circumstances disclosed only a technical breach rather than a serious or contumacious default. In such a case, imposition of a harsh penalty was not warranted.

Conclusion: The penalty under section 272A(2)(g) was not sustainable and was cancelled.

Final Conclusion: The assessee was held entitled to relief and the penalty order did not survive.

Ratio Decidendi: Where the deductor has duly deducted and deposited tax in time and the lapse is confined to a bona fide, technical failure in the mode or timing of issuing the TDS certificate, penalty for failure to furnish the certificate is not justified.

---