TaxTMI 
TaxTMI 
2006 (9) TMI 206
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....y this consolidated order. 2. These appeals emanate from the Order passed under section 272A(2)(c) of the Income-tax Act (Act) passed by the Additional Director of Income-tax (International Taxation). The brief facts borne out from the record are that the assessee filed its return under section 206 of the Income-tax Act in Form No. 27 for the financial year ending on 31-3-1998 on 30th June, 2000 which was due on 14-6-1998. Thus, there was a delay of 747 days in filing of the said return. With respect to the assessment year 1998-99, the return under section 206 was filed on 30-6-2000, whereas, it was due on 14-6-1999 and was late by 381 days. The Assessing Officer issued a show-cause notice in both these cases for levy of penalty under section 272A(2)(c) of the Income-tax Act and the assessee contended that the return could not be filed in time on account of non-payment of tax due to financial constraints. The Assessing Officer observed that similar default had been committed by the assessee in earlier years as well as in subsequent years and there was inordinate delay of 747 days in assessment year 1997-98 and delay of 381 days in assessment year 1998-99 in filing of the return.....
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.... constraints, it could not deposit the tax so deducted and there was no purpose of filing of the return. The return was filed as and when the tax were deposited. The learned counsel for the assessee 'further contended that under section 206 no time limit was prescribed for filing of the return. It was simply stated in this section that it should be filed after the end of the financial year. Whereas, rules 36 to 37 deal with the time of filing of the return under section 206 in prescribed format. But, in the assessee's case rule 37A is applicable, according to which, return is to be filed within 14 days from the end of the quarter in Form No. 27. Rule 37A does not deal with the returns which are required to be filed under section 206 of the Income-tax Act. As such, for default under rule 37A, there is no provision for levying the penalty. Hence, the penalty levied under section 272A(2)(c) in the instant case is not sustainable in the eyes of law. 5. The learned counsel for the assessee further contended that before introduction of rule 37A with effect from 12-7-1988 there was only one rule i.e., rule 37, which dealt with the time and the prescribed form for filing of the return r....
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....equired to be filed under section 206 of the Income-tax Act, what would be the period of limitation for filing the TDS return? We have carefully perused the relevant provisions of section 206 of the Income-tax Act and rules 37 and 37A of the Income-tax Rules. For the sake of reference, we prefer to reproduce the relevant portion of section 206 of the Income-tax Act and rules 37 and 37A of the Income-tax Rules. Section 206: Person deducting tax to furnish prescribed return(1) The prescribed person in the case of every office of Government, the principal officer in the case of every company, the prescribed person in the case of every local authority or other public body or association, every private employer and every other person responsible for deducting tax under the foregoing provisions of this Chapter shall, within the prescribed time after the end of each financial year, prepare and deliver or cause to be delivered to the prescribed income-tax authority or such other authority or agency as may be prescribed, such returns in such form and verified in such manner and setting forth such particulars as may be prescribed." Rule 37 : Prescribed returns regarding tax deducted at so....
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...., under section 194D from "Insurance commission", under section 194EE from "Payments in respect of deposits under the National Savings Scheme, etc.", under section 194F from "Payments on account of repurchase of units by Mutual Fund or Unit Trust of India", under section 194G from "Commission, etc., on sale of lottery tickets", under section 194H from "Commission or brokerage", under section 194-I from "Rent", under section 194J from "Fees for professional or technical services" and under section 194K from "Income in respect of units". -------------------------------------------------------- "37A. Returns regarding tax deducted at source in the case of non-residents-The person making deduction of tax in accordance with sections 193, 194, 194E, 195, 196A, 196B, 196C ....
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....nly in terms of periodicity but also in terms of the provisions with reference to which they are required to be filed. It is, therefore, quite clear that the provisions of section 206 have relevance to the annual TDS returns prescribed under rule 37 and not to the Quarterly returns prescribed under rule 37A and consequently it is the failure on the part of the person responsible to deduct the tax at source to furnish in due time the TDS returns metioned in section 206 read with rule 37 which will attract the penalty under section 272A(2)(c). Conversely, failure to furnish Quarterly TDS returns in terms of rule 37A will not attract the penalty under section 272A(2)(c) as such TDS returns are neither annual returns nor the ones specifically prescribed under section 206. 9. The aforesaid view that we have taken is further supported by the fact wherever the Legislature intended that particular TDS returns should be treated as one prescribed under section 206, the Legislature has specifically said so. Barring the TDS returns prescribed under rule 37A, all other rules, namely rules 36, 36A, 37 and 37B dealing with TDS returns have reference to section 206 of the Act. However, omission....
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....residents within the financial year 1992-93, and, in view of the scope of section 206, the assessee, tax-deductor had an obligation to file the return within 'prescribed time' after the end of that financial year, but, in case assessee tax-deductor had to follow rule 37A, the assessee had an obligation to file the return by 21st August, 1992 which is well before the end of the financial year. As to what should the Tribunal do when the provision of a rule under the Income-tax Rules, is found to be in excess of the provisions of the Income-tax Act, we find guidance from the order of the Tribunal in the case of Ginners & Pressers Ltd. v. Dy. CIT [1993] 46 ITD 185 which concludes that "the time limit prescribed by rule 37 is in excess of the power of rule making authority and, therefore, has to be ignored." 11. Keeping in view of the totality of the facts and circumstances of the case and the relevant provisions of the Rules and Act, we are of the considered opinion that though time limit is prescribed under rule 37A for filing of the TDS return after each quarter, but, no provision is made to penalize the assessee or the employer in case it commits default in filing the return. In ....