TMI Blog1993 (9) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... ce hence the forms were not submitted. Now it is difficult to submit the Form No. 16 of taxpayer pertaining the year 1989-90. Hence, may please be allowed and approve the same." The Dy. CIT however was not satisfied with the explanation and concluded that--- (a) the tax deductor has not made any effort to issue unified certificates: (b) ignorance of law cannot be an excuse. Though, in this case, the total tax deducted amounted only to Rs. 1,61,605, yet the Dy. CIT imposed the penalty of Rs. 1,31,70,600 under section 272A(2)(g) of the Act. The assessee also did not succeed before the first appellate authority. 4. Before us, the learned counsel for the assessee, Shri K.A. Sathe contended and pleaded that the levy of penalty on the facts and in the circumstances of the case is not justified. He points out that the appellant is the Executive Engineer of Phaltan Division, M.S.E.B. Phaltan, a small Taluca place in Satara District of Maharashtra, where there is no Income-tax Office or any facility of Tax Consultants for the purpose of tax deduction matters. The tax matters of Phaltan are sent to the Income-tax Officer at Kolhapur which is about 160 kms. away from the town. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee during this year was accepted by the revenue and no objection was raised at any time in the previous years. 5. Just as the appellant was not aware of the changes in the new forms, it was also not aware of the fact that the penalty for not issuing the tax deduction certificates as per section 203 was very heavy i.e. Rs. 100 per day. When the notice was issued by the ITO, TDS Circle, Kolhapur in July 1991 asking why the certificates were not attached to Form No. 24, the appellant submitted that it was not aware of the position and that the forms for 1989-90 could not be issued. In fact, same reply was given when the penalty proceedings under section 272A(2)(g) were initiated. At that time also, the appellant had not engaged any tax consultant to advise about the correct position of law. Thus, it was due to ignorance on the part of the assessee due to which the tax deduction certificates in the new forms could not be issued by the assessee. 6. The learned counsel also points out that the computation of delay worked out by the Dy. CIT is erroneous. She has taken the delay of 813 days without any justifiable reasons. As a matter of fact, the contravention by the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different provisions are required to apply for allotment of tax deduction account number (TAN) within the prescribed time. These provisions were inserted by the Finance Act, 1987 with effect from 1-6-1987. The TAN is required to be quoted by tax deductor on all challans for paying the tax deducted to the credit of the Government, on the certificates of tax deduction, on all returns required to be delivered under sections 206, 206A, 206B and all other documents relating to tax deduction. 10. Section 206 requires filing annual returns in prescribed forms, giving the information regarding tax deducted at source during the year. Different forms of returns are prescribed for different types of deductions. For deduction of tax from salaries, Form No. 24 is prescribed under rule 37 of the Income-tax Rules. Prior to 28-2-1991 the last date for filing Form No. 26 was 30th April every year. By Income-tax (Sixth Amendment) Rules, 1991 with effect from 28-2-1991 the time limit prescribed was 31st May. In the case of employers other than Government, a monthly statement in respect of salaries paid in case of employees leaving service, in Form No. 21 or monthly certificates of tax deduction fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... too was to be given on Government supplied form, three different forms viz., Form Nos. 16, 16-A and 16-B were prescribed by amendment of rule 31. These new provisions have been explained in Board Circular No. 597, dated 27-3-1991. It is stated in circular that new scheme is introduced with a view to streamline the work of issuing of certificates for tax deducted at source and avoiding the problems experienced in the use of the unified Form No. 16. As per the new scheme, new Form No. 16 was to be used for tax deductions from salaries, while Form No. 16-A was to be used for issuing of certificates for tax deducted from interest on securities under section 193, from dividends under section 194 and from insurance commission under section 194-D. Form Nos. 16 and 16-A could, therefore, be issued on a private stationery of the tax deductor or the printed forms available in the market, without approaching the Income-tax Department. Form No. 16-B was to be used for other types of deductions and it had to be on a paper serially numbered and printed by the Central Government in book form and supplied on an application in Form No. 17. New forms were to be used as per the above circular for ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... everal changes. It is to be considered whether in a place like Phaltan, a small town, where there are no facilities for tax consultation it could be presumed that every one knows the law. In other words, whether the plea of ignorance pleaded by the assessee can be accepted as a reasonable cause to fulfil the statutory obligations. The Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 118 ITR 326 has examined whether the ignorance of law can be taken as an excuse. At page 339 Their Lordships have observed : "Moreover, it must be remembered that there is no presumption that every person knows the law. It is often said that every one is presumed to know the law, but that is not a correct statement : There is no such maxim known to the law. Over a hundred and thirty years ago, Maula, J. pointed out in Martindale v. Falkner [1846] 2 CB 706 : 'There is no presumption in this country that every person knows the law : it would be contrary to common sense and reason if it were so"'. 14. The highest Court of the land therefore, has laid down that there is no presumption in law that everybody knows the law. The assessee therefore, when it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture and therefore, before imposition of penalty, the intention of a defaulter has to be taken into account. Under the Income-tax Act, where the offence is a creation of a particular section, normally, without saying more, the requirement of an element of mens rea is imported into concept of offence unless there is something expressed or implied in the language of the provisions which goes against such presumption. Therefore, in order to justify the imposition of penalty under any of the sections of the Income-tax Act, the authority must not only confine that there is a default but should also consider the question whether there is good and sufficient reason for the default and if only he finds that there was none he should impose the penalty. In other words, if there was a sufficient or reasonable cause for an assessee for the failure to perform the statutory obligations no penalty need be imposed on an assessee. This leads us to examine the import of the words 'reasonable' or 'sufficient cause'. Before a cause can be said to be reasonable or not, it must be found as a fact that the particular cause operated upon the mind of the assessee which prevented him from discharging his le ..... X X X X Extracts X X X X X X X X Extracts X X X X
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