2007 (8) TMI 326 - HC - Income Tax

Assessee had not issued tax deducted at source certificate within the prescribed time - assessee explained that the firm was incurring heavy losses over the years and its revenue-generating activities had been hampered due to labour unrest and since most of the employees had left there was no experienced person to look after the tax matters - no mala fide intention in issuing TDS certificate late - Tribunal rightly deleted the penalties on the ground that there was a reasonable cause with the assessee for failure to issue the TDS certificates within the stipulated time

Summary

Issues:
- Whether the Income-tax Appellate Tribunal was right in deleting the penalty imposed by the Assessing Officer under section 272A(2)(g) of the Income-tax Act, 1961.

Analysis:
1. The appeals were filed by the Revenue against the Tribunal's order deleting penalties imposed by the Assessing Officer for the assessment year 2000-01 due to the assessee's failure to issue tax deducted at source certificates within the stipulated time.

2. The Assessing Officer issued a show-cause notice under section 272A(2)(g) read with section 274(1) of the Act to explain the default in issuing the certificates within the prescribed time.

3. The assessee explained that heavy losses and labor unrest hindered revenue generation, leading to a lack of experienced personnel to handle tax matters, with no mala fide intention in the delay.

4. The Commissioner of Income-tax (Appeals) deleted the penalty, stating the default was not severe enough to warrant it, leading the Revenue to challenge this decision before the Tribunal.

5. The Tribunal, in its order, found a reasonable cause with the assessee for the delay in issuing the certificates, considering the lockout affecting operations and statutory obligations, lack of experienced staff, and no want of bona fides in the delay.

6. The Tribunal emphasized that the penalty provisions should not be oppressive and must consider the circumstances leading to the default, concluding that the penalty was not warranted in this case.

7. The Tribunal's decision was based on factual findings and interpretation of the law, indicating that the order did not raise a substantial question of law under section 260A of the Act, leading to the dismissal of the Revenue's appeal.

8. The Tribunal's decision was upheld, emphasizing that the apex court's decision cited by the Revenue was not applicable to the facts of this case, and the appeal was deemed not maintainable, resulting in its dismissal.