TMI Blog2018 (3) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... er This appeal, filed by the assessee, being ITA No. 6943/Mum/2014 for assessment year 2010-11 is directed against the appellate order dated 07.10.2014 passed by learned Commissioner of Income-tax (Appeals)-14, Mumbai (hereinafter called the CIT(A) ) for assessment year 2010-11, appellate proceedings had arisen before learned CIT(A) from the order dated 04.04.2012 passed by learned Assessing Officer (hereinafter called the AO ) u/s 272A(2)(k) of the Income-tax Act, 1961 (hereinafter called the Act ) levying penalty of ₹ 99,200/- against the assessee. 2. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) read as under:- a) The Learned CIT(Appeals) has erred in ignoring the submissions of the Appellant and confirming the penalty of ₹ 99,200/- under section 272A(2)(k) of the Income Tax Act. The appellant submits that on the facts and in the circumstances of the case, the levy of penalty is not justified and the entire penalty of ₹ 99,200/- ought to have been cancelled. b) The Appellants crave leave to add, alter or amend the above ground e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erage assessee. The things could have been better if the Call Centre NSDL, which is set up to help the assessee to clarify the queries, was equipped with efficient and qualified personnel who can guide the assessee. However, it has been the experience of one and all that the call centre has inadequate staff of inefficient personnel that getting any help from NSDL call centre is next to impossible. Therefore, some delay has taken place in filing the quarterly returns. However, an assessee, who is diligent to deduct Tax at Source and diligent enough to pay the tax within the time limit, must be supposed to be diligent in filing the quarterly returns, which is a mere procedural requirement. There can be hardly any reason for an assessee not to file the quarterly TDS returns after the payment of tax. Hence, it should be appreciated that it is the E-difficulties faced by the assessee, who are not fully conversant with E-filing of TDS returns. The difficulties have to be held to be genuine in the case like this. It can also be seen that a number of days delay in filing 4 quarterly returns has gradually decreased as stated in the Show-cause Notice itself There have been no delays in filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter paying the tax deducted to the credit of the Central Government. 5.1 The liability of assessee is a statutory and absolute liability. Fiscal statute has to be strictly construed so that nobody can avoid the responsibility of deposit of tax so deducted and to file return on time. 5.2 Section 199 provides that any deduction made in accordance with provision of section 194 and paid to Central Government shall be treated as payment of tax on behalf of the person from whose income deduction is made. U/s.205 of the I.T. Act, 1961 there is a bar for the revenue to demand tax from the assessee to the extent the amount has been deducted from his income. Thus, the tax deducted and paid is treated as tax paid by the person. 5.3 Section 272(A)(2k) contemplates that an offence is committed on the non-filing of TDS return on time, and is totally unrelated to deduction and thereafter deposit of tax in the Government Treasury. The language of 272(A)(2k) is clear so also the legislative intention. If it was the intention of the legislature, not to levy of penalty on deposit of tax is then the same would have been provided in, section 272(A)(2k) itself. Therefore, the contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aug-09 94J 26346 1.9.09 94C 800 1.9.09 Sep-11 94C 764 1.10.09 94J 123889 1.10.09 Q3 Oct-09 94J 13980 5.11.09 94C 388 5.11.09 Nov-09 94J 22980 1.12.09 94C 388 1.12.09 Dec-09 94C 1192 28.12.09 94J 129619 28.12.09 Q4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 0 4 2010-11 Q2 26Q 15-10-2010 18-11-2010 07Q330300634566 34 1,18,486 1,18,486 5 2010-11 Q3 24Q 15-1-2011 13-1-2011 0703311000-17261 0 0 0 6 2010-11 Q3 26Q 15-1-2011 13-1-2011 070331100047272 0 1,64,527 1,64,527 7 2010-11 Q4 240 15-5-2011 11-5-2011 07033080 06S4233 0 0 0 8 2Q1G-11 Q4 26Q 15-5-2011 11-5-2011 070330800634244 0 1,62,234 1,62,234 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 070331100073905 0 0 0 20 2012-13 Q2 26Q 15-10-2012 10-10-2012 070331 100Q73916 0 1,34,098 1,34,098 21 2012-13 Q3 24Q 15-1-2013 14-1-2013 070331100084873 0 0 0 22 2012-13 Q3 26Q 15-1-2013 14-1-2013 070331100084862 0 1,04,139 1,04,139 a 'i 2012-13 Q4 24Q 15-5-2013 14-5-2013 070330800937165 0 2,434 2,434 24 2012-13 Q4 26Q 15-5-2013 14-5-2013 070330800937176 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me as well filing of subsequent returns in time. 8. We have considered rival contentions and have perused the material on record . We have observed that the assessee has E-Filled quarterly statement of tax deducted at source late as detailed here under: Qtr. TDS Amt. Due date of filing TDS statements Date of filing TDS statement Delay of days Q-l 74485 15.07.2009 18.08.2010 399 Q-2 168595 15.10.2009 18.08.2010 307 Q-3 168547 15.01.2010 18.08.2010 215 Q-4 145218 15.06.2010 25.08.2010 71 The revenue was initially accepting the TDS return in paper forms which was later on converted into filing in an electronic mode. In this switch over face there were technological glitches as well difficulties which were faced by the taxpayers in filing returns wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the credit of the Central Government or as the Board directs. (2) Any person being an employer, referred to in sub-section (1A) of section 192 shall pay, within the prescribed time, the tax to the credit of the Central Government or as the Board directs. (2A) In case of an office of the Government, where the sum deducted in accordance with the foregoing provisions of this Chapter or tax referred to in sub-section (1A) of section 192 has been paid to the credit of the Central Government without the production of a challan, the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person, by whatever name called, who is responsible for crediting such sum or tax to the credit of the Central Government, shall deliver or cause to be delivered to the prescribed income-tax authority, or to the person authorised by such authority, a statement in such form, verified in such manner, setting forth such particulars and within such time as may be prescribed. (3) Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter or, as the case may be, any person bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified in such manner and setting forth such particulars and within such time as may be provided. The duty is upon a person deducting any sum in accordance with various provisions under the Chapter and also upon an employer who is making deduction out of the payments made to the employees, then sub-section (3) requires that the deductor is to prepare a statement for such period as may be prescribed, which is to be delivered to the prescribed authority, in such form and verified and setting forth such particulars as may be prescribed. The said statement is to be delivered within such time as may be prescribed. 20. In other words, any deductor deducting any sum on or after first day of April, 2005 in accordance with the provisions of Chapter has the following duties i.e. after paying the tax deducted at source credit to the Central Government, the TDS statements within prescribed time shall be prepared and filed. Rules 31A of the Rules provide the time limit for deposit of the tax deducted statement as per section 200(3) of the Act. The TDS statements are to be deposited quarterly i.e. quarter ending 30th June, 30th September, 31st December and 31st March of each financial year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not furnishing the said e-TDS returns in time. In this regard, reference is to be made to the provisions of section 273B of the Act, where it has been provided that in case a person establishes or proves that he had reasonable cause for the failure to comply with the provisions of various sections provided in section 273B of the Act, then no penalty shall be imposable on such person for the said failure. Reading of section 273B of the Act shows that under it, the Section refers to along with many other sections clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A of the Act. What is relevant for adjudication before us is section 272A(2) of the Act, since penalty has been levied for default in furnishing e-TDS returns under section 272A(2)(k) of the Act. Since section 273B of the Act covers the cases of levy of penalty under section 272A(2) of the Act, then in line with the provisions of said section in case a person establishes its case of reasonable cause for not complying with the provisions of said section, then the section provides that such a person shall not be liable to the penalty imposable for the said failure i.e. under section 272A(2) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be leviable for such defaults. The case put up by the assessee was that where tax was deducted at source and merely because e-TDS statements / returns were not filed in time does not result in any loss of revenue and hence, no merit in levy of penalty under section 272A(2)(k) of the Act. The claim of deduction of tax deducted at source, its payment to the Treasury to the Government and thereafter, the credit to be allowed to the deductee of tax deducted from his account, all work on the principle that the tax is collected and deposited in the account of the Government as income is earned. In other words, the said provisions of tax deducted are advance payments of tax as you earn the income. Taxes are deducted by the deductor out of payments due to the deductee and such tax deducted is the income of deductee. The credit for tax deduction at source would be allowed to the deductee only after the tax deducted at source is deposited in the credit of the Government and the deductor files the compliance report in this regard by way of e-TDS returns. Thus, it is obligatory upon the person deducting tax to deposit the tax deducted at source and also to furnish statement declaring tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the said sub-section that the amount of penalty for failure shall not exceed the amount of tax deductible or collectable, as the case may be. It is further provided that no penalty shall be levied under clause (a) for failure to furnish the statement under section 200(3) of the Act or proviso to section 206C(3) of the Act, on or after first day of July, 2012. 25. The learned Departmental Representative for the Revenue has placed strong reliance on the ratio laid down by the Hon'ble Allahabad High Court in Raja Harpal Singh Inter College's case (supra) for the proposition that where the e TDS statement was not filed in time, then penalty under section 272A(2)(k) of the Act has been held to be leviable. In the facts of the said case before the Hon'ble High Court, the assessee was deducting the tax at source but had not filed the e-TDS returns for five successive assessment years starting from 2008-09 to 2012-13. The assessee failed to furnish any explanation before the Assessing Officer for the said default and only on the last date, it was pointed out that since the Principal of college had joined recently, it would take some time to collect the records for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had explained that regular Principal had assumed charge on 25.01.2010. In other words, the Hon'ble High Court has accepted the explanation offered by the assessee regarding reasonableness of cause of delay in furnishing e-TDS returns late partially. Admittedly, the default in filing the said e-TDS returns have not been accepted in full but taking into consideration the reasonableness of explanation, the penalty chargeable under section 272A(2)(k) of the Act has been restricted i.e. suitably reduced in the case of appellant as held by the Hon'ble High Court. 27. Another reliance placed upon by the learned Departmental Representative for the Revenue is on the ratio laid down by the Chandigarh Bench of Tribunal in Central Scientific Instruments Organization's case (supra). In the facts of the said case, the assessee had filed TDS returns in Form No.26Q belatedly after expiry of 10 years from prescribed time limit and the assessee had submitted that he was unaware of provisions of section 200(3) of the Act. The assessee had deposited the tax to the Central Government at relevant time, however, the assessee failed to furnish TDS returns. The delay in filing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS to the credit of Central Government. Similar ratio has been laid down by the Chandigarh Bench of Tribunal in Ashirwad Complex case (supra). Accordingly, we hold so. 29. Another issue raised in some of the appeals is that where all quarterly returns relating to assessment year 2011-12 were filed on one date i.e. there was default in furnishing the returns for each of the quarters late, the case of the assessee was that because of overlapping default, penalty at best should be restricted to quarter No.1 and no penalty should be levied for the subsequent quarters. We find merit in the above plea of the assessee and accordingly, we direct the Assessing Officer to restrict the penalty leviable to first quarter which is in default and for the overlapping default, no penalty is to be levied under section 272A(2)(k) of the Act. We direct the Assessing Officer to verify the claim of assessee in this regard and work out the penalty accordingly. 30. The issue arising in other appeals before us is identical and following our directions in the paras hereinabove, the Assessing Officer in the case of individual assessee has to verify the claim of assessee and work out penalty, if ..... X X X X Extracts X X X X X X X X Extracts X X X X
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