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TMI Blog2025 (3) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty under section 272A(2)(g) of the Act for the impugned assessment years before us. 3. Both the penalties, it was common ground, were inter-related for the violation of the provisions of the Act pertaining to the tax deducted at source (TDS), with penalty under section 271C of the Act being levied for not depositing the TDS in time, while that levied under section 272A(2)(g) for not filing the requisite TDS returns (quarterly) in time pertaining to the same TDS which was not found deposited in time by the assessee. For both the impugned assessment years before us the assessee has been visited with penalty both for not depositing TDS in time and also for not furnishing requisite TDS returns in time. All the issues involved in the present appeals arise, it was common ground, from the same background of the facts, therefore, all the appeals were taken up together for hearing and are being dealt with by this common consolidated order. 4. We shall be dealing with the levy of both the penalties, u/s 271C & 272A(2)(g) of the Act by dealing with the facts pertaining to Asst.Year 2015-16. ITA 2678/Ahd/2017 A.Y 2015-16 - 272A(2)(g) ITA 2679/Ahd/2017A.Y 2015-16 - 271C 5. The facts rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elled and be suitably modified. 2. On the facts of the case as well as in law, learned CIT(A) grossly erred in confirming the order u/s. 271C imposing penalty of Rs. 26,33,867/- without appreciating the fact that the AO who has passed the impugned penalty order has not issued notice of demand u/s. 156 of the I.T. Act. The notice of demand u/s. 156 was issued by a subordinate authority. 3. On the facts of the case as well as in law, learned CIT(A) grossly erred in confirming the order u/s. 271C imposing penalty of Rs. 26,33,867/- without appreciating the fact that the AO had passed the impugned order without affording the appellant assessee a reasonable opportunity of being heard and the order has been passed in violation of the principles of natural justice. It, therefore prayed that the impugned order may please be cancelled. 4. The learned CIT(A) has erred in law and on facts in confirming the order u/s. 271C dated 24/10/2016 imposing penalty of Rs. 26,33,867/- for A.Y. 2015-16 for the alleged default of depositing the amount of tax deducted at source to the credit of government account within the stipulated time, without appreciating the fact that in the entire amount of T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase be cancelled. 3. On the facts of the case as well as in law, learned CIT (A) grossly erred in confirming the order u/s. 272A(2)(g) imposing penalty of Rs. 2,58,000/- for the alleged default of delay in filing quarterly statements in Form 24Q and 26Q for F.Y. 2015-16. 4. On the facts of the case as well as in law, learned CIT (A) grossly erred in confirming the order u/s. 272A(2)(g) imposing penalty of Rs. 2,58,000/- without recording any finding of fact in the body of the penalty order as to the nature of the default committed by the appellant that attracted the impugned penalty. It is therefore prayed that impugned penalty order may please be cancelled. 5. On the facts of the case as well as in law, learned CIT (A) grossly erred in confirming the impugned penalty order, which was passed without affording the appellant assessee a reasonable opportunity of being heard and the order has been passed in violation of the principles of natural justice. It is therefore prayed that the impugned order may please be cancelled. 6. On the facts of the case as well as in law, learned CIT (A) grossly erred in confirming the impugned penalty order in utter disregard to the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis for levying penalty in question does not survive any further. On this short count, the penalty in question deserves to be deleted. "There is "no loss to the revenue" since the "amount of TDS" has been deposited with the Govt. with "interest". > Assessee has deposited amount of TDS along with interest. Thus, assessee has compensated Govt. for late payment of TDS. > Accordingly, there is no loss to the revenue. / > Under such circumstances, penalty u/s 272A(2) cannot be levied. > Reliance is placed on CIT v Harsiddh Construction P Ltd - 244 ITR 417 (Guj). Whether to levy penalty u/s 272A(2) and 271C is at the "discretion" of AO; such discretion has to be exercised judiciously and accordingly, penalty u/s. 272A(2) and 271C must be levied merely for technical or venial breach". Whether penalty u/s. 272A(2) and 271C of the Act should be levied or not is as the "discretion of AO". Depositing TDS belatedly is merely a technical or venial breach which does not warrant levy of penalty u/s 272 A or 271C of the Act. It is well settled that in case of mere technical or venial breach, penalty should not be levied. Reliance is placed on decision of Hon'ble the Apex C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was rejected by the ld.CIT(A) relying on the decision of the Hon'ble Kerala High Court in the case of US Technologies Vs. CIT, ITA No.3 of 2009. He pointed out that both the AO and the ld.CIT(A) referred to this decision of the Hon'ble Kerala High Court for holding that section 271C of the Act attracts penalty for the default in the delay in deposit of TDS also, besides levying of penalty for non-deduction of TDS. The ld.counsel for the assessee pointed out that this decision of the Kerala High Court has since been reversed by the Hon'ble Supreme Court in its decision in US Technologies Vs. CIT, (2023) 453 ITR 644 (SC). Copy of the said decision was placed before us, and it was pointed from the same that the Hon'ble Apex Court had gone through the provisions of section 271C and categorically held that on true interpretation of section 271C there is no penalty leviable on a mere delay of remittance of TDS after deducting the same by the concerned assessee. 13. The ld.DR though relied on the order of the ld.CIT(A) was unable to controvert the contentions of the ld.counsel of the assessee that the decision on which the ld.CIT(A) and the AO had relied for levy of penalty in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of TDS. The Hon'ble Apex Court further noted that the statute provides for the levy of penalty for the delayed remittances of TDS under section 201(1A) of the Act, which was compensatory in nature, and similarly about prosecution under section 276B of the Act on failure to pay TDS after deducting. The Hon'ble Apex Court also referred to CBDT Circular No.551 dated 23.1.1998 and noted that it talked about the levy of penalty on failure to deduct TDS and noted that even the CBDT has taken note of the fact that no penalty is envisaged under section 271C of the Act for belated remittance of TDS. Considering all of the above, the Hon'ble Apex Court categorically held that no penalty under section 271C of the Act is leviable for default of not depositing TDS deducted. 16. The issue before us, is therefore, as rightly pointed out by the Ld.Counsel for the assessee, squarely covered in favour of the assessee by the decision of the Hon'ble apex court in US Technologies (supra) following which we hold no penalty could have been levied under section 271C of the Act for the act of delayed remittance of TDS. The penalty therefore levied of Rs. 26,33,867/- u/s 271C of the Act is directed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate to the effect that tax has been paid to the Central Government, and specify the amount so paid, the rate at which the tax has been paid and such other particulars as may be prescribed. 21. Section 203 of the Act, as is evident from a bare perusal of the section mandates furnishing of TDS certificates within prescribed time. Thus, the default attracting penalty section 272A(2)(g) of the Act is that of non-furnishing of TDS certificates in time as specified u/s 203 of the Act. Therefore, this sub-clause does not attract penalty for delayed filing of quarterly returns in Form No.24Q and 26Q, for which it has been levied in the present case. And for this reason alone the penalty levied in the present case u/s 272A(2)(g) of the Act is not sustainable. 22. Be that so, we have noted that sub-clause (k) of section 272(A)(2) deals with the levy of penalty for non-filing or delayed filing of the quarterly returns. The relevant sub-clause is reproduced hereunder: 272A. (1) If any person,- (2) If any person fails- (k) to deliver or cause to be delivered a copy of the statement within the time specified in sub-section (3) of section 200 or the proviso to sub-section (3) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment, he had delivered or cause to be delivered the statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C before the expiry of a period of one 22[year] from the time prescribed for delivering or causing to be delivered such statement. (4) The provisions of this section shall apply to a statement referred to in subsection (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012. 25. Both the parties were confronted with this position of law and the case put up for seeking clarification if any from both the sides. The order sheet entry dated 06-02-2025 fixing the case for seeking the above clarification reads as under: "The assesses in the impugned appeals is aggrieved with the levy of penalty under section 272A(2) (g) of the Act. The default attracting the penalty is for delay in filing quarterly return of TDS in Form No.24Q and 26Q. The provision of law, however reveals that the said default attracts penalty under section 272A(2)(k) of the Act. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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