TMI Blog1998 (9) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... se behalf the tax was deducted within one month and fourteen days from the date of credit or payment. In this case, penalty order dt. 22nd Dec, 1994, was passed by the Dy. GIT, Range-4, Ahmedabad. According to him the assessee failed to issue certificates in Form No. 16A during the stipulated period of one month and fourteen days' time and consequently proceedings under s. 272A(2)(g) of Act were initiated against the assessee. In this case, the ITO, TDS-in, Ahmedabad, had issued a notice to the assessee requiring it to show-cause as to why penalty under s. 272A(2)(g) of the Act should not be levied. Subsequently, the Dy. CIT, Range-10, has also issued a show-cause notice to the assessee. Thereafter, the case was transferred to Dy. CIT, Range-4, Ahmedabad, who also issued a notice dt. 21st Oct., 1994, proposing to levy penalty under s. 272A(2)(g) of the Act. The assessee vide its letter dt. 16th June, 1994, addressed to the ITO (TDS)-III, Ahmedabad, and vide letter dt. 14th July, 1994, addressed to the Dy. CIT, Range-10, Ahmedabad, strongly objected to the proposed levy of penalty under s. 272A(2)(g) of the Act. In response to the show-cause notice, issued by the Dy. CIT, Range-4, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve of the fact that the provisions of issue of certificates were complicated. The assessee also pointed out that the relevant forms in which such certificates were required to be issued were not easily available. According to the assessee it was also one of the reasons for not issuing the certificates in time. 5. The assessee also raised an additional ground of appeal before the appellate authority below. The assessee challenged the penalty order on the ground that the same was passed after the expiry of six months from the date of initiation of penalty proceedings under s. 272A(2)(g) of the Act. It was also claimed that the penalty order passed on 22nd Dec, 1994, was barred by limitation as per the provisions of s. 275(1)(c) of the Act. It was also claimed by the assessee that the penalty proceedings were initiated by the ITO (TDS-III), Ahmedabad, on 20th April, 1994. The order was to be passed within six months from the date of initiation of penalty proceedings. Since the penalty proceedings were initiated on 20th April, 1994, the penalty order was required to be passed on before 31st Oct., 1994. The assessee claimed before the appellate authority below that the order passed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the period of six months from the date of initiation of penalty proceedings and, therefore, the penalty order is illegal and bad in law and liable to be quashed. He also contended that from the facts of the case, it is clear that there was no attempt on behalf of the assessee to evade any tax liability or to cause any loss of revenue to the Department. According to Shri Patel, from the facts of the case it is clear that the assessee was under a bona fide belief that certificates in question were required to be issued at the end of the accounting year, when the accounts of such parties are generally completed for the entire year. It was also submitted by Shri Patel, that there was no mala fide intention while not issuing the certificates in question and the default on the part of the assessee is purely technical one which should be ignored and no penalty should be levied. In support of the above contentions, Shri Patel, the learned counsel for the assessee relied on the following decisions: (1) Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC); (2) J J Dechane vs. CIT (1990) 182 ITR 345 (AP); (3) Rajasthan Tribal Area Development Co-operative Federation Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief that the certificates were to be issued at the end of the financial year. According to the learned Departmental Representative, even otherwise also ignorance of law is not an excuse. He further contended that the assessee had issued certificates not on a single date but on 4 or 5 different dates in the months of April and May, 1993, which fact sufficiently indicates that belief of the assessee that he was required to issue certificates at the end of the financial year is not being fiduction (sic). He, therefore, submitted that the explanations given before the authorities below have rightly been rejected by the authorities below. 11. The learned Departmental Representative also submitted that the decision reported in (1995) 53 TTJ (JP)105 is also not applicable in the facts and circumstances of the present case. 12. According to the learned Departmental Representative the assessee had also relied upon certain other decisions to point out that in the facts and circumstances of the present case, the penalty was required to be levied. The sum and substance of the decision relied upon by the assessee is that when the TDS had been deposited in the Treasury in time and when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n read as under: "Sec. 272A(2)- If any person fails: (a) to (f)......... (g) to furnish a certificate as required by s. 203 (or s. 206C);" Now, it will be relevant to know that who is the competent authority to initiate the penalty proceedings and impose the penalty under s. 272A(2)(g) of the Act. The relevant provisions read as under: "Sec. 272A(3)- Any penalty imposable under sub-s. (1) or sub-s. (2) shall be imposed: (a) In a case where the contravention, failure or default in respect of which such penalty is imposable occurs in the course of any proceeding before an IT authority not lower in rank than a Dy. Director or a Dy. CIT, by such IT authority; (b)................. (c) in any other case, by the Dy. Director or the Dy. CIT." It is clear from cl. (c) to sub-s. (3) of s. 272A that in any other case, the penalty is to be levied by the Dy. Director or the Dy. CIT. In other words, no IT authority lower than the rank of Dy. Director or Dy. CIT can impose the penalty under s. 272A(2)(g) of the Act. The question whether the penalty is to be levied or not has to be decided by the Dy. Director or the Dy. CIT only. In such circumstances, the assessee is obliged to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the contentions of the learned counsel for the assessee that the penalty order was passed beyond the prescribed time-limit. Accordingly, this contention of the assessee is rejected. 14. During the course of hearing of the appeal, the learned counsel for the assessee also invited our attention to various circulars by the CBDT vide Nos. 529, 597, 605, 607, 625 and 664 issued from time to time with regard to the prescribed Form Nos. 16, 16A and 16B in which the relevant certificates were required to be issued by the persons deducting the tax at source. In our view, there is no substance in the contention of the learned counsel for the assessee that at the relevant time, the TDS forms in question were not easily available and due to this there was also delay in issuing the certificate. We also find that no such plea was raised by the assessee before the Dy. CIT during the course of penalty proceedings. Furthermore, there is no material on record to show that the assessee had faced genuine difficulties in obtaining the relevant forms. In our view, the findings of the CIT(A) on this point is based on proper appreciation of facts and, therefore, this contention of the assessee is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at the end of the assessee is almost the same. It is not the case of the Department that the assessee has not furnished annual return in regard to interest under s. 206 of the Act within the prescribed time. It is also admitted that the assessee carries on business on a small-scale and in the year under consideration, the assessment has been framed on a loss as returned. The tax deducted at source on the other hand is Rs. 8,062 which has also been deposited in time. On the other hand, assessee's explanation that non-issue of multiple certificate was on account of wrong impression on its part is not something which is unbelievable. In these circumstances, the default of the assessee could not be termed so serious to call for penalty as harsh as imposed." The Tribunal further held as under: "In view of the tax deducted at source being deposited in the treasury in time and parties not suffering any loss on account of non-issue of certificates, we would cancel the penalty as levied." 17. In the case of Executive Engineers vs. Dy. CIT the Tribunal, Pune Bench, while dealing with penalty matter under s. 272A(2)(g) r/w s. 203 of the Act has observed as under: "The highest Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment in time. Only Form 26A was not filed. Having regard to the facts of the case, in my opinion, it is not a circumstance aliunde to which penalty can be sustained, as I find that there existed a bona fide belief in not furnishing Form No. 26A. This, in my opinion, is a reasonable cause. Assessee can, therefore, be exonerated from the rigour of penalty. I, therefore, direct the AO to delete the same." 21. The Hon'ble Supreme Court in the case of Hindustan Steel Ltd. vs. State or Orissa has held that the order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. 22. It is worth mentioning that penalty provisions of s. 272A were brought on statute with the primary object of ascertaining compliance of certain formalities prescribed under various provisions of IT Act and to curb any tendency on the part of certain assessees of conscious discregard and breach in compliance of such legal obligations. From the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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