Whether when assessee fails to e-file TDS return for lack of verified PAN numbers although TDS deducted was deposited in time, such delay doesn't warrants Penalty of Rs. 100/= per day.
CUTTACK, APRIL 10, 2013: THE issue before the bench is - Whether when assessee fails to e-file TDS return for lack of verified PAN numbers although TDS deducted was deposited in time, such delay warrants penalty u/s 272(2)(k). And the verdict goes in favour of assessee.
Facts of the case
Assessee is a Nationalised Bank. In compliance to the show cause notice issued by the ACIT(TDS), the assessee sumbitted that it was a rural branch and TDS filing was done through the branch at Balasore, which was a distant place from the branch. TDS was deposited on due date. But, due to lack of adequate staff in comparison to the volume of business, sometimes delay occurred in filing the E-TDS within the due date. More so, the PAN Nos of the deductees were not furnished by the business constituents. For lack of information of PAN Nos, the filing of return was also delayed. Further, the Branch Manager explained that he had joined only two months back. Due to different problems, the then Managers were unable to file return, within the due date. The challans were deposited through their Balasore Branch in time. Thus the circumstances under which the default occurred were explained. But though the returns were not filed in time, but Tax Deducted had been deposited. The ACIT (TDS) did not consider the assessee's explanation and levied penalty u/s.272(2)(k) of the I.T.Act,1961. The CIT(A) confirmed the same.
On appeal before the Tribunal, the counsel for the assessee submitted that though the ignorance of law was of no excuse, still then fact was that may it be Bankers or Govt. Officers, the people or the employees were still in learning stage so far as computerized system of filing was concerned and the E-Banking services had not been fully developed. Staffs were yet to be acquainted with the provisions of I.T. Laws Vis-a-Vis computerized system, that to in rural areas it was underdeveloped. The default was not deliberate or intentional and there was no malafide intention or taint in it. In the matters of penalty proceeding always "mens rea" had to be taken into consideration. Here in this case there was no element of fraud or willful neglect. More so, the present Branch Manager was not there when the default was committed. Notice for show cause should have been made to the then Branch Manager, who could explain the default. It was no doubt a bonafide mistake. It was a settled law that an order imposing penalty for failure to carry out a statutory obligation was 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 contumacious or dishonest conduct or acted in conscious disregard of its obligation. The Counsel further submitted that the provision of I.T. Law in Sec. 272A(2)(k) of the I.T. Act, 1961 was so much complicated with so many provisions that it was very difficult to understand even for a person professionally dealing with it.
He continued that the assessee had already filed the default returns and therefore the matter had been regularized. The amount of TDS due had already been deposited with the Central Government Treasury account on due date. The Counsel contended that it was a matter concerning a Nationalized Bank and nobody's personal affairs were involved. The non-compliance to the statutory obligation was not with any malafide intention or taint. Further, he submitted that the assessee could not collect the details of PAN Nos. for all the deductees. There were only technical breach. Assesses did not derive any benefit what so ever by not filing the quarterly TDS return in time as the amount of T.D.S. was duly deposited in the Govt. Treasury to the credit of the Govt. In view of the facts, he contended that the act of the assesses cannot be said to be intentional and willful and therefore, penalty should not have been levied because the assessee was prevented by sufficient cause. Non filing of statement did not result in any revenue loss.
Having heard the parties, the Tribunal held that,
++ we are inclined to find that the penalty has been levied unilaterally by the ACIT(TDS) on the proposal of the ITO (TDS), Balasore who has not bothered to find out whether the banks are to file such statements insofar as he has computed the penalty @Rs.100 per day whether was equal to or more than the tax deducted at source which amount was to be penalized in accordance with the provisions of the said Section. The Counsel for the assessee has produced the purported statements filed u/s.200(3) for the impugned financial year which have been uploaded by the franchise on 27.11.2009 on a single day for all the four quarters indicating that the particulars reported by the deductor were uploaded even without obtaining the PANs of the deductees. In other words, it has been established that the contention of the Department to correlate the deductees claim vis-a-vis the information submitted by the assessee under the provisions of Section 272(2)(k) were to be related to the ITO(TDS), Balasore as submitted by the DR. It was automatic therefore the basic requirement of uploading was available on Form AS-26 which changed in accordance with the PANs obtained at any point of time was known to the Department when the delay in filing such statements was in relation with the levy of penalty;
++ we had occasions to deal with such similar issue in the case of Garision Engineer (I) R & D v. ACIT (TDS) in ITA No.69/CTK/2013, wherein the penalty levied u/s.272A(2)(k) was deleted. Consistent with the view taken therein on very much similar facts and circumstances as are in the present case at hand, we hold that the impugned penalty levied u/s.272A(2)(k) against the assessee is not justified and as such we cancel the same by allowing the appeal of the assessee.
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