Nisarg Infra Projects Pvt. Ltd. v. Addl. CIT(TDS), Range-1, Mumbai
[Citation -2016-LL-1003-71]

Citation 2016-LL-1003-71
Appellant Name Nisarg Infra Projects Pvt. Ltd.
Respondent Name Addl. CIT(TDS), Range-1, Mumbai
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 03/10/2016
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags initiation of penalty proceedings • statutory requirement • imposition of penalty • statutory obligation • condonation of delay • personal liability • show-cause notice • technical default • bona fide belief • deduction of tax • land acquisition • prescribed time • credit society • revenue loss • tds return
Bot Summary: Cooper Hospital, Vs. Vile Parele, Mumbai-400056 Assessee Revenue P.A. No.AAACA8844R Assessee by N.M. Porwal Revenue by Shri Sumit Kumar-DR Date of Hearing 08/09/2016 Date of Order: 03/10/2016 O R D E R The assessee is aggrieved by the impugned order dated 16/10/2014 of the Ld. First Appellate Authority, Mumbai, on 2 ITA No.851/Mum/2015 Nisarg Infra Projects Pvt. Ltd. the ground that the Ld. Commissioner of Income Tax erred in confirming the penalty of Rs.2,56,400/- u/s 272A(2)(K) of the Income Tax Act, 1961 for delay in filing the TDS statement in time. Respective counsel, so far as, condonation of delay is concerned no doubt filing of an appeal is a right granted under the statute to the assessee and is not an automatic privilege the assessee is expected to be vigilant in adhering to the manner and mode in which the appeal is to be filed in terms of the relevant provisions of the Act. The TDS statement could not be furnished by the assessee as the PANs of the deductee were not available at the relevant time and further the assessee was not conversant with filing online, which caused the delay. Shri R.N. Shukla, learned counsel for the assessee submitted that the assessee had no alternative but to collect the PAN of the deductee by individually contacting them to comply the statutory requirement because even the 40 per cent PANs of the deductees were not available with the assessee. Shri R.N. Shukla, learned counsel for the assessee further pointed out that knowing the statutory requirement of PAN, the assessee tried his best and contacted personally with the deductees and after collecting the PAN filed the e-TDS statements in Form Nos. The act of the assessee cannot be said to be intentional or wilful and therefore, penalty should not have been imposed because the assessee was prevented by sufficient cause. Since the assessee duly deposited the deducted tax in the state exchequer, following the decision from Hon'ble Apex Court in Hindustan Steel Ltd. I am of the view that the assessee had a reasonable cause in the interest of the justice, penalty is directed to be deleted.


IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI Before Shri Joginder Singh, Judicial Member, ITA No.851/Mum/2015 Assessment Year: 2010-11 Nisarg Infra Projects Pvt. Ltd. Addl. CIT(TDS), 601, Riddhi, 41 Vallabh Nagar Range-1, E-W Rd. No.2, JVPD Scheme Mumbai Opp. Cooper Hospital, Vs. Vile Parele (W), Mumbai-400056 Assessee Revenue P.A. No.AAACA8844R Assessee by N.M. Porwal Revenue by Shri Sumit Kumar-DR Date of Hearing 08/09/2016 Date of Order: 03/10/2016 O R D E R assessee is aggrieved by impugned order dated 16/10/2014 of Ld. First Appellate Authority, Mumbai, on 2 ITA No.851/Mum/2015 Nisarg Infra Projects Pvt. Ltd. ground that Ld. Commissioner of Income Tax (Appeal) erred in confirming penalty of Rs.2,56,400/- u/s 272A(2)(K) of Income Tax Act, 1961 (hereinafter Act) for delay in filing TDS statement in time. 2. During hearing, ld. counsel for assessee, Shri N. M. Porwal, drew my attention to delay of 23 days, which caused due to bona fide reasons stated in affidavit. ld. DR, Shri Sumit Kumar, contended that assessee was expected to file appeal within time, therefore, delay may not be condoned. 2.1. I have considered rival submissions and perused material available on record. In view of assertions made by ld. respective counsel, so far as, condonation of delay is concerned no doubt filing of appeal is right granted under statute to assessee and is not automatic privilege, therefore, assessee is expected to be vigilant in adhering to manner and mode in which appeal is to be filed in terms of relevant provisions of Act. Nevertheless, liberal approach has to be adopted by appellate authorities, where delay has occurred for bona fide reasons on part of assessee or Revenue in filing appeal. In matters concerning filing of appeal, in exercise of statutory right, refusal to condoned delay can result in meritorious matter being thrown out at threshold, which may lead to miscarriage of justice. judiciary is respected not on account of its 3 ITA No.851/Mum/2015 Nisarg Infra Projects Pvt. Ltd. power to legalize in justice on technical grounds but because it is capable of removing injustice and is expected to do so. 2.2. Hon ble Apex Court in celebrated decision in Collector, Land Acquisition vs Mst. Katiji & Ors. 167 ITR 471 opined that when technical consideration and substantial justice are pitted against each other, courts are expected to further cause of substantial justice. This is for reason that opposing party, in dispute, cannot have vested right in injustice being done because of non- deliberate delay. Therefore, it follows that while considering matters relating to condonation of delay, judicious and liberal approach is to be adopted. If sufficient cause is found to exist, which is bona-fide one, and not due to negligence of assessee, delay needs to condoned in such cases. expression sufficient cause is adequately elastic to enable courts to apply law in meaningful manner, which sub- serves end of justice- that being life purpose of existence of institution of courts. When substantial justice and technical consideration are pitted against each other, cause of substantial justice deserves to be preferred. Hon ble Apex Court in Vedabhai vs Santaram 253 ITR 798 observed that inordinate delay calls of cautious approach. This means that there should be no malafide or dilatory tactics. Sufficient cause should receive liberal construction to advance substantial justice. Hon ble Apex Court in 167 ITR 471 observed as under:- 4 ITA No.851/Mum/2015 Nisarg Infra Projects Pvt. Ltd. 3. legislature has conferred power to condone delay by enacting section 51 of Limitation Act of 1963 in order to enable courts to do substantial justice to parties by disposing of matters on de merits. expression sufficient cause employed by legislature is adequately elastic to enable courts to apply law in meaningful manner which subserves ends of justice that being life-purpose of existence of institution of courts. It is common knowledge that this court has been making justifiably liberal approach in matters instituted in this court. But message does not appear to have percolated down to all others courts in hierarchy. 2.3. Furthermore, Hon'ble Supreme Court in case of Vedabai Alia Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil 253 ITR 798 held that court has to exercise discretion on facts of each case keeping in mind that in construing expression sufficient cause , principle of advancing substantial justice is of prime importance. court held that expression sufficient cause should receive liberal construction. 2.4. decision of Tribunal in People Infocom Private Ltd. v/s CIT (ITA No.210/Mum/2013) order dated 19/05/2016, M/s Neutron Services Centre Pvt. Ltd vs ITO (ITA No.1180/Mum/2012) order dated 18/02/2016, Shri Saidatta Coop-. Credit Society Ltd. v/s ITO (ITA No.2379/Mum/2015) order dated 15/01/2016 and Mr. Nikunj Barot (Prop. Enigma) vs ITO (ITA No.4887/Mum/2015) order dated 06/01/2016, 5 ITA No.851/Mum/2015 Nisarg Infra Projects Pvt. Ltd. wherein, substantial delay was condoned, supports case of present assessee. In light of foregoing discussion, observation made in aforementioned decisions, including from Hon ble Apex Court, circumstances narrated by assessee, wherein, it has stated reasons which caused delay, I am satisfied that there were bona fide reasons of delay, therefore, delay is condoned. 3. So far as, merits of case is concerned, ld. counsel for assessee, contended that there is no loss to Revenue as tax deducted at source was duly deposited in state exchequer and TDS statement could not be filed in time as PAN numbers of deductee were not available at relevant time. Reliance was placed upon decision of Tribunal in case of Branch Manger, PNB vs Addl. CIT (2011) 140 TTJ 622 ; (2011) 59 DTR 381 (Lucknow ITAT). On other hand, ld. DR, defended imposition of penalty. 3.1. I have considered rival submissions and perused material available on record. facts, in brief, are that Assessing Officer noticed that assessee did not file TDS return, which were required to be filed at end of every quarter. ld. Assessing Officer has compiled delay as mentioned in order and also by Ld. Commissioner of Income Tax (Appeal) at page 2 of impugned order. show- cause notice was issued to assessee as to why penalty u/s 272A(2)(K) should not be 6 ITA No.851/Mum/2015 Nisarg Infra Projects Pvt. Ltd. levied. It was explained by assessee that delay was due to non-availability of PANs of deductees and also assessee was not conversant with full procedure of filing online, which keeps changing every year. ld. Assessing Officer did not consider explanation to be reasonable, therefore, he imposed penalty at rate of Rs.100 per day of delay, resulting into penalty of Rs.2,56,400/-. On appeal, before Ld. Commissioner of Income Tax (Appeal), penalty was confirmed. assessee is in appeal before this Tribunal. 3.2. If observation made in penalty order, leading to imposition of penalty, conclusion drawn in impugned order, material available on record, assertions made by ld. respective counsel, if kept in juxtaposition and analyzed, it is noticed that there is no loss to Revenue as deducted amount was duly deposited within prescribed time in state exchequer. TDS statement could not be furnished by assessee as PANs of deductee were not available at relevant time and further assessee was not conversant with filing online, which caused delay. In my opinion, there is reasonable cause of delay, therefore, lenient view is required. Lucknow Bench of Tribunal in ITA No.285/Luck/2011, vide order dated 31/05/2011 held as under:- This appeal filed by assessee is directed against order of learned CIT(A)-III, Lucknow, dt. 1st Oct., 2010 in confirming 7 ITA No.851/Mum/2015 Nisarg Infra Projects Pvt. Ltd. penalty of Rs. 46,700 levied under s. 272A(2)(k) of IT Act, 1961 (in short "the Act") for asst. yr. 2008-09. 2. Briefly stated, facts of case are that assessee is nationalised bank. For financial year 2007-08, Addl. CIT (TDS), Lucknow imposed penalty of Rs. 46,700 under s. 272A(2)(k) of Act on ground that assessee did not file its quarterly TDS returns for financial year 2007-08, which were mandatorily required to have been filed in prescribed Form Nos. 24Q and 26Q within stipulated time as prescribed under sub-s. (3) of s. 200 of IT Act,1961 r/w r. 31A of IT Rules, 1962. In instant case, position of returns in prescribed Forms 24Q and 26Q filed beyond prescribed time is as under : Financial Form No. Quarter Due date of Date of filing Period of year ending filing returns returns delay 2007-08 24Q 1st 15-7-2007 9-8-2007 24 2007-08 24Q 2nd 15-10-2007 15-1-2008 91 2007-08 24Q 4th 15-6-2008 15-7-2008 29 2007-08 26Q 1st 15-7-2007 27-9-2007 73 2007-08 26Q 2nd 15-10-2007 22-2-2008 129 2007-08 26Q 3rd 15-1-2008 16-5-2008 121 Total 467 2.1 Addl. CIT (TDS), Lucknow has observed that quarterly returns in prescribed Form No. 24Q for 1st, 2nd and 4th quarter and Form No. 26Q for 1st to 3rd quarter were filed late. He, therefore, issued show-cause notice under s. 272A(2)(k) of Act, dt. 13th July, 2009 requiring assessee to explain as to why penalty under s. 272A(2)(k) should not be imposed for failure to deliver copy of statement within time specified under sub-s. (3) of s. 200 of IT Act, 1961. After receiving reply of assessee, Addl. CIT (TDS) imposed penalty under s. 272A(2)(k) of Rs. 100 per day for every day during which failure continued i.e. for total period of delay of 467 days that works out to Rs. 46,700. 3. On appeal, learned CIT(A) confirmed impugned penalty for reasons stated in para 2.1 of order. 4. I have heard rival submissions and have also perused materials available on record. Shri R.N. Shukla, advocate, learned counsel for assessee submitted that assessee is nationalised bank. During financial year 2007-08, assessee has filed its quarterly statements of TDS returns in Form No. 24Q and Form No. 26Q through e-TDS as per provisions of sub-s. (3) of s. 200 of IT Act, 1961 read with r. 31A of IT Rules, 1962. He further submitted that whole of due tax amount was deducted and it was paid to credit of Government in time. He also brought to my notice that quoting of deductee PANs in e-TDS statements has become 8 ITA No.851/Mum/2015 Nisarg Infra Projects Pvt. Ltd. mandatory from 1st Oct., 2007. According to learned counsel for assessee, to ensure better compliance in quoting of PAN in e- TDS statements, IT Department has mandated that statements with less than specified percentage of quoting of deductee PAN will not be accepted. press release about same has been issued by Ministry of Finance. Shri R.N. Shukla, learned counsel for assessee submitted that to incorporate above changes, new file validation utility (FVU) version 2.110 has been released. Shri R.N. Shukla, learned counsel for assessee further submitted that due to above- mentioned rules, it is not possible to file e-TDS return without availability of PAN because new FVU version 2.110 does not validate return until and unless 70 per cent of deductee records in statement for Form No. 26Q and 90 per cent for Form 24Q for all four quarters are structurally valid PAN. This threshold limit for PAN quoting has been further enhanced to 85 per cent for Form No. 24Q and 95 per cent for Form No. 26Q without which TDS return will not be accepted. Shri R.N. Shukla, learned counsel for assessee submitted that assessee had no alternative but to collect PAN of deductee by individually contacting them to comply statutory requirement because even 40 per cent PANs of deductees were not available with assessee. Collection of PAN from deductees was not organizational problem because assessee has no statutory power to collect PAN, except to request individual deductee to supply PAN. However, bank is authorized under r. 114B of IT Rules, 1962 to make time deposits by accepting declaration in Form No. 60 in those cases where PAN is not available. Shri R.N. Shukla, learned counsel for assessee further pointed out that knowing statutory requirement of PAN, assessee tried his best and contacted personally with deductees and after collecting PAN filed e-TDS statements in Form Nos. 24Q and 26Q. According to learned counsel for assessee, there was sufficient cause which prevented assessee from filing e- TDS return within limitation period. Even otherwise, default committed by assessee was technical and venial for which no penalty should have been imposed. Reliance was placed on decision of Hon ble Supreme Court in case of Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC). 4.1 There is no dispute that quarterly statements were filed, of course, late by certain days. There is also no dispute that tax was deducted and was paid to credit of Government in time. I find substance in above submissions of Shri R.N. Shukla, learned counsel for assessee that quarterly statements could not be filed for reasons which were beyond control of assessee. act of assessee cannot be said to be intentional or wilful and therefore, penalty should not have been imposed because assessee was prevented by sufficient cause. It is seen that non-filing of quarterly statements does not involve any revenue loss and is mere technical default. Even otherwise, in my opinion, there was only technical and venial breach of provisions contained in r. 31A of IT Rules, 1962 requiring assessee to submit quarterly statements of deduction of tax under sub-s. (3) of s. 200 of Act within time prescribed in said rule. In my opinion, assessee did not derive any benefit whatsoever by not filing quarterly TDS statements in time as amount of TDS was duly deposited in Government treasury within prescribed time. Such delay has not caused any 9 ITA No.851/Mum/2015 Nisarg Infra Projects Pvt. Ltd. loss to Revenue. Considering relevant facts of present case, default committed by assessee can be treated as technical default as tax was deducted as well as paid in time and even in connection with filing of quarterly statements, assessee has complied with, when default was brought to his notice. Thus, for technical default or venial breach of provisions of Act, no penalty under s. 272A(2)(k) of Act can be validly imposed. While holding so, I am fortified by decision of Hon ble Supreme Court in case of Hindustan Steel Ltd. vs. State of Orissa (supra), wherein Hon ble Supreme Court held as under : "An order imposing penalty for failure to carry out statutory obligation is result of quasi-criminal proceeding, and penalty will not ordinarily be imposed unless 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. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform statutory obligation is matter of discretion of authority to be exercised judicially and on consideration of all relevant circumstances. Even if minimum penalty is prescribed, authority competent to impose penalty will be justified in refusing to impose penalty, when there is technical or venial breach of provisions of Act or where breach flows from bona fide belief that offender is not liable to act in manner prescribed by statute." In view of above, I am of opinion that there was no justification in imposing penalty under s. 272A(2)(k) of Act on assessee and therefore, I cancel same. 5. In result, appeal is allowed. 3.3. Likewise, Cuttack Bench of Tribunal in case of Branch Manager, State Bank of India vs Addl. CIT (TDS)(2014) 62 SOT 119 (Cuttack); ITA No.186/Ctk/2013 held as under:- 1. This appeal has been filed by assessee for assessment year 2008-09 against order dated 18.12.2012 of ld CIT(A) on following grounds: "1. That ld CIT(A) Cuttack is not justified in confirming order of AO in facts and circumstances of case. 2. That ld CIT(A) should have considered written submission of appellant that it is purely technical nature and newly introduced Act for which appellant is not conversant. 3. That ld CIT(A) should have considered that there was reasonable cause of delay in furnishing statement in Form 26Q and there was no revenue loss to department at all. 10 ITA No.851/Mum/2015 Nisarg Infra Projects Pvt. Ltd. 4. That penalty levied is highly excessive and arbitrary being personal liability of appellant who would suffer without fault. For submission of Form 26Qnumber of details including PAN of customer etc, and persons like NSDL authorities/legal counsel required which is beyond control of appellant." 5. All above grounds are interconnected, therefore, disposed of by this appeal. 6. short facts of case are that Addl.CIT (TDS) found from database of department that quarterly e-TDS return for all four quarters of F.Y. 2008-09 have been filed on dates mentioned below: Financialyear Qtr/FormNo. Due date Date of filing Delay (in TDS (Rs) Penalty(Rs.) days) 2008-09 1st/26Q 15.7.08 10.11.10 848 8807 8807 -do- 2nd /26Q 15.10.08 10.11.10 756 13,946 13,946 -do- 3rd/26Q 15.1.09 10.11.10 664 80,297 66,400 -do- 4th/26Q 15.6.09 10.11.10 513 16,091 16,091 Total 2781 119,141 105,244 4. As prima facie, it was fit case for initiation of penalty proceedings, Addl. CIT (TDS) issued notice under section 274 to assessee- deductor on 30.9.2010. In reply to show cause notice that delay for cause of filing e-TDS is not intentional but due to unawareness of knowledge, non-availability of parties PAN numbers, pressure of banks accounting works, long absence of Branch Manager due to unhealthy condition. It was submitted that due to above, assessee did not file e- TDS return in time. Addl. CIT (TDS) referring to Section 272(2)(k) and Rule 31A, held that ground taken by assessee is not acceptable as same cannot be reason for non-fulfilling of statutory obligation. He, therefore, imposed penalty of Rs.1,05,244/- under section 272A(2)(k) of Act. 6. None appeared on behalf of assessee. However, adjournment application was filed. Since issue can be decided on merits, we proceed to dispose of appeal exparte after hearing ld D.R. and on basis of material available on record. 7. Ld D.R. submitted that there is delay of 848 days in first quarter, 756 days in second quarter, 664 days in third quarter and 513 days in 4th quarter of financial year 2008-09 in filing e-TDS return. penalty has been imposed as assessee has not shown any reasonable cause to explain delay. explanation given by assessee for non-filing of e-TDS return is not acceptable Therefore, there was no reasonable cause not to file e-TDS returns by assessee for more than 2781 days in all four quarters. He therefore, urged to upheld order of ld CIT(A). 8. Having heard ld D.R,. we have gone through orders of authorities below. We find from submission of assessee before ld CIT(A) that assessee has taken contention that TDS work is usually entrusted to staff or junior officer for expending submission of statement to Central Government through NSDL, (b) section 272A(2)(k) has been newly introduced w.e.f. 1.4.2005. Branch 11 ITA No.851/Mum/2015 Nisarg Infra Projects Pvt. Ltd. Manger was not known to these technical formalities. Thereafter, bank has engaged advocate for preparing statement, who found difficulty in completing details statement in absence of PAN of all customers where TDS was made and Form No.15G, 15H. Therefore, there was delay in filing statement to Income tax Department. 9. We have gone through penalty order, which states that in financial year 2008-09 in all four quarters, due date of 1st quarter was 15.7.2008, assessee has filed return on 10.11.2010, and there was delay of 848 days and TDS was Rs.8807/-. Therefore, same amount of penalty was imposed. In 2nd, 3rd and 4th quarter, there was delay about 756, 664 and 513 days, respectively and amount of TDS was Rs.,13,946, Rs.80,297 and Rs.16,091/- and same amount of penalty was imposed in all quarters. We find from order that assessee is nationalized bank and committed technical default by not filing e-TDS return in time. It is case of assessee that Section 272A(2)(k) has been introduced w.e.f. 1.4.2005 and assessee was completely ignorant about provisions of law. Moreover, this was technical in nature and DDO was not conversant with submission of statement with I.T.,Department after duly introduction of Section 272A(2)(k). Thus, there was delay in filing statement. When Bank Manager knew this technical flaw, he engaged advocate for expending statement to I.T. Authorities through NSDL. advocate who was engaged with job for preparing statement found difficult in completing details submission in absence of PAN of all customers at relevant time. Therefore, advocate has taken time to get this information. Moreover, there are frequent transfers of Branch Manager and other staff, for which, there was delay in submitting statement to I.T authorities. We find that as per section 273B no penalty is leviable on assessee for any failure if he proves that there was reasonable cause for said failure. We are of view that assessee had reasonable cause as narrated above for non-filing of return. 10. We find that Hon'ble apex Court in case of Hindustan Steel Ltd vs. State of Orissa, 83 ITR 26 held that penalty will not ordinarily be imposed unless party obliged either acteddeliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not be imposed because it is lawful to do so. Therefore, following decision of Hon'ble Supreme Court in case Hindustan Steel Ltd (supra), we are of view that assessee has reasonable cause for non-filing e-TDS return in time. We also find that this is technical breach of law and there is no loss to revenue. In view of this, in interest of justice and fair play and when assessee is nationalized bank, we are of view that lenient view should be taken. Therefore, we delete penalty of Rs.1,05,244/- imposed by AO and confirmed by ld CIT(A). 11. In result, appeal filed by assessee is allowed. 3.4. If totality of facts and aforementioned decisions are kept in juxtapositions then it is technical default by assessee for not filing e-TDS return in time. 12 ITA No.851/Mum/2015 Nisarg Infra Projects Pvt. Ltd. Hon'ble Apex Court in Hindustan Steel Ltd. vs State of Orissa 83 ITR 26 held that penalty will not ordinarily be imposed unless 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. Penalty will not be imposed because it is lawful to do so. ratio laid down in Royal Metal Printers Pvt. Ltd. vs Addl. CIT, order dated 29/01/2010 (2010) 37 SOT 139 (Mum. Trib.) also supports case of assessee. Since assessee duly deposited deducted tax in state exchequer, following decision from Hon'ble Apex Court in Hindustan Steel Ltd. (supra) I am of view that assessee had reasonable cause, therefore, in interest of justice, penalty is directed to be deleted. Finally, appeal of assessee is allowed. This order was pronounced in open in presence of ld. representative from both sides at conclusion of hearing on 08/09/2016. Sd/- (Joginder Singh) JUDICIAL MEMBER Mumbai; Dated : 03/10/2016 Copy of Order forwarded to : 1. Appellant 2. Respondent. 13 ITA No.851/Mum/2015 Nisarg Infra Projects Pvt. Ltd. 3. CIT, Mumbai. 4. CIT- Mumbai 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai Nisarg Infra Projects Pvt. Ltd. v. Addl. CIT(TDS), Range-1, Mumbai
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