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INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD

ITA No. 2733/Ahd/2015; Assessment Year: 2011-12
Kiri Industries Ltd. (Appellant) vs. Addl. CIT (TDS) (Respondent)
Date of Order: 01-01-2016

ORDER

This appeal has been filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-8, Ahmedabad, dated 21.07.2015 for Assessment Yeas 2011-12.

2. In this appeal, the assessee has raised following grounds:-

1. The ld. CIT(A) has erred in law and on the facts of the case in confirming the action of ld. AO in levying penalty of Rs.54,200/- u/s 272A(2)(k) of the Act.

2. The learned CIT(A) has erred in law and on the facts of the case in confirming the action of learned AO in levying penalty without appreciating the fact that delay was caused in filing TDS statement due to acute shortage of funds coupled with inadequate staff and facilities.

3. . The learned CIT(A) ought to have appreciated that the case of appellant falls within the ambit of Section 273B.

4. The learned CIT(A) ought to have appreciated that the appellant has already compensated the appellant for such delay by depositing TDS along with interest for such delayed period.

5. Both the lower authorities have passed the orders without properly appreciating the fact and that they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and principles of natural justice and therefore deserves to be quashed.

3. At the time of hearing before me, the ld. Authorized Representative for the assessee pointed out that similar issue arose before the Tribunal in the case of GTPL Infonet Pvt Ltd vs. ACIT in ITA Nos.2582 & 2583/Ahd/2015 for AY 2011-12 & 2012-13, wherein the Tribunal has decided the similar issue on similar facts in favour of the assessee, by observing as under:-

“7. We have heard the rival submissions and perused the material on record. We find that the assessee had fully deposited the amount of TDS along with interest prior to the issuance of the show cause notice and the reason for late payment of taxes was financial crunch in the business of the assessee which in our view constitute a reasonable cause for late filing the quarterly statements in Form Nos. 24Q & 26Q as this statement can only be filed after the payments of taxes. Since, full amount of TDS along with interest has been paid by the assessee and therefore, no loss is caused to the Revenue and the late filing of quarterly statement is technical and venial breach of provision of the Act. In case of the Oriental Insurance Co. Ltd. (supra), it has been held as under:

“5. We have heard the rival parties and perused the material on record. In our considered view the ld. CIT(A) was justified in deleting the impugned penalty. He has given cogent reasons while deleting the penalty. There is no dispute about the fact that the appellant has deposited most of amount of the tax deducted at source under the provisions of the Act with the Government within stipulated time. However, where there is delay in such deposits, same has been deposited with interest. Further, the tax deducted at source for the relevant period was deposited by the appellant along with chargeable interest before the issue of show cause notice for the penalty under reference. The default for which penalty has been levied by the AO relates to late submission of Form No.24Q and 26Q of the IT Rules. The assessee's belief constitutes a reasonable cause within the meaning of sec.273B of the Act. Sec.273B of the Act lays down that the penalty shall not be imposed in respect of a default relating to the provisions mentioned therein if the person or the assessee concerned can show that there was a reasonable cause for default in question. Section 272A(2)(k) falls within the ambit of sec.273B of the Act. It is observed that the AO has levied the penalty in a routine manner without bringing the facts on record to establish that the appellant committed the default without a reasonable cause. The ld. CIT(A) has relied on the decision of Hon'ble Supreme Court in the case of Hindustan Steel Ltd. vs. State of Orissa (supra) and Hon'ble Gujarat High Court in the case of Harsiddh Construction (P) Ltd. vs. CIT which are squarely applicable to the facts of assessee's case. We find no infirmity in the order of ld. CIT(A) and uphold the same. The ground raised by the Revenue is dismissed.”

In case of CIT(A) Eli Lilly And Co. (India) P. Ltd. (supra), it has been held as under:

“S.273B provides that in case reasonable cause is shown, penalty u/s 272A(2) must not be levied. Appellant couldn't file TDS returns in time since TDS was deposited late on account of acute shortage of funds. Since the same is a reasonable cause, penalty cannot be levied.”

In case of CIT vs. Harsiddh Construction Pvt. Ltd.(supra), it has been held as under:

“Further, appellant has deposited TDS along with interest. Thus, it has compensated Govt. for late payment of TDS ensuring no loss to the revenue. In case there is no loss to the revenue, then penalty u/s 272A(2) cannot be levied.”

In case of Hindustan Steel Ltd. vs. State of Orisa (supra), it has been held as under:

“In any case, late filing of TDS returns is merely a technical or venial breach which doesn't warrant levy of penalty u/s 272A(k)”.

In view of above facts, we are of the view that there was a reasonable cause for not filing the quarterly statement in time within the meaning of 273B of the Act, we, therefore, delete the penalty by allowing the appeals of the assessee.”

4. Nothing contrary was brought to our knowledge on behalf of the Revenue. Facts being similar, so following the same reasoning I am not inclined to concur with the findings of the ld. CIT(A); therefore, respectfully following the decision of Coordinate Bench in the case of GTPL Infonet Pvt Ltd (supra), I allow this appeal filed by the assessee and delete the penalty of Rs.54,200/- levied by the Assessing Officer u/s 272A(2)(k) of the Act.

5. In the result, the appeal filed by the assessee is allowed.

Order pronounced in the Court on 1st January, 2016 at Ahmedabad.

(SHAILENDRA KUMAR YADAV)
JUDICIAL MEMBER

Related Judgment:
Penalty u/s 221 for delay in deposit of TDS due to genuine cash crunch deleted Click Here >>

Penalty u/s 272A(2)(k) deleted for delay in filing TDS returns due to shortage of funds and TDS deposited with interest being reasonable cause u/s 273B | 04-01-2016 |

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