Penalty for late filing TDS return us 272A(2)(k) quashed as accountant had changed during the year and assessee was not aware of the delay.
ABCAUS Case Law Citation:
1036 (2016) (10) ITAT
Brief Facts of the Case:
The Assessing Officer (AO) on the examination of records found that for the Assessment Year 2009-10, the assessee had not filed the quarterly TDS statement/returns in Form No. 26Q within the prescribed time as specified u/s 206/206C of the Income Tax Act, 1961 read with Rule 37 of the Income Tax Rules, 1962.
Accordingly, the AO issued show-cause notice and after hearing the assessee and not being satisfied, imposed penalty u/s 272A(2)(k). The assessee challenged the said order before the CIT(A) who dismissed the same.
Contention of the assessee before ITAT
The assessee submitted that during the relevant period, he had changed his Accountant and therefore was not aware whether the statement had been filed or not and due to this reason TDS statement could not be filed within the prescribed period, though the TDS had been deducted and paid in time.
Placing reliance on the law laid down by the Hon’ble Supreme Court in the case of Hindustan Steel Ltd. vs. State of Orissa the assessee submitted that the failure was not deliberately or in defiance of law but it was only a technical or venial breach.
Observations made by the Tribunal:
ITAT noted that as per Section 273B no penalty is imposable if he proves that there was reasonable cause for the said failure. Thus, as per the provisions of section 273B, unless the assessee was in a position to prove that there was a reasonable cause for the said failure, within the meaning of the said section, he was liable for penalty prescribed under law.
The Tribunal also noted the judgment of the Hon’ble Supreme Court in Hindustan Steel Ltd which is laid down as under:
“5….….. An order imposing penalty for failure to carry out a statutory obligation is the result of 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. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute…..”
The Tribunal opined that in view of the ratio laid down by the Hon’ble Supreme Court and in the light of the plea taken by the assessee that that the delay was due to the change of Accountant and thus there was reasonable cause for the failure to discharge the statutory obligation within the meaning of section 273B, the facts and circumstance of the case did not suggest that the failure was either deliberate or dishonest and there is substance in the contention of the assessee.
The order passed by the CIT(A) confirming penalty order was set aside and allowed the grounds of appeal.