TDS return filing not require directors personal time-Penalty for Late filing confirmed. Timely filing could have been done by hiring professional services – ITAT
ABCAUS Case Law Citation:
ABCAUS 1198 (2017) (04) ITAT
The appellant assessee was aggrieved by the order of the CIT(A) in confirming the action of the Assessing Officer (AO) of levy of penalty u/s 272A(2)(k) of the Income Tax Act, 1961 (‘the Act’) for late filing of quarterly TDS return.
Assessment Year : 2008-09 to 2010-11
Date/Month of Pronouncement: March, 2017
Brief Facts of the Case:
The Assessing Officer (AO) noted that the assessee company had not filed its quarterly statement for tax deducted at source (TDS) in prescribed Form Number 26Q within the time specified u/s 206/206C of the Act read with Rule 37 of the Income Tax Rules, 1962 (‘the Rules’) for three Assessment Years.
The AO issued a show cause notice to the assessee company asking it to explain as to why penalty u/s 272A(2)(k) should not be levied. In response to the notice, the assessee filed a letter enclosing copies of TDS returns. The AO observed that the assessee was under statutory obligation to file quarterly returns but the assessee had failed to comply with the provisions of the act as there was delay in filing the returns. The AO, therefore, imposed penalty of Rs. 63,344/-, 46,608/- and Rs. 25,500/-for the AYs 2008-09, 2009-10 and 2010-11 respectively.
Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA). Before CIT(Appeals) a written submissions was filed stating that child of the director of the assessee company was mentally retarded and the director could not able to attend office work to the extent it was required to, that the business of company had also suffered for that reason. However, the submission of the assessee did not find favour with the FAA who held that liability of the assessee was absolute and nobody could avoid the responsibility of deposit of tax so directed and file return on time.
CIT (A) referring to the provisions of section 199, 194, 200(3) and 272 of the Act held that the assessee company had to manage its affairs in such a manner that statutory compliances were complied with as provided in the Act and there was no reasonable cause for delay in filing the TDS returns. Thus CIT(A) upheld the penalty levied by the AO.
Contentions of the Appellant Assessee:
It was contended that there was reasonable cause for filing the TDS returns late as the son of the director was a special child, that the assessee could not devote sufficient time towards the business, that the business had virtually closed.
Observations made by the Tribunal:
The ITAT observed that the AO had levied the penalty for late filing of TDS returns. The dealy in issue were noted as under:
|Quarterly Return/Assessment Year||Delay in days|
|2nd quarterly return/AY 2008-09||402|
|4th quarterly return/AY 2008-09||295|
|2nd quarterly return/AY 2009-10||97|
|3rd quarterly return/AY 2009-10||187|
|4th quarterly return/AY 2009-10||36|
|2nd quarterly return/AY 2010-11||84|
|3rd quarterly return/AY 2010-11||161|
|4th quarterly return/AY 2010-11||10|
The ITAT observed that, out of the twelve returns the assessee had filed four returns in time which showed that the assessee company was aware of the provisions of the Act.
With respect to the reasonableness of the reason given by the assessee company for not filing the returns in time, the ITAT observed that being a corporate entity it was duty of the assessee to comply with the legal requirements. If the director of the assessee company was pre-occupied with his child, it could have been more careful about the limitations of the director. It should have taken care of the fact that director may not be available regularly.
The Tribunal observed that by hiring professional services, the assessee could have easily handled the situation as the only thing required to be done was filing of a return only. Filing a return of TDS was not a job that required higher technical qualification or personal attention of the director.
It was held that the assessee had not shown a reasonable cause for filing TDS returns belatedly. The order of CIT(A) was upheld.