INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH

ITA No.161/Chd/2015
Assessment Year :2012-13
Corporation Bank (Appellant) vs. JCIT (TDS)
Date of Order: 15-09-2015

ORDER

PER ANNAPURNA MEHROTRA, A.M

This appeal has been filed by the assessee against the order of Ld. CIT (Appeals)-2 Chandigarh, dt. 28/11/2014.

2. The only issue in the present appeal relates to levy of penalty of Rs. 19,100/- under section 272A(2)(k) of the Income Tax Act, 1961.

3. The brief facts of the case are that during the impugned year the assessee had failed to file the quarterly TDS return in Form No. 26Q for the second quarter by the due date and there was a delay of 191 days in filing the same. During penalty proceedings, in response to show cause notice, the assessee stated that no penalty under section 272A(2)(k) should be levied since the delay in filing return was on account of systems error and due to delay in filing of return by Chartered Accountant on account of mismatch in data files. It was further stated that the TDS had been deposited in time but due to aforestated reasons delay had occurred in filing Form No. 26Q for the second quarter. The AO found the reason for delay insufficient / unreasonable and therefore, levied penalty under section 272A(2)(k) amounting to Rs. 19,100/-.

4. Before the Ld. CIT(A) the assessee repeated the arguments made before the AO and stated that since TDS deducted had been duly deposited within the time limit no penalty ought to be levied. The assessee relied upon the judgment of the Hon’ble Apex Court in the case of M/s Hindustan Steel Ltd. Vs. State of Orissa [1972] 83 ITR 26 and the judgment of the jurisdictional High Court of Punjab & Haryana in the case of CIT vs. Executive Engineer [2010] 320 ITR 494 and various other judgments in support of its contention. The Ld. CIT(A) rejected the contention of the assessee and upheld the levy of penalty under section 272A(2)(k).

5. Aggrieved By the same the assessee filed the present appeal before us raising the following grounds of appeal:

1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the penalty of Rs. 19,100/- levied u/s 272A(2)(k) which is arbitrary and unjustified.

2. That the Ld. Commissioner of Income Tax (Appeals) has failed to consider the reasonable cause pleaded in the correct perspective which lead to the default and as such the upholding of the penalty is arbitrary and unjustified.

6. Before us the Ld. AR of the assessee argued that there was no case for levy of penalty u/s 272A(2)(k) because the assessee had a reasonable cause for not filing the return in time, being on account of systems error and technical fault. The Ld. AR stated that as per the provisions of Section 273 B no penalty was leviable in the event of there being a reasonable cause explaining the failure for which penalty was sought to be levied. Moreover the Ld.AR relied upon the judgment in the case of Sushma Tiwari Vs. Department of Income Tax in ITA No. 54/LKW/2011, Royal Metal Printers Pvt. Ltd. Vs. Addl. CIT(TDS) in ITA No 6840/Mum/2008, and The Collector Land Acquisition vs. Addl. CIT(TDS) in ITA Nos. 1226 to 1229/Chandi/2011 in support of his contention that for a technical and venial breach no penalty was leviable under section 272A(2)(k) .

7. The Ld. DR on the other hand relied on the order of Ld. CIT(A). 8. We have heard the rival submissions and also perused the material available on record.

9. We find that the assessee had explained to the authorities below the reason for the delay as being on account of systems error and delay in filing return by Chartered Accountant on account of data mismatch. All that the Ld. Joint Commissioner found was that the reason was insufficient / unreasonable. The explanation of the assessee was not controverted. Such uncontroverted explanation of the assessee constitutes reasonable cause within the meaning of Section 273B, which provides that no penalty shall be levied if reasonable cause for the failure is established by the assessee. Therefore the penalty could not be levied u/s 272A(2)(K) of the Act.

10. Moreover it is an admitted fact that the Tax deducted at source, to which the F.No. 26 Q pertained, was paid within the prescribed time. No loss as such has therefore been caused to the Revenue. In such circumstances, the delay in filing return is at best a technical or venial breach of law and no contumacious conduct can be attributed to the assessee.

11. The Hon’ble Supreme Court in the case of Hindustan Steel Ltd. (1972) 83 ITR 26 has held as under :

“ An order imposing penalty for failure to carry out a statutory obligation is the 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 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 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 the provisions of the Act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute. “ In view of the above, we are of the view that the ld. CIT(A) was fully justified in cancelling the penalty. We, therefore, uphold his order and dismiss the appeal.”

In view of the above discussion, it is clear that the delay in filing the return was supported by reasonable cause and in any case was only a technical and venial breach of the provisions of law. Under these circumstances we are of the considered opinion that no penalty can be validly levied and hence cancel the penalty levied of Rs. 19,100/- u/s 272A(2)(k) of the Act.

12. In the result appeal of the assessee is allowed.

Order pronounced in the Open Cour t on 15/09/2015

(H.L. KARWA)             (ANNAPURNA MEHROTRA)
VICE PRESIDENT       ACCOUNTANT MEMBER