No.- I .T.A. No.4659/Mum/2016, I .T.A. No.4660/Mum/2016, I .T.A. No.4661/Mum/2016

SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER

For The Assessee by : Shri M. Subramanian, AR
For The Revenue by : Shri Sunil Kumar Agarwal

ORDER

RAMIT KOCHAR, ACCOUNTANT MEMBER-These three appeals filed by the assessee are directed against three separate appellate orders all dated 4th April, 2016 passed by the learned Commissioner of Income Tax(Appeals)- 1, Thane, (Hereinafter called “the CIT (A)”) pertaining to the assessment year’s 2009-10 to 2011-12. Since identical issues are involved in all three appeals, these appeals were heard together and are disposed of by this common order for the sake of convenience and brevity.

2. First, we shall take up the appeal filed by the assessee in ITA No. 4659/Mum/2016 for assessment year 2009-10.The common grounds of appeal raised by the assessee in all these appeals (only difference in amount) in the memo of appeals filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the Tribunal”) read as under:-

“1. On the facts and in the circumstances of the case and in law, the penalty order passed u/s 272A(2)(k) levying a penalty of Rs. 2,89,551/- is invalid and bad in law.

2. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in dismissing the appeal and confirming the penalty levied of Rs. 2,89,551/- u/s 272A(2)(k) of the I.T. Act.

3. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in dismissing the appeal and confirming the penalty levied of Rs. 2,89,551/- u/s 272A(2)(k) of the IT. Act, and that too without giving full and proper opportunity of being heard in the matter.

4. On the facts and in the circumstances of the case and in law, the learned C.T.T. (A) erred in dismissing the appeal and confirming the penalty levied of Rs. 2,89,551/- u/s 272A(2)(k) of the I.T. Act and that too without appreciating the facts and the circumstances of the case fully and properly.”

3. This appeal in ITA no. 4659/Mum/2016 for assessment year 2009-10 is filed by the assessee before the tribunal against the appellate order dated 04-04-2016 passed by learned CIT(A) dismissing the assessee’s first appeal and appellate proceedings before the learned CIT(A) has arisen from the penalty order dated 02-07-2013 passed by the A.O. u/s 272A(2)(k) of the Income-tax Act, 1961 (hereinafter called “the Act”) . The A.O. observed that the assessee had delayed in filing of the quarterly TDS statements for financial year 2008-09 in form no 24Q and 26Q within the time prescribed u/s 200(3) of 1961 Act read with Rule 31A of Income-tax Rules, 1962, for the below mentioned quarters:-

As there was a delay in filing of the quarterly TDS statements beyond the time prescribed u/s 200(3) of 1961 Act read with Rule 31A of Income-tax Rules, 1962, the A.O. asked the assessee to explain as to why penalty u/s 272A(2)(k) of 1961 Act should not be imposed. The assessee, in reply, submitted that the PAN in respect of few deductee parties were not available which had prevented the assessee in filing of the quarterly TDS statements in time and there was a delay of 437 days to 772 days in filing of quarterly TDS statements as detailed above. The A.O. observed that the assessee has not filed any evidence to substantiate the contention of the assessee that PANs of deductees were not available and it is not substantiated that the efforts had been made by the assessee to obtain those PANs. It was observed by the AO that due to delay in filing of quarterly TDS statements by the assessee beyond time provided by statute has led to non-credit of tax at source to various deductees which has led to sufferings of these deductees. Thus, the A.O. rejected the contention of the assessee and levied penalty u/s 272A(2)(k) of the Act amounting to Rs. 2,89,551/- , vide orders dated 02-07-2013 passed by the AO u/s 272A(2)(k) of 1961 Act.

4. Aggrieved by the penalty order dated 02-07-2013 passed by the A.O. u/s 272A(2)(k) of 1961 Act, the assessee carried the matter in appeal before the ld. CIT(A) , wherein the assessee reiterated that the assessee had not received PAN of some of the deductees of TDS and also the director of the assessee company was diagnosed with cancer. It was submitted that the TDS amount deducted had been deposited with the Government and there was no loss to the Revenue, hence, the assessee prayed that the assessee had a reasonable cause for delay in filing of the quarterly TDS statements and penalty levied u/s 272A(2)(k) of 1961 Act may be deleted . In support, the assessee relied on the following case laws:-

1. Azadi Bachao Andolan v. Union of India (2001) 252 ITR 471 (Delhi)
2. Woodward Governors India (P) Ltd. v. CIT (2001) 253 ITR 745 (Delhi)
3. Kalakrithi v. ITO (2002) 253 ITR 754 (Mad.)

The ld. CIT(A) after considering the submissions of the assessee, provisions of Statute and rules observed that there was a substantial delay of 437 days to 772 days by the assessee in filing of the quarterly TDS statement for various quarters of financial year 2008-09 on the pretext that PAN of few deductees of TDS were not available which prevented the assessee from filing of the appeal in time against which the assessee has not filed any details of PANs of the said deductees which were not available with the assessee and what efforts were made by the assessee to obtain the PANs of said deductees. The other reason stated by the assessee was that the director of the assessee company was diagnosed with cancer for which also the assessee has not filed any details nor any supporting documents were filed by the assessee. The ld. CIT(A) , therefore, held that the A.O. had rightly imposed the penalty u/s 272A(2)(k) of the Act as deductees have to suffer a lot as they do not get credit of TDS till the time TDS statements are uploaded by the deductors . The learned CIT(A) thus confirmed the penalty of Rs. 2,89,551/- levied by the AO u/s 272A(2)(k) of 1961 Act for delay in filing of TDS statements in form no 24Q and 26Q for financial year 2008-09 by the assessee , vide appellate order dated 04-04-2016 passed by learned CIT(A).

5. Aggrieved by the appellate order dated 04-04-2016 passed by the ld. CIT(A), the assessee is in appeal before the tribunal.

6. The ld. counsel for the assessee reiterated the submissions what were made before the authorities below. He also relied upon the following case laws in support of his contention:-

1. ACIT v. Karrox Technologies P. Ltd. [2014] 36 ITR (Trib) 39 (Mum.)
2. SBI v. JCIT [2015] 68 SOT 370/56 taxmann.com 311
4. PNB v.JCIT (2016) 46 ITR(trib.) 8 Chandigarh

7. The ld. D.R. submitted that the assessee has not filed any evidences/ details of deductees of which the PANs were not available and what efforts the assessee made to obtain PAN of these deductees . The assessee has also cited other reasons which is stated that the director of the assessee company was diagnosed with cancer which prevented the assessee from filing the quarterly TDS statement in form no 24Q and 26Q in time with Revenue which were filed with the delay of 437 days to 772 days. He submitted that the A.O. was quite right in levying the penalty u/s 272A(2)(k) of the Act as due to this delay , the deductees of the TDS had suffered as they did not get credit of prepaid taxes by way of TDS in time.

8. We have considered rival contentions and also perused the material available on record including the relied upon case laws. We have observed that the assessee had delayed in filing of the quarterly TDS statement in form no 24Q and 26Q for financial year 2008-09 ranging from 437 days to 772 days, the details of which are as under:-

We have observed that the assessee had made the TDS payments to credit of Central Government but the assessee has not filed the quarterly TDS statements in form no 24Q/26Q for financial year 2008-09 in time with Revenue which has led to inconvenience caused to the deductees as they do not get the credit for tax deducted at source by the assessee in their cases till the time the TDS statements were uploaded by the deductors which also exposes them to punitive action by Revenue. This delay is also fatal as it increases the work load of Revenue as they have to work extra to grant credit to various deductees whom credit cannot be granted at the first go due to failure of the defaulting deductor in uploading quarterely statements in form no 24Q/26Q in time. This also lead to un-necessary litigations of various bonafide tax-payers on the one hand for no fault of theirs and Revenue on the other hand due to mismatches in TDS and non grant of credit of TDS to deductees by Revenue due to delay in uploading of quarterly TDS statements in form no 24Q/26Q by deductors of TDS. It could be seen from the above chart that the delay in filing quarterly TDS statements in form no 24Q/26Q for financial year 2008-09 by the assessee ranges from 437 days to 772 days which by all yardsticks is significant delay in filing of quarterly TDS statements . However, the assessee has come forward with the reasons that the said delay occur due to non availability of PANs in respect of few deductee parties but no details/evidences were filed by the assessee to substantiate the said contentions . It is also claimed that the director of the assessee was diagnosed with cancer , but again no details/evidences were furnished by the assessee to substantiate the said contention . The levying of the penalty u/s 272A(2)(k) of 1961 Act is not mandatory as perusal of Section 273B of 1961 will clearly reveal that the penalty u/s 272A(2)(k) will not be imposed if there was a reasonable cause for the failure. The assessee has relied on various case laws as cited above and has tried to explain a reasonable cause for the said failure so that its case gets covered by exempting provisions of Section 273B of 1961 to take it out of clutches of penalty provisions as contained u/s 272A(2)(k) of 1961 Act , but evidences were not filed by the assessee to substantiate the same. Thus, keeping in view facts and circumstances of the case and in the interest of justice, we are inclined to set aside and restore this matter back to the file of the A.O. for denovo determination of issue on merits in accordance with law keeping in view provisions of section 272A(2)(k) of the Act r.w.s. 273B of 1961 Act, after examination of the evidences filed by the assessee in its defense explaining reasonable cause in filing quarterly TDS statements in form no 24Q/26Q for financial year 2008-09 late beyond time stipulated by law. In case, the evidences filed by assessee in its are found to genuine and bonafide satisfying the mandate of Section 273B of 1961 Act, then no penalty shall be levied by the AO u/s 272A(2)(k) of 1961 Act. The assessee is directed to produce all necessary and relevant evidences before the A.O. to substantiate its claim to satisfy the mandate of section 272A(2)(k) of the Act r.w.s. 273B of 1961 Act and these evidences shall be admitted by the AO in the interest of justice. Needless to say that proper and adequate opportunity of being heard shall be provided by the A.O. to the assessee in accordance with the principles of natural justice in accordance with law. In-case the assessee does not come forward to substantiate its explanations with cogent evidences , the AO shall be free to proceed in accordance with law in set aside proceedings. We order accordingly.

9. In the result, appeal of the assessee in ITA No. 4659/Mum/2016 for assessment year 2009-10 is allowed for statistical purpose.

10. Our above decision in ITA No. 4659/Mum/2016 for assessment year 2009-10 shall apply mutatis mutandis to the assessee’s other appeals in ITA No. 4660/Mum/2016 for assessment year 2010-11 and ITA No. 4661/Mum/2016 for assessment year 2011-12 , wherein the facts are identical. We order accordingly.

11. In the result, both the appeals of the assessee in ITA No. 4660- 61/Mum/2016 for assessment years 2010-11 and 2011-12 are allowed for statistical purpose.

12. In the result, all the three appeals filed by the assessee in ITA No. 4659/Mum/2016 to 4661/Mum./2016 for assessment years 2009-10 to 2011-12 are allowed for statistical purposes.