D.T. Garasia, Judicial Member - These appeals by the different assessees are directed against the separate orders of ld. CIT (A)-1, Bhubaneswar, each dated 26/03/2014 for the A.Ys. 2008-09 to 2011-12. Since the common issue involved in all these appeals and the appeals were heard together, so these are being disposed of by this consolidated order.
2. For the sake of convenience, facts are taken from I.T.A. No. 236/CTK/2014. The following grounds are raised by the assessee :
"(1) |
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Because that the Ld. CIT(A-1) erred in law as well as in fact by confirming the penalty imposed u/s. 272A(2)(k) not appreciating the fact that the TDS returns are filed after the TDS is deposited. |
(2) |
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Because that the Ld. CIT(A-1) erred in law as well as in fact by confirming the penalty imposed u/s. 272A(2)(k) which is unjust, arbitrary, excessive and not in accordance with the law. |
(3) |
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The appellant may add, alter, delete or amend any of the grounds at the time of hearing of the matter." |
3. Short facts of the case are that the assessee has filed the quarterly e-TDS statements in Form Nos. 24Q & 26A for difference quarters for the F.Y. 2007-08. The said e-TDS statements were filed much later than the due dates for which proceedings u/s. 272A(2)(k) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act', for short) were initiated. The assessee contended that the TDS returns could not be filed in time because the TDS was not deposited in time due to non-availability of funds. The said explanation was not found reasonable by the Assessing Officer, therefore he imposed the penalty which is as under :—
Form Type |
Quarter |
Due date |
Date of filing |
Delay in days |
Amount of TDS Involved |
Amount of Penalty |
24Q |
1st |
15.7.2007 |
20.1.2012 |
1650 |
0 |
0 |
24Q |
2nd |
15.10.2007 |
-do- |
1558 |
0 |
0 |
24Q |
3rd |
15.1.2008 |
-do- |
1466 |
0 |
0 |
24Q |
4th |
15.6.2008 |
7.1.2012 |
1301 |
34,029 |
34,029 |
26Q |
1st |
15.7.2007 |
20.1.2012 |
1650 |
0 |
0 |
26Q |
2nd |
15.10.2007 |
7.1.2012 |
1545 |
1,90,314 |
1,54,500 |
26Q |
3rd |
15.1.2008 |
20.1.2012 |
1466 |
0 |
0 |
26Q |
4th |
15.6.2008 |
-do- |
1314 |
0 |
0 |
Grand Total |
11950 |
2,24,343 |
1,88,529 |
4. Matter carried to the Ld. CIT(A) and Ld. CIT(A) has dismissed the appeal.
5. Learned AR submitted that the assessee-company is a loss making company since its inception and has not earned cash profit till the F.Y. 2012-13. Since the assessee-company is incurring losses, the company is dependent on its sister concerns for daily cash requirements. From 01/04/2008 to 31/03/2010, it was necessary to mention 95% of PAN of the deductees in case of salary and 85% in case of non-salary deductees. After deposit of TDS the company had made all possible efforts to obtain the required number of PANs from the deductees. The assessee failed to obtain the PANs as required to be filled up in the TDS returns as many of employees had left and many contractors/professionals had stopped working for the company the TDS returns could not be filed in time. Learned AR relied upon the order of the Mumbai Tribunal in the case of Porwal Creative Version (P.) Ltd. v. Addl. CIT (TDS) [2012] 50 SOT 148 (URO)/[2011] 10 taxmann.com 222 . Learned AR submitted that the Tribunal has deleted the penalty on the ground that if the assessee fails to deduct the tax at source and after deducting fails to pay the same to the Central Government due to financial hitches, penalty cannot be levied, therefore it may be deleted.
6. Learned DR relied upon the orders of the revenue authorities.
7. We have heard rival contentions of both the parties. Looking to the facts and circumstances of the case, we find that the Assessing Officer imposed the penalty u/s. 272A(2)(k) of the Act in respect of A.Ys. 2008-09, 2009-10, 2010-11 & 2011-12. Penalty has been levied for not submitting the quarterly returns for tax deducted at source within the prescribed time limit. Sec. 206 relates to collection of tax and not TDS, whereas sec. 133 related to other provisions and not TDS. Since clause (k), which requires a person to deliver or cause to be delivered copy of the statement within time specified u/s. 200(3) of the Act. Under the provisions of sec 200(3) of the Act r.w.r. 31A, a person deducting tax at sources is required to prepare a statement in the prescribed form and deliver the same to the prescribed Income-tax authority after paying the tax deducted to the credit of the Central Government. Section 200(3) reads as under :—
"200(3) Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter or, as the case may be, any person being an employer referred to in sub-section (1A) of section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time, [prepare such statements for such period as may be prescribed] and deliver or cause to be delivered to the prescribed income-tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed:]"
8. Thus, under the provisions of sec. 200(3) r.w.r. 31A, a quarterly statement of TDS in Form No. 26Q is required to be filed by the assessee by 15th July, 15th Oct., 15th January & 15th June (last quarter of the year. In all these cases, there was delay as indicated by Assessing Officer in his table, which was reproduced in this order. The penalty has therefore been levied @ 100/- per day of default is staring from the due date to the date of filing the quarterly return. The case of the assessee is that it had deducted the TDS at the time of crediting amounts in the books of accounts and the payment could not be made due to financial difficulties and since the payments had not been made the TDS returns could not be filed as the same required date relating to payment of TDS. Sec. 272A(2)(k) of the Act can be levied only from the date of payment of tax as the statement u/s. 200(3) of the Act is required to be filed only after payment of tax to the Central Government. The assessee therefore can file the return only after paying the tax to the Central Government. The quarterly returns of TDS require filing of date relating to payment of taxes and therefore such returns could be filed only after paying the tax to the Central Government. Therefore penalty has to be levied for delay only from the date of paying the tax to the Central Government.
9. As regards the default in not paying the tax to the Central Government in time or for non deducting the tax at source, there are other provisions for ensuring compliance. In case the assessee fails to deduct the tax at source or after deducting fails to pay the same to the Central Government the assessee is deemed to be in default under section 201(1) and is liable for penalty. The assessee is also liable to pay interest for the period of default till the payment of tax under section 201(1A). Therefore in our view the period for levying the penalty has to be counted from the date of payment of tax because the delay in filing the return till the date of payment of tax is already explained on the ground that the assessee could not pay the taxes for which separate penal provisions exist. The assessee has also explained the reasons for not paying the tax to the Central Government in time which was because of financial difficulties. The assessee has filed the copies of P & L account and balance sheet to substantiate the claim that it was incurring losses and there were substantial liabilities on account of creditors. The assessee has placed reliance on the decision of Mumbai Tribunal in which financial hitches have been accepted as reasonable cause for default in payment of tax. Once the delay in payment of tax is explained satisfactorily, penalty u/s. 272A(2)(k) of the Act cannot be levied for the period till payment of tax. Hence, we modify the order of the Assessing Officer. The Assessing Officer is directed to levy the penalty u/s. 272A(2)(k) of the Act only for the delay in payment of tax by the assessee. The order of Ld. CIT(A) is modified accordingly.
10. In the remaining appeals i.e. I.T.A. No. 237/CTK/2014, 238/CTK/2014, I.T.A. No. 239/CTK/2014, I.T.A. No. 267/CTK/2014, I.T.A. No. 268/CTK/2014 & I.T.A. No. 269/CTK/2014, the facts are identical and even the contention of both the parties was the same, therefore, our findings given in former part of this order in respect of I.T.A. No. 236/CTK/2014 shall apply mutatis mutandis for those appeals.
11. In the result, appeals of the assessee are partly allowed in terms of the order above.