The ITO,TDS-Ward-2,, Ahmedabad v. The Oriental Insurance Company Ltd.,, Ahmedabad

ITA 2906/AHD/2009 | 2007-2008
Pronouncement Date: 14-09-2011 | Result: Dismissed

Appeal Details

RSA Number 290620514 RSA 2009
Assessee PAN ULTOF2509D
Bench Ahmedabad
Appeal Number ITA 2906/AHD/2009
Duration Of Justice 1 year(s) 10 month(s) 22 day(s)
Appellant The ITO,TDS-Ward-2,, Ahmedabad
Respondent The Oriental Insurance Company Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 14-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 14-09-2011
Date Of Final Hearing 14-09-2011
Next Hearing Date 14-09-2011
Assessment Year 2007-2008
Appeal Filed On 23-10-2009
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH CAHMEDABAD BEFORE S/SHRI D. K. TYAGI J.M. AND A. K. GARODIA A.M. INCOME-TAX OFFICER TDS-2 AHMEDABAD. V/S . THE ORIENTAL INSURANCE COMPANY LTD. 3 RD FLOOR NAVJIVAN TRUST BUILDING ASHRAM ROAD B/H GUJARAT VIDYAPITH AHMEDABAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI VINOD TANWANI SR.DR RESPONDENT BY:- SHRI S. N. DIVETIA AR DATE OF HEARING -14/9/2011 DATE OF PRONOUNCEMENT -14/9/2011. O R D E R PER D. K. TYAGI JUDICIAL MEMBER. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 16/07/2009 WHEREIN THE FOLLOWING GROU ND HAS BEEN RAISED:- (1) THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS OF THE CASE IN DELETING THE PENALTY ORDER PASSED U/S 272A(2)(K) OF THE IT ACT OF RS.5 01 800/- FOR ASST. YEAR 2007-08 BY THE AO. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF GENERAL INSURANC E ETC. THE ITA NO.2906/AHD/2009 ASST. YEAR 2007-08 ITA NO.2906/AHD/2009 ASST. YEAR 2007-08 2 ADDL.CIT TDS RANGE AHMEDABAD ASCERTAINED FROM THE ASSESSEES RECORDS FOR THE FY 2006-07 THAT IT WAS REQUIRED TO FILE RETURNS IN FORM NO.24Q I.E. QUARTERLY STATEMENT OF DEDUCTION OF TAX AT SOURCE IN RESPECT OF SALARY AND THE STATEMENT OF DEDUCTION OF TAX IN RES PECT OF PAYMENTS OTHER THAN SALARY IN FORM NO.26Q UNDER THE PROVISIONS OF SECTION 200(3) OF THE ACT. THE AO FROM THE RECORDS ASCERTAINED THAT THERE WAS A DEFAULT OF 2509 DAYS IN RESPECT OF FORM NO.24Q AND 2509 DAYS IN RES PECT OF FORM NO.26Q. IN VIEW OF THIS SHE ISSUED A SHOW CAUSE NOT ICE TO THE ASSESSEE ASKING AS TO WHY PENALTY SHOULD NOT BE LEVIED ON IT FOR SUCH DEFAULT UNDER THE PROVISIONS OF SECTION 272A(2)(K). IN RESPONSE T HEREOF THE REPLY FILED BY THE ASSESSEE WAS FOUND TO BE UNSATISFACTORY BY T HE AO. SHE THEREFORE LEVIED THE PENALTY FOR THE AFORESAID DEFAULT @ RS.1 00/- PER DAY FOR THE DAYS OF DEFAULT NUMBERING 5018 DAYS (2509 + 2509). 3. THE ASSESSEE WENT IN APPEAL BEFORE FIRST APPELLA TE AUTHORITY WHEREIN THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE O BJECTED TO THE PENALTY SO IMPOSED BY THE AO AND SUBMITTED AS UNDER :- THE APPELLANT IS A PUBLIC SECTOR GENERAL INSURANCE COMPANY AND IS REQUIRED TO DEDUCT TAX AT SOURCE FOR PAYMENT OF SAL ARY AND COMMISSION. DURING THE YEAR THE PAYMENT OF TAX DEDUCTED AT SOUR CE WAS MADE TO THE GOVERNMENT TREASURY WHILE THERE WAS A DEFAULT IN FI LING THE FORM NO.24Q AND FORM NO.26Q FOR ALL THE QUARTERS. THE RETURNS O F ALL THE QUARTERS WERE FILED ON 2.09.2008 I.E. BEFORE THE ORDER IS PA SSED. BASED ON THE INFORMATION THE LD. ADDL. COMMISSIONER PROCEEDED TO LEVY THE PENALTY. IT APPEARS THE ORDER IS STEREOTYPE WITHOUT APPLICATION OF MIND. THE LD. ADDL. COMMISSIONERS PERCEPTION IS THAT ANY REASON HAS NOT BEEN GIVEN FOR THE DELAY IN FILING THE QUARTERLY RETURNS AND THEREFORE THE LD. ADDL. COMMISSIONER CAME TO CONCLUSION THAT THERE IS NO REASONABLE CAUSE AND THEREFORE PROCEEDED TO LEVY PENALTY OF RS.100 PER DAY THAT IS THE DELAY OF 5018 DAYS. PENALTY IS WORKED OUT TO RS.5 0 1 800/-. ITA NO.2906/AHD/2009 ASST. YEAR 2007-08 3 IT IS WELL KNOWN FACT THAT IF THE FIRST QUARTER RET URN IS DELAYED NATURALLY SUBSEQUENT RETURN WOULD BE DELAYED. THEREFORE THE DEFAULT OF FIRST QUARTER IS TO BE CONSIDERED IF AT ALL TO BE CONSIDE RED AND NOT CUMULATIVE DEFAULT. FROM THE CHART ENCLOSED YOUR HONOR WILL APPRECIATE THAT THERE IS NO LOSS TO THE GOVERNMENT TREASURY SINCE THE TDS HAS BEEN P AID WITH INTEREST WHEREVER THERE IS NOMINAL DELAY. IN SUPPORT OF HIS CONTENTIONS THE LD. AR PLACED REL IANCE ON THE FOLLOWING DECISIONS :- 1. CIT VS. ACCOUNTS OFFICER TELCOM 281 ITR 302 (ALLAHA BAD) 2. DR. PRANNOY ROY VS. CIT 254 ITR 755 (DEL) IT WAS ALSO POINTED OUT THAT HONBLE GUJARAT HIGH C OURT IN THE CASE OF HARSIDDH CONSTRUCTION (P) LTD. VS. CIT 244 ITR 417 HAS CONFIRMED THE DECISION OF HONBLE ITAT AHMEDABAD FOR DELETING TH E PENALTY LEVIED U/S 272A(2)(G) OF THE ACT IN THE SIMILAR CIRCUMSTANCES. IT WAS FURTHER CONTENDED THAT THE PROVISIONS OF SECTION 272A(2)(K) ARE SIMILAR TO THE PROVISIONS OF SEC.272(2)(G). 4. THE LD. CIT(A) DELETED THE PENALTY AFTER CONSIDE RATION OF THE FACTS AND SUBMISSIONS OF THE ASSESSEE AND DISCUSSING THE ISSUE IN DETAIL AS UNDER:- 4.4 I HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISSIONS OF THE LD. AR CAREFULLY. THERE IS NO DISPUTE ABOUT THE FACT TH AT THE APPELLANT HAS DEPOSITED MOST OF AMOUNT OF THE TAX DEDUCTED AT SOU RCE UNDER THE PROVISIONS OF THE ACT WITH THE GOVERNMENT WITHIN ST IPULATED TIME. HOWEVER WHERE THERE IS DELAY IN SUCH DEPOSITS SAM E HAS BEEN DEPOSITED WITH INTEREST. FURTHER THE TAX DEDUCTED AT SOURCE FOR THE RELEVANT PERIOD WAS DEPOSITED BY THE APPELLANT ALONG WITH CHARGEABL E INTEREST BEFORE THE ISSUE OF SHOW CAUSE NOTICE FOR THE PENALTY UNDER RE FERENCE. THE DEFAULT FOR WHICH PENALTY HAS BEEN LEVIED BY THE AO RELATES TO LATE SUBMISSION OF FORM NO.24Q AND 26Q OF THE IT RULES. IT IS SEEN THA T THE AO HAS LEVIED THE PENALTY IN A ROUTINE MANNER WITHOUT BRINGING TH E FACTS ON RECORD TO ITA NO.2906/AHD/2009 ASST. YEAR 2007-08 4 ESTABLISH THAT THE APPELLANT COMMITTED THE DEFAULT WITHOUT A REASONABLE CAUSE. 4.5 THE LD. AR HAS ON THE OTHER HAND POINTED OUT TH AT THE APPELLANT WAS UNDER THE BONAFIDE BELIEF THAT ONCE DEDUCTION O F TAX WAS MADE AND THE TAX WAS DEPOSITED WITH THE GOVERNMENT IT WAS N OT REQUIRED TO FILE THE FORM NOS.24Q AND 26Q IN QUARTERS OF THE RELEVANT PE RIOD IMMEDIATELY. FURTHER THERE WAS A DELAY IN SUBMITTING THE RETURNS OF FIRST QUARTER AND CONSEQUENTLY THE RETURNS OF OTHER QUARTERS GOT DELA YED. IN THE GIVEN CIRCUMSTANCES I DO AGREE WITH THE CONTENTIONS OF L D. AR THAT BELIEF SO ENTERTAINED BY THE APPELLANT CONSTITUTES A REASONAB LE CAUSE WITHIN THE MEANING OF SEC.273B OF THE ACT. SEC.273B OF THE ACT LAYS THAT THE PENALTY SHALL NOT BE IMPOSED IN RESPECT OF A DEFAULT RELATI NG TO THE PROVISIONS MENTIONED THEREIN IF THE PERSON OR THE ASSESSEE CON CERNED CAN SHOW THAT THERE WAS A REASONABLE CAUSE FOR DEFAULT IN QUESTIO N. SECTION 272A(2)(K) FALLS WITHIN THE AMBIT OF SEC.273B OF THE ACT. 4.6 HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA 83 ITR 27 HAS HELD THAT:- THAT IN ORDER TO IMPOSE PENALTY FOR FAILURE TO CAR RY OUT A STATUTORY OBLIGATION IS THE RESULT OF QUASI CRIMINAL PROCEEDINGS AND PENALTY WI LL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFI ANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DIS REGARD OF ITS OBLIGATION. THE SUPREME COURT HAS FURTHER LAID DOWN THAT PENALTY WI LL NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IM POSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY AND IS TO BE EXERCISED JUDICIOUSLY AND ON A CONSIDERATION OF ALL THE RELEV ANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED THE AUTHORITY COMPETE NT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF ACT OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY TH E STATUTE. 4.7 FURTHER HONBLE GUJARAT HIGH COURT IN THE CASE OF HARSIDDH CONSTRUCTION (P) LTD. VS. CIT 244 ITR 417 HAS HELD THAT : IN THE INSTANT CASE THE TAX DEDUCTED AT SOURCE UN DER THE PROVISIONS OF SECTION 194C OF THE INCOME-TAX ACT 1961 WAS DEPOSITED IN THE G OVERNMENT ACCOUNT WELL WITHIN THE PRESCRIBED TIME. THERE WAS NO LOSS OF REVENUE BUT O NLY A FAILURE TO FORWARD THE CERTIFICATE AND SINCE THE TRIBUNAL ARRIVED AT THE C ONCLUSION THAT IT WAS A BONA FIDE MISTAKE THE INFERENCE WAS BASED ON FACTS. THE TRIB UNAL WAS JUSTIFIED IN CANCELING THE PENALTY UNDER SECTION 272A(2)(G). NO QUESTION OF LA W AROSE FOR REFERENCE. ITA NO.2906/AHD/2009 ASST. YEAR 2007-08 5 4.8 THEREFORE IN VIEW OF THE AFORESAID LEGAL POSIT ION A CLEAR CUT VIEW EMERGES THAT THE LEVY OF PENALTY IS NOT MANDATORY I N VENIAL BREACH OF LAW. FURTHER THE APPELLANT HAS DEPOSITED THE REQUISITE TAX DEDUCTED AT SOURCE WITH INTEREST BEFORE THE INITIATION OF PROCEEDINGS FOR LEVY OF PENALTY UNDER REFERENCE. THERE WAS A REASONABLE CAUSE FOR THE APP ELLANT FOR DELAY IN FILING OF FORM NO.24Q AND 26Q. THEREFORE UNDER THE SE CIRCUMSTANCES THERE IS NO BASIS FOR LEVY OF PENALTY U/S 272A(2)(K ) AS LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF HARSIDDH CONSTRUCTION (P) LTD. VS. CIT 244 ITR 417. 4.9 THEREFORE KEEPING IN VIEW THE TOTALITY OF THE FACTS AND THE LEGAL POSITION AS DISCUSSED ABOVE THE PENALTY LEVIED BY THE AO IS HEREBY DELETED. AGAINST THIS ORDER OF THE LD. CIT(A) THE REVENUE HA S COME IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE IMPUGNED PENALTY. HE HAS GIVEN COGENT REASONS WHILE DELETING THE PENALTY. THERE IS NO DISPUTE ABOUT THE FACT THAT TH E APPELLANT HAS DEPOSITED MOST OF AMOUNT OF THE TAX DEDUCTED AT SOURCE UNDER THE PROVISIONS OF THE ACT WITH THE GOVERNMENT WITHIN STIPULATED TIME. HOW EVER WHERE THERE IS DELAY IN SUCH DEPOSITS SAME HAS BEEN DEPOSITED WIT H INTEREST. FURTHER THE TAX DEDUCTED AT SOURCE FOR THE RELEVANT PERIOD WAS DEPOSITED BY THE APPELLANT ALONG WITH CHARGEABLE INTEREST BEFORE THE ISSUE OF SHOW CAUSE NOTICE FOR THE PENALTY UNDER REFERENCE. THE DEFAULT FOR WHICH PENALTY HAS BEEN LEVIED BY THE AO RELATES TO LATE SUBMISSION OF FORM NO.24Q AND 26Q OF THE IT RULES. THE ASSESSEES BELIEF CONSTITU TES A REASONABLE CAUSE WITHIN THE MEANING OF SEC.273B OF THE ACT. SEC.273B OF THE ACT LAYS DOWN THAT THE PENALTY SHALL NOT BE IMPOSED IN RESPE CT OF A DEFAULT RELATING TO THE PROVISIONS MENTIONED THEREIN IF THE PERSON O R THE ASSESSEE CONCERNED CAN SHOW THAT THERE WAS A REASONABLE CAUS E FOR DEFAULT IN QUESTION. SECTION 272A(2)(K) FALLS WITHIN THE AMBIT OF SEC.273B OF THE ITA NO.2906/AHD/2009 ASST. YEAR 2007-08 6 ACT. IT IS OBSERVED THAT THE AO HAS LEVIED THE PENA LTY IN A ROUTINE MANNER WITHOUT BRINGING THE FACTS ON RECORD TO ESTABLISH T HAT THE APPELLANT COMMITTED THE DEFAULT WITHOUT A REASONABLE CAUSE . THE LD. CIT(A) HAS RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (SUPRA) AND HONBLE GUJARAT HIGH COURT IN THE CASE OF HARSIDDH CONSTRUCTION (P) LTD. VS. CIT WHICH ARE SQUARELY APPLICABLE TO THE FACTS OF ASSESSEES CASE. WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) AND UPHOLD THE SAME. THE GROUND RAISED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 14/09/2011. SD/- SD/- (A. K. GARODIA) (D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD DATED : 14/09/2011 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD ITA NO.2906/AHD/2009 ASST. YEAR 2007-08 7 1.DATE OF DICTATION 14/9/11. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 15/9/11. /OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..