Central Scientific Instruments Organization, Chandigarh v. Commissioner Of Income Tax (Tds), Chandigarh And Another

ITA No. 421 of 2015 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 421 of 2015 (O&M) Date of Decision: 8.2.2016 Central Scientific Instruments Organization, Chandigarh ....Appellant. Versus Commissioner of Income Tax (TDS), Chandigarh and another ...Respondents. 1.Whether the Reporters of the local papers may be allowed to see the judgment?the judgment? 2.To be referred to the Reporters or not? YES 3.Whether the judgment should be reported in the Digest? CORAM:-HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MRS. JUSTICE RAJ RAHUL GARG. PRESENT: Mr. M.R. Sharma, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1.This order shall dispose of a bunch of three appeals bearingITA Nos. 421, 423 and 424 of 2015 as according to learned counsel forthe appellant, the issue involved is identical. For brevity, the facts arebeing extracted from ITA No. 421 of 2015. 2.ITA No. 421 of 2015 has been preferred by the assesseeunder Section 260A of the Income Tax Act, 1961 (in short “the Act”)against the order dated 30.4.2015 (Annexure A-3) passed by the IncomeTax Appellate Tribunal, Chandigarh Bench “A”, Chandigarh (hereinafter ITA No. 421 of 2015-2- referred to as “the Tribunal”) in ITA No. 54/Chandi/2015, for theassessment year 2009-10, claiming the following substantial questionsof law:- i)Whether in the facts and in the circumstancesof the case, the orders (Annexure A-1),(Annexure A-2) and (Annexure A-3) are legallysustainable?of the case, the orders (Annexure A-1),(Annexure A-2) and (Annexure A-3) are legallysustainable? ii)Whether on the facts and in the circumstancesof the case the ITAT is legally justified in law inupholding the order imposing penalty of` 4,84,945/- u/s 272A(2)(k) of the Income TaxAct for the assessment year 2009-10 fortechnical default in filing returns late on the partof the appellant more so when the tax has beendeducted, after deduction has been depositedin Government account in time and the requisiteforms have been issued to the deductee as perthe provisions of the Act? 3.Briefly stated, the facts necessary for adjudication of theinstant appeal as narrated therein may be noticed. The assessee filedits return of Tax Deducted at Source (TDS) on 10.5.2013 in Form No.26Q for the quarters ending on 30.6.2008, 30.9.2008 and 31.12.2008.The return for the 4[th] quarter ended on 31.3.2009 was filed on 13.5.2013.It had deducted TDS from the payments made under Section 194C ofthe Act amounting to ` 1,46,068/-, ` 35,377/- ` 1,90,192/- and `1,89,251/- in the 1[st], 2[nd], 3[rd] and 4[th] quarter respectively. The amount sodeducted was deposited by the appellant with the Government well in time and there was no default either under Section 201 or Section 201(1A) of the Act. The Joint Commissioner of Income Tax (TDS) issued ashow cause notice dated 24.9.2013 to the appellant for levy of penaltyunder Section 272A(2)(k) read with Section 274 of the Act. Theappellant filed reply dated 7.10.2013 to the said show cause notice.Respondent No.2 vide order dated 21.10.2013 (Annexure A-1) leviedpenalty of ` 4,84,945/-. Feeling aggrieved, the appellant filed an appealbefore the Commissioner of Income Tax (Appeals) [for brevity “the CIT(A)”] who vide order dated 31.10.2014 (Annexure A-2) affirmed thepenalty order and dismissed the appeal. Being dissatisfied, theappellant filed an appeal before the Tribunal. The Tribunal vide orderdated 30.4.2015 (Annexure A-4) upheld the order of the CIT(A) anddismissed the appeal. Hence, the instant appeals. 4.Learned counsel for the appellant submitted that the penaltyof ` 4,84,945/- levied under Section 272A(2)(k) of the Act wasunwarranted. Section 200(3) of the Act and Rule 31A of the Income TaxRules, 1962 (in short “the Rules”) were referred to by the learnedcounsel. It was also urged that there was reasonable cause within themeaning of Section 273B of the Act on the basis of which there wasjustification for delay in filing the TDS returns. Moreover, the TDS wasdeposited within time and, therefore, there was no loss of revenue.Relying upon the judgments of this Court in Commissioner of IncomeTax (TDS) v. Executive Engineer, (2010) 320 ITR 494 (P&H); HMTLtd., Tractors Division v. Commissioner of Income Tax (2005) 274ITR 544 (P&H); Rajasthan High Court in Commissioner of Income-Taxv. Deputy Housing Commissioner, Rajasthan Housing Board (2004)265 ITR 686 (Raj.) and Allahabad High Court in Commissioner of ITA No. 421 of 2015 Income Tax v. Accounts Officer, Telecom (2006) 281 ITR 302 (All), itwas urged that no penalty under Section 272A(k) of the Act was exigible.5.After hearing learned counsel for the appellant, we find no merit in the appeals. 6.It would be expedient to refer to Section 200(3) of the Actwhich read thus:- “Section 200(3) Any person deducting any sum on or after the 1[st] dayof April, 2005 in accordance with the forgoingprovisions of this Chapter or, as the case may be, anyperson being an employer referred to in sub-section(1A) of Section 192 shall, after paying the taxdeducted to the credit of the Central Governmentwithin the prescribed time, prepare such statementsfor such period as may be prescribed and deliver orcause to be delivered to the prescribed income taxauthority or the person authorized by such authoritysuch statement in such form and verified in suchmanner and setting forth such particulars and withinsuch time as may be prescribed.” Section 200 incorporated in Chapter XVII of the Act dealswith collection and recovery of tax and provides for various casesrelating to deduction of tax at source. Sub-section (3) of Section 200 ofthe Act was inserted by Finance (No.2) Act, 2004 with effect from1.4.2005. It provides for filing of the statements as prescribedthereunder after deduction of the TDS. 7.Rule 31(2) of the Rules, which is relevant for the decision of ITA No. 421 of 2015 the controversy raised in the appeal, is in the following terms:- “Rule 31A(2) Statements referred to in sub-rule (1) for the quarterof the financial year ending with the date specified incolumn (2) of the Table below shall be furnished bythe due date specified in the corresponding entry incolumn (3) of the said Table:- 1.Date of ending of the quarter - 30[th] June – Duedate of the financial year - 15[th] July of thefinancial year.date of the financial year - 15[th] July of thefinancial year. 2.Date of ending of the quarter - 30[th] September –Due date of the financial year - 15[th] October ofthe financial year.Due date of the financial year - 15[th] October ofthe financial year. 3.Date of ending of the quarter - 31[st] December – Due date of the financial year - 15[th] January ofthe financial year.the financial year. 4.Date of ending of the quarter - 31[st] March – Duedate of the financial year - 15[th] May of thefinancial year immediately following the financialyear in which deduction is made.”date of the financial year - 15[th] May of thefinancial year immediately following the financialyear in which deduction is made.” Thus, TDS returns have to be filed in Form No.26Q by thedue dates mentioned in the aforesaid rule. 2.Date of ending of the quarter - 30[th] September –Due date of the financial year - 15[th] October ofthe financial year.Due date of the financial year - 15[th] October ofthe financial year. 3.Date of ending of the quarter - 31[st] December – Due date of the financial year - 15[th] January ofthe financial year.the financial year. 4.Date of ending of the quarter - 31[st] March – Duedate of the financial year - 15[th] May of thefinancial year immediately following the financialyear in which deduction is made.”date of the financial year - 15[th] May of thefinancial year immediately following the financialyear in which deduction is made.” Thus, TDS returns have to be filed in Form No.26Q by thedue dates mentioned in the aforesaid rule. 8.The controversy herein relates to levy of penalty underSection 272A(2)(k) of the Act. According to the aforesaid provision,penalty is imposable if any person fails to deliver or cause to bedelivered a copy of the statement under sub-section (3) of Section 200within the specified time. The quantum of penalty thereunder is a sum of ITA No. 421 of 2015 one hundred rupees for every day default till the date of filing the TDSreturn but the same would be limited to the amount of tax deductible orcollectable as the case may be. It is in following terms:- “272A(2). If any persons fails- (a) to (j)XXXXXXXX (k)to deliver or cause to be delivered a copy of thestatement within the time specified in sub-section (3)of Section 200 or the proviso to sub-section (3) ofSection 206C; (l) & (m)XXXXXXXX.” 9.Having noticed the relevant statutory provisions, we proceedto examine the contention relating to concept of 'no loss of revenue' forexigibility of penalty, as urged by the learned counsel for the appellant.Section 200(3) of the Act read with Rule 31A(2) of the Rules enjoinsupon any person deducting tax at source to file statements of deductionof tax at source within the prescribed period specified thereunder. In ouropinion, the penal provisions contained in Section 272A(2)(k) of the Acthas been inserted for the purpose of compliance of filing of TDS returnsin time in Form No. 26Q by due dates mentioned in Rule 31A(2) of theRules so that the information is available with the department for utilizingby way of cross checking for proper assessment of tax in the case of thepersons from whom income tax has been deducted at source and it hasnothing to do with the loss of revenue. In case it is interpreted in anyother manner, it would render the provision redundant. Similarcontention of theory of 'no loss of revenue' raised before the CIT(A) wasrepelled with the following observations:- “A plain reading of the provision clearly shows “A plain reading of the provision clearly shows that the question of direct loss of revenue can neveroccur if the specified statement is not filed within thestipulated time. The legislature has to be attributedthat much intelligence that the penalty for delay insubmission of the statement was provided even whenthere could have been no loss of revenue under anycircumstances. Therefore, in such a situation to pleadthat since there is no loss to revenue, no penaltyshould be imposed would go not only against theintention of the legislature but would render the clearprovisions of law otiose. It has to be borne in mindthat the State compels the subjects to obey its laws atthe pain of penalty for its violation. Every violation oflaw does not necessarily entail loss to the exchequerbut still there are penal provisions to enforce the legalobligations. If there are no penal consequences fordefault, the question arises as to how else the law isto be enforced. It may also be mentioned that theinformation contained in TDS statements is utilized bythe department in ensuring proper assessment of taxin the case of the persons from whose income, taxhas been deducted at source. Hence, while non-fillingof statement by the deductor may not entail a loss torevenue in deductor's case, it may result in loss ofrevenue in the case of deductees and so thecontention of the Ld. Counsel that in the absence ofloss to revenue, the penalty imposed has to be cancelled is rejected.” On appeal, the Tribunal had approved the said observationsand the conclusion. Further, the Tribunal had recorded by way ofexample that grievance letter had also been received from one ShriAshok Gulati by the department intimating that the assessee haddeducted tax at source but it was not reflected in the 26AS statement.Thus, it shows that various persons would stand to suffer on whosebehalf taxes have been deducted for not getting benefit of those taxesfor no fault of their due to non-filing of statements on time. Therefore,the law enunciated in Hindustan Steel Ltd. v. State of Orissa (1972)83 ITR 26 (SC) has no applicability to the present case. 10.The appellant had filed the TDS returns late as per the details given below:- ITA No. 421 of 2015 benefit under Section 273B of the Act could not be given. 12.Moreover, the authorities below had noticed that theappellant was supposed to mandatorily file TDS returns within theprescribed time as provided under Rule 31A(2) of the Rules. Since theappellant had failed to do so, it had rightly been treated to be in defaultfor not filing the TDS returns within the prescribed period. Further, it hadalso been recorded that the penalties under Section 272A(2)(k) of theAct have rightly been imposed upon the appellant in all the threefinancial years. The assessee had failed to explain that there was anyreasonable cause or failure to comply with the provisions of law and theauthorities below had concurrently concluded that there was delay infiling the TDS returns without any justifiable reason or cause. 13. Adverting to the judgments in Executive Engineer andHMT Ltd.'s cases (supra), it may be noticed that these cases weredecided on the basis of facts involved therein as they were relating todefault in issuing certificates for deduction of tax at source and keepingin view the factual matrix, the levy of penalty under Section 272A(2)(g) ofthe Act was found to be inappropriate. The cases being based onindividual facts involved therein, no advantage is available to theassessee-appellant therefrom. Similarly, the issue before the RajasthanHigh Court and Allahabad High Court in Rajasthan Housing Board and Accounts Officer, Telecom's cases (supra), shows that thepronouncements were also based on individual facts of these cases anddo not come to the rescue of the appellant. 13. Adverting to the judgments in Executive Engineer andHMT Ltd.'s cases (supra), it may be noticed that these cases weredecided on the basis of facts involved therein as they were relating todefault in issuing certificates for deduction of tax at source and keepingin view the factual matrix, the levy of penalty under Section 272A(2)(g) ofthe Act was found to be inappropriate. The cases being based onindividual facts involved therein, no advantage is available to theassessee-appellant therefrom. Similarly, the issue before the RajasthanHigh Court and Allahabad High Court in Rajasthan Housing Board and Accounts Officer, Telecom's cases (supra), shows that thepronouncements were also based on individual facts of these cases anddo not come to the rescue of the appellant. 14.In view of the above, there is no error or perversity in theapproach of the CIT(A) or the Tribunal or in the findings recorded bythem warranting interference by this Court. Accordingly, no substantial ITA No. 421 of 2015 question of law arises in these appeals. Consequently, finding no meritin the appeals, the same are hereby dismissed. (AJAY KUMAR MITTAL)JUDGE February 8, 2016gbs (RAJ RAHUL GARG)JUDGE