Manager, Union Bank Of Indialudhiana v. Commissioner Of Income Taxludhiana

Income Tax Appeal No. 13 of 2004 1 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 13 of 2004Date of Decision: 23.11.2010 Manager, Union Bank of IndiaLudhiana --- Appellant Versus Commissioner of Income TaxLudhiana --- Respondent ---- CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL. --- PRESENT:Mr. Pankaj Jain, Advocatefor the appellant-assessee. Mr. Rajesh Katoch, Standing Counsel for the respondent-Revenue. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-tax Act, 1961(for short “the Act’”) has been filed by the assessee against the orderdated 10.9.2003, passed by the Income Tax Appellate Tribunal,Chandigarh Bench ‘B’, Chandigarh, (in short “the Tribunal”) in ITA No.861/CHANDI/01, relating to the assessment year 2000-2001. The assessee has claimed the following substantial questions of law for determination by this Court: 1- Whether under the facts and circumstances of the case andon an interpretation of Section 272A(2)(f), the Tribunal isjustified in upholding the levy of penalty? 2- Whether under the facts and circumstances of the case theTribunal was right in law in upholding the levy of penalty u/s272A(2)(f) even if the assessee has committed a defaultunder a bona fide belief and as a reasonable cause thatforms have to be sent annually? 3- Whether under the facts and circumstances of the case theTribunal was justified in upholding the levy of penalty on thebasis of number of days delay? 4- Whether under the facts and circumstances of the case theTribunal was justified in not following its own decision whereone of the members of the Bench was the same in whichcase the penalty under the similar circumstances wasdeleted and, hence the order of the Tribunal is against thedoctrine of judicial consistency and perverse? The facts necessary for adjudication, as narrated in theappeal, are that the appellant-assessee is the Manager of a PublicSector Bank. He was under a legal obligation to deduct income tax atsource, under Section 194A(3) (vii) of the Act, on the amount of interestpaid/ credited, exceeding Rs. 10,000/- during the financial year 1999-2000, relevant for the assessment year under reference. He, however,did not make any deduction on that account in respect of 59 persons forthe reason that they had filed declaration under Section 197A in form 15H. Since the said declarations were filed during the financial year1999-2000, the person concerned was required to deliver one copythereof in form 15H in the office of the Commissioner of Income Tax[hereinafter referred to as “CIT”] by the 7[th] of the month following themonth in which the declarations were furnished. But the saiddeclarations were furnished late and the delay in that matter varied from65 to 447 days. The CIT initiated penalty proceedings under Section272A(2) (f) of the Act against the Manager of the appellant-bank. Replywas filed on behalf of the Manager that the alleged lapse occurred dueto bona fide mistake. But the said plea was rejected. It was also soughtto be contended on behalf of the Manager that since no loss occurred tothe Revenue, no penalty could be levied. The CIT, however, by orderdated 22.10.2001 levied minimum penalty of Rs. 1,26,606/- i.e. equal tothe amount deductible for committing default under Section 272A(2)(f) ofthe Act. Feeling aggrieved, the assessee preferred appeal before theTribunal. The Tribunal after considering the submissions of both thesides dismissed the appeal by order dated 10.9.2003. It is how theassessee is in appeal before us. We have heard learned counsel for the parties and perused the record. Whether the CIT and the Tribunal were right and justified inupholding the penalty under Section 272A (2)(f) of the Act is the point inissue that has drawn the attention of this Court in this appeal. Feeling aggrieved, the assessee preferred appeal before theTribunal. The Tribunal after considering the submissions of both thesides dismissed the appeal by order dated 10.9.2003. It is how theassessee is in appeal before us. We have heard learned counsel for the parties and perused the record. Whether the CIT and the Tribunal were right and justified inupholding the penalty under Section 272A (2)(f) of the Act is the point inissue that has drawn the attention of this Court in this appeal. Learned counsel for the assessee submitted that the delaywhich had occurred in furnishing the certificate in Form 15H to the Department was not deliberate and was under a misunderstanding withthe officials of the bank whereby it was wrongly taken that Forms 15Hwere required to be filed at the time of filing of the return in Form 27A ofthe Act i.e. on 30[th] of June instead of mandatory date of 7[th] of thefollowing month in which Forms 15-H were furnished to theManager/responsible person by the declarants. The assessee hadreasonable cause for not furnishing Form 15H within time and, therefore,in terms of Section 273B of the Act, no penalty under Section 272A (2)(f)ought to have been levied. The counsel further submitted that the defaultwas of a technical nature and unless there was an intention incommitting the default, no penalty under the aforesaid provisions wascalled for. Learned counsel placed reliance on the judgment of this Courtin The Commissioner of Income Tax Vs. State Bank of Patiala,(2005) 277 ITR 315 wherein it had been held that unless there was adeliberate default in furnishing the certificates and if no loss of revenuehad occasioned due to the said unintentional default on the part of theassessee, no penalty was exigible. Learned counsel for the Revenue, on the other handsupported the order passed by the CIT and upheld by the Tribunal. In State Bank of Patiala’s case (supra), the factual positionwas that the bank had failed to furnish declaration in Form 15H to theDepartment within the time envisaged by law. In that situation, this Courthad held that as the assessee was not required to deduct any tax atsource, and no loss of revenue had occurred to the Department andmore so, the default being of a technical nature, no penalty underSection 272A (2) (f) of the Act, was leviable. In our opinion, in the case in hand the explanation furnished by the assessee for the delay in furnishing the declaration in Form 15Hto the Department being a plausible one, it cannot be said that non-compliance thereof was deliberate. The aforesaid pronouncement fullysupports the case of the assessee. The Tribunal, thus, erred inupholding the penalty under Section 272A (2)(f) of the Act. Accordingly, the appeal is allowed. The substantial questionsof law are answered in favour of the assessee. (AJAY KUMAR MITTAL)JUDGE November 23, 2010*rkmalik* (ADARSH KUMAR GOEL)JUDGE