By TIOL News Service

MUMBAI, DEC 07, 2015: THE issue is - Whether if assessee has not only defaulted in remitting TDS but also defaulted in filing TDS statement without any reasonable cause for delay, it warrants imposition of penalty. YES is the answer.

Facts of the case

The assessee is a Private Limited Company. The AO found that assessee had not filed the quarterly TDS statement for the financial year 2009–10, within the due date as provided under section 206 / 206C r/w rule 37 of the Income Tax Rules, 1962. AO observed that as per the provisions contained u/s 200(3) r/w rule 31A, the assessee being a deductor was required to file the quarterly TDS statement for each quarter by 15th July, 15th October, 15th January and 15th June of the year. As the assessee had not filed the quarterly statement within the aforesaid prescribed date, the AO issued a show cause notice to the assessee to explain why penalty u/s 272A(2)(k) should not be imposed. In response to the show cause notice, as stated by AO, though the assessee admitted the default committed in filing the TDS statement but requested for not imposing penalty. The AO, after examining the explanation of the assessee, was of the view that assessee had not made out a case that the default was due to reasonable cause. AO, therefore, proceeded to pass an order imposing penalty u/s 272A(2)(k) for Rs.3,00,858. Before the first appellate authority, the assessee explaining the cause of delay in filing the TDS statement submitted that due to oversight of his staff, TDS statement could not be filed in time. CIT(A), however, was not convinced with the explanation of the assessee. CIT(A) observed that the provisions contained u/s 203 r/w rule 31A require strict compliance. Therefore, the plea of lack of staff, ignorance of TDS provisions would not constitute reasonable cause. Accordingly, CIT(A) confirmed levy of penalty.

Having heard the matter, the Tribunal held that,

++ it is a fact on record that there is a delay in filing TDS statements in respect of all the four quarters as far as Form no.24Q is concerned and as far as statements in Form no.26Q is concerned, there is a delay in filing the TDS statement in respect of quarter 2, 3 and 4. On a perusal of the details of filing of TDS statement, it is seen that the delay is substantial ranging from almost one year to about two years. It is also relevant to note that on a specific query from the bench it was submitted by counsel that in respect of some of the quarters TDS amount was remitted to the Government account beyond the prescribed date. Thus, keeping in view the aforesaid factual decision, it is to be decided whether there is a reasonable cause for not imposing penalty. As could be seen, in response to the show cause notice, the assessee has submitted its Explanation by stating that the deductee is the director of the company to whom rent / professional fee was paid and salary was paid to the family members of the company, hence, there is no willful intention to delay or deprive any deductee of the TDS credit. However, before the first appellate authority, the assessee has taken a completely different stand by stating that due to oversight of the staff, TDS statement could not be filed. When the counsel was specifically asked by the Bench why this stand taken before the first appellate authority was not taken before AO, he submitted that due to very short time given by AO for submitting the reply, the assessee could not take such stand. However, we are not convinced with the aforesaid submissions of the assessee. It is relevant to note that in response to the show cause notice issued by AO, the assessee did submit its reply. Therefore, the assessee could very well have taken the stand which was taken before the first appellate authority. Therefore, as it appears, the assessee has taken a completely new stand before the first appellate authority which is not available before the AO. Moreover, the plea regarding oversight by the staff is very general in nature, hence, cannot be accepted. Neither the assessee has identified the concerned employee nor furnished any affidavit of the employee admitting such fact. Further, considering the period of delay, the plea of oversight by staff is not acceptable;

++ though, we accept the fact that imposition of penalty u/s 272A(2)(k) is not mandatory as the provisions of section 273B is also applicable in case of imposition of penalty under section 272A(2)(k), but, at the same time, the assessee has to show reasonable cause for the default. As far as the decision relied upon by the counsel for the assessee, we find them to be factually distinguishable. What constitutes reasonable cause would vary from case to case. The ratio laid down in a particular decision will not apply unless the facts are identical. In case of State Bank of Bikaner & Jaipur, the assessee had paid the TDS amount in time. Moreover, it was explained by the assessee that after centralization of the taxation system, the Branch was not aware where to file the TDS return. Considering the aforesaid fact, the Tribunal deleted the penalty by holding that there was a reasonable cause. Whereas in case of the assessee, not only on five occasions, TDS amounts were remitted beyond the prescribed date but there is inordinate delay in filing the TDS statement. Further, the assessee is not consistent with its stand while explaining the cause of delay. Similarly, in case of Royal Metal Printers Pvt. Ltd., the tax amount was deposited within the stipulated time. Whereas, the assessee as per its own admission on more occasions has defaulted in remitting the TDS amount to the Government account within the prescribed time. Thus, assessee has not only defaulted in remitting TDS amounts but the default is repeated in case of submission of TDS statement. Therefore, factually, the ratio laid down in this decision will not apply the present case. Therefore, in our view, the assessee having not made out a case of reasonable cause for delay in filing the TDS statement, penalty imposed is justified. Hence, the order of the first appellate authority is upheld. Thus, the grounds raised by the assessee are dismissed. In the result, assessee’s appeal is dismissed.

(See 2015-TIOL-2002-ITAT-MUM)