By TIOL News Service

MUMBAI, NOV 19, 2018: THE ISSUE BEFORE THE BENCH IN THE PRESENT CASE WAS - Whether penalty can be levied for mere delay in filing TDS return for the relevant AYs on account of shifting from manual system to e-filing of quarterly TDS returns. NO IS THE VERDICT.

Facts of the case

The assessee company filed its return for the relevant AY. During the assessment proceedings, the AO noted that the assessee had not filed quarterly statement of TDS returns within the time specified u/s 206/206C read with Rule 37 for AY 2011-12. Further, the AO issued a show-caused notice as to impose penalty u/s 272A(2)(k). However, the assessee had submitted acknowledgment of TDS quarterly returns filed with the Department but the assessee did not gave any justifications for delay in filing of quarterly TDS returns. Subsequently, the AO levied penalty u/s 272 A(2)(k). On appeal, the CIT(A) confirmed the penalty levied by the AO.

On appeal, the ITAT held that,

++ the High Court’s have upheld the constitutional validity of late fee as prescribed u/s 234E of the Act for delay in filing of TDS returns as it is a fee paid to Revenue for extra work been done in giving credit to those tax-payers who suffers because of non filing of TDS returns by the deductors in time. At the same time, the Court cannot also ignore the fact that it was for the Revenue to have allowed smooth switchover from manual to e-filing system of filing TDS returns. The onus and burden was on revenue to provide necessary infrastructure so that tax-payer did not face any inconvenience in filing e-TDS returns. But as it is emerging from the historical factual matrix, the public at large faced lot of inconvenience in initial stage of switchover from manual to e-filing system of TDS returns due to several glitches as cited in preceding para’s of this order. The Court also note the conduct of the assessee for subsequent periods wherein the TDS returns were e-filed in form no. 24Q, 26Q as well 27Q by the assessee mostly in time for financial year 2012-13, 2013-14 and 2014-15;

++ the assessee has also enclosed acknowledgement copy of TDS returns filed for the said three financial years from 2012-13, 2013-14 and 2014-15 which are placed in paper book filed with the tribunal. Thus, income-tax deducted at source were deposited in time and only filing of the TDS return was delayed in the initial years of switchover from manual system to e-filing of quarterly TDS returns, thus, the Court held that the penalty as is levied by AO and as confirmed by the CIT(A) u/s 272A(2)(k) in the instant case is not sustainable in the eyes of law as the assessee has shown a reasonable cause falling within parameters of Section 273B and hereby order deletion of the penalty levied by the AO u/s 272A(2)(k) as was confirmed by CIT(A) by setting aside the orders of the lower authorities.

(See 2018-TIOL-2151-ITAT-MUM)