• Notification Date: 28-03-2024
• Notification No: N/A

ITAT withdraws Penalty for Delay in Filing TDS Return occurred due to Lack of Professional Assistance

The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the delay in the filing of TDS returns due to lack of professional assistance is a mere “technical breach” for which penalty under section 272A(2)(k) of the Income Tax Act, 1961 cannot be imposed. The Assessing Officer levied the penalty of Rs. 85,200 under section 272A(2)(k) of the Act on the assessee, Hi Techno Control System Pvt. Ltd on the ground that there is a delay in filing of TDS returns. 
 
Section 272A(2)(k) of the IT Act provides a penalty for failure to deliver or cause to deliver a copy of the statement within the time specified in sub-section (3) of s. 200 or the proviso to sub-section 3 of s. 206(c) of the Act. The assessee submitted that the same was due to the lack of knowledge and at the same time non availability of Professional person in the Rural Area i.e. at Sonar Pada village Dombivli East, Thane Rural. Shri Prashant Maharishi, Accountant Member and Shri Sandeep Singh Karhail, Judicial Member observed that Sec. 273B of the Act provides that no penalty shall be imposed on the person or the assessee for any failure referred to in the said provision if the assessee proves that there was a reasonable cause for the said failure. It is an admitted fact that the assessee deducted tax on time and deposited with the Revenue Department on time. 

“There was only a technical breach of the provisions contained above, requiring the assessee to submit the quarterly return statements of tax deducted at source within the time provided under the Law. It is not a case of the Revenue that the assessee did not file the required statements with the Revenue Department. The requisite statement/returns have been filed belatedly, for which, a penalty have been imposed. In the present case, the assessee explained that the delay in filing the TDS return is due to negligence on the part of the assessee and nonawareness of the importance of filing the TDS return,” the Tribunal said. 
 
After analysing the facts deeply, the ITAT held that the assessee had no assistance from any professional person to guide them regarding the compliance of statutory provisions. Concluding the order in favour of the assessee, the Tribunal held that “These facts clearly show that the assessee had a reasonable cause for failure to comply with the provisions of law.  

On filing the belated returns/statements, Revenue has not suffered any loss because the tax deducted was already deposited on time with the Revenue Department. It was, therefore, a technical breach of the provisions contained in the Act for submitting the return statement of tax deducted at source. The above reasons are sufficient to hold that the penalty need not be levied in the facts and circumstances of the case to guide them regarding the compliance of statutory provisions.  

These facts clearly show that the assessee had a reasonable cause for failure to comply with the provisions of law. On filing the belated returns/statements, Revenue has not suffered any loss because the tax deducted was already deposited on time with the Revenue Department. It was, therefore, a technical breach of the provisions contained in the Act for submitting the return statement of tax deducted at source. The above reasons are sufficient to hold that the penalty need not be levied in the facts and circumstances of the case.”