Ram Lal Inder Lal vs Dy. Cit
2003 Latest Caselaw 129 Del

ORDER

Keshaw prasad, A.M.:

The cross-appeals have been directed by the assessed as well as by the revenue against the order of the Commissioner (Appeals) dated 28-8-1997, relating to penalties under section 272A(2)(g) of the Act pertaining to assessment year 1993-94.

2. Briefly, the facts of the case are that the assessed is a firm which deducted tax at source and issued TDS certificates as required under section 203 of the Act. However, there was delay in issuing such certificates and, therefore, the assessing officer held that the assessed has contravened the provisions of section 272A(2)(g) of the Act. After considering the submissions of the assessed in response to show-cause notice, the assessing officer held that the assessed has not been able to prove that there was a bona fide case in issuing the certificate late. He calculated various delays in respect of each certificate and accordingly imposed the penalty of Rs. 33,16,400 under section 272A(2)(g) of the Act. On appeal, the Commissioner (Appeals) approved the imposition of penalty in principle. However, he held that the delay calculated by the assessing officer was wrong. After calculating the delay of these certificates, the Commissioner (Appeals) reduced the penalty to Rs. 5,20,200 and deleted the penalty of balance amount.

2. Briefly, the facts of the case are that the assessed is a firm which deducted tax at source and issued TDS certificates as required under section 203 of the Act. However, there was delay in issuing such certificates and, therefore, the assessing officer held that the assessed has contravened the provisions of section 272A(2)(g) of the Act. After considering the submissions of the assessed in response to show-cause notice, the assessing officer held that the assessed has not been able to prove that there was a bona fide case in issuing the certificate late. He calculated various delays in respect of each certificate and accordingly imposed the penalty of Rs. 33,16,400 under section 272A(2)(g) of the Act. On appeal, the Commissioner (Appeals) approved the imposition of penalty in principle. However, he held that the delay calculated by the assessing officer was wrong. After calculating the delay of these certificates, the Commissioner (Appeals) reduced the penalty to Rs. 5,20,200 and deleted the penalty of balance amount.

3. The assessed is in appeal before us against sustaining the part penalty whereas the revenue is in appeal before us against the relief granted by the Commissioner (Appeals).

3. The assessed is in appeal before us against sustaining the part penalty whereas the revenue is in appeal before us against the relief granted by the Commissioner (Appeals).

4. It is argued by the learned counsel that even according to Commissioner (Appeals), the minimum delay in the issuing of TDS certificates was 5 days and maximum delay was 12 days. While relying on the proviso to section 272A(2)(g) which was inserted on the statute with effect from 1-10-1991, the learned counsel stated that the penalty cannot exceed the maximum amount of tax deducted at source in respect of which the TDS certificate has been issued late. On such calculation, the maximum penalty comes to Rs. 1,21,412. The Commissioner (Appeals) was, therefore, not justified in sustaining the penalty of Rs. 5.20 lakhs.

4. It is argued by the learned counsel that even according to Commissioner (Appeals), the minimum delay in the issuing of TDS certificates was 5 days and maximum delay was 12 days. While relying on the proviso to section 272A(2)(g) which was inserted on the statute with effect from 1-10-1991, the learned counsel stated that the penalty cannot exceed the maximum amount of tax deducted at source in respect of which the TDS certificate has been issued late. On such calculation, the maximum penalty comes to Rs. 1,21,412. The Commissioner (Appeals) was, therefore, not justified in sustaining the penalty of Rs. 5.20 lakhs.

5. It was also stated that the penalty under section 272A(2)(g) was subject to the provisions of section 273B of the Act. It provides that if there was a reasonable cause in issuing the certificate late, no penalty was imposable. It was stated that it is also settled law that if the tax had been deducted at source in time and the same has been deposited to the credit of Central Government in time and there was no complaint from the person to whom the certificate was to be issued, tten, no penalty for late issue of TDS certificate was warranted. The reliance was placed on the decision of Hon'ble Gujarat High Court in the case of CIT v. Harsiddh Construction (2000) 244 ITR 417 (Guj). It was also stated that the certificates from all the such parties were filed to the effect that they will collect their TDS certificates whenever they needed it. The assessed was under a bona fide belief that whenever these parties would require the TDS certificate, it would be issued at that time. Thus, there was reasonable cause in a little delay in issuing the certificate late. While relying on the decision in Sudershan Auto &, General Finance v. CIT (1998) 60 ITD 177 (Del) at page 180, the learned counsel stated that there was no bad intention behind withholding the TDS certificate for a period of 10 to 12 days. The same view was taken by Delhi Bench of the Tribunal in the case reported in Aroma Chemicals v. Dy. CIT (2002) 121 Taxman 31 (Del) (Tribunal Part). The Hon'ble Pune Bench of the Tribunal. in the case of Executive Engineer, M.S.E.B. v. Dy. CIT (1994) 48 ITD 414 (Pune) had also taken the same view. The learned counsel stated that the issue was squarely covered in favor of the assessed and, therefore, part penalty sustained by the Commissioner (Appeals) was not justified and the same deserves to cancelled. On the other hand, learned Departmental Representative stated that once the default on the part of the assessed was established, the Commissioner (Appeals) was not justified in reducing the penalty. He supported the order of the assessing officer.

5. It was also stated that the penalty under section 272A(2)(g) was subject to the provisions of section 273B of the Act. It provides that if there was a reasonable cause in issuing the certificate late, no penalty was imposable. It was stated that it is also settled law that if the tax had been deducted at source in time and the same has been deposited to the credit of Central Government in time and there was no complaint from the person to whom the certificate was to be issued, tten, no penalty for late issue of TDS certificate was warranted. The reliance was placed on the decision of Hon'ble Gujarat High Court in the case of CIT v. Harsiddh Construction (2000) 244 ITR 417 (Guj). It was also stated that the certificates from all the such parties were filed to the effect that they will collect their TDS certificates whenever they needed it. The assessed was under a bona fide belief that whenever these parties would require the TDS certificate, it would be issued at that time. Thus, there was reasonable cause in a little delay in issuing the certificate late. While relying on the decision in Sudershan Auto &, General Finance v. CIT (1998) 60 ITD 177 (Del) at page 180, the learned counsel stated that there was no bad intention behind withholding the TDS certificate for a period of 10 to 12 days. The same view was taken by Delhi Bench of the Tribunal in the case reported in Aroma Chemicals v. Dy. CIT (2002) 121 Taxman 31 (Del) (Tribunal Part). The Hon'ble Pune Bench of the Tribunal. in the case of Executive Engineer, M.S.E.B. v. Dy. CIT (1994) 48 ITD 414 (Pune) had also taken the same view. The learned counsel stated that the issue was squarely covered in favor of the assessed and, therefore, part penalty sustained by the Commissioner (Appeals) was not justified and the same deserves to cancelled. On the other hand, learned Departmental Representative stated that once the default on the part of the assessed was established, the Commissioner (Appeals) was not justified in reducing the penalty. He supported the order of the assessing officer.

6. We have considered the rival submissions. As per proviso to section 272A(2)(g) which is on the statute with effect from 1-10-1991, the penalty under the above section cannot exceed the maximum amount of TDS for which the certificate was issued late. Admittedly, the maximum TDS involved in the late certificate all together was much less than the penalty sustained by the Commissioner (Appeals).

6. We have considered the rival submissions. As per proviso to section 272A(2)(g) which is on the statute with effect from 1-10-1991, the penalty under the above section cannot exceed the maximum amount of TDS for which the certificate was issued late. Admittedly, the maximum TDS involved in the late certificate all together was much less than the penalty sustained by the Commissioner (Appeals).

7. The penalty under section 272A(2)(g) is subject to the provisions of section 273B of the Act. It provides that if there was a reasonable cause in issuing the certificate late, the penalty under the above section will not be attracted. On the record, we find that there are letters from those parties to whom the TDS certificates have been issued late to the effect that they would collect their TDS certificates as and when required. The assessed, therefore, thought that this was a bona fide cause in issuing the certificate late. On this account itself, the penalty sustained by the Commissioner (Appeals) cannot be sustained. We also find that the taxes have been deducted at source in time. The same have been paid to the government in time. None of the persons whom the certificates have been issued have complained about non-receipt of the TDS certificates. The Delhi Bench of the Tribunal in the case reported in (1997) 60 ITD 177 (Del) (supra) has held that if the taxes have been collected in time and the tax has been paid in time, there was no bad intention on the part of the assessed in withholding such certificates. The Delhi Bench of the Tribunal in the case of Bansal Brothers v. Dy. CIT (1998) 64 ITD 129 (Del) has also taken similar view. Even the Pune Bench of the Tribunal in the case of Executive Engineer, M.S.E.B. v. Dy. CIT (supra) has taken the same view. Hon'ble Supreme Court in the case of Hindustan Steels Ltd. v. State of Orissa (1972) 83 ITR 26 (SC) has held that such lapses are venial in nature and do not attract penalty under section 272A(2)(g) of the Act. Considering the facts as a whole, we hold that the penalty sustained by the Commissioner (Appeals) is not justified and the same is cancelled. Consequently, the appeal directed by the revenue has no force and the same is dismissed.

7. The penalty under section 272A(2)(g) is subject to the provisions of section 273B of the Act. It provides that if there was a reasonable cause in issuing the certificate late, the penalty under the above section will not be attracted. On the record, we find that there are letters from those parties to whom the TDS certificates have been issued late to the effect that they would collect their TDS certificates as and when required. The assessed, therefore, thought that this was a bona fide cause in issuing the certificate late. On this account itself, the penalty sustained by the Commissioner (Appeals) cannot be sustained. We also find that the taxes have been deducted at source in time. The same have been paid to the government in time. None of the persons whom the certificates have been issued have complained about non-receipt of the TDS certificates. The Delhi Bench of the Tribunal in the case reported in (1997) 60 ITD 177 (Del) (supra) has held that if the taxes have been collected in time and the tax has been paid in time, there was no bad intention on the part of the assessed in withholding such certificates. The Delhi Bench of the Tribunal in the case of Bansal Brothers v. Dy. CIT (1998) 64 ITD 129 (Del) has also taken similar view. Even the Pune Bench of the Tribunal in the case of Executive Engineer, M.S.E.B. v. Dy. CIT (supra) has taken the same view. Hon'ble Supreme Court in the case of Hindustan Steels Ltd. v. State of Orissa (1972) 83 ITR 26 (SC) has held that such lapses are venial in nature and do not attract penalty under section 272A(2)(g) of the Act. Considering the facts as a whole, we hold that the penalty sustained by the Commissioner (Appeals) is not justified and the same is cancelled. Consequently, the appeal directed by the revenue has no force and the same is dismissed.

8. In the result, appeal filed by the assessed is allowed whereas the appeal filed by the revenue is dismissed.

8. In the result, appeal filed by the assessed is allowed whereas the appeal filed by the revenue is dismissed.