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August 2012

Sections 200(3), 272(2)(k), Rule 31A — When assessee derives no benefit from failure to file e-TDS return, no penalty is called for. In a case where assessee has deposited TDS on time but failed to file e-TDS return because of delay in collecting PANs from landowners, such breach is only technical in nature and no penalty is warranted.

By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi
Chartered Accountants
Reading Time 3 mins
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38. (2012) TIOL 399 ITAT-Mum.
The Collector, Land Acquisition Department of Industries and Commerce v. Addl. CIT (TDS)
A.Ys.: 2007-08 to 2010-11. Dated: 9-3-2012

Sections 200(3), 272(2)(k), Rule 31A — When assessee derives no benefit from failure to file e-TDS return, no penalty is called for. In a case where assessee has deposited TDS on time but failed to file e-TDS return because of delay in collecting PANs from landowners, such breach is only technical in nature and no penalty is warranted.


Facts:

The Person Responsible (PR) in respect of Collector, Land Acquisition, Department of Industries & Commerce, Punjab Chandigarh (PR) had not filed e-TDS quarterly returns on respective due dates and so had defaulted u/s.200(3) of the Act. In response to the show-cause notice issued by the Assessing Officer, the PR submitted that the delay was due to landowners not having submitted their PAN numbers and therefore the delay was for a reasonable cause and no penalty could be levied. The AO rejected this explanation and held PR to be an assessee in default and levied penalty u/s.272A(2) (k) of Rs.6,11,600.

Aggrieved, the PR filed an appeal to the CIT(A) and contended that the interest on compensation was disbursed to landowners not directly but was deposited in the District/High Courts and as per guidelines issued for submission of e-TDS quarterly returns Form No. 26Q with less than 70% PAN data was not accepted for quarter ended 30-9-2007. Since PAN data was not available with PR, the quarterly returns could not be filed. The CIT(A) upheld the order passed by the AO. Aggrieved, the assessee preferred an appeal to the Tribunal

Held:

The Tribunal noted that the Collector, Land Acquisition, Department of Industries is a government organisation acquiring land on behalf of Punjab Government. The land compensation is paid by the organisation to the landowners through the District/High Courts. The tax is deducted at source on the interest payment to the landowners, but the compensation and interest is deposited in the Court and not paid directly to the landowners. The landowners/agriculturists do not have PAN numbers. The Department was not able to find PAN numbers of these landowners.

Letters written to the landowners to furnish their PAN Numbers, at the available address, but no response was received due to improper addresses. The amount of tax was deducted at source and paid to the credit of the Government on time. The Tribunal held that the assessee was prevented by sufficient cause from filing the returns within the statutory period. Nonfiling of quarterly returns was only a technical and venial breach to the provisions contained in Rule 31A(2). Even otherwise also, the assessee did not derive any benefit whatsoever by not filing the e-TDS returns in time, as the amount of TDS was duly deposited in the Government Treasury within prescribed time. Such delay has not caused any loss to the Revenue/ Income-tax Department. The Tribunal cancelled the penalty levied by the AO. The appeals filed by the assessee were allowed.

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