In a recent ruling, the ITAT, Jaipur bench held that penalty cannot be levied under Income Tax Act if the assessee failed to file E-TDS return within the stipulated time frame due to non-availability of PAN of deductees.
In the instant case, the assessee-Company was aggrieved by the order of the AO imposing penalty under Section 272A(2)(K) of the Income Tax Act on ground that it has willfully delayed filing of quarterly e-TDS return within the time prescribed under the statute. Assessee maintained that the delay was due to deductees themselves who were reluctant to provide their PAN to the assessee which resulted into non filing TDS return in the stipulated time frame.
Assessee failed to secure relief from the first appellate authority and approached the Appellate Tribunal on appeal.
Analyzing the facts of the case, the bench found that during the relevant FY, there was a change which was brought about in filing of e-TDS returns wherein there was a necessity to mention 100% valid Permanent Account Numbers of the payee to whom the payment has been made and TDS done in such payment in the e-TDS return and thereafter only the e-TDS return can be validated and uploaded in the IT system.
Allowing the appeal, the bench noted that “The assessee has submitted that since there were large number of deductees scattered throughout the country, a fact not disputed by the Revenue, it took them some time to collect the PANs of these deductees and thereafter, it was able to upload the e-TDS returns in the IT system maintained by the Revenue. Further, the taxes have deducted and deposited at the prescribed rate with delay of few days. Hence, there is no loss to the Revenue which is caused due to the delay in filing of the e-TDS returns which is totally unintentional. Further, our attention was drawn to the decision of the Coordinate Benches in case of Collector Land Acquisition, UCO Bank and SBI (supra) wherein non availability of PAN was held to be a reasonable cause for delay in filing of the e-TDS return. Given the pecularity of the facts in the present case where there was a change effected in the IT system for mandatory requirement of PANs of all deductees before the returns can be validated and uploaded, the fact that there were large number of deductees spread throughout the country and efforts were made by the assessee to obtain their PANs numbers, the fact that taxes have been deducted and deposited, hence no loss to the Revenue, we find that assessee has a reasonable cause for delayed filing of its e-TDS returns in terms of section 273B and the penalty under section 272(A)(K) is hereby deleted.”
Read the full text of the Order below.
