The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under section 272(2)(k) of the Income Tax Act, 1961 as Tax Deduction at Source ( TDS ) filing was delayed due to paucity of funds, with interest duly paid.
The assessee had explained that the delay in filing of TDS returns was due to the paucity of funds with the assesses and accordingly the assessee had remitted the TDS with applicable interest under Section 201(1A) of the Income Tax Act to the account of the Central Government.
The TDS returns could not be filed electronically without remitting the requisite taxes. Further it was explained that some of the parties had not furnished their Permanent Account Number ( PAN ), without which the assessee could not file its TDS returns electronically.
Hence, there was a delay on the part of the assessee to file the TDS returns in time. The Quarterly TDS returns were suo moto filed by the assessee after due remittance of TDS with applicable interest without receiving any notice from the income tax department. Accordingly, it was pleaded that there was only a technical venial breach committed by the assessee, for which it should not be invited with the levy of penalty under Section 272A (2) (k) of the Income Tax Act.
The ITAT bench found that the assessee had duly explained the reasons for the delayed filing of TDS returns. The reasons explained by the assessee were not found to be false by the revenue. Further found that the assessee had already suffered the interest under Section 201(1A) of the Income Tax Act for the late remittance of TDS.
Thus submitted that there was no loss to the exchequer by the delayed filing of TDS returns by the assessee. For a mere technical venial breach, the assessee should not be invited with penalty under Section 272A (2) (k) of the Income Tax Act.
The bench of Anubhav Sharma ( Judicial member ) and M. Balaganesh ( Accountant member ) held that this was not a fit case for levy of penalty under Section 272A (2) (k) of the Income Tax Act. Accordingly, the grounds raised by the assessee for all the years under consideration are allowed, and the appeals of the assessee are allowed.
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