Income Tax Appellate Tribunal - HyderabadSreemitra Estates Pvt. Ltd.,, ... vs Assessee on 27 March, 2014IN THE INCOME TAX APPELLATE TRIBUNAL
                HYDERABAD BENCH 'B', HYDERABAD


      BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
           AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER

                         I.T.A. No. 1275/Hyd/2013
                               A.Y. : 2005-06


Sreemitra Estates Pvt.         vs.   Addl. Commissioner of
Ltd., Hyderabad                      Income-tax, Range - 15,
PAN - AADCS2217D                     Hyderabad.
        Appellant                           Respondent

                  Assessee by: Shri M. Madhusudhan
                   Revenue by: Shri Jeevanlal Lavidiya

               Date of hearing: 27.03.2014
       Date of pronouncement: 11.04.2014


                                O RDE R

PER SAKTIJIT DEY, JM:This appeal by the assessee is directed against the order of the
CIT(A)-II, Hyderabad dated 26/07/2013 for the assessment year 2005-06.2.     The grievance of the assessee in the present appeal is
with regard to the order passed by the CIT(A) confirming
penalty imposed u/s 272A(2)(k) of the Act.3.     Briefly the facts are, the assessee a company is engaged
in real estate business of developing and sale of flats. A survey
u/s 133A of the Act was conducted in case of the assessee on
10/03/2008 to verify TDS compliance. In course of survey, it
was noticed that the assessee has failed to file quarterly returns
in the prescribed form i.e. 24Q and 26Q for the FY 2004-05
within the stipulated time and there was a delay for all the four
quarters. On the basis of survey report, the Assessing Officer2                    I.T.A. No. 1275/Hyd/2013Sreemitra Estates Pvt. Ltd.was of the view that as per the provisions containedu/s 200(3)of the IT Act, read with Rule 31A of the IT rules, the assessee
being a deductor is under statutory obligation to furnish
quarterly statements with details of tax deducted at source to
the prescribed authority in the prescribed form within the
stipulated time. Since non-compliance to the aforesaid statutory
provisions attracts penal consequencesu/s 272A(2)(k)of the
Act, the ITO, Ward - 15(2), Hyderabad suggested for initiation
of penaltyu/s 272A(2)(k). On such basis, the Addl. CIT, Range- 15, Hyderabad issued a show cause notice to the assessee to
explain why penalty shall not be imposed.       In response to the
show cause notice, the assessee contended that the real estate
business has suffered a deadly blow due to telengana agitation,
recession in economy, general business decline, particularly in
information technology business and various other reasons
during the last 4/5 years. Due to this reason, the cash inflows of
the assessee was seriously affected and the assessee was not
able to pay even salaries in time and meet other financial
commitments including TDS payments. It was submitted that
due to these reasons there was a delay in filing returns for TDS.
The explanation submitted by the assessee was however found
to   be   unsatisfactory   because   the   reasons   on   which      the
assessee tried to explain the delay in filing the TDS returns was
found to be non-existent as the economic recession as well as
telengana agitation happened long after the periods for which
the assessee had deducted the tax. It was further noted in the
penalty order that the assessee would not have submitted the
TDS returns unless the survey had taken place in case of the
assessee. Therefore, rejecting the explanation of the assessee,
order was passed imposing penaltyu/s 272A(2)(k)of the Act.
Being aggrieved of the penalty order so passed, the assessee
preferred appeal before the CIT(A).3                   I.T.A. No. 1275/Hyd/2013Sreemitra Estates Pvt. Ltd.4.    The CIT(A) confirmed the penalty by holding as under:"6.   The information on record is carefully examined.
      From the above table it is evident that the delay in filing
      of TDS returns is almost for more than 3 years for all the
      4 quarters. This clearly indicates that the appellant is
      habitual late filer and has scant respect for statutory
      provisions ofIncome Tax Act. The reasons given by the
      appellant are completely incorrect. In fact, the due date to
      file TDS returns in 2005 perfectly coincides with
      unprecedented boom period in real estate business in
      Andhra Pradesh. The boom period started in 2005 and
      recession took over only towards the end of 2008. It is
      pertinent to mention that it is only due to survey operation
      u/s 133A on 10/03/2008 it was noticed that the assessee
      had not filed TDS returns and subsequent to the survey
      proceedings, the assessee was compelled to file the TDS
      returns with a delay of more than 3 years. As per the
      provisions ofsection 273B, 'no penalty shall be imposable
      on the person or the assessee, as the case may be, for
      any failure referred to in the said provisions if he proves
      that there was reasonable cause for the said failure.'
      Since the appellant had failed to give any reasonable
      cause for delay in furnishing of the TDS returns, the
      penalty levied by the Assessing Officer of Rs. 11,16,000/-
      is confirmed. It is also pertinent to mention that non-filing
      of the TDS return in time, having deducted the money,
      would cause great difficulty for the deductees to take
      credit for the said amounts. In view of the above
      discussion, since the appellant happens to be a habitual
      defaulter and has not submitted any reasonable cause for
      the said failure of not filing the TDS return within the
      stipulated time, the penalty levied by the Assessing
      Officer is confirmed."5.    The learned AR submitted before us that there is a
reasonable cause for not furnishing quarterly returns and the
delay was due to circumstances beyond the control of the
assessee. It was submitted that since during that period there
was a change in management,       affairs of the company was in
utter chaos, which resulted in delay in filing the returns. It was
submitted by the learned AR that the assessee has not only
paid the tax but has also paid interest in terms ofsection
201(1A)of the Act. The department is no way prejudiced as tax4                     I.T.A. No. 1275/Hyd/2013Sreemitra Estates Pvt. Ltd.along with interest has been paid. It was submitted that since
there is a reasonable cause in terms ofsection 273of the Act,
penalty should not have been imposed in case of the assessee.6.     The learned DR, on the other hand, submitted that since
the assessee has not only defaulted in making payment of the
tax deducted at source to the Government exchequer but has
also not furnished quarterly returns within the stipulated date,
penalty levied is completely justified.7.     We have heard the submissions of the parties and
perused the material on record as well as the orders of the
revenue authorities. The undisputed facts are, though the
assessee has deducted tax at source, he has failed to remit the
tax deducted to the Government account in terms with the
statutory provisions. So far as the TDS amount is concerned, it
does not belong to the assessee but the assessee is merely a
custodian of the Government money. Therefore, the paramount
duty of the assessee is to remit the TDS amount within the
statutory time limit. Payment of interestu/s 201(1A)of the Act
will   not   absolve   the   assessee       from   penal   consequences
because interest is compensatory in nature whereas penal
provisions are by way of deterrent measure. Therefore, for
escaping from rigors of penalty, the assessee has to satisfy the
Assessing Officer that there was a reasonable cause for the
default committed by him. As can be seen from the explanation
of the assessee, while before the Assessing Officer the
assessee had explained that the delay in filing of the quarterly
returns was due to telengana agitation and economic recession,
at the time of hearing before us it is contended that there was
change in management which resulted in utter chaos in affairs
of the company. This change in stance, in our view, was due to
the fact, as has been rightly brought out in the penalty order,5                   I.T.A. No. 1275/Hyd/2013Sreemitra Estates Pvt. Ltd.both the telengana agitation and economic recession were
much after the relevant period. Therefore, the explanation
furnished by the assessee cannot be taken at its face value and
appears to be an after thought. In this context, allegation of the
department that only because of the survey action, assessee
came forward to file the returns assumes importance. So far as
the contention of the learned AR that since the assessee has
paid the interestu/s 201(1A)of the Act, it should be absolved
from penal consequences, we are unable to accept it. If this
argument is accepted, then, penal provisions would become
redundant.   In every case assessee     would commit default by
not paying TDS amount        and absolve itself by paying TDS
amounts subsequently along with interestu/s 201(1A)and come
forward with a plea that since it has paid interest no penalty
should be imposed. In our view, such argument is totally
fallacious and deserves to be rejected at the first instance. So
far as the decision relied upon by the learned AR, though, there
is no dispute to the principles laid down therein, but the
application of the ratio laid down depends on the particular
facts involved in a case. The ratio laid down in a decision
cannot be applied uniformly to every case irrespective of the
factual position. Therefore, considering the totality of the facts
and circumstances of the case, we are firmly of the view that
since the assessee has failed to offer reasonable explanation in
terms ofsection 273Bof the Act, imposition of penalty in the
present case is justified. Accordingly, we confirm the order of
the CIT(A) in upholding the penalty imposed by the Assessing
Officeru/s 272A(2)(k). The grounds raised by the assessee in
this regard are dismissed.6                  I.T.A. No. 1275/Hyd/2013Sreemitra Estates Pvt. Ltd.8.     In the result, appeal of the assessee is dismissed.Order pronounced in the open court on 11/04/2014.Sd/-                                Sd/-
      (CHANDRA POOJARI)                   (SAKTIJIT DEY)
     ACCOUNTANT MEMBER                   JUDICIAL MEMBER


Hyderabad, dated 11 th April, 2014

kv


Copy forwarded to:1.     Sreemitra Estates Pvt. Ltd., 302, Shilpa Arcade, Road
       No. 3, Banjara Hills, Nagarjuna Circle, Above Chutneys
       Restaurant, Hyderabad - 500 034.2.     Addl. CIT, Range - 15, Hyderabad.3.     The CIT(A)-II, Hyderabad.4.     The CIT-(TDS), Hyderabad5.     The DR, ITAT, Hyderabad7               I.T.A. No. 1275/Hyd/2013Sreemitra Estates Pvt. Ltd.Description                      Date   Intls
S.No.
1.      Draft dictated on                                   Sr.P.S./P.S
2.      Draft placed before author                          Sr.P.S/PS
        Draft   proposed    &   placed                      JM/AM
3       before the second Member
4       Draft discussed/approved by                         JM/AM
        second Member
5       Approved Draft comes to the                         Sr.P.S./P.S
        Sr.P.S./PS
6.      Kept for pronouncement on                           Sr.
                                                            P.S./P.S.
7.      File sent to the Bench Clerk                        Sr.P.S./P.S
8       Date on which file goes to the
        Head Clerk
9       Date of Dispatch of order