10 June 2024


Income Tax Appellate Tribunal

Guruashish Construction Pvt. Ltd. vs. Joint Commissioner of Income Tax



Direct Taxation

No penalty could be levied on an assessee for a mere technical venial breach

Present appeal arises out of the order by the learned Commissioner of Income Tax (Appeals), in the matter of imposition of penalty under Section 272A(2)(k) of the Income Tax Act, 1961 (IT Act). The only effective issue to be decided in present appeal is as to whether the learned CIT(A) was justified in upholding the levy of penalty in the sum of Rs.500,700 under Section 272A(2)(k) of the IT Act in the facts and circumstances of the instant case.

Assessee is engaged in the business of real estate development. A survey action under Section 133A of the IT Act was conducted in its premises pursuant to which, the TDS defaults to the tune of Rs.2,31,71,365 was detected leading to the commencement of proceedings under Section 201(1) / 201(1A) of the IT Act. The assessee had submitted that, it had not claimed any tax deduction of expenditure on which TDS default had occurred. It had also submitted that, the majority of said default related to interest payments made to an entity identified as IL & FS which had already accounted for the said interest receipts in its return. The assessee also stated that, it had paid the balance amount of tax in default amounting to Rs.70,27,550 prior to the date of commencement of the present penalty proceedings. The assessee submitted that, since the tax deducted was not paid in time, the TDS statements could not be filed electronically. According to assessee, the same constituted reasonable cause within the meaning of Section 273B of the IT Act and hence, there cannot be any levy of penalty under Section 272A(2)(k) of IT Act on it.

Admittedly, assessee had duly deducted the tax at source and had also remitted the same, with some delay, for which it had already been penalised with interest as per the Act. The interest under Section 201(1A) of the IT Act had also been paid by the assessee. Admittedly, the assessee had indeed filed its TDS statements under Section 200(3) of the IT Act beyond prescribed time. But, there is absolutely no loss to the exchequer pursuant to the said delay as the entire taxes that were due to the Government had already been duly remitted by the assessee. Hence, the default committed by the assessee is only a minor technical and venial breach. It is settled law that, no penalty could be levied on an assessee for a mere technical venial breach, more especially when there is no loss caused to the exchequer due to such breach. The learned AO is directed to delete the penalty levied under Section 272A(2)(k) of IT Act in the facts and circumstances of the instant case. Appeal of the assessee is allowed.

Tags : Penalty Imposition Legality

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