Income Tax Appellate Tribunal - Delhi
Bansal Bros. vs Deputy Commissioner Of Income-Tax on 19 August, 1997
ORDER
Smt Moksh Mahajan, Accountant Member
1. In an appeal filed, the assessee is aggrieved against the order of the learned Commissioner of Income-tax (Appeals) whereby the penalty levied at Rs. 3,19,000 under section 272A(2)(g) of the Act is confirmed by him. Explaining the facts leading to imposition of penalty, Shri Predeep Dinodia, the learned AR submitted that the assessee is a small firm which has raised loans from certain relatives of the partners to whom interest was payable either annually or half yearly or monthly as per the agreement arrived at with them. The assessee has been paying/crediting the due interest on mutually agreed time intervals (Annexures to Form 26A - P. Nil of Paper Book). The amount of TDS in question at Rs. 8,062 was not only deducted but also deposited in the Treasury within the stipulated time. Harbouring under an impression that as in the case of salaries, a consolidated certificate is to be issued, it also furnished a similar certificate to each of the payees at the year end. In doing so, there was no loss suffered by either of the payees. The learned DCIT imposed a penalty of Rs. 3,19,000 computing it at Rs. 100 per day for 3,192 days - the aggregate of delays for issuing TDS certificate for each deduction. This is not only enormous considering the amount involved but is uncalled for. The formats in which certificates are to be furnished have undergone changes from time to time and it was difficult to keep pace with the same more so in the case of a small party like the assessee.
2. According to the learned AR, the unified TDS certificate in Form No. 16 was provided for with effect from 1-4-1989. Subsequently vide Income-tax (9th Amendment) Rules, 1988 - 174 ITR (St.) 26, 3 forms were introduced, namely Form Nos. 16, 16A and 16B. This was done by amending Rule 31 of the Income-tax Rules through Notification No. S.O. 148(E) dated 28-2-1991. New Forms were to be use by tax deductors for issuing any certificate for TDS after 28th February, 1991. This is as provided in CBDT Circular No. 597 dated 27-3-1991. Vide circular No. 664 dated 19-9-1993, Form No. 16B was discontinued and instead Form No. 16A was substituted w.e.f. 1st July, 1993. Thus, TDS certificates which were required to be issued in Form No. 16B were to be issued in Form No. 16A w.e.f. 1-7-1993. This was done by amendment made to rule 31 of the Income-tax Rules, 1962. It was then argued that the rule being procedural and not substantive is applicable to all the proceedings pending on date when the rule came into being. Reliance was placed on the decisions of Hon'ble Supreme Court in the cases of CWT v. Sharvan Kumar Swarup & Sons [1994] 210 ITR 886/76 Taxman 620 and Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677/91 Taxman 205. According to the learned AR, at best there was a technical breach. As the assessee harboured under a bona fide belief that only one certificate has to be issued to the party, the levy of penalty is not called for. Reliance was placed on the following decisions of the various Benches of the Appellate Tribunal :-
(1) Motisagar Estate (P.) Ltd. v. Dy. CIT [1993] 47 ITD 72 (Pune), (2) Executive Engineer v. Dy. CIT [1994] 48 ITD 414 (Pune), (3) Sudershan Auto & General Finance v. CIT [1997] 60 ITD 177 (Delhi), (4) ITO v. Srichand Hariram [1997] 61 ITD 33 (Mum.) and (5) Nestle India Ltd. v. ACIT [1997] 61 ITD 444 (Delhi).
The learned DR on the other hand, while admitting that the quantum of penalty far exceeded the default of the assessee, however, maintained that since the minimum penalty was levied, no relief could have been allowed to the assessee.
3. We have carefully considered the rival submissions. We have also gone through the decisions as cited by the learned AR. The assessee has been penalised for default committed under section 272A(2)(g) of the Act. The relevant provisions read as under :-
"272A(2) if any person fails -
(a) to (f) ** ** **
(g) to furnish a certificate as required by section 203 or section 206C or [The later being inserted by Finance (No. 2) Act, 1991 with effect from 1-10-1991]".
The certificates as mentioned in clause (g) relate to tax deducted as source. This is in relation to the provisions of section 192, section 194, section 194A, etc. etc. As per the provisions of section 203 of the Act, the person deducting tax in accordance with the specified provisions of sections mentioned therein is to furnish a certificate to the person in a prescribed form within the stipulated time of credit or payment of the sum or as the case may be from the time of issue of a cheque. The certificate is to be issued to the person on whose account such credit is given or payment is made or cheque is issued intimating the amount of tax rate at which the tax is deducted and such credit is given or payment is tax is deducted and such other particulars as may be prescribed. The person deducting tax at source is to apply for allotment of tax deduction account number which is to be quoted in the certificate (203A of the Act). In the case of the assessee, the tax deducted at source relates to the interest payable on deposits which falls under section 194A of the Act. Rule 31 lays down the procedure in regard to the format of certificates as well time and periodicity for the issue of the same. A comprehensive procedure has, thus, been laid down not only for deduction of tax at source but also the manner in which it is to be done. There are four stages involved in the entire process - one when the amount of interest is either credited or paid, second when the tax is to be deposited in the Government Treasury, third the procedure for obtaining account number from the Government and lastly, when the certificate is to be issued to the party on whose account the tax is deducted. Annual return is also to be furnished to the Government under section 206 of the Act indicating the particulars of the entire transaction.
4. A close look at these provisions would show that a deterrent action has been provided for each of the defaults. This is in the form of a penalty/interest. One, however, finds that scale of penalty for non-deduction of tax and non-deposit of the same is different from the one leviable for the non-issue of certificate within the stipulated time to the party on whose behalf the tax is deducted. While under section 201 and section 201A, the penalty is leviable with reference to the tax to be deducted/deposited for non-furnishing of a certificate to the party, it is in regard to the amount per day during which the default continues. The scale of penalty is Rs. 100 per day (Minimum) which can extend to Rs. 200 per day. Elaborate procedure has been laid down for implementation of the provisions relating to the recovery of tax at source. This is as prescribed in Rules relating to deduction of tax at source in Part 4 of the Income-tax Rules, 1961. Amongst others, Rule 30 lays down the mode of payment to Government account of tax deducted at source. Rule 31 relates to certificate of tax deducted at source to be issued to the person on whose behalf the tax is to be deducted.
5. The levy of penalty is to be seen in the backdrop of nature and reasons for the default for which the penalty has been imposed. As to the nature of default, we find that instead of issuing certificate at the time of credit or payment of the sum or issue of a cheque for payment of any amount as prescribed in section 203 of the Act, the assessee has issued a consolidated certificate to the party after the end of the accounting period. It is not a case where no certificate at all has been issued to the party. Thus, at best the default of the assessee could be termed as technical breach. This is more so when we find that as per action points given below the form, the certificate is to be filed along with the return of income for the relevant year and not as and when certificates are issued. This apart, comparison of the forms prescribed for furnishing of annual return under section 206 and that under section 203 show that the information required to be furnished at the end of the assessee is almost the same. It is not the case of the department that the assessee has not furnished annual return in regard to interest under section 206 of the Act within the prescribed time. It is also admitted that the assessee carries on business on a small-scale and in the year under consideration, the assessment has been framed on a loss as returned. The tax deducted at source on the other hand is Rs. 8,062 which has also been deposited in time. On the other hand, assessee's explanation that non-issue of multiple certificate was on account of wrong impression on its part is not something which is unbelievable. In these circumstances, the default of the assessee could not be termed so serious to call for penalty as harsh as imposed. In this context, we would like to quote the observations of the Hon'ble Supreme Court in the case of CIT v. Podar Cement (P.) Ltd. [1997] 92 Taxman 541 wherein it has been stated that the provisions of the Act could not be construed in a manner to make them an instrument of oppression. While holding so, the observations of Hedge Judge in the case of R. B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 (SC) have also been cited which we would like to quote :-
"We are very much alive to the legal position that it is true that there is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in - nothing is to be implied. We can look only fairly at the language used. Nonetheless, the tax laws have to be interpreted reasonably and in consonance with justice. This is well-settled by numerous decisions of the Supreme Court itself."
In view of the tax deducted at source being deposited in the treasury in time and parties not suffering any loss on account of non-issue of certificate, we would cancel the penalty as levied.
6. In the result, the appeal is allowed.