Issue : Delay in filing return due to failure of payer to deposit TDS ,will the Assessee be liable for penalty or interest ?
No penal or financial consequence would be visited upon assessee on account of delay in uploading return of income for failure of third person to pay tax deducted at source from payment made to assessee, into treasury in time
HIGH COURT OF BOMBAY
Zulfikar Jeewanjee Moriswala
Deputy Commissioner of Income-tax, (TDS)- 2(3), Mumbai
WRIT PETITION (L) NO. 337 OF 2015
FEBRUARY 18, 2015
F.B. Andharujina, Sr. Adv. and Manek Andharujina for the Petitioner. Arvind Pinto, Adv. and Ms. Akshita Mehta, Advocate for the Respondent.
1. Mr. F.B. Andharujina, learned Senior Counsel for the petitioner seeks liberty to amend the petition to add Commissioner of Income Tax-17 as party respondent and suitably amend the prayer clause. Mr. Pinto, learned Counsel for the revenue has no objection to the amendment being carried out. Liberty granted to carry out the amendment. The amendment to be carried out by Friday, the 20 February 2015. Reverification dispensed with.
2. This petition under Article 226 of Constitution of India has been filed seeking a direction to the respondent – assessee to accept the petitioner’s Return of Income for Assessment Year 2014-15 which is not being accepted by its system inview of non deposit of tax deducted at source by Respondent No.5. The petitioners had sold their property to Respondent No.5 who interalia deducted a sum of Rs.1.23 Crores as the Tax Deducted at Source (the ‘TDS’) but had failed to deposit it with the revenue. Yet it appears no action was taken by the Respondent-Revenue against Respondent No.5 to deposit the TDS inspite of petitioner’s repeated request that the non-deposit does cause them prejudice.
3. The petitioners are Non Residents Indians who in February 2014 alongwith another resident co-owner sold immovable property to Respondent No.5 i.e. M/s. Vardhaman Developers Ltd. for a consideration of Rs.9 Crores. M/s Vardhaman Developers Ltd. after deducting the tax at source at 20% out of the sums payable to each of the petitioners (aggregating to Rs.1.23 Crores) paid the balance consideration to the petitioners. In terms of Section 200 of the Income Tax Act, 1961 (the ‘Act’) read with the Income Tax Rules, 1962, the person who deducts tax at source is required to deposit the tax deducted within 7 days of the end of the month in which the deduction is made. However, M/s Vardhaman Developers Ltd., after having deducted the tax at source and paying only balance consideration to the petitioners, did not deposit the same into the Government Treasury.
4. The petitioners by notice dated 21 July 2014 requested M/s Vardhaman Developers Ltd. to deposit the tax deducted at source from the consideration payable to them with the Revenue. It was pointed out that this non deposit would cause them prejudice as they would not be able to upload their return of income for the Assessment Year 2014-15 which was due to be filed on 31 July 2014. However M/s Vardhaman Developers Ltd. did not act upon the same. Consequently, the petitioners could not upload their return of income for Assessment Year 2014-15. Thereafter, on 12 August 2014 and 26 December 2014, the petitioners by their Chartered Accountant’s letter brought the aforesaid facts to the notice of Respondent No.3 namely Commissioner of Income Tax (TDS), particularly the failure of Respondent No.5 to pay the tax deducted at source into the Government Treasury and the prejudice to the petitioners in being unable to file/upload their Returns of Income for the Assessment Year 2014-15. However the Respondent-Revenue were unmoved and apparently did not take any action against M/s Vardhaman Developers Ltd. to the prejudice to the petitioner. It was this callous attitude of the respondent-revenue and apparently dishonest act on the part of M/s Vardhaman Developers Ltd. that compelled the petitioners to file the present petition.
5. The petition was on board on 13 February 2015 and we were shocked at the attitude of the Respondent-Revenue and also the conduct of Respondent No.5 which has resulted in unnecessary harassment of the petitioners. At which time Mr. Pinto, learned Counsel appearing for respondent sought time to take instructions. This on account of the fact that we were of the view that the petitioners should not suffer in any manner for no fault of theirs. Today, Mr. Pinto on instructions states that the Respondent No.5 viz. M/s Vardhaman Developers Ltd. have already paid the tax deducted at source into the Government Treasury together with interest and the petitioners would now be able to upload their returns of income for the Assessment Year 2014-15. Mr. Pinto on instructions further states that once return of income has been uploaded, the Respondent-Revenue could be in a position to make a statement that no penal or financial consequence would be visited upon the petitioners on account of delay in uploading the return of income for the failure of Respondent No.5 to pay the tax deducted into the treasury.
6. Ms. Akshita Mehta, learned Counsel appearing for Respondent No.5 states that the amount of tax deducted at source alongwith interest has already been deposited in Government Treasury and no sooner they receive Form 16-A which is generated online, the same would be handed over to the petitioners.
7. In the above view, we adjourn the hearing of petition to enable the petitioners to uploaded its Return of Income and enable Mr. Pinto to take instructions that no penal and/or financial consequence would visit the petitioners only on account of delay in uploading their Returns of Income of Assessment Year 2014-15 for no fault of theirs.
8. S.O. to 27 February 2015