Judgment:
These two appeals had been filed by the assessee against the orders of the CIT, dated 28th June, 2000, and 18-7-2000. The appeals are interlinked and concerned the same assessee. These were heard together, so are being disposed of by this conunon order.
First we shall deal with ITA No. 689/Chd/2000. In this appeal, the sole grievance of the assessee relates to the penalty of Rs. 36,400 which had been levied under section 272A(2)(f) of the Income Tax Act. The learned Commissioner in the penalty order passed under section 272A(2)(f) of the Income Tax Act, observed that the assessee being responsible person was required to deduct tax under section 194A of the Income Tax Act, 1961, at the prescribed rate of interest paid/credited, exceeding Rs. 2,500 during the financial year under consideration.
However, it did not deduct tax since the persons to whom interest was paid/credited made declarations under section 197A(lA) in Form No. 15H.According to him, one copy of each declaration was due to be delivered in the office of the C by the 7th day of the month next following the month in which the declaration was furnished to the assessee-firm. The learned Commissioner pointed out the delay in furnishing the Form No.15H as per following details : Therefore, the learned Commissioner (Appeals) asked the assessee to show cause as to why penalty under section 272A(2)(f) may not be imposed. In response to that the assessee replied that in each account interest amounting to less than Rs. 2,500 was only credited on 30-9-1997, therefore, delivery of declaration in Form No. 15H was not required. It had been further stated that one copy of each declaration had been submitted on 7-4-1998 since the aggregate amount of interest exceed Rs. 2,500 after credit of further interest on 31-3-1998. The learned Commissioner (Appeals) did not find any merit in the aforestated explanation of the assessee and levied the penalty of Rs. 36,400, Now the assessee is in appeal. The learned counsel for the assessee reiterated the submission made before the Commissioner (Appeals) and further submitted that the interest exceeded Rs. 2,500 only on 31-3-1998 as such Form No. 15H was submitted on 7-4-1998. It was argued that the assessee was under a bona fide belief that the Form no. 15H was to be submitted only when the interest credited exceeded the limit of Rs. 2,500. As such, the mistake, if any, was a technical mistake and there was no mala fide intention of the assessee. He further submitted that the loans were temporary loans and as on 30-9-1997, the assessee was not in a position to know as to whether the depositor will continue with the deposit and the interest would exceed Rs. 2,500 at the year-end, i.e., 31-3-1998. It was also submitted that in respect of all other credits wherein the interest exceeded Rs. 2,500, Form No. 15H had been furnished on the due date. Reliance was placed on the following cases : (i) ITA No. 361/Chd/2001, The Manager, Union Bank of India, Khanna v.CIT (iii) ITA No. 830/Chd/1996, The Manager, Allahabad Bank, Ludhiana v.CITChd/2000, The Manager, Indian Overseas Bank, Ludhiana v. Income Tax Officer In her rival submission, the learned Departmental Representative strongly supported the order of the Commissioner (Appeals) and stated that the assessee. had not filed Form No. 15H on due date as such the default has been committed and the Commissioner (Appeals) was justified in levying penalty under section 272A(2)(f) of the Income Tax Act.
We have considered the rival submissions,and have gone through the material available on the record. In the instant case, it is noticed that the assessee had not deposited Form No. 15H in respect of only two persons from whom form had been received on 29-9-1997. The interest credited on 30-9-1997, was Rs. 1,750 and Rs. 2,377 in respect of Smt.
Baljinder Kaur and Smt. Baljit Kaur, respectively. However, on 31-3-1998, the interest credited was Rs. 1,908 and Rs. 2,591. From the above, it would be clear that as on 30-9-1997, the interest credited was less than Rs. 2,500. It only exceeded the prescribed limit of Rs. 2,500 on 31-3-1998 and the assessee furnished the Form No. 15H along with return in Form No. 27A on 7-4-1998 which shows that the assessee was under this impression that Form No. 15H should have been submitted whenever the interest credited exceeds Rs. 2,500. In view of that, we find some force in this contention of the learned counsel for the assessee that there was no mala fide intention and only the default was technical default because in all other cases where tax (sic) exceeded Rs. 2,500, the assessee filed Form No. 15H on the due date, That contention of the learned counsel for the assessee had not been rebutted by the learned Departmental Representative. Considering the totality of the facts as narrated hereinabove, we are of the view that the default committed by the assessee was only a technical default and the assessee was having a bona bde belief that Form No. 15H was to be submitted only when the amount of interest credited exceeds Rs. 2,500.
The -Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa "Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances.
Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." Considering the ratio laid down by the Hon'ble Supreme Court in the above case, we are of the opinion that no penalty was leviable on the facts of the present case. We, therefore, delete the penalty levied by the learned Commissioner (Appeals).
In ITA No. 755/Chd/2000 for assessment year 1998-99, the issue involved is similar having the identical facts as were in the assessment year 1997-98 even the rival contentions are also similar, therefore, our findings given in assessment year 1997-98 in ITA No. 689/Chd/2000 shall apply mutatis mutandis. , 9. In the result, the appeals of the assessee are allowed.