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Judgment
The revenue is aggrieved by an order dated 27-10-2006 passed by the Income Tax Appellate Tribunal, Delhi Bench ''D'' in ITA Nos. 2260/Delhi/ 2004 and 2261 /Delhi/2004 for the financial years 2001-02 and 2002-03.
The only issue that arises in this case is with regard to the quantum of penalty for failure on the part of the assessed to deposit TDS. The assessing officer required the assessed to pay 100 per cent penalty u/s 221 of the Income Tax Act, 1961. According to learned Counsel for the revenue this was because the assessed did not offer any valid Explanation for failure to deposit the TDS.
In appeal, the Commissioner (Appeals) reduced the penalty amount to 10 per cent of the total tax and this view of the Commissioner was upheld by the Tribunal. That is how the revenue is before us u/s 260A of the Income Tax Act, 1961.
Having gone through the order passed by the Tribunal as well as having heard learned Counsel for the revenue, we find that it has come on record that the assessed had rendered all possible co-operation with the Income Tax department during the proceedings u/s 201(1) and Section201(1 A) of the Act. The tax due was deposited, though admittedly after some delay, but this was only the first such instance of default committed by the assessed.
The Gauhati High Court in Braja Lal Bamli v. State of Tripura (1990) 78 STC 283 as well as the Kerala High Court in the case of K. Rajendran Nairv. State of Kerala (1999) 116 STC 266 took the view that the maximum penalty should not be imposed mechanically but only for discernible reasons. The Gauhati High Court held:
The quantum of penalty, subject to the maximum fixed by the statute, has been left to the discretion of the Authority concerned and the said discretion being a judicial discretion must be exercised on a consideration of all the relevant facts and circumstances of the case, including the degree of contumaciousness involved. The maximum penalty should be reserved only for exceptionally bad cases.
We are satisfied, having gone through the record, that there was no illegality committed by the Commissioner as well as by the Tribunal in imposing the penalty of only 10 per cent, as there were no special reasons warranting imposition of the maximum penalty. The authorities have exercised their discretion in accordance with law and have committed no error.
No substantial question of law arises.
Dismissed.