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[2007] 165 Taxman 11 (Delhi)/[2009] 311 ITR 208 (Delhi) [2007] 165 TAXMAN 11 (DELHI) HIGH COURT OF DELHI Commissioner of Income-tax* (TDS) v. General Engg. Works MADAN B. LOKUR AND V.B. GUPTA, JJ. IT APPEAL NOS. 649 AND 678 OF 2007 AUGUST 2, 2007 Section 272A of the Income-tax Act, 1961 - Penalty - For failure to answer question, sign statements, etc. - Assessment year 2000-01 - Since there was delay in issuing TDS certificates penalty under section 272A(2)(g) was imposed on assessee - Tribunal observed that assessee-company was under lock-out which had not only affected production, but also carrying out other statutory obligations, as a result of which most of employees had left and assessee was forced to work with skeleton staff and no senior/experienced person was left for looking after tax matters and that levy of penalty under section 272A(2)(g) is subject to reasonable cause as stipulated under section 273B - Tribunal, accordingly, held that there was reasonable cause with assessee for failure to issue TDS certificates within stipulated time - Whether Tribunal was justified - Held, yes FACTS The Assessing Officer noticed that the assessee had not issued TDS certificate within the prescribed time. Since there was delay, he imposed penalty under section 272A(2)(g), after rejecting the assessee's explanation that the firm was incurring heavy losses over the years and is revenue-generating activities had been hampered due to labour unrest and since most of employees had left there was no experienced person look after the tax matters. On appeal, the Commissioner (Appeals) deleted the penalty. On revenue's appeal, the Tribunal affirmed order of the Commissioner (Appeals) holding that there was reasonable cause with the assessee for failure to issue the TDS certificates within the stipulated time. The Tribunal observed that the assessee was under lock-out which had not only affected the production, but also carrying out other statutory obligations, as a result of which most of employees had left and the assessee was forced to work with skeleton staff and no senior/experienced person was left for looking after tax matters and that levy of penalty under section…

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