Balu Vitthal Kharate, Nashik V. Deputy Commissioner of Income-tax, Circle - 3, Nashik

ITA 1597/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5248 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-07-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 23-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VODHAL RAJ SINGH
• Keywords: Bonafide belief; Reasonable cause
• Section: 273B

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1597/PUN/2017 / ASSESSMENT YEAR : 2011-12 BALU VITTHAL KHARATE, POOJA ROW HOUSE NO.B-2, VIDYA NAGAR, MAKHMALABAD, NASHIK 422 003. PAN : BEYPK5261C. . / APPELLANT. V/S THE DY.COMMISSIONER OF INCOME TAX, CIRCLE 3, NASHIK. . / RESPONDENT ASSESSEE BY : NONE (WRITTEN SUBMISSIONS FILED) REVENUE BY : SHRI VODHAL RAJ SINGH / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE O RDER OF COMMISSIONER OF INCOME TAX (A) 1, NASHIK DT.29.05.2017 FOR THE ASSESSMENT YEAR 2011-12. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME FOR A .Y. 2011- 12 ON 19.12.2013 DECLARING TOTAL INCOME OF RS.14,11,382/-. A O HAS NOTED THAT ASSESSEE WAS REQUIRED TO FILE THE RETURN OF INCOME O N OR BEFORE 31.03.2013 BUT THE RETURN OF INCOME THAT WAS FILED BY THE ASSESSEE ON / DATE OF HEARING : 31.07.2019 / DATE OF PRONOUNCEMENT: 19.08.2019 2 19.12.2013 WAS BEYOND THE DUE DATE OF FILING THE RETURN OF INCOME. SINCE THE ASSESSEE HAD FAILED TO FILE THE RETURN OF INCOME U/S 139(1) OF THE ACT, AO VIDE ORDER DT.15.04.2016 LEVIED PENALTY OF RS.5,000/- U/S 271 F OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD.CIT(A), WHO VIDE ORDER DT.29.05.2017 (IN APPEAL NO.NSK/CWT(A)-1/84/ 2016-17) CONFIRMED THE ORDER OF AO AND THEREBY DISMISSED THE APPE AL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US AND HAS RAISED THE FOLLOWING EFFECTIVE GROUND : ON THE BASIS OF FACTS AND THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE COMMISSIONER OF INCOME TAX, (APPEAL) 1, NASHIK, IS NOT JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY OF RS.5,000/- U/S 271F OF THE A CT. 3. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE THOUGH NOTICE WAS SERVED ON THE ASSESSEE. ASSESSEE H AS HOWEVER FILED WRITTEN SUBMISSIONS ON 29.07.2019. WE THEREFORE PROCEED TO DISPOSE OF THE APPEAL EX-PARTE QUA THE ASSESSEE BASED ON THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AND ON THE BASIS OF MATERIAL AVAILABLE ON RE CORD AND AFTER HEARING THE LD. D.R. 4. BEFORE US, LD. D.R. SUBMITTED THAT DURING THE FINANCIAL YEA R ENDING 31 ST MARCH, 2011 RELEVANT TO A.Y. 2011-12 ASSESSEE JOINTLY W ITH HIS OTHER FAMILY MEMBERS HAD SOLD AGRICULTURAL LAND FOR A TOTAL CONSID ERATION OF RS.3,52,36,500/- AND IN WHICH ASSESSEES SHARE WAS RS.48,3 3,334/-. ASSESSEE HAD NOT FILED THE RETURN OF INCOME FOR A.Y. 2011-1 2 WITHIN THE TIME STIPULATED UNDER SEC.139(1) OF THE ACT WHICH WAS 31.03.2013 BUT HOWEVER ASSESSEE HAD FILED THE RETURN OF INCOME ON 19.12.2013. H E SUBMITTED THAT THE CONTENTION OF THE ASSESSEE OF BEING AN ILLITERATE AGRIC ULTURIST, BEING NOT AWARE ABOUT THE INTRINSIC PROVISIONS OF THE I.T. ACT IS NOT ACCEPTABLE IN VIEW OF THE FACT THAT THE SALE HAD TAKEN PLACE UNDER THE G UIDANCE OF QUALIFIED 3 PRACTITIONERS AND LAWYERS. HE THEREFORE SUBMITTED THAT A SSESSEE HAD NOT DEMONSTRATED ANY REASONABLE CAUSE FOR NOT FILING THE RETU RN OF INCOME WITHIN THE TIME ALLOWED U/S 139(1) OF THE ACT AND THEREFORE, THE A O WAS FULLY JUSTIFIED IN LEVYING THE PENALTY. HE THUS SUPPORTED THE ORDER OF AO. 5. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL A VAILABLE ON RECORD INCLUDING THE WRITTEN SUBMISSIONS FILED BY THE ASSESS EE. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO LEVY OF PENALTY U /S 271F OF THE ACT. IT IS THE CONTENTION OF THE ASSESSEE THAT DURING THE YEAR UNDER CONSIDERATION, ASSESSEE JOINTLY WITH FIVE PERSONS OF HIS FAMILY HAD SOLD A GRICULTURAL LAND FOR A TOTAL CONSIDERATION OF RS.3,52,36,500/- AND IN WHICH ASSESS EES SHARE WAS RS.48,33,334/-. IT IS ASSESSEES SUBMISSION THAT ASSESSEE IS AN ILLITERATE AGRICULTURIST AND WAS NOT AWARE OF THE INTRINSIC PROVISIONS OF THE INCOME TAX ACT AND HE WAS UNDER THE BONAFIDE BELIEF THAT THE PROFITS EARNED ON SALE OF AGRICULTURAL LAND IS EXEMPT AND IS NOT CHARGEABLE TO TAX. SUBSEQUENTLY, WHEN HE CAME TO KNOW ABOUT HIS LIABILITY TO PAY THE TAX O N SALE OF LAND, HE FILED THE RETURN OF INCOME FOR A.Y. 2011-12 ON 19.12.2013 DE CLARING TOTAL INCOME OF RS.14,11,382/-. IT WAS ALSO THE ASSESSEES SUBM ISSION BEFORE THE LD.CIT(A) THAT HIS TOTAL INCOME NEVER EXCEEDED THE MAXIMU M AMOUNT CHARGEABLE TO TAX IN ANY OTHER YEAR AND IN THE YEAR U NDER CONSIDERATION ONLY DUE TO THE SALE OF AGRICULTURAL LAND, ASSESSEE WAS REQUIRED TO FILE THE RETURN OF INCOME. IT IS THEREFORE ASSESSEES SUBMISSION THAT TH E DEFAULT OF THE ASSESSEE OF NOT FILING THE RETURN OF INCOME WITHIN THE STAT UTORY LIMIT WAS ON ACCOUNT OF IGNORANCE AND BEING A TECHNICAL BREACH, THERE FORE THE PENALTY LEVIED U/S 271F OF THE ACT BE DELETED. THE AFORESAID CONTE NTIONS OF THE ASSESSEE HAVE NOT BEEN FOUND TO BE FALSE OR UNTRUE. 4 6. SEC.271F OF THE ACT DEALS WITH PENALTY FOR FAILURE TO FUR NISH THE RETURN OF INCOME. IT STATES THAT IF A PERSON WHO IS REQUIRED TO FURNISH THE RETURN OF INCOME AS REQUIRED U/S 139(1) OF THE ACT OR BY THE PROVIS IONS TO THAT SECTION, FAILS TO FURNISH SUCH RETURN BEFORE THE END OF THE RELEVAN T ASSESSMENT YEAR, THE AO MAY DIRECT THAT SUCH PERSON SHALL PAY, BY WAY OF PENALTY, A SUM OF RS.5,000/-. SEC.273B OF THE ACT DEALS WITH PENALTY NOT TO BE IMPOSED IN CERTAIN CASES. IT STATES THAT NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISIONS OF CLAUSE (B) OF SUB-SECTION (1) OF SEC.271 AND VAR IOUS SECTIONS INCLUDING SEC.271F, NO PENALTY SHALL BE IMPOSABLE ON THE ASSE SSEE FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THAT FAILURE. ON CONJOINT READING OF S EC.271F AND 273B OF THE ACT, IT CAN BE SEEN THAT IT IS NOT MANDATORY U/S 271F OF THE ACT THAT A PENALTY MUST BE IMPOSED IN EVERY CASE IF THE CONDITIONS LAID DOWN IN THE SAID SECTION ARE ESTABLISHED. THEREFORE NO PENALTY U/S 271F O F THE ACT SHALL BE IMPOSED ON ASSESSEE IF HE PROVES THAT THERE WAS REASON ABLE CAUSE FOR SAID FAILURE. THE EXPRESSION REASONABLE CAUSE USED IN SEC.27 3B OF THE ACT IS NOT DEFINED UNDER THE ACT. HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. TRIUMPH INTERNATIONAL FINANCE (I) LTD. (2012) 345 ITR 270 HAS OBSERVED THAT THE EXPRESSION REASONABLE CAUSE WOULD HAVE WIDER CONNOTATION THAT THE EXPRESSION SUFFICIENT CAUSE AND THEREFORE THE EXPRE SSION REASONABLE CAUSE IN SEC.273B OF THE ACT FOR NON-IMPOSITION OF PENALTY WOULD HAVE TO BE CONSTRUED LIBERALLY DEPENDING UPON THE FACTS OF EACH CASE. 7. IN THE PRESENT CASE, IT IS ASSESSEES SUBMISSION THAT HE IS AN ILLITERATE AGRICULTURIST, HE WAS NOT SUBJECT TO INCOME TAX IN ANY E ARLIER YEARS, HE WAS UNDER A BONAFIDE BELIEF THAT PROFITS EARNED ON SALE OF AGRICU LTURAL LAND IS NOT SUBJECT TO INCOME TAX AND WHEN HE CAME TO KNOW THAT HE WAS LIABLE TO INCOME TAX ON PROFITS EARNED ON SALE OF AGRICULTURAL LAND, HE FILED THE RETURN 5 OF INCOME. THE AFORESAID CONTENTIONS OF THE ASSESSEE HAS NOT BEEN FOUND TO BE FALSE / UNTRUE. IN SUCH CIRCUMSTANCES, WITHOUT THERE BEING ANY MATERIAL TO THE CONTRARY, IT CAN BE SAID THAT ASSESSEE WAS UND ER A BONAFIDE BELIEF OF HE BEING NOT TAXABLE. AT THIS MOMENT IT WOULD ALSO BE RELE VANT TO REFER TO THE OBSERVATION MADE BY THE TRIBUNAL IN THE CASE OF WTO VS. S .P. JAYAKUMAR REPORTED IN (1983) 3 ITD 221 (ITAT) MAD. 6. THAT THE TAX LAWS OF THIS COUNTRY ARE COMPLEX A ND COMPLICATED AND OFTEN REQUIRE FOR COMPLIANCE, THEREWITH THE ASSISTANCE OF TAX PRACTITIONERS SPECIALISING IN THIS FIELD, IS A WELL KNOWN FACT. I T IS EQUALLY WELL KNOWN FACT THAT THE LEGISLATION IN THIS FIELD UNDERGOES SO FREQUENT CHANGES AND AMENDMENTS THAT IT IS NOT POSSIBLE FOR EVEN A PERSON SPECIALIS ING IN THIS FIELD, INCLUDING THE TAX ADMINISTRATOR, TO CLAIM THAT HE KNOWS WHAT EXAC TLY THE LAW IS ON A PARTICULAR GIVEN DAY OR PERIOD WITHOUT MAKING REFER ENCES TO THE HISTORY OF THE ENACTMENTS. IN SUCH CIRCUMSTANCES, IT WOULD BE A TR AVESTY OF TRUTH AND JUSTICE TO HOLD THAT THE ASSESSEE KNEW OR OUGHT TO HAVE KNO WN THE CORRECT LAW AND COMPLY THEREWITH, EVEN THOUGH, IN FACT, HE WAS NOT AWARE OF THE PROVISIONS. WHEN THE FACTS IN THE PRESENT CASE ARE SEEN IN THE LIGHT OF THE ABOVE OBSERVATIONS, WE ARE OF THE VIEW THAT IN THE PRESENT C ASE, THE BELIEF OF ASSESSEE CAN BE CONSIDERED TO BE A REASONABLE CAUSE FO R FAILURE AS CONTEMPLATED IN SEC.273B OF THE ACT IN FILING THE RETURN OF INCOME. IN SUCH CIRCUMSTANCES, WE THEREFORE DIRECT THE DELETION OF PENALTY. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 19 TH DAY OF AUGUST, 2019. SD/- S D/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 19 TH AUGUST, 2019. YAMINI 6 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, NASHIK. PR. CIT 1, NASHIK. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.