The Sub Registrar, Sub Registrar Office Dasada, RAJKOT-GUJARAT V. The Income Tax Officer, TDS-1, Ahmedabad

ITA 175/RJT/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6639 (ITAT-RAJKOT)
• Duration Of Justice: 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 10-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Keywords: Bonafide belief
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE SHRI S.V. MEHROTRA , ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY , MEMBER ITA NO. 175 / RJT /201 6 : ASS T. YEAR : 2015 - 16 THE SUB REGISTRAR SUB REGISTRAR OFFICE DASADA, C/O. D.R. ADHIA , OM SHRI PADMALAYA , BESIDE TRIKAMRAIJI HAWELI, OPP. HOTEL IMPERIAL PALACE, 16 JAGNATH PLOT, DR. YAGNIK ROAD, RAJKOT. (APPELLANT) VS ITO, TDS - 1, AHMEDABAD (RESPONDENT) APPELLANT BY : WRITTEN SUBMISSION RESPONDENT BY : SHRI AVINASH KUMAR, DR DATE OF HEARING : 2 2 /0 3 /201 7 DATE OF PRONOUNCEMENT : 24 /0 3 /201 7 O R D E R PER K. NAR A SIMHA CHARY, MEMBER, JM : THIS APPEAL IS CHALLENGING THE ORDER DATED 7.4.2016 PASSED BY THE DIRECTOR OF INCOME TAX (I&CI), AHMEDABAD IN ORDER NO. DIT(I&CI)/AHD ./PENALTY/271FA/2015 - 16/16. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FAILED TO FURNISH THE AIR WITHIN THE STIPULATED TIME. UNDER THE PROVISIONS OF SECTION 285BA OF THE ACT, EVERY PERSON WHO IS AN ASSESSEE OR OTHER CATEGORIES ENUMERATED THERE AND RESPONSIBLE FOR REGISTERING OR RESPONSIBLE FOR 2 I T A - 1 7 5 / R J T / 2 0 1 6 T H E S U B - R E G I S T R A R D A S A D A REGISTERING, OR, MAINTAINING BOOKS OF ACCOUNT OR OTHER DOCUMENT CONTAINING A RECORD OF ANY SPECIFIED FINANCIAL TRANSACTION, UNDER ANY LAW FOR THE TIME BEING IN FORCE, SHALL FURNISH AN ANNUAL INFORMATION R ETURN, IN RESPECT OF SUCH SPECIFIED FINANCIAL TRANSACTION WHICH IS REGISTERED OR RECORDED BY HIM DURING ANY FINANCIAL YEAR BEGINNING ON OR AFTER THE 1ST DAY OF APRIL, 2004 AND INFORMATION RELATING TO WHICH IS RELEVANT AND REQUIRED FOR THE PURPOSES OF THIS ACT, TO THE PRESCRIBED INCOME - TAX OR AUTHORITY OR AGENCY. ASSESSEE FALLING WITHIN THE AMBIT OF SECTION 285BA FAILED TO COMPLY WITH THIS LEGAL REQUIREMENT FOR THE PERIOD OF 201 5 - 1 6. A NOTICE DATED 27 . 11 .201 5 WAS ISSUED BY THE AO CALLING U P ON THE ASSESSEE TO FILE THE AIR ON OR BEFORE 26.12.2015 . BUT T HE ASSESSEE COMPLIED WITH THE REQUIREMENT OF SECTION 285BA BY FILING THE ANNUAL INFORMATION RETURN BY 31.12.2015 WITH A DELAY OF FOUR DAYS. WHEN ASKED AGAIN BY WAY OF ANOTHER LETTER DATED 18.3.201 6, ASSESSEE E XPLAINS THAT ON A CCOUNT OF CHANGE IN OFFICE INCUMBENCY DUE TO MEDICAL LEAVE, THE DELAY OCCURRED. ON THAT THE OFFICE OF THE DIRECTOR OF INCOME TAX (INTELLIGENCE AND CRIMINAL INVESTIGATION) SERVED PENALTY ORDER DATED 07.4.2016 LEVYING PENALTY OF RS. 10700/ - FOR THE DELAY OF 107 DAYS IN FURNISHING AIR IN RESPECT OF AY 2015 - 16 TILL 26.12.2015 AND A SUM OF RS.2,000/ - FOR THE FOUR DAYS DELAY SUBSEQUENTLY . 3. CHALLENGING THE IMPOSITION OF PENALTY, THE ASSESSEE PREFERRED THIS APPEAL RAISING THE AS TO W HETHER ON THE FACT AND IN THE CIRCUMSTANCES, LD. DIRECTOR OF INCOME TAX IS JUSTIFIE D BY IMPOSING PENALTY U/S 271FA . 4. IT IS THE ARGUMENT OF THE LEARNED AR THAT THE ASSESSEE EXPLAINED THE DELAY WITH SUFFICIENT CAUSE AND AFTER THE ASSESSEE COMPLIED WITH THE 3 I T A - 1 7 5 / R J T / 2 0 1 6 T H E S U B - R E G I S T R A R D A S A D A DIRECTION WITHIN THE EXTENDED TIME, IT IS NOT OPEN FOR THE AUTHORITIES TO RESORT TO THE PENALTY PROCEEDINGS UNDER SECTION 271 FA OF THE ACT. ACCORDING TO HIM, NON - COMPLIANCE WITH THE REQUIREMENT OF SECTION 285BA OF THE ACT TILL THE NOTICE WAS ISSUED, WAS NON - INTENT IONAL BUT ONLY DUE TO THE FACT THAT THE ASSESSEE WAS NOT AWARE OF THE EXISTENCE OF SUCH AN OBLIGATION. LEARNED DR, ON THE OTHER HAND, SUBMITTED THAT THE DEPARTMENT IS PERIODICALLY LAUNCHING AWARENESS CAMPAIGNS BY ADVERTISING IN THE PRINT AND VISUAL MEDIA A BOUT THE OBLIGATION OF THE SPECIFIED PERSONS FOR FILING OF AIR BY THEM, AND IT IS NOT OPEN FOR THE ASSESSEE TO CONTEND THAT THEY ARE NOT AWARE OF THE OBLIGATION BECAUSE THE ASSESSEE GOT THE ACCOUNTS OF ALL BRANCHES CONSOLIDATED AND AUDITED, FILED INCOME TA X/TDS RETURNS AND AWARE OF THE OBLIGATIONS UNDER THE ACT. 5 . BASING ON THE ABOVE CONTENTIONS, THE POINT THAT ARISES FOR OUR CONSIDERATION IS WHETHER THERE IS SUFFICIENT CAUSE FOR THE ASSESSEE FOR NON - COMPLIANCE WITH THE REQUIREMENT OF SECTION 285BA OF THE ACT TILL THE NOTICE WAS SERVED? 6 . FACTS ARE ADMITTED. THERE IS NO DISPUTE THAT THE ASSESSEE, IS AN ENTITY FALLING WITHIN THE AMBIT OF SECTION 285BA OF THE ACT, IT FAILED TO COMPLY WITH THIS LEGAL REQUIREMENT FOR THE PERIOD OF 2015 - 16 AS SUCH A NOTICE DAT ED 27 - 11 - 2015 WAS ISSUED BY THE AO QUESTIONING THE SAME, AND THE ASSESSEE COMPLIED WITH THE REQUIREMENT OF SECTION 285BA OF THE ACT BY FILING THE ANNUAL INFORMATION RETURN BY 31.12.2015 WITH A DELAY OF FOUR DAYS . SUBSEQUENTLY THE OFFICE OF THE DIRECTOR OF INCOME TAX (INTELLIGENCE AND CRIMINAL INVESTIGATION) SERVED PENALTY ORDER DATED 7 - 4 - 2016 LEVYING PENALTY OF RS. 10700 / - FOR THE DELAY OF 107 DAYS IN 4 I T A - 1 7 5 / R J T / 2 0 1 6 T H E S U B - R E G I S T R A R D A S A D A FURNISHING AIR IN RESPECT OF AY 2015 - 16 . ACCORDING TO THE ASSESSEE, THE DEFAULT IS NOT INTENTIONAL, BUT DUE TO IGNORANCE OF EXISTENCE OF SUCH AN OBLIGATION, WHEREAS THE REVENUE CONTENDS THAT THERE CANNOT BE SUCH IGNORANCE IN VIEW OF THE DEPARTMENT CONDUCTING SO MUCH OF AWARENESS CAMPAIGN AND THE ASSESSEE COMPLYING WITH OTHER OBLIGATIONS UNDER THE ACT. 7. OUR ATTENTION IS DRAWN TO THE DECISIONS OF THE COORDINATE BENCH OF KOLKATA TRIBUNAL IN MALDA DISTRICT CENTRAL CO - OP BANK LTD. V. DIRECTOR OF INCOME - TAX (I & CI), KOLKATA [2016] 72 TAXMANN.COM 306 (KOLKATA - TRIB.) WHEREIN IT WAS HELD AS FOLLOWS: 6. LEARNED AR PLACED RELIANCE ON A DECISION MOTILAL PADAMPAT SUGAL MILLS CO. LTD . V. STATE OF UP [1979] [118 ITR 326(SC) FOR THE PRINCIPLE THAT THERE IS NO PRESUMPTION IN LAW THAT EVERY PERSONS KNOWS THE LAW. HE ALSO PLACED RELIANCE ON A DECISION REPORTED IN WTO V. S.P. JAYAKUMAR [1983] 3 ITD 221 (MAD.) WHEREIN IT WAS HELD: '6. THAT THE TAX LAWS OF THIS COUNTRY ARE COMPLEX AND COMPLICATED AND OFTEN REQUIRE FOR COMPLIANCE, THEREWITH THE ASSISTANCE OF TAX PRACTITIONERS SPECIALISING IN THIS FIELD, IS A WELL KNOWN FACT. IT 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 SPECIALISING IN T HIS FIELD, INCLUDING THE TAX ADMINISTRATOR, TO CLAIM THAT HE KNOWS WHAT EXACTLY THE LAW IS ON A PARTICULAR GIVEN DAY OR PERIOD WITHOUT MAKING REFERENCES TO THE HISTORY OF THE ENACTMENTS. IN SUCH CIRCUMSTANCES, IT WOULD BE A TRAVESTY OF TRUTH AND JUSTICE TO HOLD THAT THE ASSESSEE KNEW OR OUGHT TO HAVE KNOWN THE CORRECT LAW AND COMPLY THEREWITH, EVEN THOUGH, IN FACT, HE WAS NOT AWARE OF THE PROVISIONS. 7. IT IS WELL ESTABLISHED BY THE DECISION OF THE SUPREME COURT IN HINDUSTAN STEEL LTD. V. STATE OF ORISSA [1972] 83 ITR 26 THAT THE LIABILITY TO PAY PENALTY DOES NOT ARISE MERELY UPON PROOF OF DEFAULT IN COMPLYING WITH THE STATUTORY REQUIREMENTS AND AN ORDER IMPOSING PENALTY FO R FAILURE TO CARRY OUT A STATUTORY OBLIGATION BEING THE RESULT OF A QUASI - CRIMINAL PROCEEDING, WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT, CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION AND PENALTY WILL ALSO NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM THE STATUTORY OBLIGATION, IT IS STATED, IS A MATTER OF DISCRETION OF THE AUTHORITY CONCERNED TO BE EXERCISED JUDICIALLY ON A CONSIDERATION OF ALL RELEVANT CIRCUMSTANCES AND 5 I T A - 1 7 5 / R J T / 2 0 1 6 T H E S U B - R E G I S T R A R D A S A D A EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE IT WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE...' HE FURTHER PLACED RELIANCE ON A DECISION IN KAUSHAL DIWAN V. ITO [1983] 3 ITD 432 (DELHI) (TM) , FOR THE OBSERVATION THAT: 'IT CANNOT BE CONSIDERED THAT EACH ASSESSEE, WHETHER SMALL OR BIG, MUST RUSH TO AN INCOME - TAX SPECIALIST, PRACTISING AS A LAWYER OR A CHARTERED ACCOUNTANT, FOR HIS INCOME - TAX ASSESSMENT ESPECIALLY WHEN THE INCOME EARNED OR BEING EARNED BY HIM WAS TOO LOW. IT CANNOT INDEED BE SUCH A POLICY OF THE GOVERNMENT. IN FACT, ON THE OTHER HAND, AN EFFORT WAS BEING MADE TO SIMPLIFY THE LAW SO THAT THE PEOPLE COULD PURSUE THEIR ASSESSMENTS BEFORE THE DEPARTMENT IN A SIMPLE MANNER AND THAT THEY DO NOT HAVE NECESSARILY TO DEPEND ON THE PROFESSIONALS. 7. AGAIN, IT IS NOT EACH DEFAULT THAT MUST BE PUNISHED AND IN THIS RESPECT, SUPPORT CAN BE HAD ON THE OBSERVATIONS OF THE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. V. STATE OF ORISSA [1972] 83 ITR 26 .' LASTLY, HE BROUGHT TO OUR NOTICE A DECISION DATED 20 - 02 - 2015 RENDERED BY LUCKNOW BENCH OF THE TRIBUNAL IN ITA NO. 699/LKW/2013 ( RAIBEREILLY DISTRICT COOPERATIVE BANK LTD V DIT (I&C) , ON AN IDENTICAL POINT. 7. WHILE PLACING RELIANCE ON THE ABOVE PRINCIPLES OF LAW, LEARNED AR CONTENDS THAT THE BREACH IN QUESTION IS TE CHNICAL AND VENIAL ONE AND NOT ALL INTENDED OR DELIBERATE, AND THE EXPLANATION OF THE ASSESSEE AS TO THEIR IGNORANCE OF OBLIGATION IS SUFFICIENT CAUSE WITHIN THE MEANING OF SECTION 273B OF THE ACT. 8. ON A CAREFUL CONSIDERATION OF THE MATTER, WE FIND THAT EXCEPT THE INSTANT ALLEGED BREACH, NOTHING MORE IS ALLEGED AGAINST THE ASSESSEE. AS A MATTER OF FACT, THE DIRECTOR OF INCOME TAX (INTELLIGENCE AND CRIMINAL INVESTIGATION) WHO PASSED THE PENALTY ORDER HIMSELF OBSERVED IN HIS ORDER VIDE PARA NO 3 THAT THE AS SESSEE GOT THE ACCOUNTS OF ALL BRANCHES CONSOLIDATED AND AUDITED, AND ALSO FILED INCOME TAX/TDS RETURNS. THE ORDER OF THE DIRECTOR OF INCOME TAX (INTELLIGENCE AND CRIMINAL INVESTIGATION) DOES NOT SPEAK AS TO HOW THE ASSESSEE STOOD TO GAIN BY CONTRAVENING W ITH THE PROVISIONS OF SECTION 285BA OF THE ACT OR THE ACT OF ASSESSEE RESULTED IN ANY LOSS TO THE REVENUE. FURTHER, IT IS AN ACKNOWLEDGED AND JUDICIALLY RECOGNIZED FACT THAT THE TAX LAWS OF THIS COUNTRY ARE COMPLEX AND COMPLICATED AND OFTEN REQUIRE FOR COM PLIANCE, THEREWITH THE ASSISTANCE OF TAX PRACTITIONERS SPECIALISING IN THIS FIELD, IS A WELL KNOWN FACT, AND IT 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 PE RSON SPECIALISING IN THIS FIELD, INCLUDING THE TAX ADMINISTRATOR, TO CLAIM THAT HE KNOWS WHAT EXACTLY THE LAW IS ON A PARTICULAR GIVEN DAY OR PERIOD WITHOUT MAKING REFERENCES TO THE HISTORY OF THE ENACTMENTS. IN THESE CIRCUMSTANCES, NO MALA FIDES CAN BE AT TRIBUTED TO THE ASSESSEE SO AS TO INVOKE THE PENALTY PROCEEDINGS UNDER SECTION 271FA OF THE ACT AND THE LEARNED DIRECTOR OF INCOME TAX (INTELLIGENCE AND CRIMINAL INVESTIGATION) SHOULD HAVE TAKEN NOTE THAT THE BREACH IS ONLY TECHNICAL OR VENIAL BREACH OF TH E PROVISIONS OF THE ACT AND SUCH A BREACH 6 I T A - 1 7 5 / R J T / 2 0 1 6 T H E S U B - R E G I S T R A R D A S A D A COULD HAVE FLOWN FROM A BONAFIDE IGNORANCE OF THE ASSESSEE THAT HE IS LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE, AND SHOULD NOT HAVE INVOKED THE PENALTY PROCEEDINGS. WE FIND EVERY FORCE IN THE ARGUMENT OF THE LEARNED AR AND HOLD THAT THE PENALTY PROCEEDINGS ARE LIABLE TO BE SET ASIDE. WE ORDER ACCORDINGLY, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. THIS DECISION WAS FOLLOWED IN THE CASE OF DURGAPUR STEEL PEOPLES' COOPERATIVE BANK LTD. V. DIRECTOR OF INCOME - TAX (INTELLIGENCE & CRIMINAL INVESTIGATION), KOLKATA [2016] 74 TAXMANN.COM 97 (KOLKATA - TRIB.) 8 . ON A CAREFUL CONSIDERATION OF THE MATTER, WE FIND THAT EXCEPT THE INSTANT ALLEGED BREACH, NOTHING MORE IS ALLEGED AGAINST THE ASSESSEE. THE ORDER OF T HE DIRECTOR OF INCOME TAX (INTELLIGENCE AND CRIMINAL INVESTIGATION) DOES NOT SPEAK AS TO HOW THE ASSESSEE STOOD TO GAIN BY CONTRAVENING WITH THE PROVISIONS OF SECTION 285BA OF THE ACT OR THE ACT OF ASSESSEE RESULTED IN ANY LOSS TO THE REVENUE. FURTHER, IT IS AN ACKNOWLEDGED AND JUDICIALLY RECOGNIZED FACT THAT THE TAX LAWS OF THIS COUNTRY ARE COMPLEX AND COMPLICATED AND OFTEN REQUIRE FOR COMPLIANCE, THEREWITH THE ASSISTANCE OF TAX PRACTITIONERS SPECIALISING IN THIS FIELD, IS A WELL KNOWN FACT, AND IT IS EQUA LLY WELL KNOWN FACT THAT THE LEGISLATION IN THIS FIELD UNDERGOES SO FREQUENT CHANGES AND AMENDMENTS THAT IT IS NOT POSSIBLE FOR EVEN A PERSON SPECIALISING IN THIS FIELD, INCLUDING THE TAX ADMINISTRATOR, TO CLAIM THAT HE KNOWS WHAT EXACTLY THE LAW IS ON A P ARTICULAR GIVEN DAY OR PERIOD WITHOUT MAKING REFERENCES TO THE HISTORY OF THE ENACTMENTS. IN THESE CIRCUMSTANCES, NO MALA FIDES CAN BE ATTRIBUTED TO THE ASSESSEE SO AS TO INVOKE THE PENALTY PROCEEDINGS UNDER SECTION 271FA OF THE ACT AND THE LEARNED DIRECTO R OF INCOME TAX (INTELLIGENCE AND CRIMINAL INVESTIGATION) SHOULD HAVE TAKEN NOTE THAT THE BREACH IS ONLY TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT AND SUCH A BREACH COULD HAVE FLOWN FROM A BONA FIDE IGNORANCE OF THE 7 I T A - 1 7 5 / R J T / 2 0 1 6 T H E S U B - R E G I S T R A R D A S A D A ASSESSEE THAT HE IS LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE, AND SHOULD NOT HAVE INVOKED THE PENALTY PROCEEDINGS FOR THE PERIOD COVERED BY THE NOTICE DATED 27.11.2015 . HOWEVER, THERE IS NO PROPER EXPLANATION FOR THE DELAY BEYOND THE ORIGINALLY GRANTED PERIOD I.E., 26. 12.2015 AND THE ASSESSEE SHOULD HAVE ASKED FOR FURTHER TIME BEFORE THE EXPIRY OF SUCH PERIOD. HENCE THE ORDER LEVYING PENALTY OF RS.2,000/ - FOR THE FURTHER DELAY OF FOUR DAYS HAS TO BE ACCEPTED. WE, THEREFORE, BY FOLLOWING THE ABOVE DECISION CITED SUPRA FIND THAT THE PENALTY OF RS.10,700/ - HAS TO BE DELETED WHILE CONFIRMING THE PENALTY OF RS. 2,000/ - . WE ORDER ACCORDINGLY. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART . ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MARCH , 201 7 . SD/ - SD/ - ( S.V. MEHROTRA ) ACCOUNTANT MEMBER ( K. NARSIMHA CHARRY ) JUDICIAL MEMBER RAJKOT , DATE : 24 TH MARCH , 201 7 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, RAJKOT 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, RAJKOT