A.C.I.T.. Cir.-2, Nagpur V. M/S VIDHARBHA CRIKET ASSOCIATION, Nagpur

ITA 300/NAG/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1537 (ITAT-NAGPUR)
• Duration Of Justice: 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 1999-2000
• Appeal Filed On: 27-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D RAVI KUMAR
• Keywords: Bonafide belief; Reasonable cause
• Section: 11

Judgement Text

1 ITA NOS. 300 TO 304/NAG/2015 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. SR. NO. I.T.A. NO. ASSTT. YEAR. 1. 300/NAG/2015 1999 - 2000 2. 301/NAG/2015 2000 - 01 3. 302/NAG/2015 2001 - 02 4. 303/NAG/2015 2002 - 03 5. 304/NAG/2015 2003 - 04. ASSTT. COMMISSIONER OF INCOME - TAX, VIDARBHA CRICKET ASSOCIATION, CIRCLE - 2, NAGPUR. VS. NAGPUR. P AN AAAAV3 410C. APPELLANT. RESPONDENT. APPELLANT BY : SHRI D. RAVI KUMAR. RESPONDENT BY : SHRI K.P. DEWANI. DATE OF HEARING : 31 - 12 - 2015. DATE OF PRONOUNCEMENT : 31 ST DEC., 2015. O R D E R PER BENCH: THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST COMMON ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 24 - 09 - 2015 FOR ASSESSMENT YEARS 1999 - 2000 TO 2003 - 04. THE ISSUE RAISED IS THAT THE LEARNED CIT(APPEALS) ERRED IN CANCELLING THE PENALTY LEVIED U/S 272A(2)(E) OF THE I.T. ACT. 2. AT THE THRESHOLD WE NOTE THAT THE TOTAL PENALTY LEVIED IN ALL THESE YEARS IS BELOW RS.10 LAKHS. AS SUCH THESE APPEALS WERE BELOW THE LIMIT FIXED BY THE CBDT FOR FILING APPEALS BEFORE THE ITAT. HOWEVER, LEARNED D.R. CONTENDED 2 ITA NOS. 300 TO 304/NAG/2015 THAT THESE APPEALS FALL UNDER THE EXCEPTION CLAUSE IN THE SAID CBDT CIRCULAR DATED 10 - 12 - 2015 INASMUCH AS THERE WAS REVENUE AUDIT O BJECTION IN THIS CONNECTION AND THE SAME WAS ACCEPTED BY THE REVENUE. 3. BE AS IT MAY, WE PROCEED TO ADJUDICATE THE ISSUE AS UNDER. IN THIS CASE THE AO NOTED THAT THERE WAS DELAY IN FILING OF RETURNS FROM THE CONCERNED ASSESSMENT YEARS. THE AO HELD THAT THERE WAS NO REASONABLE CAUSE FOR THE DELAY. HENCE THE AO IMPOSED PENALTY U/S 272A(2)(E) AS UNDER : 1999 - 2000 RS.2,47,800/ - 2000 - 01 RS.2,11,200/ - 2001 - 02 RS.1,76,200/ - 2002 - 03 RS.1,39,700/ - 2003 - 04 RS.1,03,200/ - 4. UPON ASSESSEE S APPEAL, LE ARNED CIT(APPEALS) FOUND THAT IT IS EVIDENT THAT THE APPELLANT WAS UNDER A BONAFIDE BELIEF THAT ITS INCOME WAS EXEMPT U/S 10(23) OF THE INCOME TAX ACT AND THAT THEREFORE IT WAS NOT UNDER ANY OBLIGATION TO SUBMIT THE RETURN OF INCOME. THAT IT IS ALSO A FACT THAT APPELLANT IS MANAGED BY ELECTED REPRESENTATIVES BEING MEMBERS OF ASSOCIATION AND THE DAY - TO - DAY MANAGEMENT IS CONDUCTED BY THE HONOURARY MEMBERS OF THE ASSOCIATION AND SUCH MEMBERS OF ASSOCIATION WERE UNDER THE BONAFIDE BELIEF THAT NO RETURN OF INCOM E WAS REQUIRED TO BE FILED. THAT IN ANY CASE IT IS A FACT THAT THE DEFAULT IS VENIAL IN NATURE AS A TAX PAYABLE FOR EACH OF THE YEARS UNDER CONSIDERATION IS NIL AND THERE IS NO LOSS OF REVENUE ON ACCOUNT OF DELAY IN FILING OF RETURN OF INCOME. LEARNED CIT( APPEALS) FURTHER REFERRED TO SEVERAL CASE LAWS. LEARNED CIT(APPEALS) CONCLUDED AS UNDER : THUS THE BENEFIT OF THE ASSESSEE THAT IT WAS NOT OBLIGED TO FILE RETURN OF INCOME U/S 139(4A) WAS BONAFIDE AS IT WAS UNDER THE BELIEF THAT ITS INCOME WAS EXEMPT UND ER SECTION 10(23) OF I.T. ACT 1961 AND THAT THEREFORE THERE WAS NO OBLIGATION TO SUBMIT A RETURN OF INCOME. IT IS 3 ITA NOS. 300 TO 304/NAG/2015 IMPORTANT TO NOTE THAT FOR THE ABOVE MENTIONED ASSESSMENT YEARS THE APPELLANT HAS BEEN HELD TO BE ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF I .T. ACT 1961 BY HONBLE CIT(APPEALS) - I AND THE DECISION OF HONBLE CIT(A) HAS BEEN UPHELD BY THE HONBLE ITAT, NAGPUR BENCH, NAGPUR IN ITA NOS. 127 TO 133/NAG/2009 VIDE ORDER DATED 31/07/2009 AND IN VIEW OF THE SAME THE APPELLANT WAS NOT EXIGIBLE TO TAX FO R THE ABOVE MENTIONED ASSESSMENT YEAR. THUS TAX PAYABLE FOR THE ABOVE MENTIONED ASSESSMENT YEAR WAS NIL AND CONSEQUENTLY THERE IS NO LOSS OF REVENUE FOR THE DELAY IN SUBMISSION OF RETURNS AND HENCE T H E DEFAULT AT THE HANDS OF APPELLANT IS A TECHNICAL OR VE NIAL BREACH FOR WHICH NO PENALTY CAN BE LEVIED. THUS THE BELIEF OF THE ASSESSEE THAT IT WAS NOT OBLIGED TO FILE RETURN OF INCOME U/S 139(4A) FOR SUCH CIRCUMSTANCES WAS BONAFIDE AND CONSTITUTED A REASONABLE CAUSE FOR NOT FURNISHING ITS RETURN OF INCOME. IN VIEW OF THE ABOVE FACTS OF THE CASE AND THE LEGAL POSITION, THE PENALTY IMPOSED U/S 272(A)(2)(E) OF RS.2,47,800/ - , RS.2,11,200/ - , RS. 1,76,200/ - , RS. 1,39,700/ - & RS. 1,03,200/ - FOR ASSESSMENT YEARS 1999 - 2000, 2000 - 01, 2001 - 02, 2002 - 03 & 2003 - 04 RESPECTIVE LY IS HEREBY CANCELLED. 5. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE ITAT, NAGPUR BENCH VIDE ORDER DATED 31 - 07 - 2009 IN ITA NOS. 127 TO 133/NAG/2009 HAS HELD THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE I.T. ACT. HENCE IT IS EVIDENT THAT THE ASSESSEE IS NOT EXIGIBLE TO ANY TAX IN THE ABOVE MENTIONED ASSESSMENT YEARS. FURTHER MORE THERE IS CONSIDERABLE COGENCY IN THE ASSESSEES PLEA THAT T HE ASSESSEE IS MANAGED BY THE MEMBERS OF ASSOCIATION WHO ARE HONOURARY MEMBERS WHO WERE UNDER A BONAFIDE BELIEF THAT THE ASSESSEES INCOME WAS EXEMPT U/S 10(23) OF THE I.T. ACT. HENCE THERE WAS NO OBLIGATION TO FILE INCOME - TAX RETURN. AS SUCH WE ARE OF TH E CONSIDERED OPINION THAT FIRSTLY THERE WAS REASONABLE CAUSE FOR THE FAILURE OF THE ASSESSEE TO FILE THE RETURNS IN TIME. SECONDLY THE ASSESSEE HAVING BEEN FOUND TO BE ELIGIBLE FOR EXEMPTION U/S 11 OF THE I.T. ACT THERE WAS NO TAX LIABILITY UPON THE ASSES SEE. IN THESE CIRCUMSTANCES WE PLACE RELIANCE UPON THE HONBLE APEX COURT DECISION IN THE CASE OF HINDUSTHAN STEEL LTD. VS. STATE OF ORISSA REPORTED IN 8 3 ITR 26. IN THIS CASE IT WAS HELD AS UNDER: 4 ITA NOS. 300 TO 304/NAG/2015 AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A ST ATUTORY OBLIGATION IS THE RESULT OF A QUASI - CRIMINAL PROCEEDING, AND PENALTY 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 DISR EGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO B E 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. 7. RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT, IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE ORDER OF LEARNED CIT( APPEALS) DELETING THE LEVY OF PENALTY. ACCORDINGL Y THESE APPEALS OF THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEALS FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF DEC., 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 31 ST DEC., 2015. 5 ITA NOS. 300 TO 304/NAG/2015 COPY FORWARDED TO : 1. M/S VIDARBHA CRICKET ASSOCIATION, , CIVIL LINES, NAGPUR. 2. A.C.I.T., CIRCLE - 2, NAGPUR. 3. COMMISSIONER OF INCOME - TAX - , NAGPUR. 4. CIT(APPEALS) - II, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.