Anchal Charitable Trust, New Delhi V. Addl. CIT (E), New Delhi

ITA 4864/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3588 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-07-2010
• Assessment Year: 1996-1997
• Appeal Filed On: 29-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRENDRA KUMAR
• Assessee Lawyers: SHEKHAN
• Keywords: Charitable institution; Reasonable cause
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NOS.4863 & 4864/DEL/2009 ASSESSMENT YEARS : 1995-96 & 1996-97 ANCHAL CHARITABLE TRUST, F-16, NAVEEN SHAHDARA, DELHI 110 032. PAN : AAAAA413H VS. ADDL. DIRECTOR OF INCOME TAX (EXEMPTIONS), AAYKAR BHAWAN, DISTT. CENTRE, LAXMI NAGAR, DELHI 110 092. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.S. SHEKHAN, CA REVENUE BY : SHRI AMRENDRA KUMAR, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AGAIN ST THE CONSOLIDATED ORDER OF THE CIT (A) DATED 30 TH OCTOBER, 2009 FOR ASSESSMENT YEARS 1995-96 & 1996-97. GROUNDS OF APPEAL WHICH ARE IDENTICAL FOR BOTH THE YEARS READ AS UNDER:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS), XXI, NEW DELHI, HAS ERRED IN CONFIRMING THE PENALTY OF RS.37,375/- WHICH WAS IMPOSED BY THE ADDITIONAL DIR ECTOR OF INCOME TAX (EXEMPTIONS), NEW DELHI, UNDER SECTION 272A(2)(E) OF THE INCOME TAX ACT, 1961. 2. THAT THE ORDER OF THE LEARNED DIT (EXEMPTIONS ) IS BAD IN LAW AND ON THE FACTS OF THE CASE; AND 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY OF THE GROUNDS OF APPEAL AT ANY TIME B EFORE OR AT THE TIME OF THE HEARING OF THE APPEAL. ITA NOS.4863 & 4864/DEL/2009 2 2. FOR DELAY IN FILING THE RETURN OF INCOME, PENALT Y U/S 272A(2)(E) HAS BEEN IMPOSED IN RESPECT OF ABOVE MENTIONED TWO ASSESSMEN T YEARS. THE DELAY IN FILING THE RETURNS HAS BEEN CALCULATED AT 691 DAYS AND 299 DAYS FOR ASSESSMENT YEAR 1995-96 AND 1996-97 RESPECTIVELY. THE CHART O F DELAY IN RESPECT OF BOTH THE YEARS FOR FILING THE RETURN AS DESCRIBED IN THE ORD ER OF THE CIT (A) IS AS UNDER:- ASSTT. YEAR DUE DATE DATE OF FILING DELAY 1995-96 31.10.1995 22.9.1997 691 1996-97 31.10.1996 22.9.1997 299 3. DURING THE COURSE OF PENALTY PROCEEDINGS BEFORE THE ASSESSING OFFICER, THE ASSESSEE DID NOT ATTEND DESPITE VARIOUS OPPORTU NITIES. THEREFORE, THE ASSESSING OFFICER LEVIED PENALTY @ 125 PER DAY WHIC H WAS AGITATED IN APPEAL FILED BEFORE THE CIT (A). BEFORE THE CIT (A) IT WA S SUBMITTED THAT THE ASSESSEE IS A CHARITABLE ORGANIZATION. ITS MEMBERS WERE DOING A VOLUNTARY WORK AND HAVE EXPRESSED THEIR APOLOGIES FOR NOT BEING AWARE OF TH EIR LEGAL DUTIES IN FILING THE INCOME-TAX RETURN TO GET THEMSELVES REGISTERED U/S 12A OF THE ACT AS THE MEMBERS WERE IN A WRONG CONCEPTION THAT SINCE THEY ARE DOING A VOLUNTARY LAUDABLE SOCIAL SERVICE EXGRATIA THEY ARE NOT LIABLE FOR FILING INCOME TAX RETURN. REFERENCE WAS MADE TO THE DECISION OF DELHI BENCHES IN THE CASE OF WOODWARD GOVERNORS INDIA (P) LTD. VS. CIT (2001) 118 TAXMAN 433 WHEREIN IT WAS HELD THAT BEFORE LEVYING PENALTY, THE CONCERNED OFFICER IS RE QUIRED TO FIND OUT THAT EVEN IF THERE IS ANY FAILURE REFERRED TO IN THE CONCERNED P ROVISION, THE SAME IS WITHOUT A REASONABLE CAUSE. IT WAS FURTHER OBSERVED THAT REA SONABLE CAUSE MEANS AN HONEST BELIEF FOUNDED UPON REASONABLE GROUNDS, OF T HE EXISTENCE OF A STATE OF CIRCUMSTANCES WHICH (ASSUMING THEM TO BE TRUE), WOU LD REASONABLY LEAD ANY ORDINARY PRUDENT AND CAUTIOUS MAN (PLACED IN THE PO SITION OF THE PERSON CONCERNED), TO COME TO THE CONCLUSION THAT THE SAME WAS THE RIGHT THING TO DO. THE CAUSE SHOWN HAS TO BE CONSIDERED AND ONLY IF IT IS FOUND TO BE FRIVOLOUS, WITHOUT SUBSTANCE OR FOUNDATION, THE AFORESAID PENA LTY CAN BE IMPOSED. IT WAS SUBMITTED THAT RETURNS OF INCOME GOT DELAYED IN THE INITIAL YEARS OF WORKING DUE TO ITA NOS.4863 & 4864/DEL/2009 3 OPERATIONAL DIFFICULTIES AND DUE TO THE FACT THAT T HE CA AND THE ACCOUNTANT DID NOT GUIDE THEM AND THE TRUST WAS IGNORANT ABOUT THE IT ACT REQUIREMENT. IT WAS SUBMITTED THAT UNDER SIMILAR CIRCUMSTANCES PENALTIE S FOR ASSESSMENT YEAR 1997- 98 AND 1998-99 WERE ALSO INITIATED, BUT LATER ON DR OPPED ON SIMILAR GROUND VIDE ORDER DATED 5 TH MARCH, 1999 AND 15 TH DECEMBER, 1999. IT WAS SUBMITTED THAT AFTER ASSESSMENT YEAR 1998-99 THERE WAS NO DELAY IN FILING THE INCOME-TAX RETURN AS THE ASSESSEE HAS TAKEN CARE OF FILING THE RETURN REGULARLY WITHIN TIME. 4. LD. CIT (A) DID NOT FIND SUBSTANCE IN THE SUBMIS SIONS OF THE ASSESSEE AS, ACCORDING TO THE CIT (A), THE ABSENCE OF GUIDANCE F ROM CAS AND ACCOUNTANT CANNOT BE ACCEPTED AS A REASONABLE CAUSE FOR DEFAUL T. LD. CIT (A) HAS OBSERVED THAT THE ASSESSEE HAS WILLFULLY FAILED TO FILE INCO ME-TAX RETURNS IN TIME AND, THUS, HE HAS UPHELD THE PENALTY. THE ASSESSEE IS AGGRIEV ED AND, HENCE, IN APPEAL BEFORE US. 5. THE SUBMISSIONS MADE BEFORE THE CIT (A) WERE REI TERATED BEFORE US AND IT WAS SUBMITTED THAT UNAWARENESS OF THE ASSESSEE SHOU LD BE ACCEPTED AS A REASONABLE CAUSE. IT WAS SUBMITTED THAT THE ASSESS EE DID NOT HAVE ANY TAXABLE INCOME FOR BOTH THE YEARS AND, RATHER, IT WAS HAVIN G DEFICIT. THE DEFAULT, IF ANY, COMMITTED BY THE ASSESSEE IS ONLY TECHNICAL. IT WA S SUBMITTED THAT FOR TECHNICAL DEFAULTS PENALTY CANNOT BE IMPOSED. IT WAS SUBMITT ED THAT THE ASSESSEE BEING NOT AWARE OF THE INCOME-TAX PROVISIONS CONSTITUTE R EASONABLE CAUSE AND, THUS, PENALTY SHOULD HAVE BEEN CANCELLED BY THE CIT (A). 6. ON THE OTHER HAND, RELYING UPON THE ORDER OF THE CIT (A) LD. DR PLEADED THAT THE PENALTY HAS RIGHTLY BEEN UPHELD BY THE CIT (A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. IT HAS BEEN THE CASE OF THE ASSESSEE TH AT IT IS A VOLUNTARY ORGANIZATION DOING CHARITABLE ACTIVITIES. ALL OF ITS MEMBERS AR E WORKING HONORARY FOR THE PUBLIC CAUSE. THEY WERE NOT GUIDED BY THE CAS TO FILE TH E RETURNS AND THAT ACCORDING TO THEIR BELIEF THEY WERE NOT UNDER AN OBLIGATION TO F ILE THE RETURN AS THE INCOME OF THE TRUST DID NOT EXCEED THE TAXABLE LIMIT. ACCORD ING TO THEM, ONCE THEY HAVE GOT ITA NOS.4863 & 4864/DEL/2009 4 THE REGISTRATION AND THEIR INCOME IS NOT TAXABLE, T HEN THEY WERE NOT UNDER AN OBLIGATION TO FILE THE RETURN. WHEN THE ASSESSEE C AME TO KNOW ABOUT THE NATURE OF DEFAULT FOR NOT FILING THE RETURN IN TIME, THEY STARTED FILING THE REGULAR INCOME-TAX RETURN IN TIME. UNDER SIMILAR CIRCUMSTANCES, PENAL TY FOR ASSESSMENT YEAR 1997- 98 AND 1998-99 WAS DROPPED BY THE DEPARTMENT ITSELF ACCEPTING THE SAME AS REASONABLE CAUSE. THUS, THE DEFAULT OF THE ASSESSE E, ACCORDING TO THE FACTS OF THIS CASE IS ONLY A TECHNICAL DEFAULT. ACCORDING T O WELL ESTABLISHED LAW LAID DOWN IN THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA 83 ITR 26 THE ORDER IMPOSING PENALT Y FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI CRIMI NAL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIO US OR DISHONEST OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. IT WAS OBSE RVED THAT PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. IT WA S OBSERVED THAT WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDI CIALLY AND ON CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENA LTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE J USTIFIED IN REFUSING TO IMPOSE PENALTY WHERE 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. THE P RINCIPLES OF LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE AFOREMENTIONED CAS E WILL BE FULLY APPLICABLE TO THE FACTS OF THE PRESENT CASE. IT IS A CASE WHERE THE DEFAULT OF THE ASSESSEE IS TECHNICAL AND VENIAL. THE ASSESSEE HAS NOT ACTED DE LIBERATELY IN DEFIANCE OF LAW AND THE ASSESSEE IS ALSO NOT GUILTY OF CONDUCT CONT UMACIOUS OR DISHONEST AND ALSO IT DID NOT ACT IN CONSCIOUS DISREGARD OF ITS O BLIGATION. THEREFORE, WE SEE NO JUSTIFICATION IN UPHOLDING THE PENALTY. IT IS ORDE RED TO BE DELETED. THE PENALTY FOR BOTH THE YEARS IS DELETED. ITA NOS.4863 & 4864/DEL/2009 5 8. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. 9. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.07. 2010. SD/- SD/- [K.D. RANJAN] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 21.07.2010. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES