Thattantavita Asharaf, Vadakara V. Income Tax Officer Ward2(2), Kozhikode

ITA 900/COCH/2022

AI Insights

The case involves Thattantavita Asharaf, the appellant, who appealed against the penalty imposed by the Income Tax Officer (ITO) under section 271F for failing to file a return of income (ROI) on time for the assessment year 2011-12. The appellant filed the ROI belatedly on March 28, 2013, declaring an income of Rs.3,72,410, whereas the due date was July 31, 2011. The AO issued a penalty notice on December 21, 2018, which the appellant contested as being time-barred. The appellant argued that the penalty was invalid due to the excessive delay in issuing the notice and claimed a reasonable cause for the delay in filing the ROI, as he had filed for a refund. The Tribunal found that the CIT(A) and AO had not adequately examined these claims and thus remanded the matter back to the AO for a detailed examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 115374 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-05-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 18-09-2022
• Other Referred Cases: State of Gujarat Vs. Patel Raghav Natha and Other [AIR (1969) SC 1297], State of Punjab and Others Vs. Bhatinda District Co-operative Milk Producers Union Ltd. [(2007) 11 SCC 363], Director of Income Tax (International Taxation) Vs. Mahindra and Mahindra Ltd. [(2014) 365 ITR 560 Bom]
• Laws Referred To: Income Tax Act, 1969
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Invalid notice; Reasonable cause
• Section: 273B; 139(1); 139(4)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI SANJAY ARORA, AM AND SHRI ABY T. VARKEY, JM आयकर अपील सं/ I.T.A. No. 900/Coch/2022 (िनधाŊरण वषŊ / Assessment Year: 2011-12) Thattantavita Asharaf Thattantavita House, P.O, Thuneri, Vadakara, Kozhikode District-673514. बनाम/ Vs. ITO, Ward-2(2) 5 th Floor, Aayakar Bhavan North Block, Mananchira, Kozhikode-673001. ̾थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AIVPA7829G (अपीलाथŎ /Appellant) .. (ŮȑथŎ / Respondent) सुनवाई की तारीख / Date of Hearing: 16/05/2023 घोषणा की तारीख /Date of Pronouncement: 06/06/2023 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the Assessee against the order of the Ld. CIT(A)/NFAC dated 22.07.2022 for AY. 2011-12. 2. The main grievance of the assessee is against the imposition of penalty u/s 271F of the Income Tax Act, 1969 (hereinafter “the Act”) on the ground of failure to furnish return of income (ROI) as required u/s 139(1) or proviso to that sub-section. In this case, the assessee had filed return of income belatedly on 28.03.2013 reflecting an income of Rs.3,72,410/- whereas as per section 139(1) of the Act assessee was to file the return of income on 31.07.2011 (and u/s 139(4) by 31.03.2012). 3. The AO before imposing the penalty of Rs.5000/- u/s 271F of the Act had issued notice dated 21.12.2018 and after giving opportunity to assessee has imposed penalty on 12.03.2019. Assessee by: Shri R. Krishnan Revenue by: Smt J. M Jamuna Devi, (Sr. AR) ITA No. 900/Coch/2022 A.Ys. 2012-12 Thattantavita Asharaf 2 4. The assessee had assailed the action of AO initiating penalty by issuing notice of penalty only on 21.12.2018, which according to assessee was bad in law being issued after un-reasonable period of time. According to assessee, even if there was infraction on the part of assessee not to have filed the ROI, the penalty notice ought to have been issued after finding about it within a reasonable period say at least one (1) year from 31.03.2012. And according to him, AO ought not to have initiated on 21.12.2018, which is after six (6) years and eight (8) months, therefore bad in law; and raised ground no. 2 which is reproduced as under: - “2. Grounds of Appeal No.2: For a return filed on 28-03-2013, the Assessing Officer issues Penalty notice on 21-12-2018. In the normal course, the Assessing Officer should have issued this notice immediately after 31-03-2012 when he came to know that the assessee has not filed return. In other words the Assessing officer issues penalty notice after a period of 6 years. Any penalty nonce issued after a lapse of 6 years has to be considered as time barred notice. In this view of the matter, the levy of penalty is legally invalid. Even in cases where no limitation is prescribed under the Act, a reasonable time limit has to be understood. In the absence of a prescribed time limit for completing assessments under the statute, a reasonable period has to be read in, and in determining what that reasonable period should be, clues can be gathered from the following judgments. (1) State of Gujarat Vs. Patel Raghav Natha and Other [AIR (1969) SC 1297) ITA No. 900/Coch/2022 A.Ys. 2012-12 Thattantavita Asharaf 3 (2) State of Punjab and Others Vs. Bhatinda District Co- operative Milk Producers Union Ltd. [(2007) 11 SCC 363]. (3) Director of Income Tax (International Taxation) Vs. Mahindra and Mahindra Ltd. [(2014) 365 ITR 560 Bom].” 5. The assessee filed the written submission before the Ld. CIT(A)/NFAC dated 12.07.2022 wherein the assessee brought to the notice of Ld. CIT(A)/NFAC that assessee in the instant case has filed ROI belatedly on 28.03.2013, showing income of Rs.3,72,410/- as well as claimed refund of Rs.32,280/-. Therefore, assessee has raised the defense of “reasonable cause” given u/s 273B of the Act from imposition of penalty u/s 271F of the Act. According to assessee, since assessee had claimed refund, it can’t be inferred that assessee deliberately didn’t file the return of income in time; and Ld AR read out section 271F of the Act which has given discretionary power to AO to levy or not to levy the penalty by using the word ‘may’ and not ‘shall’. According to Ld. AR, the since the assessee has claimed refund while filing belated return on 28.3.2013, the assessee should not be saddled with the penalty because it shows the reasonable cause for non-levy of penalty as held by this Tribunal [Kolkata Bench] in the case of Mrs. Manju Kataruka Vs. ITO in ITA. No. 1955/Kol/2003 dated 07.04.2004. We note that though the assessee has raised the defense of “reasonable cause” for not imposing the penalty u/s 273B of the Act, which facts [belated return with refund claim] and case law has not been examined by Ld. CIT(A)/AO. Therefore, for the interest of fair-play, we set aside the impugned order of Ld. CIT(A) and ITA No. 900/Coch/2022 A.Ys. 2012-12 Thattantavita Asharaf 4 restore this issue back to the file of AO for examining this issue/facts in the light of the Tribunal order in case of Mrs. Manju Kataruka (supra) as well as also, the ground of limitation raised by the assessee on issuance/imposition of notice/penalty relying on the decision on the following case laws. (1) State of Gujarat Vs. Patel Raghav Natha and Other [AIR (1969) SC 1297) (2) State of Punjab and Others Vs. Bhatinda District Co-operative Milk Producers Union Ltd. [(2007) 11 SCC 363]. (3) Director of Income Tax (International Taxation) Vs. Mahindra and Mahindra Ltd. [(2014) 365 ITR 560 Bom]. 6. In the light of the aforesaid discussion, the AO to pass a reasoned order after examining the contention raised by assessee as well as the case laws raised by assessee in accordance to law. And needless to say, assessee be given reasonable opportunity before passing the order. 7. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 06/06/2023. Sd/- Sd/- (SANJAY ARORA) (ABY T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin; Dated : 06/06/2023. Vijay Pal Singh, (Sr. PS) ITA No. 900/Coch/2022 A.Ys. 2012-12 Thattantavita Asharaf 5 Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)-Trichur. 4. The CIT, Cochin. 5. The DR, ITAT, Cochin. 6. Guard File. Asst. Registrar/ITAT, Cochin