SHRI RAJESH AJJAVARA ,BANGALORE vs. INCOME TAX OFFICER WARD-5(3)(1), BANGALORE

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: BENGALURU BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER

ITA Nos.2604, 2605, 2606/Bang/2018 (Assessment Years: 2012-13, 2014-15 & 2015-16) & ITA No.357/Bang/2019 (Assessment Year: 2013-14)

Shri Rajesh Ajjavara, The Income Tax Officer (TDS), No.65, 3rd Main, Prashanth Nagar, Vs. Ward-5(3)(1), Bengaluru – 560 079. Bengaluru. [PAN: AGCPA 0752H]

(अपीलाथ� /Appellant) (��यथ�/Respondent) Shri A.Ravish Rao, C.A अपीलाथ� क� ओर से / Appellant by : Smt. R. Premi, JCIT ��यथ� क� ओर से/Respondent by : सुनवाई क� तार�ख/ Date of hearing : 04.12.2019 20.12.2019 घोषणा क� तार�ख /Date of Pronouncement :

O R D E R PER D.S. SUNDER SINGH, A.M:

All the four appeals filed by the assessee are directed against the orders of the Commissioner of Income Tax (Appeals)-5, Bengaluru (hereafter referred as “CIT(A)”) dated 01.05.2018, 19.04.2018 & 31.01.2019 for the Assessment Years (AYs) 2012-13, 2014-15, 2015-16 & 2013-14 respectively.

:- 2 -: ITA Nos.2604 to 2606/Bang/2018 & ITA No.357/Bang/2019

involved in all the appeals are identical, these appeals are clubbed, heard

together and disposed of by a common order as under:

ITA NOs.2604, 2605 & 2606/Bang/2018 for Assessment Years 2012-13, 2014-15 & 2015-16:

income, though he was having taxable income for the relevant assessment

years under consideration, therefore, the Assessing Officer (AO) has issued

the notice under section 271 of the Income Tax Act, 1961 ("the Act"). The

AO issued the show cause notice dated 16.10 2017 for the AYs. 2012-13 to

2015-16 directing the assessee to explain as to why the penalty should not

be levied for non furnishing of the returns as required under section 139(1)

of the Act. In response to which the assessee filed his reply stating that he

was salaried employee working in TCS. During the relevant previous years,

he was on assignment outside the headquarters at Bangalore including

foreign assignment with periodical intervals which has stretched for months

together. Therefore the assessee submitted that he could not focus himself

on his legal objects for filing his returns of income which resulted in filing

the returns belatedly. The assessee further submitted that he is having only

income from salary and the tax was deducted at source by way of Tax

Deduction at source(TDS) and always the returns resulted in refund hence,

submitted that there was no loss to the Revenue. The assessee requested

to treat the return filed under section 139(4) of the Act as return under

:- 3 -: ITA Nos.2604 to 2606/Bang/2018 & ITA No.357/Bang/2019

section 139(1) and take lenient view for the purpose of penalty and

requested to drop the penalty proceedings. The assessee also relied on the

decision of Hon’ble Bombay High Court in the case of Trustees of Tulsidas

Gopalji Charitable and Chaleswar Temple Trust vs. CIT [1994] 207 ITR 368

(Bom), wherein it was held that the sub s. (1) & (4) to section 139 of the Act

have to be red together and on such reading, the inevitable conclusion is

that the return made within the time specified in sub section (4) of the Act

has to be considered as having made within the time prescribed in sub

section (1) & sub section (2) to section 139 of the Act. Thus, submitted that

there is no default and requested to drop the penalty proceedings under

section 271F of the Act. Not being convinced with explanation of the

assessee, the AO levied the penalty of Rs.5,000/- each for the assessment

years 2012-13 to 2015-16.

CIT(A) and reiterated the submissions which were made before the AO.

The Ld. CIT(A) considered the submissions of the assessee and allowed

the appeal. While allowing appeal, the Ld.CIT(A) relied on the decision of

Hon’ble High Court of Bombay in the case of Trustees of Tulsidas Gopalji

Charitable and Chaleswar Temple Trust vs. CIT (supra). For the sake of

clarity and convenience, we extract the relevant part of the order of the Ld.

CIT(A), which reads as under:

“I have considered the above grounds of appeal, statement of 'facts and written sumissions filed by the appellant and also perused the penalty orders. Penalty u/s 271F levied by the assessing Officer for non filing of return of Income within due dates specified u/s.139( 1) of the IT Act. The

:- 4 -: ITA Nos.2604 to 2606/Bang/2018 & ITA No.357/Bang/2019

appellant submitted that the returns were filed within the time allowed u/s.139(4) of the Income Tax Act 1961 and hence there was delay in filing return of income for which the appellant rendered to liable to interest. further submitted that there was no deliberate or willful omission on the part of the appellant to be subjected to penalty u/s.271 F of the Act. The provisions of Sec.271 F provides that if a person who is require to furnish a return of his income as required under sub-sec.(1) of Sec.139 or by provisos to that sub-section, fails to furnish such return before the end of the relevant assessment year, the Assessing Officer may direct that such person shall pay, by way of penalty a sum of Rs.5000/-. Whereas the appellant has filed his returns of income u/s.139(4) tor A.Y.2012-13 on 29/03/2014 and for A.Y.2014-15 on 27.03.2016 declaring total incomes of Rs.5,50,074/- and Rs.6,41,498/- respectively: Further, the appellant relied on the Hon'ble Bombay High Court Trustees of Tulsidas Gopalji Charitable and Chaleshwar Temple Trust Vs. CIT wherein it was held that on a careful reading of section 139 of the Act, we are of the clear opinion that sub-sections (1) and (4) of section 139 have to be read together and on such reading, the inevitable conclusion is that a return made within the time specified in sub-section (4) has to be considered as having been made within the time prescribed in sub-section (1) or sub-section (2) of Sec.139 of the Act. CIT Vs. Kulu Valley Transport Co. (P) Ltd. (1970) 77 ITR 518 (SC) followed. In view of the factual position and legal matrix of the cases under consideration the penalties u/s.271 F of the Act levied by the Assessing Officer is not justified. Therefore, the grounds of appeals are hereby allowed.”

of the Act and the Ld. CIT(A) passed the order under section 154

confirming the penalty levied by the AO. We also extract the relevant part

of the order of the Ld. CIT(A), which reads as under:

“3.1 I have carefully considered the submissions made by the appellant and also perused the case relied upon by his Authorised Representative. In respect to the provisions of Section 271 F, the Assessing Officer points out that the appellant has failed to give satisfactory explanation for delay in filing of return of Income and states that as per the provisions of Section 271 F, if a person who is required to furnish his return of income as required under sub section (1) of 139 or by proviso to that sub-section, fails to furnish such return before the end of the relevant assessment year is liable to pay penalty of Rs.5000/-. But, I have held that on careful reading of Section 139 of the Act, we are of the clear opinion that sub- section (1) and (4) of Section 139 have to be read together and on such a reading, the inevitable conclusion is that a return made within the time specified in sub section (4) has to be considered as having been made within the time prescribed as sub section (1) or (2) of Section 139 of the Act relying upon the Hon'ble Bombay High Court Trustees of Tulsidas Gopalji Charitable & Chaleswar Temple Trust Vs. CIT. Judgement. 3.2 In this context, it is submitted by the Assessing Officer that the provisions of section 271 F of the Act nowhere mentions that for levying

:- 5 -: ITA Nos.2604 to 2606/Bang/2018 & ITA No.357/Bang/2019

penalty under this section, there should be willful and deliberate omissions on the part of the assessee. Besides, filing of return as per Section 139(4) would not dilute infraction of not furnishing the return of income before the end of the relevant assessment year as per the ratio laid down by the Hon'ble Supreme Court decision in the case of Prakash Nath Khanna Vs.CIT(2004) 135 Taxman 327 (SC). Respectfully following Hon'ble Supreme Court order, the appeals filed by the appellant is hereby treated as dismissed and the appellate orders are amended to this effect. The Review petitions filed for rectification under section 154 of the Income-Tax Act, 1961 stands disposed off.”

placed on record. In the instant case, the assessee challenged the order in

ground No.5 with regard to validity of order u/s 154. During the appeal

hearing, the Ld. AR vehemently pressed this ground stating that once the

Ld.CIT(A) has taken conscious decision relying on the decision of Hon’ble

Bombay High Court in favour of the assessee and then changed his opinion

in rectification proceedings which is not permissible under section 154 of

the Act. On the other hand, the Ld.DR supported the order of the Ld.CIT(A).

We considered the rivals submissions and found from the order of the

Ld. CIT(A) that the Ld. CIT(A) has taken a decision after considering the

law laid down by the Honorable Bombay High Court in the case of Trustees

of Tulsidas Gopalji Charitable and Chaleswar Temple Trust vs. CIT (supra),

wherein the Hon’ble High Court of Bombay held that sub section (1) & (4)

of section 139 of the Act have to be read together and on such reading the

inevitable conclusion is that the return made within the time specified in sub

section (4) of the Act has to be considered as having been made within the

time prescribed time under sub section (1)/(2) of section 139 of the Act. On

rectification petition filed by the AO, the Ld. CIT(A) taken a different view

:- 6 -: ITA Nos.2604 to 2606/Bang/2018 & ITA No.357/Bang/2019

and held that return of income filed under section 139(4) of the Act would

not dilute non furnishing the return of income before the end of relevant

assessment year as required u/s 139(1) of the act. The Ld.CIT(A) in the

rectification order relied on the ratio laid down by the Hon’ble supreme

Court in the case of Prakash Nath Khanna vs. CIT [2004] 135 Taxman 327

(SC). From the plain reading of the order u/s. 250 of the Act, dated

19.04.2018 and 16.08.2019, it is clear that the Ld. CIT(A) has taken two

different views, placing reliance on the decision of Hon’ble High Court of

Bombay allowed the appeal of the assessee and re-visiting s. 271F of the

Act and considering the decision of Hon’ble Supreme Court in the case of

Prakash Nath Khanna vs. CIT (supra) decided the appeal against the

assessee. The two decisions apparently contradictory following the different

judgements of Honourable Bombay High court and the Supreme Court

which are not on the same facts. Therefore, it is clear from the above facts

that there are two views are possible on the issue one is in favour of the

assessee and the other one is against the assessee. When the two views

are possible on the same issue and the issue which needs to be decided

after debate and deliberations it is not permitted to make the rectification

section 154 of the Act. It is settled issue that under section 154 of the Act,

the authorities are permitted to rectify the mistake which is apparent from

the record and in the instant case, there was no mistake which is apparent

from the record and the issue required to be discussed deliberately and

consider various case laws. Therefore, we hold that the order passed by Ld.

:- 7 -: ITA Nos.2604 to 2606/Bang/2018 & ITA No.357/Bang/2019

CIT(A) u/s 154 is bad in law and unsustainable. Accordingly, we the cancel

the order passed under section 154 of the Act and restore the original order

dated 19-4-2018 and allow appeal of the assessee.

2606/Bang/2018 for Assessment Years 2012-13, 2014-15 & 2015-16 are

allowed.

ITA No.357/Bang/2019 for Assessment Year 2013-14:

due date allowed under section 139(1) of the Act. Therefore, the AO had

issued the notice under section 271F of the Act, vide show cause notice

dated 16.10.2017. In response to which the assessee filed explanation

stating that he could not file the return of income because of preoccupation

of the employment. The AO did not convince with the explanation of the

assessee hence, levied penalty of Rs.5,000/- under section 271F of the Act.

The assessee went on appeal before the Ld. CIT(A) and the Ld. CIT(A)

confirmed the penalty. Against which the assessee filed appeal before this

tribunal.

made before the AO which was discussed in ITA Nos. 2604, 2605 &

2606/Bang/2018 for Assessment Years 2012-13, 2014-15 & 2015-16 of this

order and requested to drop the penalty. Ld.AR further submitted that the

Ld. CIT(A) relied on the Prakash Nath Khanna vs. CIT (supra), the facts of

:- 8 -: ITA Nos.2604 to 2606/Bang/2018 & ITA No.357/Bang/2019

the case law relied upon by the Ld. CIT(A) are distinguishable and not

applicable to the assessee’s case. Calling our attention to the decision of

Hon’ble Apex Court in the case of Prakash Nath Khanna vs. CIT (supra),

the Ld. AR submitted that in the case of Prakash Nath Khanna the issue

involved was relating to the prosecution and not the levy of penalty u/s

271F. therefore, argued that the decision of Hon’ble Supreme Court has no

application in the assessee’s case. The AR submitted that the assessee

was engaged in the employment which did not permit him to spare time for

filing return of income. However he submitted that he filed the return of

income within the time limit allowed under section 139(4) of the Act,hence,

requested to cancel the penalty and allow the appeal of the assessee.

defaulter and not filing returns of income within the time allowed u/s 139(1)

of the act, therefore, argued that there is no case for taking a leniency in the

case of assessee, hence, argued that it is a fit case for levy of penalty and

submitted that there is no reason to interfere with the order of Ld. CIT(A)

thus, requested to uphold the order of Ld. CIT(A) and dismiss the appeal of

the assessee.

placed on record. In the instant case, the assessee is a salaried employee

and working with the TCS company. Though the assessee is very busy in

his employment, it is obligation of the assessee to comply with the statutory

:- 9 -: ITA Nos.2604 to 2606/Bang/2018 & ITA No.357/Bang/2019

requirements and to abide by the laws of the land. Being an educated

assessee he should not be very casual towards compliance of statutory

requirements. The way in which the assessee filed the returns of income

for the impugned years, shows his casualness in complying the statutory

requirements which cannot be appreciated. However, the assessee has

filed the return of income within the time allowed u/s. 139(4) of the Act. The

AO also issued show cause notice on 16.10.2017 after filing the return of

income. The assessee filed the return of income u/s. 139(4) of the Act

before the Department has noticed that the assessee did not file the return

of income. Before the filing of the return of income, the department has

neither issued the notice u/s. 142(1) of the Act nor reopened the

assessment by issuing of notice u/s. 148 of the Act. The assessee has filed

return of income voluntarily without any enquiry or verification from the

department and explained that he is having only salary income and no

other income and the tax was deducted at source from the salary income.

Always the income tax returns resulted in refund but not the demand. By

filing the return of income belatedly there was no loss to Revenue but there

was a loss to the assessee and the assessee was losing the interest to be

paid u/s. 244A of the Act. Further, in the earlier AYs, the Ld. CIT(A) by an

order dated 19.04.2018 cancelled the penalty following the decision of

Hon’ble High Court of Bombay in the case of Trustees of Tulsidas Gopalji

Charitable and Chaleswar Temple Trust vs. CIT (supra), wherein the

Hon’ble High Court of Bombay held that the combined reading of s. 139(1)

:- 10 -: ITA Nos.2604 to 2606/Bang/2018 & ITA No.357/Bang/2019

& 139(4) of the Act, the conclusion to be drawn is return made within the

time specified in sub s. (4) of the Act has to be considered to have been

made within the time prescribed sub s. (1) of 139 of the act. The Ld. CIT(A)

relied on the decision of Prakash Nath Khanna vs. CIT (supra), which is

related to the case of the prosecution and not the penalty u/s 271E of the

Act. The department has not made out the case that the assessee required

to pay tax which remained unpaid. The income tax return was refund return

and the order of Hon’ble ITAT, Kolkata in the case of Mrs. Manju Kataruka

vs. ITO in ITA No.1955/Kol/2003 dated 7.04.2004, held that when there was

a refund due, non filing of return of income within specified time u/s. 139(1)

of the Act has to be considered as a bonafide belief and the said bonafide

belief is to be treated as reasonable cause for non furnishing the return

before the end of the assessment year. Considering the all the facts of the

case that the assessee has filed the return of income within time allowed

u/s. 139(4) of the Act, the return being refund return, the decision of Hon’ble

High Court of Bombay in the case of Trustees of Tulsidas Gopalji Charitable

and Chaleswar Temple Trust vs. CIT (supra) and the decision of ITAT,

Kolkata (supra), we hold that there is no case for levy of penalty u/s. 271F

of the Act. Accordingly, we set aside the order of the Ld. CIT(A) and delete

the penalty levied u/s. 271F of the Act.

No.357/Bang/2019 for Assessment Year 2013-14 is allowed.

:- 11 -: ITA Nos.2604 to 2606/Bang/2018 & ITA No.357/Bang/2019

2012-13 to 2015-16 are allowed.

Order pronounced in the open court on 20th December, 2019.

Sd/- Sd/-

(N.V. VASUDEVAN) (D.S. SUNDER SINGH) VICE PRESIDENT ACCOUNTANT MEMBER

Bengaluru, Dated: 20.12.2019 EDN Copy to 1. The appellant 2. The Respondent 3. CIT (A) 4. Pr. CIT 5. DR, ITAT, Bangalore. 6. Guard File By order

Assistant Registrar Income-tax Appellate Tribunal Bangalore