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IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI "I" BENCH, MUMBAI
BEFORE SHRI SAKTIJIT DEY, HON'BLE JUDICIAL MEMBER & SHRI Dr. A.L. SAINI, HON'BLE ACCOUNTANT MEMBER
ITA No. 7360 & 5565/MUM/2016 (Asst. Years: 2014-15 & 2015-16)
Mahadeo Bhagavan Chavan, Sub-Registrar Thane-6, Kokan Bhavan, 1st Floor, CBD Belapur, Navi Mumbai vs. Director of Income Tax (I & CI),Earnest House, 12th Floor, Mumbai – 21
TAN No. MUMS50147G (Appellant) (Respondent)
> Assessee by : ShriRajkumar G. Tonali–CA. Department By : Shri Virendra Singh – DR
Date of hearing : 20/06/2018. Date of pronouncement : 27/06/2018.
O R D E R
PERDr.A.L. SAINI, ACCOUNTANT MEMBER
The captioned two appeals filed by the assessee, pertaining to Assessment Years 2014-15 and 2015-16, are directed against the separate orders passed by the Director of Income Tax (Intelligence & Criminal Investigation), Mumbai under section271FA of the Income Tax Act, 1961 (for short, "Act"), dated 28/10/2016 and 13/07/2016 respectively.
- 2. Since these two appeals filed by the same assessee for different assessment years and identical issues are involved, therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. The assessee's appeal in ITA No. 7360/MUM/2016 for the Assessment Year 2014-15 is taken-up, as the lead case. - 3. The solitary grievance of the assessee in these appeals is that the Director of Income Tax (I & CI) was erred in levying penalty of Rs. 3,17,200/- under section271FA for the Assessment Year 2014-15 and Rs.1,26,000/- for the Assessment Year 2015-16. - 4. The facts of the case may be briefly stated. The assessee, 'Sub-Registrar Thane-6' was required to file Annual Information Return (AIR) under the provisions of section 285BA of the Act read with Rule 114E of the Income Tax Rules, 1962 for the financial years2013-14 and 2014-15. The Director of Income Tax (I & CI)observed that the assessee 'Sub-Registrar Thane-6' had failed to file Annual Information Return (AIR) within the prescribed time limit, as specified in section 285BA read with rule 114E of the Income Tax Rules, and he noted that assessee was supposed to
file the AIR on or before 31/08/2014, but in fact the AIR was filed by the assessee on 13/09/2016, therefore, there was delay in filing AIR for the financial year 2013-14.The filing of AIR is a statutory requirement which has to be filed by the assessee on or before due date of filing. The onus is on the assessee to fulfil such statutory obligations within the stipulated time. In the assessee`s case under consideration, the AIR for the financial year 2013-14 was due to be filed on 31/08/2014 which is filed on 13/09/2016. Therefore, a show-cause notice was issued by the Director of Income Tax (I & CI) on 29/09/2016 asking the assessee,'Sub-Registrar Thane-6', to explain the reasons as to why penalty should not be levied under section 271FA of the Act for delay in filing the AIR for the financial year 2013-14.
In response to the show-cause notice, the assessee, 'Sub-Registrar Thane-6', vide letter dated 18/10/2016, has submitted that due to shortage of manpower and inadequate infrastructure in his office, the AIR could not be filed within time, as prescribed under the Act. The assessee also informed that the said AIR is prepared through private agency and, therefore, there was a minor delay in filing the AIR. The assessee also submitted a copythe AIR report to the Director of Income Tax (I & CI), which was filed by him late, online on 13/09/2016.
The assessee, 'Sub-Registrar Thane-6', also submitted before the Director of Income Tax (I & CI),that he had taken the charge of the office on 06/06/2016 and soon after taking the charge, the delayed AIR for the financial years 2013-14 and 2014-15 have been filed online by paying personal attention. The assessee also submitted a copy of online receipt of AIR for the financial years 2013-14 to 2015-16. However, the Director of Income Tax (I & CI) rejected the contention of the assessee and noted that the assessee, 'Sub-Registrar Thane-6' had defaulted in filing the AIR for the financial year 2013-14, which was due to be filed by 31/08/2014, but was filed on 13/09/2016. Thus, there was a delay in filing the AIR for the financial year 2013-14 by 744 days, which attracts the penalty under section 271FA of the Act and accordingly, penalty to the tune of Rs. 3,17,200/- was imposed.
- 6. Aggrieved by the penalty order of Director of Income Tax (I & CI), the assessee is in appeal before us. - 7. Ld. Authorized Representative for the assessee submitted before us that assessee is a Principal Officer of 'Sub-Registrar
Office, Maharashtra Government, Konkan Bhavan, Navi Mumbai, and is engaged in the registration process of all agreements. The assessee was liable to furnish an AIR under the provisions of section 285BA of the Act in respect of specified financial transactions by 31/08/2014 for financial year 2013-14 and 31/08/2015 for financial year 2014-15 respectively but due to shortage of manpower and inadequate infrastructure in his office, he could not file the AIR on time. The ld AR also submitted that the assessee always depends on private agencies to File AIR, and moreover, when he joined the office as a 'Sub-Registrar', he found that TAN Number was not working and it was inactive, therefore, it has resulted into delay and these circumstances were beyond of his control, hence penalty under section 271FA should not be levied.
On the other hand, ld. Departmental Representative for the Revenue, submitted before us that ignorance of law is not an excuse, hence, the AIR report should be filed within the time limit prescribed under section 285BA of the Act, read with Rule 114E of the Income Tax Rules, 1962. The assessee, 'Sub-Registrar Thane-6' has to file the AIR return on time. There was continues default in filing the AIR return, therefore, penalty should be levied under section 271FA of the Act.
- 9. We have given a careful consideration to the rival submissions and perused the material available on record. We note that the assessee was liable to furnish the AIR return under the provisions of section 285BA of the Act, read with rule 114E of the Rules, in respect of the specified financial transactions by 31/08/2014 for financial year 2013-14 and by 31/08/2015 for financial year 2014-15. We note that AIR is a statutory requirement which has to be filed on or before due date and onus is on the assessee to fulfil such statutory obligation within the specified time. We note that the assessee is a Principal Officer of 'Sub-Registrar Office, Maharashtra Government, and is engaged in the registration process of agreements and due to shortage of manpower and poor infrastructure facilities in his office, the assessee could not file the AIR report timely,and such delay was beyond his control. Besides, the assessee always depends upon private agency to prepare the AIR report. - 10. The assessee took the charge of his office on 06/06/2016 and prior to that, no responsible person has been appointed to file
the AIR report. Soon after his appointment in the office, as a Sub-Registrar, he came to know about inactive TAN number of his office and took immediate steps to make it active and this process has resulted into delay, in filing the AIR report. After joining the said office on 06/06/2016, he took personal attention and the delayed AIR reports for the financial years 2013-14 and 2014-15 have been filed online.
Section 273B of the Income Tax Act, (Penalty not to be imposed in certain cases) provides thatno penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said section 271FA, if he proves that there was reasonable cause for the said failure.
We note that in the case of Hindustan Steel Ltd Vs. State of Orissa, (1972) 83 ITR 0026, the Hon`ble Supreme court held that merely a technical or venial breach of the provisions of the Act does not attract the penalty. The relevant quote is given below:
"5. Under the Act penalty may be imposed for failure to register as a dealer : s. 9(1), r/w s. 25(1) (a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory 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 disregard 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 be 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. Those in charge of the affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that the company was not a dealer. Granting that they erred, no case for imposing penalty was made out."
We note that in assessee's case under consideration, the assessee was depending on the private agency to file the AIR report and there was also shortage of manpower and inadequate infrastructure facility in his office, and moreover, the TAN Number of the assessee was inactive, all these factors have contributed delay in filing the AIR report which were beyond his control. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. We note that considering these facts and circumstances and position of law as explained above, the penalty should not be levied. Therefore, we quash the penalty order for both the assessment years, that is, A.Y. 2014-15 and A.Y. 2015-16.
In the result, both the appeals filed by the assessee (ITA No. 7360 & 5565/Mum/2016), are allowed.
Order Pronounced in open Court on this 27 th day of June, 2018.
(SAKTIJIT DEY) (A.L. SAINI)
Sd/- sd/- Judicial Member Accountant Member
Dated : 27 th June, 2018.
vr/-
Copy to:
- 1. The Assessee – Mahadeo Bhagavan Chavan, Sub-Registrar Thane-6, Kokan Bhavan, 1st Floor, CBD Belapur, Navi Mumbai - 2. The Revenue – Director of Income Tax (I & CI), Earnest House, 12th Floor, Mumbai – 21. - 3. The D.R., Mumbai. - 4. Guard file.
By order
Dy./Asst. Registrar, ITAT, Mumbai.