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Before: Shri Duvvuru RL Reddy & Shri S. Jayaraman
Shri V.C. Ganesan, The Joint Commissioner of No. 1, Nadiamman Koil St., Vs. Income Tax , Alangudi, Pudukkottai Dt. Range III, Tiruchirapalli. [PAN:AEJPG9287N] (अपीलाथ� /Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से / Appellant by : Shri K. Meenakshisundaram, ITP ��यथ� क� ओर से/Respondent by : Shri N. Madhavan, Addl.CIT सुनवाई क� तार�ख/ Date of hearing : 17.10.2017 घोषणा क� तार�ख /Date of Pronouncement : 30.10.2017 आदेश /O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 2, Tiruchirappalli dated 24.03.2017 relevant to the assessment year 2006-07 passed under section 272A(2)(c) of the Income Tax Act, 1961 [“Act” in short]. The only issue to be decided in this appeal is as to whether the penalty under section 272A(2)(c) of the Act amounting to ₹. 1,80,900/- could be levied in the facts and circumstances of the case.
Brief facts of the case are that the assessee is an individual and assessed to tax by the ITO, Ward 1(1), Pudukkottai. The assessee started production of a cinematographic Tamil film “Paesuvoma” during the financial year relevant to the assessment year under consideration. After completion of the production of the above film, the assessee did not file Form No. 52A as required under Rule 121A of the IT Rules read with section 285B of the Act with regard to the payment made to various artists/technicians, etc. incurred at the time of production of the film. Accordingly, notice under section 272A(2)(c) of the Act was show-caused as to why penalty should not be levied for the failure to file Form No. 52A. In response thereto, the assessee submitted his explanation with regard to the non-filing of the Form 52A. After considering the submissions of the assessee and not accepted the reasonable and bonafide explanation tendered by the assessee, the Assessing Officer levied penalty under section 272A(2)(c) of the Act of ₹.1,80,900/- in filing the Form No. 52A with a delay of 1809 days. On appeal, the ld. CIT(A) confirmed the penalty.
Aggrieved, the assessee is in appeal before the Tribunal. By reiterating the submissions of reasonable cause and moreover, no prejudice is caused to the revenue by non submission of Form No.52A, the ld. Counsel for the assessee has prayed that the penalty levied under section 272A(2)(c) of the Act should be deleted. On the other hand, the ld. DR strongly supported the orders of authorities below.
We have heard the rival contentions, perused the materials available on record and gone through the orders of authorities below. Filing of Form 52A as required under Rule 121A of the IT Rules r.w. section 285B of the Act is warranted for the payment made to various artists/technicians. During the financial year 2005-2006 relevant to assessment year 2006-07, the assessee started production of a film called “Paesuvoma”. The main reason for non-filing of Form 52A by the end of financial year or within thirty days is that the film after exhibition before the Censor Board had to undergo a reshoot and the hero of the film Shri Kunal passed away in a road accident and the assessee was in search for a look alike actor to complete the reshoot of some scenes. The heroine of the film also not cooperated to act with an actor look alike actor Kunal. Therefore, the film is not yet completed and the film is not released at all till date. Causing penalty notice to the assessee wept over the loss he had incurred in the production of the film. Immediately on receipt of penalty notice dated 04.03.2011, the assessee filed the statement under section 285BA of the Act on 15.04.2011.
4.1 It is an admitted fact that the film called “Paesuvoma” has not yet released till date or the Censor Board issued certificate of completion of the film. As per the statement of expenditure filed under section 285BA of the Act, incurred towards film production has not been disputed by the Assessing Officer in any manner whatsoever in the penalty order passed under section 272A(2)(c) of the Act. Hence, no prejudice is caused to the revenue by non submission of Form 52A within the prescribed statutory time. Hence, we hold that it only amounts to technical venial breach and that the assessee had tried to explain the reasonable cause contemplated u/s. 273B r.w.s 272A(2)(c) of the Act by stating that the hero of the film Shri Kunal passed away in a road accident and the assessee was in search for a look alike actor to complete the reshoot of some scenes. The heroine of the film also not cooperated to act with an actor look alike actor Kunal. It was also the submission of the assessee that though there was no written agreement, the other two persons who were co-producers with the assessee parted ways with the assessee unable to bear with the troubles of the film production any longer, moreover, the film was never completed and released for public viewing in theatres in Tamil Nadu or anywhere or even in satellite TVs and finally the film was abandoned by incurring heavy loss, not correct to add insult to injury when the film producer has already in huge loss on account of the still born nature of the film. We are of the considered opinion that the above explanation is truly bonafide and reasonable cause in terms of provisions of section 273Br.w.s 272A(2)(c) of the Act has been duly adduced by the assessee. As soon as the notice was issued to the assessee, the assessee has filed the statement under section 285BA of the Act. Thus, we hold that the “reasonable cause” can be reasonably said to be a cause which prevents a man of ordinary prudence and average intelligence acting under normal circumstances. We place reliance on the decision of the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. Vs. State of Orissa reported in (1972) 83 ITR 26(SC), wherein it has been held as under:- “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 bonafide belief that the offender is not liable to act in the manner prescribed by the statute.”
We find that the case law as laid down by the Hon'ble Supreme Court in the aforesaid case is applicable looking to the provisions of section 272A(2)(c) r.w.s 273B of the Act. We also find that there is no loss to the revenue that could be attributed in the facts of the case and the interest of the revenue is not jeopardized. The assessee had committed only technical venial breach which itself satisfied test of reasonable cause under section 273B of the Act. Hence, we have no hesitation in cancelling the penalty levied under section 272A(2)(c) of the Act in the hands of the assessee.
In the result, the appeal filed by the assessee is allowed. Order pronounced on the 30th October, 2017 at Chennai.