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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA & SHRI RAVISH SOOD
This appeal by the assessee is directed against order of CIT-A dated 03.09.2014 and pertains to assessment year 2006-07. 2. The grounds of appeal read as under:
Kripa Shanakar Singh ITA no.4146Mum./2013 1. On the facts and circumstances of the appellant’s case and in law the Ld. CIT-A erred in confirming the penalty of Rs. 5,000/- u/s 271F of the Income Tax Act, 1961. 2. The Appellant craves leaves to add, to amend, alter, modify and/or withdraw any or all of the above grounds of appeal
, each of which are without prejudice to one another. The appellant prays this Hon’ble Tribunal to delete the additions made by the Ld. A.O and confirmed by the CIT-A.
3. Brief facts of the case leading to the levy of penalty are as under: The return for AY 2006-07 was filed on 25/2/2010 declaring income of Rs.12,82,510 and the assessment u/s 143(3) was completed at total income of Rs.17,89,110/-. The AO had issued the show cause notice u/s. 271F as the assessee had filed the return beyond the time permitted u/s. 139(4). In response to the show cause notice dated 21/3/2011 u/s 271F issued by the AO, the assessee replied vide letter dated 6/4/2011 that it was under bonafide belief that amount received towards goodwill at the time of retirement was not chargeable to tax. The return was filed only when the assessee came to know that the receipt was taxable. The AO however did not accept the contention of the assessee on the ground that right from AY 2003-04 the assessee has no where mentioned in any returns about his being partner in any firm and other details like share of profit/remuneration/capital a/c with firms etc. were not mentioned in the return filed for any years. That there is hardly any proof that the assessee Kripa Shanakar Singh ITA no.4146Mum./2013 received amounts from partnership firms. That the ignorance of law is cannot be accepted as excuse to file return with such inordinate delay. Accordingly, he levied the penalty u/s. 271F@ Rs. 5,000/-.
4. Upon assessee’s appeal Ld. CIT-A noted the following submissions of the assessee as under: “Before me the Ld.AR has reiterated the same argument that the assessee being MLA, the salary & allowance received were exempt u/s 10 and it was under bonafide belief that the receipt towards goodwill from the firm at the time of retirement was not taxable in view of the decisions in case of 115 ITR 95(Bom), 130 ITR 863(Bom) etc. Hence earlier no return was filed. The return was flied only when assessee learnt that the receipt of goodwill was taxable.” However, the Ld. CIT-A was not convinced he held that there has 5. already been the change of law u/s. 55(2), hence assessee’s claim of ignorance of law cannot be accepted. Ld. CIT-A proceeded to confirm the levy of penalty of Rs. 5,000/- u/s. 271(F).
6. Against the above order assessee’s is an appeal before us. We have heard both the counsel and perused the records. We find that penalty in this case has been levied u/s.271 (F) for not furnishing the return within the due date. The reasonable cause as attributed by the assessee in this regard is that assessee was under a bonafide belief that the income/allowance as MLA was exempt u/s. 10(14). Further more he has claimed that in view of the earlier case laws where Kripa Shanakar Singh ITA no.4146Mum./2013 receipt of goodwill from the firm at a time of retirement was not taxable he considered the same exempt. These have been submitted as reasonable cause for the bonafide belief of the assessee that since there was absence of taxable income so return of income was not needed to be filed. This submission of the assessee has been rejected by the Ld. CIT-A of the ground that there has already been the change of law whereby the effect of decisions relied by the assessee is no longer applicable.
6. Upon careful consideration in our consider opinion the reasonable cause attributed by the assessee for failure to comply with the provision of filing return on due time is reasonable of acceptable. Hence the assessee case false under the sweep of Section 273 B of the I.T. Act. The said section provides that no penalty shall be impossed inter-alia for failure under this section if the assessee proves that there was reasonable cause of the said failure. In the facts and circumstances of this case referred here in above in our consider opinion there was reasonable cause for the failure of the assessee to comply with the provisions of the Act. Accordingly assessee should not be visited with the regour penalty u/s. 271(F) of I.T. Act.
7. Accordingly, we set aside the orders of Ld. CIT-A and delete the penalty.
Kripa Shanakar Singh ITA no.4146Mum./2013 In the result this appeal by the assessee stands allowed.