KORPUS FINANCIAL SERVICES P.LTD,MUMBAI vs. DCIT C C 44, MUMBAI

आदेश / O R D E R

PER C.N. PRASAD, JM:

3.1. Since the assessee filed returns beyond the time specified in the notice issued u/s. 153C, notice u/s. 271F was issued requiring the assessee to show cause as to why penalty u/s. 271F should not be imposed for delay in filing the returns. In response to the notice, assessee filed letter dated 22.7.2013 stating that there were 8 assessees in its group and total 55 search assessments were in progress and the returns of the entire group were also required to be filed and therefore there is little delay in filing the returns. It was also contended that Chairman/Chief Promoter of the group was unwell/sick and was not attending to the business regularly and he was hospitalized twice. Therefore, it was contended that there was no willful and deliberate delay on the part of the assessee in filing the returns belatedly. It was also contended that assessee has reduced its accounting staff as was no much business and therefore no sufficient staff was left to deal with huge return filing work. It was also contended that the assessee was regular and prompt in filing its returns since inception except on this occasion which was beyond its control. Therefore it was contended that no penalty u/s. 271F should be levied as the Assessing Officer has discretion to impose the penalty u/s. 271F of the Act and it is not mandatory and automatic. However, not convinced with the submissions of the assessee, the Assessing Officer proceeded to levy penalty u/s. 271F observing that the assessee has failed to file the returns within the specified time without any reasonable cause.

a. Appellant were regular and prompt in filing their return of income, since inception except this stray incident, that too beyond the control of the appellant. b. Appellant and their group companies were required to file a total number of 55 returns, followed by search proceedings which necessarily required time. c. Chairman of the Group/Chief Promotor of the group was unwell/sick and was not attending business regularly and had to be hospitalized twice. d. There were no willful/deliberate delay on the part of the appellant. e. Provision of Sec. 271F were not applicable on the facts and circumstances of the case and if it is considered to be applicable, it may be appreciated that the alleged delay was on account of reasonable grounds and does not warranted levy of penalty u/s. 271B r.w. Sec. 273.

5.1. The Ld. Counsel for the assessee further relying on the decision of the Hon’ble Supreme Court in the case of Hindustan Steel Ltd., Vs State of Orissa (83 ITR 26) submits that levy of penalty is not automatic. The Assessing Officer has the discretion to impose penalty and such discretion is to be exercised judiciously and no penalty should be imposed where there is a technical or venial breach of the provisions of the Act. The Ld. Counsel for the assessee submits that here there is a reasonable cause within the meaning of Sec. 273B for not filing the returns within the time stipulated in the notice u/s. 153C. Therefore he submits that penalty be deleted.

a. Appellant were regular and prompt in filing their return of income, since inception except this stray incident, that too beyond the control of the appellant. b. Appellant and their group companies were required to file a total number of 55 returns, followed by search proceedings which necessarily required time. c. Chairman of the Group/Chief Promotor of the group was unwell/sick and was not attending business regularly and had to be hospitalized twice. d. There were no willful/deliberate delay on the part of the appellant. e. Provision of Sec. 271F were not applicable on the facts and circumstances of the case and if it is considered to be applicable, it may be appreciated that the alleged delay was on account of reasonable grounds and does not warranted levy of penalty u/s. 271B r.w. Sec. 273.

“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”. The Hon’ble Supreme Court held that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings and penalty should not 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. It was also held that penalty also will not imposed merely because it is lawful to do so. In this case the assessee filed returns belatedly and there is reasonable cause in filing the return in time as stated above and further the record does not show that assessee has acted either deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. In the circumstances, we hold that assessee was prevented with reasonable cause in filing the returns and there is no deliberate attempt to file the returns belatedly. Thus, we delete the penalty levied u/s. 271F of the Act.

Order pronounced in the open court on 21st September, 2016.