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Income Tax Appellate Tribunal, “ C” BENCH, KOLKATA
Before: Shri M. Balaganesh
This appeal of the assessee arises out of the order of the Learned CIT(A), XXXVI, Kolkata in Appeal No. 58/CIT(A)-XXXVI/Kol/R. -55/09-10 dated 22-03- 2013 for the Asst Year 2005-06 against the order of penalty levied by the Learned AO u/s 272A(2)( c) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).
The only issue to be decided in this appeal is as to whether the penalty u/s. 272A(2) ( c) of the Act amounting to Rs. 64,900/- could be levied in the facts and circumstances of the case.
The brief facts of this issue are that the assessee is an undergraduate lady engaged in the business of film production during the assessment year under appeal. She had produced a film by name ‘Annay Attachar’, which was completed on 21-05- 2004. She also produced the film ‘Chheta’. She had no experience in the film line of business, which could be evident from copy of her income-tax return filed for the earlier year. The assessee ought to have filed the Form No. 52A containing the details of expenditure incurred on film production in terms of provision of section 285B of the Act with 30 days from the date of completion of film. The assessee due to her ignorance with regard to the same did not file the said statutory form. However, she had duly filed her return of income containing the entire details of expenses incurred on film production. In the assessment order passed u/s. 143(3) of the Act, the ld.AO had not made no addition/disallowance towards expenses incurred by the assessee for film production. For non submission of form no. 52A in terms of provisions of section 285B of the Act, the ld.AO imposed penalty u/s. 272A(2) ( c) of the Act amounting to Rs. 64,900/-. On 1st appeal, this action of the ld.AO was confirmed by the ld.CIT(A). Aggrieved, the assessee is in appeal before us on the following grounds :- (1) That under the facts & circumstances of the case L' d CIT (A) erred in confirming the penalty u/s. 272A(2)(C) for non submission of return u/s. 285B ignoring section 273B, the reasonable cause.
(2) That the CIT (A) erred in confirming the penalty Rs. 64,9001- imposed u/s 272A(2)(C) despite that was no allegation that expenditure claimed by the assessee in the return either inflated or false.
(3) That the appellant craves to add or amend any grounds of appeal on or before the date of hearing.
We have heard the rival submissions. We find that the assessee being an undergraduate lady has started new line of business of film production during the assessment year under appeal. We further find that she had no income from activities/business of film production in the earlier years. During the penalty proceedings she pleaded that she was not aware about the submission of form no.52A within 30 days from the date of completion of film as contemplated u/s. 285B of the Act. We find from the assessment order that no disallowance/addition of expenditure towards cost of film production was made in the assessment proceedings by the ld. AO. The entire expenditure incurred towards film production has not been disputed by the ld. AO in any manner whatsoever. Hence, no prejudice is caused to the revenue by non submission of form no.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 she has started the film production business during the assessment year under appeal. She was completely ignorant of the statutory provision regarding non submission for form no. 52A. We hold that this explanation is truly bonafide and reasonable cause in terms of provisions of section 273B r.w.s 272A(2)( C ) has been duly adduced by the assessee. We hold that “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 the test of reasonable cause u/s. 273B of the Act. Hence, we have no hesitation in cancelling the penalty levied u/s. 272A(2)(c ) of the Act in the hands of the assessee.
In the result, the appeal of the assessee is allowed as stated above.
THIS ORDER IS PRONOUNCED IN OPEN COURT ON 05 -02-2016