2005 (4) TMI 521 - AT - Income Tax

Summary

Issues Involved:
1. Levy of penalty under section 272A(2)(c) for failure to submit Form No. 52A.
2. Whether the failure to submit Form No. 52A constitutes a technical or venial breach.
3. Validity of penalty proceedings initiated separately from the assessment proceedings.
4. Consideration of "reasonable cause" under section 273B for non-compliance.

Issue-wise Detailed Analysis:

1. Levy of penalty under section 272A(2)(c) for failure to submit Form No. 52A:
The assessee, engaged in the production of cinematograph films, failed to submit Form No. 52A as mandated by section 285B of the Income-tax Act, 1961. The form was required to be submitted within thirty days from the end of the financial year or the completion of the film, whichever was earlier. Despite filing the details during the assessment proceedings in September 1996, the penalty of Rs. 1,97,900 was levied for a delay of 1979 days. The CIT(A) confirmed the penalty, stating that the submission of details during assessment did not fulfill the statutory requirement of filing Form No. 52A.

2. Whether the failure to submit Form No. 52A constitutes a technical or venial breach:
The assessee argued that the default was technical and venial, citing the Supreme Court's decision in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26, which states that penalties should not be levied for technical or venial breaches. However, the tribunal held that the failure to submit Form No. 52A was not a mere technical or venial breach, as the form contained crucial information for the department to act upon. The tribunal emphasized that timely information was essential, and belated submission could not substitute the statutory requirement.

3. Validity of penalty proceedings initiated separately from the assessment proceedings:
The assessee contended that since penalty proceedings were not initiated during the assessment, subsequent initiation was contrary to law. The CIT(A) rejected this argument, clarifying that penalty proceedings under section 272A could be initiated at any time, unlike section 271, which requires initiation during the course of any proceedings under the Act. The tribunal concurred with this view, affirming the validity of the separately initiated penalty proceedings.

4. Consideration of "reasonable cause" under section 273B for non-compliance:
The tribunal examined whether there was a "reasonable cause" for the failure to submit Form No. 52A as required by section 273B. The assessee argued that the lack of pre-decided contract values and the submission of detailed information during assessment constituted reasonable cause. The tribunal found these arguments unconvincing, noting that the details required in Form No. 52A pertained to payments, not contract values, and that the assessee failed to provide a plausible reason for the entire period of delay. Consequently, the tribunal held that the assessee did not demonstrate a reasonable cause for non-compliance.

Judgment:
The tribunal upheld the levy of penalty but modified the period for which the penalty was calculated. It directed the Assessing Officer to compute the delay only up to 12-3-1999, the date on which the required information was submitted during the assessment proceedings. The appeal was partly allowed, reducing the penalty to reflect the revised period of default.