2010 (8) TMI 352 - AT - Income Tax

Penalty - Return u/s 139(4A) - Voluntary contribution - Exemption under section 10(23C) - penalty in the present case was imposed by the Assessing Officer under section 272A(2)(e). - As per the provisions of section 273B, any penalty imposed by the Assessing Officer under sub-section (2) of section 272A is not imposable if the assessee proves that there was reasonable cause for the said failure. Penalty under section 272A(2)(e) is imposable if the assessee fails to furnish the return of income, which he is required to furnish under sub-section (4A) of section 139. Return u/s 139(4A) - there is non-specific reference to those assessees who are covered by the provisions of section 10(23C)(iiiab). - In this section, reference has been made to sections 11 and 12. In addition to this reference was made to those assessees also, who have income from voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2. Section 2(24)(iia) - When we examine the provisions of sub-clause (iia) of sub-section (24) of section 2, we find that reference has been made to various other clauses of sub-section (23C) of section 10 but no reference has been made to clause (iiiab) of sub-section (23C) of section 10. There was reasonable cause on which the assessee might have been having a bona fide belief that the provisions of section 139(4A) are not applicable to it and hence the penalty imposed by the Assessing Officer is not justified.

Summary

Issues:
- Appeal against combined order of Ld. CIT(A) for Assessment Years 1999-2000 and 2000-01.
- Exemption under section 10(23C)(iiiad) disregarded.
- Obligation to file return of income under section 139(1) or 139(4).
- Recalling of earlier Tribunal order for deciding if assessee was prevented from filing return due to income exemption under section 10(23)(iiiab).
- Applicability of penalty under section 272A(2)(e) for failure to furnish return of income under section 139(4A).

Analysis:

1. The appeals were filed against the combined order of the Ld. CIT(A) for the Assessment Years 1999-2000 and 2000-01. The grounds raised by the assessee highlighted errors in the order, disregard of exemption under section 10(23C)(iiiad), and the absence of an obligation to file a return of income under section 139(1) or 139(4) due to being an educational institution not seeking exemption under section 11.

2. The Tribunal recalled the earlier order and directed a fresh decision on whether the assessee was justified in not filing a return due to income exemption under section 10(23)(iiiab). The assessee argued that being substantially financed by the Government, it fell under the purview of clause (iiiab) of section 10(23C), exempting it from filing a return under section 139(4A).

3. The Ld. D.R. contended that the provisions of section 139(4A) applied to assessees receiving voluntary contributions under sub-clause (iia) of clause (24) of section 2, justifying the penalty for failure to file a return. The Tribunal examined the provisions of section 139(4A) and found no specific reference to assessees covered by clause (iiiab) of section 10(23C).

4. Considering the arguments and the legal provisions, the Tribunal held that the assessee had a reasonable cause to believe that section 139(4A) did not apply to them due to their exemption under section 10(23C)(iiiab). Consequently, the penalty imposed under section 272A(2)(e) was deemed unjustified and was deleted for both years, allowing the appeals of the assessee.

5. In conclusion, the Tribunal's decision was based on the interpretation of relevant legal provisions and the assessee's genuine belief regarding their exemption status under section 10(23C)(iiiab), leading to the deletion of the penalty for failure to file a return of income.