2011 (3) TMI 120 - AT - Income Tax

Penalty u/s. 271BA - Not filing the audit report within the stipulated time - The assessee has not placed any evidence that it was filed by the assessee before completion of the assessment u/s. 143(3) or 143(1) - The filing of audit report during the assessment u/s. 148 does not cure the mistake committed by the assessee - From this infer that the assessee has not filed the report u/s. 92E before the Assessing Officer on or before the completion of assessment u/s. 143(3) or processing the return u/s. 143(1) of the Act - The assessee has not filed the audit report u/s. 92E before completion of regular assessment or processing the return as the case may be and the assessee has not shown reasonable causes for not filing the audit report within the stipulated time - The assessee argued before the CIT(A) that initiation of penalty proceedings is barred by limitation - However it could not show as to how the initiation of penalty proceedings is barred by limitation. Held that do not find any infirmity in the orders of the CIT(A)- Hence penalty is confirmed - The appeals of the assessee is dismissed.

Summary

Issues involved:
Confirmation of penalty under section 271BA of the Income-tax Act, 1961 for assessment years 2003-04 and 2005-06.

Detailed Analysis:

Issue 1: Confirmation of penalty by CIT(A) under section 271BA

- The appeals were against separate orders of the CIT(A)-III, Hyderabad for assessment years 2003-04 and 2005-06, regarding the penalty levied under section 271BA of the Income-tax Act, 1961.
- The Assessing Officer initiated penalty proceedings due to the assessee's failure to furnish the required report under section 92E for international transactions.
- The Assessing Officer issued show-cause notices, and despite discussions, the assessee did not provide a written explanation for non-compliance.
- The CIT(A) confirmed the penalty for both years, leading to the appeals before the tribunal.

Issue 2: Reasonable cause for non-filing of audit report

- The assessee argued that a clerical error led to the failure to furnish the audit report under section 92E, emphasizing no revenue loss to the department and invoking judgments supporting deductions for timely filing.
- The Department contended that the assessee failed to show reasonable cause for non-compliance, citing relevant judgments for the requirement of reasonable causes.
- The tribunal noted that the assessee's reason for non-filing was too general and lacked substantiation, highlighting the absence of a valid explanation for the delay.
- The tribunal compared the beneficial provisions of deductions to penal provisions under section 271BA, emphasizing the necessity of timely compliance with statutory obligations.

Issue 3: Bar on limitation for penalty proceedings

- The assessee claimed that the initiation of penalty proceedings was time-barred but failed to demonstrate how the limitation applied.
- The tribunal found no merit in the limitation argument, upholding the CIT(A)'s orders based on the facts and circumstances of the case.

Conclusion:
- The tribunal dismissed both appeals, confirming the CIT(A)'s orders regarding the penalty under section 271BA for the assessment years in question.
- The failure to provide a valid explanation for non-compliance with statutory requirements, coupled with the absence of evidence supporting the limitation argument, led to the dismissal of the appeals.