2015 (2) TMI 1034 - AT - Income Tax

Penalty u/s 275(1)(c) - late filing of AIR returns - main contention of the assessee he was ignorant of law i.e. about the provisions of section 285BA of the I.T. Act - Held that - Provisions of section 285BA of the Act was introduced by the Finance (No. 2) Act, 2004 w.e.f. 1.4.2005, it is not the case that this section has been introduced for the first time by Finance (No. 2) Act, 2004. The plea taken by the assessee for ignorance of law is not sustainable in the eyes of law, because the ignorance of law is not an excuse, as per the decision in the case of UOI & Ors. vs. Dharmendra Textile Processor 2007 (7) TMI 307 - SUPREME COURT OF INDIA , Patan Nagrik Sarkari Bank Ltd. vs. DIT (2011 (3) TMI 719 - Gujarat High Court ) and Moti Lal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh & Ors. reported in (1978 (12) TMI 45 - SUPREME Court). Assessee has not established any reasonable cause for not filing the Annual Information Return (AIR) within time. Secondly, assessee has also failed to file any documentary evidence supporting the version submitted before the Revenue Authority as well before us. Assessee has also failed to establish any bonafide in not filing the AIR within time, inspite of the fact that assessee is holding a very responsible post and discharging very important duties which directly affect the exchequer of the country. Since the AIR to be filed by the assessee is very much essential for further cause of action on the same for which the assessee has failed to submit within time. Therefore, the penalty in dispute has rightly be levied by the Revenue Authorities, hence, we uphold the penalty in dispute by dismissing all the Appeals filed by the Assessee. - Decided against assessee.

Summary

Issues Involved:
1. Penalty for late filing of Annual Information Return (AIR).
2. Consideration of the decision given by the Hon'ble Apex Court in Hindustan Steel Ltd. vs. State of Orissa.
3. Applicability of the decision by the Hon'ble Gujarat High Court in Patan Nagrik Sahakari Bank Ltd. vs. DIT(CIB).
4. Time-barred penalty proceedings under Section 275(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:

1. Penalty for Late Filing of Annual Information Return (AIR):
The Sub-Registrar, Bhiwani, Haryana, was required to file AIRs for the Financial Years 2004-05 to 2008-09. According to Section 285BA of the Income Tax Act, 1961, certain specified persons must file an AIR in respect of specified financial transactions. The due date for filing the AIR is the 31st August immediately following the financial year. The assessee filed the AIR late for all the financial years in question, resulting in penalties under Section 271FA, which imposes a penalty of Rs. 100 per day for each day of default.

2. Consideration of the Decision by the Hon'ble Apex Court in Hindustan Steel Ltd. vs. State of Orissa:
The assessee argued that the penalty should be waived based on the Supreme Court's decision in Hindustan Steel Ltd. vs. State of Orissa, which states that penalty will not ordinarily be imposed unless there is a deliberate defiance of law or gross negligence. However, the Director of Income Tax (CIB), Chandigarh, rejected this argument, stating that the assessee was a habitual defaulter and had no reasonable cause for the delay.

3. Applicability of the Decision by the Hon'ble Gujarat High Court in Patan Nagrik Sahakari Bank Ltd. vs. DIT(CIB):
The CIT(A) partly allowed the appeal by following the judgment of the Gujarat High Court in Patan Nagrik Sahakari Bank Ltd. vs. DIT(CIB), where it was held that penalty should be deleted up to the date of the first notice if the delay was due to ignorance of the law. However, the penalty should be sustained for the period after the first notice was served. In this case, the assessee was issued multiple notices starting from 30.11.2006, and the penalty was upheld for the period after the first notice.

4. Time-Barred Penalty Proceedings under Section 275(1)(c) of the Income Tax Act, 1961:
The assessee contended that the penalty order dated 6.1.2011 was time-barred as it was beyond six months from the initiation of penalty proceedings. However, this argument was not accepted, and the penalty was upheld.

Conclusion:
The Tribunal upheld the penalty imposed by the Revenue Authorities, stating that the assessee failed to establish any reasonable cause for not filing the AIR within the prescribed time. The plea of ignorance of the law was not accepted, and the penalty was deemed appropriate given the habitual nature of the default and the importance of the AIR for tax administration. The appeals filed by the assessee were dismissed, and the penalty was sustained.