2015 (8) TMI 803 - AT - Income Tax

Penalty u/s 271FA - failure to file AIR within time - assessee argued that the assessee has never been served notice for filing the annual information return - Held that - On perusal of section 285BA of the Act, which 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. Prior to its substitution, section 285BA was inserted by the Finance Act, 2003 w.e.f. 1.4.2004, where any assessee who enters into any financial transaction, as may be prescribed, with any other person, shall furnish, within the prescribed time, an annual information return in such form and manner, as may be prescribed in respect of such financial transaction entered into by him during any previous year. Rule 114A to 114E prescribes such return to be furnished in Form No.61A and shall be verified in the manner indicated therein. At item No.6 of the said Rule, return shall be furnished on or before 31st August, immediately following the financial year in which the transaction is registered or recorded Penalty order dated 22.12.2010 has been served on the assessee is not in dispute against which the assessee filed appeal on 31.01.2011 before the ld. CIT(A), Bathinda. The Ld. CIT(A) s order dated 14.12.2012 has also been served upon the assessee on 09.01.2013 at the same address has also not been disputed by the ld. counsel for the assessee. Therefore, the arguments made by the Ld. counsel for the assessee that one notice dated 20.11.2006 having mentioned wrong District is part of the paper book cannot prove that the notice dated 20.11.2006 and other six notices as mentioned hereinabove have not been issued and served on the assessee. Therefore, the argument of the ld. counsel for the assesse is rejected that no notice u/s 285BA(5) has been issued/served upon the assessee even in remand proceedings when all notices were confronted. Therefore, the reliance placed by the ld. counsel for the assessee on the decisions of various courts of law on service of notice cannot be made applicable in the present case and cannot help the assessee. As regards the reasonable cause we may refer that ignorance of law is not an excuse, as per our findings hereinabove and also as per decision of the Hon ble Gujrat High Court in the case of Pattan Nagrik Sahakari Bank Ltd. (2011 (3) TMI 719 - Gujarat High Court).It is settled law that ignorance of law is of no excuse, as decided by the Hon ble Supreme Court in the case of MotiLal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh & Ors reported in (1978 (12) TMI 45 - SUPREME Court ). - Decided against assessee.

Summary

Issues Involved:
1. Legality of penalty under Section 271FA of the Income Tax Act, 1961.
2. Reasonable cause for failure to file Annual Information Return (AIR) within the prescribed time.
3. Service of notice under Section 285BA(5) of the Income Tax Act.
4. Ignorance of law as a defense.

Detailed Analysis:

1. Legality of Penalty under Section 271FA:
The primary issue in all the appeals was the imposition of penalties under Section 271FA of the Income Tax Act, 1961, due to the delay in filing the Annual Information Return (AIR). The appellants were various Sub Registrars who failed to file the AIR within the prescribed time. The penalty under Section 271FA is levied at Rs. 100 per day for each day of default.

2. Reasonable Cause for Failure to File AIR:
The appellants argued that they had a reasonable cause for the delay in filing the AIR, citing ignorance of the provisions of Section 285BA and lack of professional tax assistance. They contended that they were posted in mofussil areas and were not aware of the statutory requirements. The appellants relied on Section 273B, which provides for non-imposition of penalty if there is a reasonable cause for the failure.

3. Service of Notice under Section 285BA(5):
The appellants also argued that they were not served with the notice under Section 285BA(5), which requires the Income Tax Authority to serve a notice if the AIR is not filed within the prescribed time. They claimed that the advisory letters issued by the department were not received, and hence, they were not aware of their statutory obligations.

4. Ignorance of Law as a Defense:
The appellants further argued that ignorance of the law should be considered a reasonable cause for the delay in filing the AIR. They cited various judicial precedents to support their contention that penalties should not be imposed due to their lack of knowledge about the income tax provisions.

Judgment Analysis:

Legality of Penalty:
The Tribunal upheld the penalty under Section 271FA, emphasizing that the appellants had failed to file the AIR within the prescribed time despite being aware of their statutory obligations. The Tribunal noted that the appellants were habitual defaulters, as they had delayed filing the AIR for multiple financial years.

Reasonable Cause:
The Tribunal rejected the appellants' argument of reasonable cause, stating that ignorance of the law is not a valid excuse. The Tribunal referred to the judgment of the Hon'ble Gujarat High Court in the case of Patan Nagrik Sahakari Bank Ltd. vs. Director of Income Tax, which held that once the advisory letters were issued, the reasonable cause for delay disappears, and the appellants cannot claim ignorance of the law as a defense.

Service of Notice:
The Tribunal found that the advisory letters and notices were indeed issued and served on the appellants. The Tribunal noted that the address discrepancies claimed by the appellants were not substantiated with evidence. The Tribunal held that the appellants were aware of their statutory obligations and had failed to comply despite receiving multiple notices.

Ignorance of Law:
The Tribunal reiterated that ignorance of the law is not an excuse. It cited the Supreme Court's judgment in the case of Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh, which held that ignorance of the law is not a valid defense for non-compliance with statutory requirements.

Conclusion:
The Tribunal dismissed all the appeals, upholding the penalties imposed under Section 271FA. The Tribunal found no infirmity in the orders of the CIT(A) and held that the appellants had failed to provide a reasonable cause for the delay in filing the AIR. The Tribunal emphasized that the appellants were habitual defaulters and had consciously disregarded their statutory obligations. The judgment was pronounced in the open court on 30th May 2013.