2013 (10) TMI 1512 - AT - Income Tax

Summary

Issues Involved:
1. Justification of penalty u/s 271FA of the Income Tax Act, 1961.
2. Consideration of reasonable cause for delay in filing Annual Information Return (AIR).
3. Quantum of penalty levied and its computation.

Summary:

Issue 1: Justification of Penalty u/s 271FA

All appeals concern the levy of penalty u/s 271FA of the Income Tax Act, 1961, for failure to file Annual Information Return (AIR) within the prescribed time. The Sub Registrars were required to file AIRs for transactions of immovable property valued at Rs. 30 lakhs or more by 31st August following the financial year. The DIT (CIB) noted delays in filing these returns and issued show cause notices. The assessees argued ignorance of the law and lack of a Tax Deduction Account Number (TAN) as reasons for the delay. The DIT (CIB) rejected these explanations, emphasizing that ignorance of the law is not an excuse and that government bodies should be more diligent. The CIT(A) upheld the penalties, stating that the legal requirement to file AIRs is mandatory and the assessees' habitual delays indicated mala fide intentions.

Issue 2: Consideration of Reasonable Cause for Delay

The assessees contended that the provisions were newly introduced and not within their knowledge, and that they had filed the information manually before obtaining a TAN. The Tribunal acknowledged that the lack of awareness of newly introduced provisions could be considered a reasonable cause for the initial delay. However, once the assessees were made aware through notices or other means, the plea of ignorance could not be sustained. The Tribunal directed that no penalty should be levied for the period up to the date of the first notice, considering it a reasonable cause for the delay. For subsequent delays, the assessees were held liable for penalties.

Issue 3: Quantum of Penalty Levied and Its Computation

The Tribunal accepted the assessees' plea that manual filing of AIRs should be considered compliance for the initial years when the provisions were newly introduced. The DIT (CIB) had already accepted this in some cases, reducing the penalty for the period between manual filing and uploading on the NSDL system. The Tribunal directed the DIT (CIB) to recompute the penalty, excluding the period of reasonable cause and any overlapping periods of default. The assessees were given the opportunity to provide complete information to determine the exact period of default and the quantum of penalty.

Conclusion:

The Tribunal partly allowed the appeals, directing the DIT (CIB) to recompute the penalties in line with the directions provided, considering the reasonable cause for initial delays and excluding overlapping periods of default.