2018 (6) TMI 1457 - AT - Income Tax

Penalty under section 271FA - assessee failed to file Annual Information Return (AIR) within the prescribed time limit, as specified in section 285BA read with rule 114E of the Income Tax Rules - Held that - The assessee was depending on the private agency to file the AIR report and there was also shortage of manpower and inadequate infrastructure facility in his office, and moreover, the TAN Number of the assessee was inactive, all these factors have contributed delay in filing the AIR report which were beyond his control. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. We note that considering these facts and circumstances and position of law as explained above, the penalty should not be levied. - Decided in favour of assessee.

Summary

Issues involved:
Penalty under section 271FA for delay in filing Annual Information Return (AIR) for Assessment Years 2014-15 and 2015-16.

Detailed Analysis:

Issue 1: Penalty Imposition
The appeals were against penalty orders under section 271FA for not filing the AIR within the specified time limit. The assessee argued that the delay was due to shortage of manpower and infrastructure issues. The Director of Income Tax (I & CI) issued a show-cause notice, and the assessee explained the reasons for the delay, attributing it to reliance on a private agency for filing and administrative challenges. The Director imposed penalties of ?3,17,200 for 2014-15 and ?1,26,000 for 2015-16.

Issue 2: Assessee's Arguments
The assessee, as the Principal Officer of the Sub-Registrar Office, Maharashtra Government, highlighted the challenges faced, such as manpower shortage and inactive TAN number, which led to the delay. The assessee contended that these circumstances were beyond their control and sought relief from the penalty.

Issue 3: Revenue's Arguments
The Revenue argued that ignorance of the law is not an excuse, emphasizing that the AIR report should have been filed within the prescribed time limit. They maintained that continuous default in filing the AIR warranted the penalty under section 271FA.

Issue 4: Tribunal's Decision
The Tribunal considered the facts, noting the statutory obligation to file the AIR on time and the assessee's challenges in meeting this requirement. Referring to Section 273B, which exempts penalty if reasonable cause is proven, the Tribunal cited the Hindustan Steel Ltd case, emphasizing that penalties are not imposed for technical or venial breaches. Considering the circumstances, including reliance on a private agency and administrative constraints, the Tribunal held that the penalty should not be levied, quashing the penalty orders for both assessment years.

Conclusion
The Tribunal allowed both appeals, emphasizing the importance of considering all relevant circumstances before imposing penalties for statutory obligations. The decision highlighted the need for a judicial exercise of discretion in penalty imposition, especially in cases where delays are beyond the assessee's control.