2019 (5) TMI 1059 - AT - Income Tax

Penalty u/s 271FA r.w.s. 274 - non filing of AIR return without considering reasonable cause - HELD THAT - Assessee has not given any reply to the numerous notices issued by the Income Tax Department deleting total penalty will not be a good message to the various government departments who are bound to supply the information to the ITD which per se helps in checking the tax evasion as well as assessing the correct income of various persons. Assessing authority has computed the penalty @₹ 500/- per day which was changed from ₹ 100/- to ₹ 500/- w.e.f. 1.4.2018, therefore the penalty if any has to be computed @₹ 100/- per day. When the assessee did not appear on 15.12.2015 why the action was not taken against the assessee, the reason is best known to the revenue authorities who waited for almost 2 years to compute the penalty. From 10.9.2015 to 15.12.2015 a total number of days for the failure on the part of the assessee is 97 days. In our considered view, totality of the facts and in the interest of justice and fair to both the parties we hold that sustaining the penalty of ₹ 9700/- (97 days x ₹ 100/- per day) on the assessee will be justified and it will be a message to the government authorities, so that in future such casual approach should not be taken and compliance to the statutory requirements including reply of notices by Income Tax Department should be adhered to. We accordingly sustain penalty of ₹ 9,700/- and delete the remaining amount of penalty of ₹ 3,41,800/- and partly allow the assessee s appeal. - Appeal of the assessee is partly allowed.

Summary

Issues involved:
Penalty under section 271FA of the Income Tax Act for non-filing of AIR return without reasonable cause.

Analysis:

1. The appeal was filed by the assessee against the penalty imposed under section 271FA of the Income Tax Act for the Assessment Year 2015-16. The penalty was levied by the Ld. Director of Income Tax (I&CI) for the non-filing of the Annual Information Return (AIR) as required by Section 285BA of the Act.

2. The assessee, a local authority under the State Government of Madhya Pradesh, failed to submit the required statement in Form 61B for the financial year 2014-15 by the extended due date. Despite multiple notices and opportunities given by the revenue authorities, the assessee did not comply with the requirements, leading to the imposition of a penalty amounting to ?3,51,500.

3. The counsel for the assessee argued that technical issues with the web portal for e-registration of documents caused delays in filing the necessary information. However, the Departmental Representative contended that the assessee showed a casual approach by not complying with the notices issued by the Income Tax Department.

4. The Tribunal observed that while there was a delay in filing the AIR, there was a reasonable cause for such delay due to the technical problems faced by the Government Department. The penalty was computed at ?500 per day for 703 days, but the Tribunal considered the provisions of Section 273B of the Act, which allows for penalty waiver if a reasonable cause is proven.

5. The Tribunal acknowledged the importance of government departments supplying information to the Income Tax Department for tax assessment and evasion prevention. While recognizing the delay, the Tribunal reduced the penalty to ?9,700 (97 days x ?100 per day) to send a message to ensure compliance with statutory requirements in the future.

6. The Tribunal partially allowed the assessee's appeal, sustaining a reduced penalty of ?9,700 and deleting the remaining penalty amount of ?3,41,800. This decision aimed to balance justice and compliance with statutory obligations while sending a message to government authorities regarding timely compliance with Income Tax Department requirements.