2019 (10) TMI 899 - AT - Income Tax

Penalty u/s 272A(2)(e) - delay in filing the return of income by the assessee, though it is undisputed that the income of the assessee was not chargeable to tax in view of the provisions of section 10(23C)(iiiad) - due to a reasonable and genuine cause - HELD THAT - As decided in HTSL COMMUNITY SERVICE TRUST 2012 (4) TMI 152 - ITAT BANGALORE it is not a case that the assessee did not file a return of income at all. During the year preceding the relevant assessment year, the assessee-trust was formed. The relevant previous year was the first year of activities of the assessee and the assessee was not familiar with the relevant provisions of filing of return of income and the procedure involved thereof. It was under a bona fide belief that the return is to be filed only after securing recognition under section 80G. However, on being appraised of the provisions of law, return was filed without any further delay. Since the entire income was applied towards the charitable activities, no tax was payable for the relevant assessment year. As a result of late filing of the return, there was no loss of revenue to the Government. The assessee had no ulterior motive to defraud the revenue and had not acted dishonestly or negligently. We also agree with the submission of the learned counsel for assessee that the provisions of section 139(4A) are applicable only in case where exemption is claimed u/s 11 and 12 of the Act and not in case where income of an organization does not form part of the total income under the Act in view of the provisions of Sec.10(23C)(iiiad) of the Act. Provisions of Sec.139(4A) makes a reference only to provisions of Sec.11 and 12 and not to the provisions of Sec.10(23C)(iiiad) of the Act. - Decided in favour of assessee.

Summary

Issues:
Appeal against penalty under section 272A(2)(e) of the Income-tax Act,1961 for assessment years 2013-14 and 2014-15.

Analysis:
1. The appellant challenged the penalty imposed under section 272A(2)(e) of the Act for late filing of income tax returns despite income being exempt under section 10(23C)(iiiad) of the Act for both assessment years.
2. The appellant cited the age and genuine belief of the Trust President, lack of tax liability, and the charitable nature of the organization as reasonable causes for the delay in filing the returns.
3. The Tribunal considered a similar case precedent where penalty was deleted due to genuine reasons for delay in filing returns, leading to the decision to delete the penalty in the present case as well.
4. The Tribunal also noted that section 139(4A) applies to cases claiming exemption under sections 11 and 12, not to cases where income is exempt under section 10(23C)(iiiad), further supporting the decision to cancel the penalty.
5. Consequently, the Tribunal canceled the penalty and allowed both appeals of the assessee, emphasizing the similarity of reasons with the precedent case and the specific applicability of section 139(4A) in relation to exemptions under sections 11 and 12.

This detailed analysis of the judgment provides insights into the legal reasoning behind the decision to cancel the penalty imposed on the assessee for late filing of income tax returns, considering the specific provisions of the Income-tax Act and the genuine reasons presented by the appellant.