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2023 (8) TMI 1109 - AT - Income TaxPenalty levied u/s. 272A(2)(e) - failure to furnish return of income which it was obligated to file under subsection (4A) of Section 139 - Alternative contention of the AR that penalty u/s. 272A(2)(e) could have been imposed only for the period reckoned from the due date of filing of the said return u/ss (1) of Section 139 of the Act, i.e., from 30.09.2012 till the date specified in sub-section (4A) of Section 139 of the Act, i.e., up to 31.03.2014 - HELD THAT - Admittedly, though the time for filing the return of income for the year under consideration, i.e., A.Y. 2012-13 under sub-section (4) of Section 139 had lapsed on 25.09.2014, but are unable to fathom that as to why the assessee made no effort to get its return for the year under consideration, i.e., A.Y. 2012-13 regularized by filing a letter and bringing the aforesaid factual position to the notice of the A.O. If the assessee would have come up with clean hands and fairly brought the facts above to the notice of the A.O., the latter would have, at his behest, issued notice u/s. 148 of the Act. We are afraid that the assessee chose to adopt an evasive approach, sat tight, and filed its return of income for the year under consideration only after notice u/s. 148 of the Act was issued to him on 30.03.2019 at the instance of the A.O. Conduct of the assessee as observed by us hereinabove does not inspire any confidence as regards his claim of holding a bonafide belief that having been registered u/s 12A, no obligation was cast upon it to file return of income. Our conviction above is fortified by the fact that the assessee despite being well conversant about its obligation to file its return of income on 25.09.2014 (supra), had still not taken any step for facilitating the filing of its return of income for the year under consideration. As Section 272A(2)(e) did cast an obligation on the assessee trust to furnish its return of income under sub-section (4A) of section 139 of the Act, which in turn, refers to the period contemplated under sub-section (1) of Section 139 of the Act; or to furnish the same within the period and manner prescribed under said sub-section, falling which the assessee is to be visited with the penalty therein prescribed, i.e. @Rs. 100/- for every day during which failure continues. As the assessee trust/society could have validly filed its return of income under sub section (4A) of Section 139 of the Act, latest within the period specified under sub section (4) of Section 139 of the Act, therefore there is a substance in the claim of the Ld. AR that no penalty could have been validly imposed upon the assessee for the period falling thereafter. We say so because, after the lapse of the period specified for filing a delayed return as contemplated in sub section (4) of Section 139 of the Act, no return of income on a suo-motto basis could have been filed by the assessee. As the return of income could have been filed by the assessee trust under sub-section (4A) of Section 139 of the Act latest by 31.03.2014, i.e., the period provided under sub-section (4) of Section 139 of the Act, therefore, obligation cast upon the assessee under sub section (4A) of Section 139 of the Act, i.e., filing of the return of income, having been rendered as unworkable after the lapse of the period within which the return of income could be filed u/s. 139 of the Act; therefore, the penalty for the period falling thereafter could not have been imposed. Our aforesaid conviction is fortified by case of G Pulla Reddy 2010 (2) TMI 1322 - ITAT HYDERABAD as observed that for levying penalty u/s. 272A(2)(e), the period of default was to be counted up to the time limit laid down in section 139(4) of the Act. Thus direct the A.O. to restrict the penalty imposed u/s. 272A(A)(e) of the Act up to the period that was available to the assessee trust for filing its return of income under sub-section (4) of Section 139 of the Act, i.e., up to 31.03.2014., the Ground of appeal No.1 is partly allowed
Issues Involved:
1. Validity of penalty imposed under Section 272A(2)(e) of the Income-tax Act, 1961. 2. Consideration of "reasonable cause"¯ under Section 273B for failure to file the return of income. 3. Period for which penalty under Section 272A(2)(e) can be imposed. Summary: Issue 1: Validity of Penalty Imposed under Section 272A(2)(e) The assessee trust, running an educational institution, failed to file its return of income for the assessment year 2012-13. The A.O. issued a notice under Section 148, but the return filed was considered invalid due to pending ITR-V/E verification. Consequently, the A.O. imposed a penalty of Rs. 2,55,800/- under Section 272A(2)(e) for failure to furnish the return of income as required under Section 139(4A). The CIT(A) upheld this penalty, rejecting the assessee's contention that it was under a bonafide belief that no return was required due to its registration under Section 12A. Issue 2: Consideration of "Reasonable Cause"¯ under Section 273B The assessee argued that the failure to file the return was due to a bonafide belief that its income was exempt and managed by priests not well-versed in tax laws. However, the CIT(A) found these reasons unsatisfactory and not fitting the criteria of "reasonable cause" under Section 273B. The Tribunal also noted that the assessee had filed returns for subsequent years, indicating awareness of its obligations, thus rejecting the bonafide belief argument. Issue 3: Period for Which Penalty Can Be Imposed The Tribunal agreed with the assessee's alternative contention that the penalty under Section 272A(2)(e) should only be imposed for the period up to the time limit laid down in Section 139(4), i.e., up to 31.03.2014. The Tribunal directed the A.O. to recompute the penalty accordingly, limiting it to the period during which the return could have been validly filed under Section 139(4). Conclusion: The Tribunal partly allowed the appeal, confirming the penalty's imposition but limiting the period for which it could be levied to up to 31.03.2014, based on the provisions of Section 139(4). The general grounds of appeal were dismissed as not pressed. Order Pronounced: The appeal of the assessee is partly allowed, and the order was pronounced in open court on 21st August 2023.
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