1996 (10) TMI 129 - AT - Income Tax

Assessment Year Bona Fide Delay In Filing Penalty For Default Reasonable Cause Show-cause Notice Tax At Source

Summary

Issues Involved:
1. Imposition of penalty under section 272A(2)(f) read with section 274 of the Income-tax Act, 1961.
2. Failure to deliver declarations in Form No. 15H within the prescribed time.
3. Validity of the declarations in Form No. 15H.
4. Reasonable cause for failure to comply with section 197A(2).
5. Technical and legal objections regarding initiation of penalty proceedings.

Detailed Analysis:

1. Imposition of Penalty under Section 272A(2)(f):
The appellant, a registered partnership firm, was penalized Rs. 41,28,700 for failing to deliver declarations in Form No. 15H within the prescribed time. The penalty was imposed under section 272A(2)(f) read with section 274 of the Income-tax Act, 1961.

2. Failure to Deliver Declarations in Form No. 15H:
The appellant did not deduct tax at source for 49 depositors who had submitted Form No. 15H, declaring their income below the taxable limit. The appellant failed to deliver these forms to the Commissioner within the due time, leading to the issuance of a show-cause notice and subsequent penalty.

3. Validity of the Declarations in Form No. 15H:
The appellant argued that the Forms No. 15H were undated when submitted to the ITO and were dated as per the ITO's instructions. The CIT presumed the date of receipt of these forms, which was contested by the appellant. The Tribunal noted discrepancies in the dates of verification and deposit amounts in the forms, indicating that the forms were not valid as per section 197A.

4. Reasonable Cause for Failure to Comply with Section 197A(2):
The appellant claimed ignorance of the requirement to submit Form No. 15H to the CIT and relied on their tax consultant, who was also unaware of this provision. An affidavit from the tax consultant confirmed this ignorance. The Tribunal accepted this as a reasonable cause under section 273B, noting the absence of any guilty intention or benefit derived by the appellant from the delay.

5. Technical and Legal Objections:
The appellant raised objections regarding the initiation of penalty proceedings by the ACIT on behalf of the CIT, arguing that the CIT should have initiated the proceedings himself. The Tribunal did not delve into these objections, as it found sufficient reasonable cause for the appellant's failure to comply with section 197A(2).

Conclusion:
The Tribunal concluded that the appellant's failure to deliver the declarations in Form No. 15H was due to a bona fide mistake and ignorance of the law, both on the part of the appellant and their tax consultant. The Tribunal found that there was no guilty intention or benefit derived from the delay, and the revenue did not suffer any loss. Therefore, the penalty imposed was canceled, and the appeal was allowed.