1999 (12) TMI 108 - AT - Income Tax

Summary

Issues:
Appeal against imposition of penalty under s. 272A(2)(c) of the Act for asst. yrs. 1995-96 and 1996-97.

Detailed Analysis:

1. Imposition of Penalty by AO:
The assessee, a part of the excise department, collected and deposited tax in time but failed to submit the half-yearly return as prescribed under s. 206C of the Act. The AO initiated penalty proceedings under s. 272A(2)(c) of the Act, imposing penalties for both assessment years. The assessee argued that the delay was due to a bona fide belief that no further action was required, with no wilful default or loss to the Revenue. However, the AO held the delay was deliberate and imposed penalties.

2. Appeal to CIT(A):
The CIT(A) upheld the penalty, emphasizing the importance of the half-yearly return to track liquor contractors. Despite the appellant's claim of ignorance, the CIT(A) considered the default as a fit case for penalty, reducing the quantum but confirming the imposition. The assessee then appealed to the ITAT against the CIT(A)'s order.

3. Arguments Before ITAT:
The appellant reiterated its stance before the ITAT, while the Departmental Representative highlighted that mens rea need not be proved in penalty proceedings as per relevant Supreme Court decisions. The Department argued there was no reasonable cause for the failure, citing precedents supporting the penalty.

4. ITAT's Decision:
The ITAT analyzed the provisions of s. 206C and s. 272A(2)(c) of the Act, noting the penalties for failure to furnish the half-yearly return. Referring to previous decisions, the ITAT emphasized that not every default attracts a penalty and that penalties can be waived if the failure was due to a reasonable cause. Citing various tribunal decisions and the Supreme Court's stance on technical breaches, the ITAT concluded that the default in this case was venial and canceled the penalties imposed by the AO and upheld by the CIT(A).

This detailed analysis showcases the progression of the case from the AO's penalty imposition to the final decision by the ITAT, highlighting the legal arguments, precedents, and considerations leading to the cancellation of the penalties for both assessment years.