1991 (3) TMI 225 - AT - Income Tax

Summary

Issues: Penalty under section 285A(2) of the Income-tax Act for failure to file requisite particulars in Form No. 52.

The judgment pertains to appeals against the imposition of penalties under section 285A(2) of the Income-tax Act for failing to file the necessary particulars in Form No. 52. The assessee, a registered firm, had contracts with the State Government for sinking borewells. The Commissioner of Income-tax initiated penalty proceedings as the assessee did not submit the required details in Form No. 52 despite significant contract receipts. The assessee contended that the contracts were based on metered payments and thus believed Form No. 52 was not applicable. The Commissioner imposed fines of Rs. 10,000 and Rs. 5,000 for two assessment years.

The main issue revolved around whether the penalties under section 285A(2) were justified. The Tribunal analyzed the requirement of section 285A(1), which mandates furnishing particulars for contracts exceeding Rs. 50,000 in value. The Tribunal noted that the contracts' value was not fixed initially due to metered payments, making it unclear if they exceeded Rs. 50,000 at the contract stage. The Tribunal acknowledged the assessee's genuine belief that the contracts did not fall under section 285A, considering the payment structure. It deemed the belief a reasonable cause for non-compliance, as the value threshold was not met at the contract initiation.

Another crucial aspect involved the timing of penalty proceedings. The contracts were from previous years, and the assessee voluntarily submitted Form No. 52 after assessments were completed. The Commissioner initiated penalty proceedings post-form submission. The Tribunal referenced a High Court decision emphasizing the discretionary nature of the Commissioner's power to levy fines under section 285A(2). It highlighted that the section aims to ensure form submission rather than penalize post-submission defaults. The Tribunal concluded that the failure to file initially, if considered a technical default, was minor and did not warrant penalties. Therefore, it ruled in favor of the assessee, canceling the imposed fines and allowing the appeals.