2016 (10) TMI 502 - HC - Income Tax

Penalty u/s 271F - non-filing of return immediately in response to notice under Section 153A - Held that - The fact that the petitioner has not filed the return of income was well within the knowledge of the first respondent, even at the time, when notice under Section 153A of the Act was issued. It is not as if, immediately thereafter, proceedings under Section 271F were initiated, but in the interregnum, the petitioner s representation dated 19.05.2015, was taken note of. The first respondent records in her order that in the representation, it was specifically stated that they could not file their return due to ill-health and consequent surgery. That apart, the first respondent records that there is a request for furnishing the photocopies of the documents, which were seized/impounded during the search. This request made by the petitioner s/husband s letter dated 19.05.2015, was complied with on 02.06.2015. Thus, the fact that the petitioner could not file return of income for reasons given in the representation dated 19.05.2015, was found to be acceptable by the first respondent, and there is no finding that the representation is false, while entertaining the request for furnishing the photostat copies of the seized/impounded documents. Therefore, if for such purpose, the cause pleaded by the petitioner was found to be reasonable and consequently their plea that they were unable to file return of income due to certain factors, this yardstick can also be made applicable and extended while considering a proposal to levy penalty under Section 271F. Therefore, if a cause was found to be reasonable and for non-filing of return immediately in response to notice under Section 153A, this Court finds that such cause can also be construed as a reasonable cause, while considering as to whether penalty has to be levied under Section 271F. Therefore, the cause expressed by the petitioner is found to be a reasonable cause and the explanation merits acceptance. With regard to the other allegations made by the petitioner as against the officer in her personal capacity, does not merit acceptance, as it appears to be vague allegation, in any event those allegations are not germane for deciding the legal issue in the instant case. Therefore, all such allegations stand eschewed. The other issue pointed out by the learned Senior counsel for the petitioner is that the counter affidavit has not been sworn to by the first respondent. In the first paragraph of the counter affidavit, the officer has clearly stated that she is the jurisdictional Assessing Officer of the petitioner and it is fairly admitted in the title to the counter, it has been wrongly mentioned as counter of the first respondent, when it should have been mentioned as counter affidavit on behalf of the first respondent and this appears to be a bonafide mistake, the explanation offered by the learned counsel for the Revenue is acceptable. Writ Petition is allowed and the impugned orders levying penalty under Section 271F, for all the assessment years, are set aside - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of the penalty under Section 271F of the Income Tax Act, 1961.
2. Reasonable cause for non-filing of income tax returns.
3. Allegations of malafide against the assessing officer.
4. Maintainability of the writ petition in light of alternate remedies.
5. Validity of the counter affidavit filed by the respondent.

Issue-wise Detailed Analysis:

1. Legality of the Penalty under Section 271F of the Income Tax Act, 1961:
The petitioner challenged the order passed by the Assessing Officer under Section 271F, which levied a penalty of ?5,000 for non-filing of returns for the assessment years 2008-09 to 2014-15. The court noted that Section 271F deals with penalties for failure to furnish returns of income. The petitioner had filed the returns only after the initiation of penalty proceedings. The court examined whether the penalty was justifiable under the circumstances.

2. Reasonable Cause for Non-filing of Income Tax Returns:
The petitioner argued that the delay in filing returns was due to the seizure of documents during a search on 27.11.2013, and the subsequent delay in receiving copies of these documents. The court referred to Section 273B, which provides that no penalty shall be imposed if the assessee proves that there was a reasonable cause for the failure. The court found that the petitioner had made continuous efforts to obtain the seized documents, which were only provided on 02.06.2015. The court cited several precedents where reasonable cause was accepted, such as CIT vs. Padmanabhan S. and CIT vs. Kanubhai Muljibhai Patel, concluding that the petitioner's cause was reasonable and the penalty should not be imposed.

3. Allegations of Malafide against the Assessing Officer:
The petitioner alleged that the penalty order was tainted with malafide, as it was passed after the dismissal of their earlier writ petitions. The court found these allegations to be vague and not substantiated by evidence. The court emphasized that such personal allegations were not relevant to the legal issue at hand and thus eschewed them from consideration.

4. Maintainability of the Writ Petition in Light of Alternate Remedies:
The Revenue argued that the writ petition was not maintainable due to the availability of alternate remedies. The court acknowledged that while alternate remedies exist, the mere existence of such remedies is not an absolute bar to the maintainability of a writ petition. The court held that given the specific circumstances and the reasonable cause shown, it was appropriate to entertain the writ petition under Article 226 of the Constitution.

5. Validity of the Counter Affidavit Filed by the Respondent:
The petitioner pointed out that the counter affidavit was not sworn by the first respondent but by another officer. The court accepted the explanation that this was a bona fide mistake and found the explanation offered by the Revenue's counsel to be satisfactory.

Conclusion:
The court allowed the writ petition, setting aside the impugned orders levying penalties under Section 271F for all the assessment years in question. The court concluded that the petitioner had shown a reasonable cause for the delay in filing returns, and thus, the penalty was not justified. The court also dismissed the allegations of malafide and accepted the explanation regarding the counter affidavit. Consequently, the connected miscellaneous petition was also closed.