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2021 (5) TMI 951 - AT - Income TaxPenalty u/s 272A(2)(e) - return in this case was filed on 12/07/2017 as late by 2537 days - HELD THAT - Assessee being an educational institution whose total receipts were less than ₹ 1.00 crore and thus falls U/s 10(23C)(iiiab) of the Act. Therefore, the entire income of the assessee was exempt and as per provisions of Section 139(4C)(e) of the Act the person is required to file the return where its income exceeds the maximum amount which is not chargeable to income tax. However, in this case, the assessee has filled its return of income declaring the nil income and assessment has also 'been completed at nil income vide assessment order dated 25.12.2017 u/s 143((3)/148 of the Act in the status of educational institution. The assessee was not required to file the return on or before 31.07.2010 and thus, in this way, no penalty could have been imposed u/s 272A(2)(e) - Decided in favour of assessee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Imposition of penalty under Section 272A(2)(e) of the Income Tax Act. 3. Assessment of whether the assessee was required to file a return under Section 139(4C)(e). Issue-wise Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The assessee filed an application for condonation of a 132-day delay in filing the appeal. The reasons cited included non-receipt of the order from the CIT(A) and subsequent delays in obtaining a certified copy. The assessee referenced several legal precedents advocating a liberal approach towards condonation of delay, particularly when the delay is not due to malafide intentions. The Tribunal considered the rival submissions and relevant material, emphasizing the principle that courts should adopt a liberal approach in interpreting "sufficient cause" for condonation of delay. The Tribunal found the reasons for the delay to be factually correct and not malafide, thus condoning the delay and admitting the appeal for hearing. 2. Imposition of Penalty under Section 272A(2)(e): The penalty was imposed on the assessee for filing the return late by 2537 days. The assessee argued that it was under the bona fide belief that its income was exempt under Section 10(23C)(iiiad) since its receipts were less than ?1 crore, and thus, it was not required to file a return under Section 139(4C)(e). The assessee cited several judicial precedents where penalties were not justified under similar circumstances, emphasizing that the breach was technical and not deliberate. The Tribunal noted that the assessee’s income was assessed at nil and no tax was payable, supporting the assessee's claim of a bona fide belief and reasonable cause for the delay. 3. Assessment of Whether the Assessee was Required to File a Return: The Tribunal examined whether the assessee was indeed required to file a return by 31/07/2010. The assessee's argument was based on the provision that entities with receipts less than ?1 crore are exempt under Section 10(23C)(iiiad). The Tribunal found that the assessee’s income was nil and the assessment was completed at nil income, indicating no tax liability. Citing the case of Akali Baba Phool Singh Educational Trust vs. DDIT (Exemption), the Tribunal concluded that the assessee was under a bona fide belief that it was not required to file a return, and thus, the penalty under Section 272A(2)(e) was not justified. Conclusion: The Tribunal, after considering the facts, judicial precedents, and the bona fide belief of the assessee, directed the deletion of the penalty imposed under Section 272A(2)(e). The appeal was allowed in favor of the assessee. The order was pronounced in the open court on 24th May 2021.
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