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TMI Blog2019 (7) TMI 1368X X X X Extracts X X X X X X X X Extracts X X X X ..... er or gross receipts exceeds Rs. 40 lakh in the previous year relating to assessment year 2009-10 and the same was required to be submitted with the I.T. Department on or before the due date of filing I. T. return. 2. For that the observations and contentions of the ld. CIT(A)-14, Kolkata while passing order u/s 250 of the I.T. Act, 1961 dismissing assessee's appeal on the grounds which are not correct. 3. For that the appellant craves leave to adduce, modify and or alter the grounds at or before hearing. 3. Brief facts qua the issue are that the assessee filed his return of income belated for assessment year 2009-10, on 26.08.2010 declaring total income of Rs. 1,29,070/-. The return of income was processed u/s 143(1) of the Act on 23.06.2011. Subsequently the case was reopened by issuing notice u/s 148 of the Act on 29.03.2016 following an information received from DDIT(Inv), Unit-3(1), Kolkata relevant to the assessee. The facts leading to the re-opening of the case in nutshell are as follows: As per investigation report, it had been found that the assessee was doing the trading business of cotton bags through his sole proprietorship concern in the name and style of M/s Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed below: "........ Being not so professionally literate and qualified as regards the legal formalities required to be made related to the said sections as been mentioned in the Income Tax Act which has been relevant the case, I have been unaware related to the same. Meanwhile in running the said business, I tried my best to maintain the requisite books of accounts to the extent I had been able to, however due to lack of knowledge on my side, I was not fully compatible to do so. As regards the penalty proceedings u/s 271B in my case, I would state that the said section has been justified in cases of genuine defaulters but in my case it has been out of my knowledge regards the said section, thereby the said default occurred regards which I would request your honour to kindly waive of the same" . Having gone through the reply of the assessee, the ld AO was of the view that the explanation offered by the assessee was found neither justified nor acceptable.In any case, lack of information about the section cannot be treated as a valid ground for non compliance of a provision of an Act. Therefore, ld AO imposed penalty u/s. 271Bat Rs. 73,070/-. 6. Aggrieved by the order of the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons which are not deliberate and intentional. There was a bona fide belief in the mind of the assessee regarding non-applicability of provision of section 44AB of the Act and this constitutes a reasonable cause not to impose penalty on the assessee under consideration. 10. We note that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi- criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he turnover for that year approximated Rs. 100 lacs. As the due date for filing the return for AY 2013-14 (for unaudited accounts) fell on 31.07.2013, the assessee would have, post AY 2012-13, only approached his Advocate for filing the returnfor that year sometime between April and July, 2013, i.e., as he would be doing in the past. The accounts for that year being also required to be audited under section 44AB, the latest that the assessee would therefore become aware of his obligation under law to get his accounts audited (and file the same with the Department) is by the end of July, 2013, allowing him a reasonable time to obtain the audit report (for AY 2013-14) and file the same by the due date therefor (u/s.44AB), i.e., 30.09.2013, and, in fact, also return his income for that year. Why, then, he did not do so? The ld. AR could not, on being asked during hearing, explain. And neither do we find any answer to this question in the pleadings by the assessee in the penalty and the appellate proceedings, i.e., before the Revenue. Not only the assessee did not do so, he also did not approach his counsel for filing the return for the current year (AY 2014-15) in time, being due - fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble jurisdictional High Court in the assessee's compilation, which we are therefore obliged to take note of. In CIT v. Deepak Kumar [2010] 38 DTR 118 (P&H), the Hon'ble Court upheld the deletion of penalty under section 271(1)(c). All the facts along with the dates of purchase and sale of shares stood disclosed. That the assessee had acted bona fide on the basis of the advice of his counsel, who furnished an affidavit admitting his mistake. In the facts of the present case, on the other hand, a plea similar thereto has been found lacking a factual basis. In CIT v. Usha Ashoka Dairy [2005] 279 ITR 32 (P&H), the assessee filed its return, accompanied by audit report, on November 29, 1985, as against the due date of 30.09.1985. The reasons for the delayed filing of the audit report, stated at para 2 of the judgment, which would appeal to any reasonable person, were found reasonable by the Tribunal, and it is upon this basis, also discussed by the hon'ble court at para 14, that it upheld the concurrent findings of the first and the second appellate authority. How is the said case law relevant? If anything, it shows that 'reasonableness' is a matter of fact, to be decided on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther been explained by the assessee nor enquired into. Laches on the part of the assessee, which therefore has been inferred by us, cannot be a reasonable cause u/s. 273B. There could, however, be a valid reason for the delay in the filing the said returns, constituting a reasonable cause for the delayed audit. The matter, strictly speaking, should therefore go back to the file of the AO for examination of the reason/s for the delayed filing of his returns by the assessee. We, however, in the facts and circumstances of the case, as well as considering the quantum of the penalty involved, do not consider it proper to restore the matter back for the same. 4. In view of the foregoing, giving the assessee the benefit of doubt, so that he has furnished a reasonable explanation bona fide for the delayed audit of his accounts, we direct the deletion of the impugned penalty. Needless to add, this order, rendered in the peculiar factual matrix of the case, shall not constitute a precedent. We decide accordingly." 12. Considering the facts narrated above, that is, this is the 1st year of business operation of the assessee, and assessee was misguided by his accountant, hence penalty should ..... X X X X Extracts X X X X X X X X Extracts X X X X
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