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Income Tax Appellate Tribunal - Bangalore

M/S.Sri Anjanadri Education Trust, ... vs Deputy Commissioner Of Income Tax, ... on 20 July, 2018

           IN THE INCOME TAX APPELLATE TRIBUNAL
                    'B' BENCH, BENGALURU


      BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER
                          and
       SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER


                      ITA No.1669/Bang/2016
                    (Assessment year: 2009-10)


Sri Anjanadri Education Trust,
#1832/10, LIC Colony,
BIET, Vidyanagar Road,
Davangere-577 004.                          ...               Appellant
PAN:AAHTS 6698 H

     Vs.

Deputy Commissioner of Income-tax,
Circle 1(1),
Davangere.                                  ...           Respondent


       Appellant by : Shri Ravishankar, Advocate.
     Respondent by : Smt.Padmameenakshi, JCIT(DR)


                    Date of hearing : 16/07/2018
            Date of pronouncement : 20/07/2018


                           O R D E R

Per INTURI RAMA RAO, JM :

This is an appeal filed by the assessee directed against the order of the learned Commissioner of Income-tax (Appeals), Davangere, dated 27/07/2016 for the assessment year 2009-10.

2. The assessee raised the following grounds of appeal:

3. Briefly facts of the case are that the assessee is a trust duly registered under the provisions of section 12AA of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] with the ld. Commissioner of Income-tax, vide letter F.No.T-1158/12AA/CIT-

DVG/2008-09 dated 20/03/2009. The r/ for the assessment year 2009-10 was filed on 25/03/2011 declaring 'nil' income after claiming exemption u/s 11 of the Act. Against said return of income, the assessment was completed by the Assessing Officer (AO) vide order dated 21/12/2011 passed u/s 143(3) accepting the returned income. However, AO on noticing that the appellant had not filed return of income in terms of provisions of sub-section (4A) of section 139 of the Act, had issued show cause notice dated 26/06/2013 calling upon the appellant-trust to show cause why an order imposing penalty u/s 272A(2)(e) of the Act should not be levied. In response to the said show cause notice, an explanation was filed before AO stating that the return was not fiied within due date prescribed u/s 139(4A) following the advice given by the Accounts Manger of the trust viz., Shri Obaiah. The said explanation was rejected by the AO by holding that plea of ignorance of law cannot be accepted. Then he proceeded with levy of penalty as provided u/s 272A(2)(e) of the Act at the rate of Rs.100/- per day vide order dated 17/10/2013 and accordingly levied penalty of Rs.54,100/- for delay of 541 days.

4. Being aggrieved, an appeal was preferred before the ld.CIT(A) who vide impugned order, had confirmed the penalty placing reliance on the decision of the Hon'ble Bombay High Court in the case of Director of Income-tax vs. Malad Jain Yuvk Mandal Medical Relief Centre dated 30/03/2001 wherein the Hon'ble Bombay High Court, after referring to the decision of the Hon'ble Apex Court in the case of Aditanar Educational Institution vs. Addl.JCIT (224 ITR

311) had confirmed levy of penalty by holding that the provisions of section 139(4A) required to be interpreted strictly.

5. Being aggrieved, the assessee is before us in the present appeal.

5.1 Learned counsel for the assessee submitted that the assessee-trust was under bona fide belief that the return of income was not required to be filed based on the advice given by the ITA No.1669/Bang/2016 Page 4 of 5 Accounts Manager of the assessee-trust and therefore, no penalty should be levied. It is further submitted that ignorance of law constitutes reasonable cause for not filing return of income within due date prescribed. Reliance in this regard was placed on the following decisions:

i. Motilal Padampat Sugar Mills Co. Ltd. (118 ITR 326)(SC);

 ii.      K.P.V.Shaik Mohammed Rowther & Co., (232 ITR 176)(Mad)
iii.      P.V.Devassy (84 ITR 502)(Ker)

It was further submitted that it is only technical breach of law which does not warrant levy of penalty placing reliance on the decision of the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. (83 ITR 26). It is further argued that penalty can be levied only on the trustees of the appellant-trust in the capacity of the representative assessee and not on the trust itself.

5.2 On the other hand, learned Departmental Representative vehemently opposed the submissions of the learned counsel for the assessee-trust. He submitted that ignorance of law cannot be valid reason for violating the mandatory provisions of section 139(4A) of the Act. The provisions of section 273(b) of the Act which prescribes reasonable cause for non levy of penalty does not include penalty u/s 272(2)(e) during the relevant period under consideration.

6. We heard rival submissions and perused the material on record. The only issue in the present appeal is whether levy of penalty u/s 272(2)(e) of the Act is justified, having regard to the fact that delay in filing return of income within due date prescribed u/s 139(4A) is on account of ignorance of law. The provisions of section 139(4A) of the Act lay down that every religious or charitable institution whose income was exempt u/s 11 and 12 of the Act is required to furnish return of income of the previous year within due date prescribed u/s 139(1) of the Act. In the present case, undisputedly, there is delay in filing return of income by 541 days. Accordingly, AO imposed penalty of Rs.54,100/- at the rate of ITA No.1669/Bang/2016 Page 5 of 5 Rs.100/- per day of delay. As held by the Hon'ble Supreme Court in the case of Aditanar Educational Institution (supra), the assessee claiming exemption u/ss.11 and 12 of the Act, should mandatorily file return of income as the assessee's claim for exemption could be decided by the department only after relevant material is placed before the department by filing the return of income. The provisions of section 273-B mandates that penalty is not to be levied if a reasonable cause is established. In the present case, the Parliament had inserted section 272A in the provisions of section 273-B only by Finance Act, 2012 w.e.f. 01/04/2012. Therefore, during the previous year relevant to assessment year under consideration, levy of penalty is mandatory even if there is a reasonable cause.

Therefore, we do not see any merit in the submission made by the assessee. The Act does not confer any discretion on the AO not to levy penalty in case reasonable cause is shown to exist. As regards the alternative plea that penalty can be levied only in case of representative assessee not on the assessee-trust itself, there is no ground of appeal was raised on this issue nor this issue was raised before the lower authorities and therefore, no decision can be rendered on this issue.

7. In the result, the appeal filed by the assessee is dismissed.

Order pronounced in the open court on 20th July, 2018 Sd/- sd/-

  (N.V.VASUDEVAN)                             (INTURI RAMA RAO)
 JUDICIAL MEMBER                             ACCOUNTANT MEMBER
Place    : Bengaluru.
Dated:        /07/2018
srinivasulu, sps
Copy to :
        1 Appellant
        2 Respondent
        3 CIT(A)
        4 CIT
        5 DR, ITAT, Bangalore.
        6 Guard file
                                                    By order

                                               Senior Private Secretary
                                            Income-tax Appellate Tribunal
                                                     Bangalore