Income Tax Appellate Tribunal - Chandigarh
The Sub Registrar, Yamunanagar vs Assessee on 13 August, 2013
I N T H E I NC O ME T A X A P PE L L A T E T RI B U N AL
C H A NDI G A RH B E N CH E S ' B ' CH A N DI G A RH
BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER
AND MS SUSHMA CHOWLA, J UDIC IAL MEMBER
ITA Nos. 431 to 434/Chd/2012
A.Ys. : 2006-07 to 2009-10
The Sub Registrar, Vs The Director of Income Tax(CIB),
(Tehsildar), Sector 17-C,
Jagadhari, Chandigarh.
Distt. Yamuna Nagar.
PAN No.RTKS-14260B
(Appellant) (Respondent)
A p p e l l a n t b y: Shri S.K. Mukhi
Respondent by : Shri Akhilesh Gupta
Date of Hearing : 13.08.2013
&
ITA Nos. 79 to 82/Chd/2012
A.Ys. : 2006-07 to 2009-10
The Sub Registrar, Vs The Director of Income Tax(CIB),
(Tehsildar), Sector 17-C,
Bilaspur, Chandigarh.
Distt. Yamuna Nagar.
PAN No.RTKT-0310B
(Appellant) (Respondent)
A p p e l l a n t b y: Shri Rajeev Sharma
Respondent by : Shri Akhilesh Gupta
Date of Hearing : 22.08.2013
&
ITA Nos. 89 to 92/Chd/2012
A.Ys. 2006-07 to 2009-10
The Sub Registrar, Vs The Director of Income Tax(CIB),
Chhachhrauli, Sector 17-C,
Distt. Yamunanagar. Chandigarh.
PAN No.RTKS-14261C
(Appellant) (Respondent)
A p p e l l a n t b y: Shri Rajeev Sharma
Respondent by : Shri Akhilesh Gupta
Date of Hearing : 17.09.2013
Date of Pronouncement : 30.10.2013
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O R D E R
PER SUSHMA CHOWLA, J.M.
The bunch of appeals have been filed by different assessees against the different orders of the CIT(Appeals) relating to a s s e s s m e n t ye a r s v a r yi n g b e t w e e n 2 0 0 6 - 0 7 t o 2 0 0 9 - 1 0 r e s p e c t i v e l y against the penalt y levied under section 271FA of the Income Tax Act, 1961 ( 'the Act' for short ). All these appeals relating to different Sub Registrars on similar issue were heard together and are being disposed of by this consolidated order for the sake of convenience. Reference is being made to the facts in different sets of appeals in order to adjudicate the issue.
2. The assessee has raised common grounds of appeal in all the abovesaid appeals but reference is being made to the grounds of appeal as raised in ITA No. 431/Chd/2012, which read as under :
1. That the Ld. CIT (A) is not justified in concurring with the action of the A.O. in upholding the penalty levied u/s 271FA of the Income Tax Act, 1961 without passing a speaking order and without appreciating the facts of the present case which is against the established principles of law, so that so the orders of Id. CIT (A) are illegal, arbitrary and bad in law.
2. That the Ld. CIT (A) is not justified in concurring with the A.O. and thereby confirming the levy of penalty without considering the fact that it is a case of Government Undertaking and there being no malafide intentions or intentional mistake or delay but for reasonable cause and there being only Technical Breach and also there being no Revenue Loss to the Department and thus the orders of CIT (A) are bad in law and requires due consideration by this Hon'ble Bench.
3. That without prejudice to above the appellant disputes the very findings of the A.O. and its confirmation by the Id. CIT (A) without appreciating the facts and circumstances, evidences on record which is also against the principles of Natural Justice.
4. That without prejudice to above the appellant disputes the quantum of penalty so levied as highly excessive and arbitrary.
5. That findings of Ld. CIT (A) are perverse and thus needs to be quashed by the interference of this Hon'ble Bench.3
3. The only issue raised in all the appeals is against the levy of penalty under section 271FA of the Act.
4. The first set of appeals is in ITA Nos. 431 to 434/Chd/2012, the appeals filed by Sub Registrar, Jagadhari, Distt. Yamuna Nagar. The brief facts of the case are that under section 285 BA(1) of the Act certain persons are required to file an Annual Information Return (AIR) in respect of specified financial transactions registered or recorded b y him during the financial year. The nature of the transactions and the threshold value for information to be submitted in the AIR are prescribed in the Table (Item No.6) under Rule 116E of the Income Tax Rules, 1962. The form in which the return is required to be filed is Form No.61A. The Central Board of Direct Taxes has authorized M/s National Securities Depositories Ltd. (NSDL) as the agency authorized to receive AIRs on behalf of the Commissioner of In come Tax (Central Information Branch). The filer can also furnish the AIR with the Facilitation Centres of NSDL, located in different parts of t h e c o u n t r y. Item No.6 of the Table in Rule 114E specifies that the Registrar or Sub-registrar appointed under section 6 of the Registration Act, 1908 is required to file AIR in respect of transactions of purchase or sale by any person of immovable property valued at Rupees Thirty lakhs or more. The due date for filing the AIR is the 31st August immediately following the f i n a n c i a l ye a r i n w h i c h t h e t r a n s a c t i o n i s r e g i s t e r e d o r r e c o r d e d . In the event of failure to furnish the AIR, penalt y is leviable under section 271FA of the Act.
5. The brief facts of the case are that Sub Registrar, Jagadhari, District Yamuna Nagar was required to file the annual information 4 return (AIR) for the financial ye a r s 2005-06 to 2008-09 by 31.08.2006, 31.08.2007, 31.08.2008 and 31.08.2009. The DIT (CIB) Chandigarh noted that the assessee had furnished the said A I R s l a t e i . e . i n r e s p e c t o f f i n a n c i a l ye a r 2 0 0 5 - 0 6 o n 0 5 . 1 2 . 2 0 1 0 , f i n a n c i a l ye a r 2 0 0 6 - 0 7 o n 0 3 . 1 2 . 2 0 1 0 , f i n a n c i a l ye a r 2 0 0 7 - 0 8 o n 22.11.2010 and 2008-09 on 22.11.2010. Show Cause Notice was issued to the assessee to explain as to why penalty under section 271FA of the Act, should not be imposed for the failure to furnish the AIRs in time. In repl y the assessee claimed that the officials of the Sub-Registrar Department had no knowledge of the provisions of section 285BA of the Act, which had required the Sub Registrar/s to submit AIRs in form No. 61A in respect of the transaction registered/recorded for purchase and sale of immovable p r o p e r t y v a l u e d a t R s . 3 0 l a c s o r m o r e d u r i n g a n y f i n a n c i a l ye a r beginning on or after 1.4.2004. The plea of the assessee was that though ignorance of law was no excuse in legal proceedings but such major changes were not brought to the knowledge. Further claim of the assessee was that it did not have any PAN number or a TAN number till 01.10.2010 on which date the application was made with NSDL for the allotment of TAN number.
6. The DIT (CIB) after considering the ex planation of the assessee observed that the same was not acceptable in view of the following :
i) One main contention raised by the Filer is that it was not aware about the I.T, provisions with regard to filing of AIRs with NSDL. This contention of the Filer is not acceptable as the provisions regarding filing of AIR were/are applicable since financial year 2004-05. Moreover, ignorance of law is not an excuse for not complying with the required provisions
ii) Rather, the Filer being a Govt. body should have bee-n more responsible and should have ensured that the AIRs, as required by a Govt. Act, should have been filed well within time. Hence the Filer 5 has failed to give any reasonable cause for the delay. The inordinate delay which is true in the case of the Filer, stands un-
explained and un-substantiated.
iii) Further the perusal of record shows that the Filer was made aware about the filing of AIRs from time to time by issuance of notices on 29.11.2006, 13.09.2006, 22.06.2009 etc, which also remained un- complied with.
iv) Hence the Filer has entirely failed to provide a valid reason u/s 273B of the Act. The Filer cannot be absolved of his statutory duties u/s 285BA(1) of the Income Tax Act, 1961 for the timely filing of AIR for the financial years under consideration.
7. The DIT (CIB) thus held the assessee to have defaulted in furnishing the AIRs in time and hence, held liable to levy of penalt y under section 271FA of the Act. In respect of the financial year 2005-06, it was noted that the assessee had furnished the AIR in the office of the Addl. Commissioner of Income Tax, Yamuna Nagar Range on 11.10.2006. It was further observed by DIT (CIB) that though the requirement of the law is to furnish information w i t h t h e a u t h o r i z e d a g e n c y, w h o i n t u r n w o u l d u p l o a d i t o n t h e s ys t e m b u t t h e d e f a u l t w a s o n l y a t e c h n i c a l d e f a u l t a s t h e r e t u r n w a s f i l e d w i t h t h e p r e s c r i b e d a u t h o r i t y. In view thereof, the penalty under section 271FA of the Act for assessment year 2005- 0 6 w a s r e s t r i c t e d t o o n l y 4 1 d a ys i . e . t h e p e r i o d o f d e f a u l t f r o m 1 . 9 . 2 0 0 6 t o 1 1 . 1 0 . 2 0 0 6 a n d i n r e s p e c t o f o t h e r ye a r s i . e . f i n a n c i a l y e a r 2 0 0 6 - 0 7 t o 1 1 8 9 d a ys , 2 0 0 7 - 0 8 t o 8 1 3 d a ys a n d 2 0 0 8 - 0 9 t o 4 4 8 d a ys a n d p e n a l t y @ R s . 1 0 0 / - p e r d a y f o r t h e s a i d d e f a u l t w a s levied.
8. The CIT(Appeals) held that as the assessee had failed to comply with the provisions of law, the argument of having furnished information and ignorance about the procedure of filing the same was held to be of no help to the assessee.The 6 CIT(Appeals) further held as under :
"The Income Tax Act requires the appellant to file AIR and the appellant being a Govt. Servant is not exempt form the legal requirement of filing the AIR. The plea of the appellant that no revenue loss has occurred to the department due to non filing of return in time is of no help to the appellant since furnishing of AIR by due date is a mandatory requirement of law. The appellant i.e. the Sub Registrar, Jagadhri, Yamuna Nagar has been filing AIRs late for the last three years i.e. right from Financial Year 2006-07 to 2008-09. The appellant did not bother to respond to any advisory letters which were issued from the office of the DIT(CIB) on 29.11.2006, 13.09.2006, 22.09.2009. These facts make the appellant a habitual defaulter without any concern/respect for the law of the land. Mens-rea and malafide in late filing of AIR for levy of penalty are thus; established beyond doubt. In these circumstances suitable penalty as per law is leviable on the appellant."
Therefore the penalty levied under section 271FA @ 100/- per day for default for delay infilling AIR information by the DIT(CIB) is confirmed."
9. Shri S.K.Mukhi, ld. counsel for the assessee pointed out that penalty under section 271FA of the Act was levied relating to a s s e s s m e n t ye a r s 2 0 0 6 - 0 7 t o 2 0 0 9 - 1 0 . T h e c o n t e n t i o n o f t h e l d . counsel for the assessee was that the assessee had filed the AIR information manually as it had no TAN number and later on, the said returns of income were filed through NSDL. But the Assessing Officer had ignored the manual returns filed by the assessee which were in compliance to various notices issued to the assessee and had imposed the penalty under section 271FA of the Act till the date of filing the returns through NSDL. Our attention was drawn by the ld. counsel for the assessee to the various communications issued b y the Assessing Officer or the DIT (CIB) for the respective years and also to the various replies in response filed by the assessee.
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10. The second limb of contention of the ld. AR for the assessee was that as new provisions were introduced under the Act which were not in the knowledge of the assessee, the impugned penalty levied in the cases may be deleted as there was no loss to the revenue for non furnishing the said information within the requisite time. The intention of the legislature was to collect the abovesaid information, which the assessee complied by way of furnishing the returns in manual form and no penalty was leviable for such technical or venial breach of the provisions of the Act as held by the Hon'ble Supreme Court in Hindustan Steel Ltd. Vs State of Orissa 83 ITR 26 (S.C).
11. The ld. AR for the assessee further in respect of each of the year pointed out that the penalty leviable under section 271FA of the Act was on the higher side because of the under mentioned facts. I n r e l a t i o n t o f i n a n c i a l ye a r 2 0 0 5 - 0 6 , p e n a l t y u n d e r s e c t i o n 2 7 1 F A w a s l e v i e d f o r d e l a y o f 4 1 d a ys b u t t h i s b e i n g t h e f i r s t ye a r , p r a ye r w a s m a d e f o r d e l e t i n g t h e i m p u g n e d p e n a l t y b y w a y o f f a c t s and events/case laws filed by the assessee.
12. I n r e s p e c t o f f i n a n c i a l ye a r 2 0 0 6 - 0 7 , p e n a l t y w a s l e v i e d f o r d e l a y o f 1 1 8 9 d a ys o n t h e b a s i s t h a t t h e r e q u i s i t e i n f o r m a t i o n w a s filed in the prescribed form on 22.11.2010. The assessee claims to have furnished the information manually before the office of Income Tax Officer (CIB) on 23.10.2008 in response to the notice. dated 10.09.2008 placed at page 7 of the Paper Book. The assessee claims that part information was furnished on 22.06.2007 as per copy of letter annexed at page 24 of the Paper Book No. 2 and as on 23.10.2008 in the form of CD filed on 23.10.2008 placed at page 7 of the Paper Book. As per the Act, the said information was 8 due to be filed on 31.08.2007 and thus, as per the assessee, there w a s n o d e l a y a n d n o t 1 1 8 9 d a ys a s h e l d b y t h e D I T ( C I B ) .
13. I n r e l a t i o n t o t h e f i n a n c i a l ye a r 2 0 0 7 - 0 8 , p e n a l t y u n d e r s e c t i o n 2 7 1 F A o f t h e A c t h a s b e e n l e v i e d f o r a d e l a y o f 8 1 3 d a ys since the requisite details were filed in the prescribed form through duly appointed agency on 22.11.2010. The assessee, however, claims that the requisite information was filed in the form of CD before the office of the DIT (CIB) on 02.07.2009 in response to notice dated 22.06.2009 as per the copy of the notice enclosed at page 9 of the Paper Book. As per the assessee, there w a s d e l a y o f o n l y 3 0 4 d a ys a n d n o t 8 1 9 d a ys a s h e l d b y t h e DIT(CIB).
14. F u r t h e r , i n r e s p e c t o f f i n a n c i a l ye a r 2 0 0 8 - 0 9 , p e n a l t y h a d b e e n l e v i e d f o r a d e l a y o f 4 4 8 d a ys a s t h e i n f o r m a t i o n w a s f i l e d through the appointed agency on 22.11.2010. The assessee claims to have filed the information in CD before the office of DIT(CIB) on 02.07.2009 in response to notice dated 22.06.2009 placed at page 9 of the Paper Book. The information having been filed before 31.08.2009, the claim of the assessee was that there was no delay in filling the information.
15. I n r e s p e c t o f t h e d e l a y i n e a c h o f t h e ye a r , t h e l d . A R f o r t h e assessee pointed out that there were frequent transfers in the office of the Sub Registrar and the new officials were not being aware of the pending jobs and also the assessee having no TAN number, could not file the necessary information in time, but filed the same in response to various notices issued by the concerned authorities. The ld. AR further placed reliance on the ratio laid 9 down in Mohammad Yousuf Vs ITO 254 ITR 314 (All) for the proposition that each assessment was an independent unit of assessment and the provisions of the Act apply separately. Further reliance was placed on C.T.Ramanathan & Co. Vs ITO 34 TTJ 125 ( M a d ) f o r t h e p r o p o s i t i o n t h a t w h e r e t h e a s s e s s e e h a d b e e n t r yi n g to comply with the requirements of law and still faults occur, such defaults were to be considered to be venial. Further contention of t h e a s s e s s e e w a s t h a t t h e A s s e s s i n g O f f i c e r i n t h e f i n a n c i a l ye a r 2005-06 had accepted the details filed manually by treating the d e l a y o f o n l y 4 1 d a ys b u t i n s u b s e q u e n t ye a r s , s i m i l a r d e t a i l s f i l e d by the assessee have been ignored.
16. The Ld. AR for the assessee placed reliance on the principles of judicial consistency as held in the case of Radhasoami Satsang Vs CIT [193 ITR 321 (S.C)]. Further reliance was placed on M/s Berger Paints (India) Ltd. Vs CIT [266 ITR 99 (S.C)] wherein the Hon'ble Supreme Court held that in case the Department had not challenged one issue in some assessees case, then it was precluded from taking action in the case of other assessees under similar facts and circumstances.
17. The ld. DR for the revenue pointed out that the perusal of the information furnished by the assessee reflects that most of the information has been filed before the Assessing Officer (CIB) and the said information is called for under section 133(6) of the Act in respect of sale and purchase of immovable property of Rs. 5 lacs t o R s . 3 0 l a c s f o r t h e f i n a n c i a l ye a r s u n d e r c o n s i d e r a t i o n . Our attention was drawn to the compliance made by the assessee for the f i n a n c i a l ye a r 2 0 0 4 - 0 5 , 2 0 0 5 - 0 6 a n d 2 0 0 6 - 0 7 a s p e r t h e l e t t e r placed at page 7 of the Paper Book. The ld. DR for the revenue 10 further pointed out that though the copy of the said letter has been annexed, but the assessee has failed to furnish on record any record of having furnished the said information to the Assessing Officer (CIB). It was pointed out by the ld. DR for the revenue that the first advisory letter was issued by the Department to the assessee on 29.11.2006 and the CIT(Appeals) at page 5 has given a finding that the first advisory was issued on 29.11.2006. The assessee having failed to comply with the provisions of the Act is eligible for levy of penalt y under section 271FA of the Act. It was further pointed out by the ld. DR for the revenue that under section 285BA of the Act read with Rule 114E of the IT Rules, the assessee was to furnish the requisite information in form No. 61A. As per the ld. DR for the revenue, law had specified certain acts to be done in specified manner. Opposing the contention of the ld. AR for the assessee that TAN number was not available and hence, t h e d e l a y, i t w a s p o i n t e d o u t t h a t s u c h p l e a c a n n o t b e a c c e p t e d . Reliance was placed on Bihari Lal Jaiswal & Ors. Vs CIT [217 ITR 746 (S.C)] and Maddi Venkataraman & Co. Pvt.Ltd. [229 ITR 534 (S.C)] for the proposition that one arm of law cannot be used to subvert the provisions of law. The ld. DR stressed that the application for issue of TAN had to be made by the assessee but that in-turn does not mean that no compliance would be made to the other provisions of the Act. The ld. DR further stressed that t h o u g h m a n u a l f i l i n g b y t h e a s s e s s e e i n t h e f i r s t ye a r w a s a c c e p t e d by the Assessing Officer but the same was incorrect under the provisions of the Act.
18. The ld. DR for the revenue pointed out that under Rule 114E(2) Point-6 of the IT Rules, the information had to be filed b y 11 the assessee in respect of the transactions over Rs. 30 lacs and all the correspondence referred to by the assessee which was submitted before the Assessing Officer (CIB) was in respect of transaction between Rs. 5 lacs to Rs.30 lacs. The said information was called for under the provisions of section 133(6) of the Act by the appropriate authorities but the same could not be said to be in compliance to the provisions of section 285BA of the Act. It was further pointed out by the ld. DR for the revenue that the ratio laid down in the Hindustan Steel Ltd. Vs State of Orissa (supra) has been distinguished in Patan Nagrik Sahakari Bank Ltd. Vs DIT (CIB) 338 ITR 167 (Guj). The ld. DR for the revenue further placed reliance on the ratio laid down in CIT v. Kanubhai Muljibhai Patel [ (2008) 306 ITR 179 (Guj.] that even where the returns were accepted manually but that was not correct position in view of the provisions of the Act. The ld. DR for the revenue further pointed out that the Hon'ble Gujrat High Court in Patan Nagrik Sahakari Bank Ltd. Vs DIt (CIB) (supra) had upheld lev y of penalty under section 271FA of the Act.
19. The ld. AR for the assessee in rejoinder pointed out that the ratio laid down in Patan Nagrik Sahakari Bank Ltd. Vs DIT (CIB), 338 ITR 167 (Guj) was on completel y different issue where the assessee had failed to furnish any information before the authorities. It was again stressed by the ld. AR for the assessee that information was filed manually in response to the various notices. Our attention was drawn to the notice issued to the a s s e s s e e f o r f i n a n c i a l ye a r 2 0 0 6 - 0 7 a t p a g e 1 d a t e d 1 0 . 0 8 . 2 0 0 7 . The ld. AR pointed out that the totality of the facts and circumstances reflect that there was reasonable cause for not 12 furnishing the information in time and hence, there was no merit in the levy of penalty under section 271FA of the Act.
20. In ITA Nos. 79 to 82 i.e. in respect of the Sub Registrar, Bilaspur Distt. Yamuna Nagar, the ld. AR submitted that the earlier submissions made in the case of Sub Registrar, Jagadhari, Distt. Yamuna Nagar may be adopted for adjudicating the issue.Our attention was drawn to the chart furnished at page 2 of Paper Book No. 2 under which it was claimed that the manually returns were f i l e d b e f o r e f i l i n g t h e r e t u r n s t h r o u g h t h e a p p o i n t e d a g e n c y. The ld. DR for the revenue in response pointed out that the first advisory letter was issued on 29.11.2006 and the CIT(Appeals) has also given a finding in this regard at page 5 of the appellate order, but the assessee failed to comply with the said advisory letter and had further delayed in furnishing the requisite information. Reliance was placed on the ratio laid down by Amritsar Bench of the Tribunal in the case of Sub Registrar Vs.DIT (CIB) Chandigarh ITA Nos. 261 to 265(Asr)/2013 A.Y. 2005-06 to 2009-10 and Sub Registrar Vs DIT (CIB), Chandigarh ITA Nos. 266 to 270/Asr)/2013 A.Y. 2005-06 to 2009-10, order dated 27.06.2013 which in turn had followed the ratio laid down in ITA Nos. 137 to 140/Asr/2013 order dated 30.05.2013 by the ld. DR for the revenue.
21. The ld. AR for the assessee in ITA Nos. 89 to 92/Chd/2012 pointed out that under the provisions of section 285BA(i) of the Act, it is prescribed that the information may be filed before prescribed authority or NSDL and the assessee having furnished information before the prescribed authority could not be held to be i n d e f a u l t a n d t h e r e w a s n o m e r i t i n l e v yi n g p e n a l t y u n d e r s e c t i o n 13 271FA of the Act. It was further pointed out b y the ld. AR for the a s s e s s e e t h a t i n f i n a n c i a l ye a r 2 0 0 8 - 0 9 t h e r e w a s a n e r r o r i n mentioning the date i.e. the information was filed on 16.09.2010 and not 17.11.2010 as held b y the DIT (CIB). The ld. AR for the assessee submitted that earlier submissions made by him should be considered in the present set of facts also.
22. The ld. DR for the revenue, in response pointed out that under the provisions of section 285BA(1) of the Act, the term used i s ' m a y' i . e . n o t i c e m a y b e s e n t b y t h e p r e s c r i b e d a u t h o r i t y a n d there was no compulsion to send notice and onus was upon the assessee to furnish the requisite information within the stipulated period. It was further pointed out by the ld. DR for the revenue that no pleadings were made before the CIT(Appeals) that the AIR was filed on 16.09.2010 and further the letter filed by the assessee is not acknowledged by the department and the assessee has failed to furnish any evidence of having filed the said information.
23. We have heard the rival contentions and perused the record. Section 285BA of the Act prescribed an obligation to furnish Annual Information Report by the prescribed person for the specified transaction within stipulated time. The Sub Registrar in view of the provisions of section 285BA of the Act is required to file Annual Information Report in respect of the transaction of purchase and sale by any person of immovable property valued at Rs.30 lacs or more. The due date for filing the said AIR information in Form No.61A is 31st August immediately following t h e f i n a n c i a l ye a r i n w h i c h t h e t r a n s a c t i o n w a s r e g i s t e r e d o r recorded. The onus is upon the assessee to furnish the specified information under section 285BA of the Act.
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24. Coming to the provisions of section 285BA of the Act, the sub-section (1) provides the list of persons who are required to furnish the Annual Information Return in respect of financial transactions which are registered or recorded during the financial year beginning on or after 1st day of April, 2004. Such information is to be furnished to the prescribed income tax authorit y i.e. the Director of Income Tax (Central Information B r a n c h ) o r t h e a u t h o r i t y/ a g e n c y p r e s c r i b e d u n d e r t h e A c t i . e . NSDL. The Annual Information Return referred to in sub-section (1) to section 285BA of the Act, as per sub-section (2) is to be furnished on or before 31st August immediately following the f i n a n c i a l ye a r i n w h i c h t h e t r a n s a c t i o n w a s r e g i s t e r e d o r r e c o r d e d , in Form No.61A, as prescribed under Rule 114E of the Income Tax Rules. Sub-section (3) defines specified financial transaction, which may be prescribed under the Act. The Board has given authority to prescribe different values for different transactions in respect of different persons, having regard to the nature of said transaction. Under Sub-section (4) where the prescribed income tax authority considers the Annual Information Return furnished under sub-section (1) to be defective, then such defects are to be intimated to the prescribed person and an opportunity is to be allowed for rectifying the same within the specified/ extended period. In case said defects are not removed within the prescribed or extended period then such returns would be treated as an invalid return and the provisions of the Act would apply as if the person had failed to furnish the Annual Information Return. Under sub- section (5) where the prescribed person has not furnished Annual Information Return within the prescribed time, the prescribed income tax authority may serve upon such person notice requiring 15 him to furnish such return within a period not exceeding sixty d a ys .
25. Under the provisions of section 271FA of the Act, penalty is imposable in the event of the person responsible having failed to furnish the AIR information under section 285BA of the Act. Section 271 FA of the Act reads as under:
"[Penalty for failure to furnish annual information return.
271FA. If a person who is required to furnish an annual information return, as required under sub-section (1) of section 285BA, fails to furnish such return within the time prescribed under that sub-section, the income-tax authority prescribed under the said sub-section may direct that such person shall pay, by way of penalty, a sum of one hundred rupees for every day during which the failure continues.] "
26. Reading the provisions of section 285BA and the relevant provisions of section 271FA of the Act, it transpires that where the prescribed person is required to furnish the AIR and fails to furnish the same within the prescribed time, then such person could be held to be liable to levy of penalty equivalent to Rs.100/- for every day of default. The above said provisions were inserted by the Finance (No.2) Act 2004 w.e.f. 1.4.2005. Under the provisions of section 273B of the Act, the penalty leviable under various sections is not to be imposed, where the person proves that there was reasonable cause for the said failure/default. The levy of penalty under section 271FA of the Act is also covered within the provisions of section 273B of the Act. It thus implies that in each case of default under section 271FA of the Act, the levy of penalty is not compulsory and the same is not imposable if the person satisfies the conditions prescribed under section 273B of the Act. 16
27. We find that the issue of levy of penalty under section 271FA of the Act arose before the Hon'ble Gujarat High Court in Patan Nagrik Sahakari Bank Ltd. Vs DIT (CIB) (supra), wherein it has been observed as under:
"Section 285BA of the Act imposes an obligation upon any person, being an assessee, who is responsible for registering or maintaining books of account or other documents containing a record of any specified financial transaction, under any law for the time being in force, to furnish an annual information return, in respect of such specified financial transaction which is registered or recorded by him during any financial year beginning on or after the April 1, 2004, and information relating to which is relevant and required for the purposes of the Act to the prescribed income- tax authority or such other authority or agency as may be prescribed. Such annual information report is required to be furnished within the prescribed time after the end of the financial year. Sub-section (5) of section 285BA of the Act lays down that where a person who is required to furnish an annual information return under sub-section (1) has not furnished the same within the prescribed time, the prescribed income-tax authority may serve upon such person a notice requiring him to furnish such return within a period not exceeding sixty days from the date of service of such notice and he shall furnish the annual information return within the time specified in the notice."
28. The Hon'ble Court further held that where the petitioner had made out a reasonable cause for not filing the prescribed AIR return within the prescribed period of limitation, it would be reasonable to believe that the petitioner was not aware of the provisions of section 285BA of the Act. The Hon'ble Court further observed that where the person had not furnished the AIR return u n d e r s e c t i o n 2 8 5 B A ( 1 ) o f t h e A c t , s u b - s e c t i o n ( 5 ) t h e r e o f l a ys down that prescribed income tax authority may serve upon such person a notice requiring him to furnish said return within the specified period not exceeding 60 days from the date of service of such notice. The Hon'ble Court concluded by holding that Upon such notice being served, the petitioner can no longer plead that it 17 was unaware of the statutory provisions or its obligations under the same. The Hon'ble Court thus held that the assessee in such circumstances could not be said to have any reasonable cause for not filing the Annual Information Return within the period of 60 d a ys o f s e r v i c e o f t h e s a i d n o t i c e . The Hon'ble Court observed that However, merely because the petitioner has not immediately taken steps after the issuance of the first notice on December 17, 2008, it cannot be said that the reasonable cause made out by the petitioner in respect of the period prior thereto should not be taken into consideration while considering the quantum of penalty to be imposed under section 271FA of the Act. However, with effect from the date of service of the notice dated December 17, 2008, issued under section 285BA(5) of the Act, any default on the part of the petitioner would be viewed as a conscious disregard of its statutory obligation and as such, in respect of the period subsequent thereto, the petitioner would not be entitled to the benefit of the provisions of section 273B of the Act. This view finds support in the decision of this court in the case of CIT v. Kanubhai M u l j i b h a i P a t e l [ 2 0 0 8] 3 0 6 I T R 1 7 9 ( G u j ) o n w h i c h r e l i a n c e h a s been placed on behalf of the petitioner.
29. The Hon'ble Supreme Court in Motilal Padampat Sugar Mills Co.Ltd. Vs. State of Uttar Pradesh & Others [118 ITR 326(S.C.)] had held that there is no presumption that every person knows the law. It is often said that every one is presumed to know the law, but that is not a correct statement: there is no such maxim known to the law. Without going into the facts of the case, we are of the opinion that same is applicable only till the time the specified person was made aware through the notice of its obligation under 18 section 285BA of the Act or had become aware on its own notion. However, the situation would change after having received the notice for filing the AIRs. The specified person was well aware of the legal position and its obligations.
30. In the facts of the present case and as referred to b y us in paras hereinabove, the case of the specified persons before us is that the provisions of section 285BA of the Act being newly introduced were not in their knowledge and because of the same there was default in compliance to the said provisions. We find merit in the said plea that in view of the newly introduced provisions of section 285BA of the Act and because of lack of knowledge of the said provisions, there was default in furnishing the prescribed information before the income tax authorities. Thus, we are of the view that no penalty under section 271FA of the Act is leviable for the period upto the date of first notice by which the specified persons became aware of its obligations or through any other mode, as there was reasonable cause for not filing the said information in time. However, the said plea of non- awareness of the provisions of the Act cannot be pressed into service for the period after the said date. Further, the person cannot take shelter under the plea that in the absence of any notice issued, it was not aware of its obligations, as the onus is upon the persons to furnish the information. In such cases, the date of first notice or date of furnishing the first AIR under section 285BA of the Act, would be the date of notice.
31. The second plea raised by the learned A.R. for the assessee was that because of technical and venial breach, no penalty was imposable, for which reliance was placed on Hindustan Steel 19 Limited Vs State of Orissa 83 ITR 26 (S.C) and C.T.Ramanathan and Co. vs ITO, 34 TTJ 125 (Mad).
32. On consideration of thejudgements, we are of the opinion that failure to file required particulars in respect of transactions of sale value of Rs. 30 lacs or above under section 285BA of the Act cannot be termed merely breach of technical nature because on the basis of such information, the revenue would take action against specified persons i.e. persons purchasing or selling properties in value exceeding Rs. 30 lacs and in the absence of such information, which is required to be filed by Sub-Registrar, the Department can loose huge revenue. Therefore, such default is leading to enormous consequences, which cannot be termed as technical.
33. S e c o n d l y, i n a n y c a s e , G u j r a t H i g h C o u r t i n P a t a n N a g r i k Sahakari Bank Ltd. (supra)has considered the decision of Hindustan Steel Ltd. Vs State of Orissa (supra) while dealing with the issue of levy of penalty under section 271FA of the Act, which is identical and still held the penalty to be leviable. We find no merit in the plea of the assessee in this regard.
34. T h e H o n ' b l e P u n j a b & H a r ya n a H i g h C o u r t i n H . M . T . L t d . Tractors Division Vs CIT [ 274 ITR 544 (P&H) ] have laid down the principle that where the tax at source had been paid in time and the necessary return in respect thereof was filed in time with the income tax department, on mere late issue of tax deduction certificate, there was no loss to the Revenue and the delay in furnishing the tax deduction certificate was merely technical or venial in nature and penalty could not be imposed. The said 20 decision cannot be applied to the present issue in view of the reasons given above.
35. However, in the facts of the present case, where the assessee failed to furnish the AIR within time, could not be said to be mere technical or venial breach.
36. The next plea raised by the assessee was that there was no tax involvement and it would not make any difference if the return was not submitted in time does not stand as similar plea was raised before the Hon'ble Gujarat High Court in Patan Nagrik Sahakari Bank Ltd. Vs DIT (CIB) (supra) and the Hon'ble Court observed as under:
"As regards the contention that in any case, the Revenue had no use for the annual information returns of the financial year 2006-07, when there is a statutory obligation on the assessee to furnish annual information return, it is bound by it. How and in what manner the income-tax authorities make use of the said information is not the look out of the petitioner. The petitioner is bound to comply with the statutory requirements as prescribed, failing which it has to face the consequences of such failure. Besides, as rightly contended on behalf of the Revenue, on account of not providing information in time, the Revenue was not in a position to take remedial action."
37. We further find that the Amritsar Bench of Tribunal in Sub Registrar Vs DIT (CIB) in ITA Nos. 137 to 140/Asr/2013 vide order 30.05.2013 had applied the ratio laid down by the Hon'ble Gujrat High Court in Patan Nagrik Sahakari Bank Ltd. Vs DIT (CIB) (supra)and had held that the period of penalty is to be worked out from the first advisory letter issued to the assessee. The plea of ignorance of law made by the assessee therein was rejected in view of ratio laid down by the Hon'ble Gujrat High Court in Patan Nagrik Sahakari Bank Ltd. Vs DIT (C IB) (supra). 21 But the plea of reasonable cause from the date of issue of first advisory letter was accepted by the Tribunal.
38. The next issue raised by the ld. AR for the assessee before us is in relation to the furnishing of information in respect of the transactions relating to the sale and purchase of the property valued at Rs. 30 lacs or above. The case of the assessee is that in the absence of the awareness of the provisions of the Act and also as no TAN number was available with the assessee, information was furnished manually with the concerned officers of the Department and when the notice was issued by the said department for furnishing the requisite information. However, the information was uploaded on the NSDL on a later date. The plea of the assessee before us is that such information furnished manually be accepted as date of compliance to the provisions of section 285BA of the Act. On the perusal of the orders passed by the DIT (C IB) in ITA Nos. 431 to 434/Chd/2012 i.e. in the case of Sub Registrar, Jagadhari, we find that the said plea of the assessee has been accepted b y the DIT (C IB) vide para 7 at page 5 of the order imposing penalty under section 271FA of the Act. The DIT (CIB) thereafter had accepted the date of furnishing of manual information as date of compliance to the provisions of section 285BA of the Act and had computed the penalty leviable under section 271BA of the Act upto such date i.e. in the case of f i n a n c i a l ye a r 2 0 0 5 - 0 6 , t h e p e r i o d o f p e n a l t y w a s d e t e r m i n e d u p t o 1 1 . 1 0 . 2 0 0 6 i . e . o f 4 1 d a ys , t h o u g h t h e i n f o r m a t i o n o n N S D L w a s furnished by the assessee on a later date.
39. We find merit in the claim of the assessee in this regard in 22 view of the provisions of section 285BA of the Act as per which the assessee can file the return either with the prescribed authority or with the authorized agency of the prescribed a u t h o r i t y. However, under the proviso to Rule 114E(3) of the IT Rules, it is clarified that the AIR is to be filed with the authorized agency on behalf of the DIT (CIB), who in turn would upload it on the software. In cases where the person had filed AIR with the prescribed authority but had not uploaded the same through the NSDL, then the same would be a technical default and the person could be held to have a reasonable cause in not furnishing the information through NSDL and no penalty under section 271FA of the Act is leviable for the period of default between the date of furnishing the information manually and the date of furnishing the information through the authorized agency i.e. NSDL. However, the onus is upon the assessee to establish its case of having furnished complete information manually to the prescribed a u t h o r i t y, w h i c h i n - t u r n w a s f u r n i s h e d t o t h e a u t h o r i z e d a g e n c y o n a later date. The case of reasonable cause on this account and the benefit of non-levy of penalty under section 271BA of the Act on t h i s i s s u e i s b e i n g a c c e p t e d i n t h e p r e s e n t ye a r s w h i c h a r e t h e i n i t i a l ye a r s w h e n t h e p r o v i s i o n s o f s e c t i o n 2 8 5 B A o f t h e A c t w e r e introduced and there was non-awareness about the said provisions of the Act. However, the said plea would not be available to the assessee in later years as complete awareness about the provisions of the Act and the compliance through the authorized agency has been made available to the specified persons.
40. The ld. AR for the assessee has time and again referred to various replies filed before the different officers for the respective 23 years in compliance to the notices issued under section 133(6) of the Act. Reliance was placed on the information furnished as per the reply placed at page 7 of the Paper Book. It may be b rought on record that the said information has been furnished by the assessee in response to the information sought under section 133(6) of the Act in relation to the transactions between Rs. 5 lacs to Rs. 30 lacs, which is not the information sought for under section 285BA of the Act. Hence, no reliance can be placed on such replies filed by the assessee from time to time and the same have to be ignored. S i m i l a r p l e a w a s m a d e b y t h e a s s e s s e e i n r e s p e c t o f t h e o t h e r ye a r s but there is no basis of the same as the perusal of the Paper Book reflects the said information to be in respect of the properties transactions of sale value between Rs. 5 lacs and Rs. 30 lacs whereas under section 285BA of the Act, the information is to be furnished in respect of the properties sold having sale value of Rs. 30 lacs or more. The said pleas raised by the assessee are, thus rejected.
41. In the totality of the facts and circumstances and in view of our observations in the paras herein above, in-turn following the ratio laid down by the Hon'ble Gujrat High Court in Patan Nagrik Sahakari Bank Ltd. Vs DIT (CIB) (supra), we direct the Assessing Officer to recompute the penalty leviable under section 271BA of the Act and the period of penalty in furnishing the information would be computed on the basis of following directions :
1. No penalty to be levied till the first notice issued to the assessee to furnish the requisite information holding the same to be reasonable cause in not furnishing the AIRs in time. In the absence of an y notice issued to the specified persons, the date of 24 filing the first AIR would be date of notice.
2. Where the assessee had furnished manual information before the concerned authorities in respect of specified transactions of Rs. 30 lacs or more and not uploaded the said information through appointed a g e n c y, then default between date of furnishing manual information and uploading on s ys t e m , b e i n g t e c h n i c a l i s t o b e i g n o r e d , w h i c h h a s been ignored by DIT (CIB) in majority of cases.
The onus is upon the assessee to furnish the complete information of manually furnishing the complete information, which in turn was uploaded.
3. No penalty under section 271FA of the Act to be imposed for the overlapping period of default. For eg. If the assessee had defaulted in furnishing AIRs f o r f o u r f i n a n c i a l y e a r s i . e . f i n a n c i a l ye a r s 2 0 0 4 - 0 5 to 2007-08 and the first notice was received on 0 1 . 0 1 . 2 0 0 6 , t h e n i n a l l t h e ye a r s , n o p e n a l t y i s leviable for default upto 01.01.2006 and is leviable for the default thereafter.
43. However, in cases where the Annual Information Reports h a v e b e e n f i l e d b y t h e s p e c i f i e d p e r s o n s b e yo n d t h e a b o v e s a i d period of limitation, the specified person would be held to be in default, making it eligible to levy of penalty under section 271FA of the Act. The DIT (C IB) is directed to recompute the said levy of penalty under section 271FA of the Act in line with our directions. However, reasonable opportunity of hearing should be afforded in this regard and the specified person shall furnish complete information before his DIT (CIB), with regard to its 25 several claims, in order to finally determine the period of default and the quantum of penalty leviable under section 271FA of the Act. The grounds of appeal raised by the assessee are thus, allowed as stated above.
44. In the result, appeals of the assessees are partl y allowed.
Order pronounced in open Court on 30.10.2013.
Sd/- Sd/-
(T.R.SOOD) (SUSHMA CHOWLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated 30th October,2013
Poonam
Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR
By Order
Assistant Registrar, ITAT,
Chandigarh