Income Tax Appellate Tribunal - Kolkata
Ramacast Ltd., Kolkata vs Assessee on 17 May, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH: KOLKATA
[Before Shri Pramod Kumar, A.M. & Shri George Mathan, J.M.]
I.T.A. No.1310/Kol/2011
Assessment Year :2006-07
M/s. Ramacast Ltd., -Vs- I.T.O., Ward-3(1), Kolkata
C/o- M/s.Salarpuria Jajodia & Co.
7, C.R. Avenue,
Kolkata - 700 072
(PAN:AABCR 2967B)
(Appellant) (Respondent)
Date of concluding the hearing : 17.05.2012
Date of pronouncing the Order : 17.05.2012
Appearances : For the Appellant : Shri S. Jhajharia
: For the Respondent : Shri Ranadhir Gupta
ORDER
Per Pramod Kumar
1. By way of this appeal, the assessee-appellant has challenged the correctness of CIT(A)'s order dated 29th July 2011 upholding the penalty of Rs.5,000/- imposed on the assessee under section 271F of the Income Tax Act, 1961 for the assessment year 2006-07.
2. The grievances raised by the assessee are as follows:
"1. For that in view of the facts and circumstances of the case the Ld. CIT(A) was wholly and unjustified in confirming the penalty of Rs.5,000/- imposed by the A.O u/s. 27IF of the IT Act,1961 without considering the facts that delay in filing the return of income had occurred due to a reasonable cause duly explained before them and that it was a bonafide and unintended delay for which the provision of section 273B of the Act is clearly applicable in the case. The penalty u/s 271F imposed by the A.O and confirmed by the Ld. CIT(A) should be quashed / cancelled.
2. For that in view of the facts and circumstances of the case the Ld. CIT(A) was wholly wrong and unjustified in confirming the said penalty u/s 271F of 2 ITA No.1310/Kol/2011 M/s. Ramacast Ltd. Assessment Year: 2006-07 the Act without considering the facts that the total loss of Rs.29,30,640/- voluntarily declared in the return, filed prior to any notice issued by the Department, was fully accepted in the assessment made u/s 143(3) of the Act and as such there was no loss of revenue in the case. The penalty u/s 271F imposed by the A.O and confirmed by the Ld. CIT(A) should be quashed / cancelled.
3. For that your petitioner craves the right to put additional grounds and/or to alter/amend/modify the present grounds at the time of hearing."
3. The short issue lies in this appeal is like this. The assessee has filed its return of income for the assessment year 2006-07 on 05.01.2008, i.e., after the end of the relevant assessment year, though, being a company, it was required to file the return voluntarily in terms of section 139(1). In response to the AO's requisition to show cause as to why penalty under section 271F should not be imposed for not filing the return in time, it was submitted by the assessee that the assessee's tax consultant had fallen sick during the relevant period and that the filing of return through electronic media was made mandatory for the first time for the assessment year under consideration and therefore, the assessee needed help of expert's hands to prepare the return. The assessee also filed copies of the discharge certificate and the admission certificate issued by the Nursing Home. The case of the assessee was that in view of illness of tax consultant and in view of the fact that electronic filing of return was made mandatory for the first time but it was difficult to handle the filing of return, which was delayed due to illness of the tax consultant. The ld. AO, however, was not impressed by this submission. He observed that as it is evident from the discharge certificate of the tax consultant that the tax consultant was discharged from the Nursing Home on 18.08.2006 whereas the last date for filing the return was extended upto 30.11.2006. It was also noted that the assessee filed its return much later and therefore, the reasons given by the assessee for delay in filing the return cannot be said to be sufficient. Accordingly, the AO imposed penalty under section 271F of the Act.
3 ITA No.1310/Kol/2011 M/s. Ramacast Ltd.Assessment Year: 2006-07
4. Aggrieved, the assessee carried the matter in appeal before the ld. CIT(A), but without success. The ld. CIT(A) was of the view that admittedly, there was a default in terms of section 271F and violation of clear mandate of the statutory provisions of section 271F and that the plea of there being no loss to the revenue was not relevant for the purpose of levy of penalty. The ld. Commissioner further observed that it is not necessary that there has to be mens rea for the purpose of levy of penalty under section 271F and as such consideration could only be relevant for prosecution proceedings under section 276CC. He, therefore, concluded that he is of the view that the assessee has not been able to show, much less, prove any reasonable cause for not furnishing the return of income by 31st March, 2007 and accordingly the penalty has been rightly imposed by the AO. The assessee is not satisfied and further is in appeal before us.
5. We have heard the rival contentions and perused the materials on record as also the applicable legal position. We find that there is no dispute about the fact that the tax consultant handling the matters of the assessee was unwell and even hospitalized for sometime. It is also undisputed position that filing of income tax returns electronically in the relevant assessment year, had some teething problems as electronic media filing of return was made mandatory for the first year. The authorities below have laid undue emphasis on the date on which the tax consultant was discharged from the nursing home which proceeds on the fallacious assumption that having been discharged from the hospital, consultant should have immediately resumed normal office work. One has to take into account a hard reality that when a person gets unwell, particularly, at one's advance age, everything else takes a back seat for sometime and his professional life also suffers inasmuch as he is not able to attend the work as scrupulously as also diligently as he would have normally. When assessee offers an explanation, it has to be viewed 4 ITA No.1310/Kol/2011 M/s. Ramacast Ltd. Assessment Year: 2006-07 in the light of human probabilities and not on the basis of what ought to have happened in ideal situation. In these circumstances and bearing in mind the entirety of the fact that due to serious illness of the tax consultant, the delay in filing of the return cannot be said to be perverse and mala fide. It is also important to bear in mind the fact that the present assessment year, being the first year, in which electronic media filing of return was made mandatory, there were teething problems in the process. The provisions of section 271F do not require that penalty is to be automatically imposed for late filing of the return. Section 273B comes to the rescue in the cases where the delay in filing of return is due to reasonable cause. In our considered view and keeping all these facts in mind, there indeed was reasonable cause for delay in filing of the return. It is further evident from the fact that the assessee, on his own, filed the income tax return and without any notice being issued of filing the return when he could so. In view of these discussions and considering the totality of the facts, we are of the considered view that assessee's explanation ought to have been accepted and that it was not a fit case for imposition of penalty under section 271F. We, therefore, delete the penalty. The assessee gets relief accordingly.
6. In the result, the appeal filed by the Assessee is allowed.
This Order is dictated and pronounced in the open court on 17th May, 2012 immediately after the completion of the hearing.
Sd/- Sd/-
(George Mathan) (Pramod Kumar)
Judicial Member Accountant Member
Dated : 17th May, 2012
5 ITA No.1310/Kol/2011 M/s. Ramacast Ltd.
Assessment Year: 2006-07
Copy of the order forwarded to:
1. M/s. Ramacast Ltd., C/o- M/s.Salarpuria Jajodia & Co. 7, C.R. Avenue, Kolkata - 700 072 2 I.T.O., Ward-3(1), Kolkata
3. The CIT(A), Kolkata
4. CIT, Kolkata
5. DR, Kolkata Benches, Kolkata True Copy, By order, Asstt. Registrar, ITAT, Kolkata Talukdar(Sr.P.S.)