Income Tax Appellate Tribunal - Chandigarh
The Sub Registrar, Fatehgarh Sahib vs Assessee on 13 May, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH 'A', CHANDIGARH
BEFORE SHR I T.R.SOOD, ACCOUNTANT MEMBER
AND Ms. SUSHMA CHOWLA, JUDICIAL MEMBER
ITA Nos.792 to 795 /Chd/2012
Assessment Years : 2005-06,2006-07,2008-09 & 2009-10
The Sub Registrar, Vs. Director of Income Tax (CIB),
Tehsil Office Amloh. Chandigarh.
Distt. Fatehgarh Sahib.
PAN: PTLS1604C
(Appellant) (Respondent)
Appellant by : None
Respondent by : Shri Akhilesh Gupta, DR
Date of hearing : 13.05.2014
Date of Pronouncement : 29.05.2014
O R D E R
Per SUSHMA CHOWLA, J.M. :
This bunch of four appeals filed by the assessee are against the consolidated order of the Commissioner of Income Tax (Appeals), Patiala dated 30.5.2012 against the order passed under section 271FA of the Income Tax Act, 1961 (in short 'the Act').
2. The appeals of the assessee were fixed for hearing on 13.5.2015 on which date none appeared on behalf of the assessee. Earlier the appeals were fixed for hearing on 8.7.2013 and the appeals were adjourned to 21.8.2013 at the request of the learned counsel for the assessee and it was informed to the learned counsel for the assessee that the same would b e t h e l a s t o p p o r t u n i t y. However, the Bench did not function on 21.8.2013 and thereafter on 10.12.2013 and was ultimately fixed for 2 13.5.2014. Despite service of notice, there was no appearance on behalf of the assessee in the bunch of appeals.
3. The learned D.R. for the Revenue, however, pointed out that the issue raised in the present appeals is against the levy of penalty under section 271FA of the Act, which is covered by the earlier order of the Tribunal. We proceed to decide the present set of appeals after hearing the learned D.R. for the Revenue.
4. All the four appeals filed by the assessee relating to the same assessee were heard together and are being disposed off by this consolidated order for the sake of convenience.
5. Common grounds of appeal have been raised by the assessee in all the appeals, which read as under:
a) The provision of filing AIR data was new and the officers and even the professional in the region were not updated with this provision.
b) As and when the assessee came to know about the provision in question, it expedited the matter and filed the returns. The returns for succeeding years are being filed in time now.
c) The delay, if any, was bonafide and without any bad motive or without any intent to defraud revenue by any means.
d) The return was just an information to the Department. No tax effect was involved. By late filing of AIR data, no revenue leakage has been caused.
e) The only default on the part of the assessee is that the returns were not filed within prescribed period of time. The assessee being the Govt. Body, the officers have no personal interest. In the present case there is no loss of revenue to the Department and there is no unlawful gain to the assessee.
f) Further, a reading of section 271FA and its head note lays down that penalty is to be levied if the assessee fails to file AIR within time prescribed u/s 285BA(1). However, factually no time is prescribed u/s 285BA(1). Section 285BA prescribes two time limitations i.e. u/s (2) and (5). Sub Section (2) prescribes 31st August after end of F.Y. as the limitation date and Sub Section (5) prescribes 60 days after issuance of notice for non-filing of return. U/s (5), your Honour has been empowered to issue notice for non-filing of return.3
As mentioned above, The assessee filed the returns as time prescribed u/s 285BA(5). Hence, the levy of penalty will be unjustified since the assessee has filed the returns before time u/s 285BA(5).
G) Hence, that the Commissioner of Income Tax (A), Patiala is not justified by Confirming the orders and has erred in penalizing u/s 271FA by Rs. 18,200/- for FY 2004-05, Rs. 22,400/- for FY 2005-06, Rs. 76,100/- for FY 2007-08 and Rs. 8,900/- for FY 2008-09 for late filing of AIR."
6. The issue raised in the present appeals is against the penalty levied under section 271FA of the Act.
7. The brief facts of the case are that the assessee was obliged to file A n n u a l I n f o r m a t i o n R e p o r t s f o r t h e f i n a n c i a l ye a r s 2 0 0 4 - 0 5 t o 2 0 0 8 - 0 9 , w h i c h w e r e f i l e d b e l a t e d l y. The Assessing Officer in view thereof initiated penalty proceedings under section 271FA of the Act. The assessee sought various opportunities before the Assessing Officer for filing the information and no reply was received by the Assessing Officer The Assessing Officer observed that the assessee statutorily was required to file AIR within the time prescribed under section 285BA of the Act v o l u n t a r i l y, suo moto and without any notice from the Department. Another contention of the assessee before the Assessing Officer was that it had manuall y filed AIRs with ITA No (CIB), Patiala a n d D I T ( C I B ) , C h a n d i g a r h r e s p e c t i v e l y. The Assessing Officer on verification of the claim of the assessee noted that the assessee had filed A I R r e l a t i n g t o t h e f i n a n c i a l ye a r 2 0 0 4 - 0 5 o n 3 1 . 5 . 2 0 0 6 b e f o r e t h e ITO(C IB), Patiala and for financial year 2005-06 on 31.7.2007 and for f i n a n c i a l ye a r s 2 0 0 7 - 0 8 a n d 2 0 0 8 - 0 9 o n 1 . 1 0 . 2 0 1 0 b e f o r e t h e D I T ( C I B ) , Chandigarh. As the assessee had failed to show the reasonable cause for late filing of AIR, the Assessing Officer imposed penalty under section 271FA of the Act @ Rs.100/- per day for default, calculated for 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 a s u n d e r :
4Financial year Period of default No. of days Amount of of default penalty 2004-05 01.12.2005 to 182 Days Rs.18,200/-
31.05.2006 2005-06 0l. 09 .2006 to 224 Days Rs.22,400/-
12.04.2007 2007-08 01.09.2008 to 761 Days Rs.76,100/-
01.10.2010
2008-09 01.09.2009 to 89 Days Rs.8,900/-
28.11.2009
Total 1256 days Rs.1,25,600/-
8. The CIT (Appeals) upheld the levy of penalty in all the captioned a s s e s s m e n t ye a r s .
9. On perusal of the record we find that similar issue of levy of penalty under section 271FA of the Act arose before the Tribunal in the case of Sub Registrar, Alewa Vs. Director of Income Tax (CIB) & Others in ITA No.1028 to 1034/Chd/2011. The Tribunal vide consolidated order dated 30.04.2014 had in turn relied upon the ratio laid down by the Tribunal in ITA Nos.431 to 434/Chd/2012, order dated 30.10.2013 and directed the Assessing Officer to recompute the penalty levied under section 271FA of the Act. The relevant findings of the Tribunal are as under:
11. We have heard the rival submissions and find that the issue of levy of penalty under section 271FA of the Act arose before the Chandigarh Bench of Tribunal in ITA Nos. 431 to 434/Chd/2012 wherein vide order dated 30.10.2013, it has been held as under :
"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 the financial year in which the transaction was registered or recorded. The onus is 5 upon the assessee to furnish the specified information under section 285BA of the Act.
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 authority i.e. the Director of Income Tax (Central Information Branch) or the authority/agency prescribed under the Act 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 financial year in which the transaction was registered or recorded, 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 him to furnish such return within a period not exceeding sixty days.
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 6 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.
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 7 285BA of the Act. The Hon'ble Court further observed that where the person had not furnished the AIR return under section 285BA(1) of the Act, sub-section (5) thereof lays 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 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 days of service of the said notice. 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 reliance has 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 [ 1 1 8 I T R 3 2 6 ( S . C . )] h a d h e l d t h a t t h e r e i s n o 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 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 by 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 8 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 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 the judgements, 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. Secondly, in any case, Gujrat High Court in Patan Nagrik 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. The Hon'ble Punjab & Haryana High Court in H.M.T. Ltd. Tractors Division Vs CIT [ 274 ITR 544 ( P &H ) ] h a v e l a i d d o w n t h e p r i n c i p l e t h a t w h e r e t h e t a x 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 decision cannot be applied to the present issue in view of the reasons given above.
935. 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 (CIB) (supra). 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 (CIB) in ITA Nos. 431 to 10 434/Chd/2012 i.e. in the case of Sub Registrar, Jagadhari, we find that the said plea of the assessee has been accepted by the DIT (CIB) 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 financial year 2005-06, the period of penalty was determined upto 11.10.2006 i.e. of 41 days, though the information on NSDL was furnished by the assessee on a later date.
39. We find merit in the claim of the assessee in this regard in 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 authority. 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 authority, which in-turn was furnished to the authorized agency on 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 this issue is being accepted in the present years which are the initial years when the provisions of section 285BA of the Act were 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 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 brought 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 11 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. Similar plea was made by the assessee in respect of the other years 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 any notice issued to the specified persons, the date of 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 agency, then default between date of furnishing manual information and uploading on system, being technical is to be ignored, which has 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 for four financial years i.e. financial years 2004-05 to 2007-08 and the first notice was received on 01.01.2006, then in all the years, no penalty is leviable for default upto 01.01.2006 and is leviable for the default thereafter.
43. However, in cases where the Annual Information Reports have been filed by the specified persons beyond the abovesaid period of limitation, the specified person would be held to be in default, making it eligible to levy 12 of penalty under section 271FA of the Act. The DIT (CIB) 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 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 partly allowed."
10. F o l l o w i n g o u r d i r e c t i o n s i n t h e e a r l i e r ye a r s w e r e m i t t h e m a t t e r back to the file of the Assessing Officer to recompute the quantum of penalty leviable under section 271FA of the Act in line with our observations in the above orders after affording reasonable opportunity of hearing to the assessee. The grounds of appeal raised by the assessee in all the appeals are thus allowed for statistical purposes.
11. In the result, all the appeals of the assessee in ITA Nos.792 to 795/Chd/2012 are allowed for statistical purposes.
O r d e r p r o n o u n c e d i n t h e o p e n c o u r t o n t h i s 2 9 t h d a y o f M a y, 2 0 1 4 .
Sd/- Sd/-
(T.R.SOOD) (SUSHMA CHOWLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 29 t h May, 2014
*Rati*
Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.
Assistant Registrar, ITAT, Chandigarh