2017 (8) TMI 373 - HC - Income Tax

Appeals dismissed for late filing penalty upheld, failure to establish reasonable cause or provide evidence.

Sub-Registrar, Bhiwani Versus Director of Income Tax (CIB), Chandigarh

The court dismissed the appeals, upholding the penalty under Section 271FA due to the appellant's failure to establish reasonable cause for the delay in ... Levy of penalty under Section 271FA - failure of the appellant in furnishing AIR in time - Held that:- As categorically recorded by the Tribunal that the assessee had not established any reasonable cause for not filing AIR within time. The assessee also failed to file any documentary evidence supporting the version submitted by him. Thus, the Tribunal rightly held the penalty levied to be valid Learned counsel for the appellant was unable to demonstrate that when show cause notice was issued on 06.9.2010 asking the filer to show cause as to why penalty under Section 271FA of the Act be not imposed and the reply was sought by 27.7.2010, the order imposing penalty under Section 271FA of the Act having been passed on 06.01.2011, it could not be shown that the order was beyond limitation as it was hit by Section 275(1)(c) of the Act. No error in the findings recorded by the Tribunal could be established or it could not be successfully controverted regarding the applicability of the decision rendered in the Joint Registrar, Sangat, District Bathinda’s case (2014 (9) TMI 499 - PUNJAB & HARYANA HIGH COURT ). - Decided against assessee. Issues Involved:1. Whether the penalty imposed is time-barred under Section 275.2. Justification of penalty imposition despite filing Annual Information Returns (AIR) before the show cause notice.3. Consideration of frequent transfers of Sub Registrars as a reasonable cause for delay.4. Responsibility of the current appellant for lapses committed by predecessors.Issue-wise Detailed Analysis:1. Whether the penalty imposed is time-barred under Section 275:The appellant argued that the penalty proceedings initiated on 30.11.2006 were time-barred. However, the court noted that the appellant failed to demonstrate that the penalty order dated 06.01.2011 was beyond the limitation period as stipulated by Section 275(1)(c) of the Income Tax Act, 1961. The court found no error in the Tribunal's findings that the penalty was not time-barred.2. Justification of penalty imposition despite filing AIR before show cause notice:The appellant claimed that the penalty of Rs. 15,600 was unjustified as the Annual Information Returns (AIR) were filed before receiving the show cause notice from DIT (CIB), Chandigarh. The court, however, referenced a prior decision in ITA No.344 of 2013 (The Joint Sub Registrar, Sangat, District Bathinda Vs. Director of Income Tax (CIB), Chandigarh), which concluded that failure to furnish AIR within the prescribed time justified the penalty under Section 271FA. The Tribunal found that the appellant had not established any reasonable cause for the delay and failed to provide documentary evidence supporting their claim. Thus, the penalty was deemed valid.3. Consideration of frequent transfers of Sub Registrars as a reasonable cause for delay:The appellant argued that the frequent transfers of Sub Registrars (seven officers in five years) should be considered a reasonable cause for the delay in filing AIR. The court, however, upheld the Tribunal's view that the appellant did not establish a reasonable cause for the delay. The Tribunal emphasized that the appellant, holding a responsible position, failed to demonstrate bona fide reasons for the delay, thus justifying the penalty.4. Responsibility of the current appellant for lapses committed by predecessors:The appellant contended that they should not be held responsible for the lapses committed by their predecessors. The court, however, did not find this argument sufficient to overturn the penalty. The Tribunal noted that the appellant, despite being in a responsible position, failed to file the AIR within the prescribed time and did not provide adequate justification for the delay. Therefore, the penalty was upheld.Conclusion:The court dismissed the appeals, concluding that no substantial question of law arose. The Tribunal's decision to uphold the penalty under Section 271FA was found to be justified, given the appellant's failure to establish reasonable cause for the delay in filing AIR and the lack of supporting documentary evidence. Consequently, the appeals were dismissed, and the penalty was upheld.