Tribunal Rules on Penalties for Late Tax Returns

The Tribunal partly allowed the assessee's appeal, setting aside penalties for late filing of Annual Information Returns (AIR) for F.Y. 2010-11 and 2011-12 due to no reportable transactions. Penalties for delayed original returns in F.Y. 2012-13 to 2014-15 were upheld, but penalties for late supplementary returns were canceled. However, a penalty for delayed supplementary return in F.Y. 2015-16 was confirmed. The order was pronounced on 25th January 2019, with a mixed outcome favoring the assessee on certain penalties.

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Issues Involved:
1. Requirement to file Annual Information Return (AIR) under section 285BA of the Income Tax Act.
2. Imposition of penalty under section 271FA for failure to file AIR on time.
3. Validity of penalties for late filing of AIR for different financial years.
4. Consideration of reasonable cause for delay in filing returns and supplementary returns.

Detailed Analysis:

1. Requirement to file Annual Information Return (AIR) under section 285BA of the Income Tax Act:
The assessee was required to file AIR under section 285BA of the Income Tax Act for the financial years 2010-11 to 2015-16 by 31st August of the succeeding financial year. The assessee failed to file the AIR for these years before the due date.

2. Imposition of penalty under section 271FA for failure to file AIR on time:
The Director of Income Tax (Intelligence & Criminal Investigation) [DIT (I&CI)] issued notices under section 274 read with section 271FA of the Act, calling for an explanation from the assessee for the failure to file AIR on time. The DIT imposed penalties for the financial years 2010-11 to 2015-16 as follows:
- F.Y. 2010-11: Rs. 2,08,000
- F.Y. 2011-12: Rs. 1,71,400
- F.Y. 2012-13: Rs. 1,34,900
- F.Y. 2013-14: Rs. 98,400
- F.Y. 2014-15: Rs. 61,900
- F.Y. 2015-16: Rs. 27,800

3. Validity of penalties for late filing of AIR for different financial years:

F.Y. 2010-11 and 2011-12:
The assessee contended that there were no transactions requiring reporting under section 285BA for these years and filed AIRs disclosing nil transactions. The Tribunal held that in the absence of specified transactions, there was no obligation to file AIR, and thus, the penalties imposed were unjustified. The orders of the lower authorities were set aside, and the penalties were canceled.

F.Y. 2012-13 to 2015-16:
The assessee filed the annual returns belatedly, and they were found defective. The DIT issued notices under section 285BA(4) for rectifying the defects, but the assessee did not comply within the given timeframe. The penalties were imposed for the delay in filing the original and supplementary returns.

4. Consideration of reasonable cause for delay in filing returns and supplementary returns:

F.Y. 2012-13 to 2014-15:
The Tribunal acknowledged that the assessee filed the supplementary returns within 30 days from the date of receiving the notice, citing the end-of-year closing work as a reasonable cause for the delay. Thus, no penalty was levied for the delay in filing the supplementary returns for these years.

F.Y. 2015-16:
The assessee filed the supplementary return with a delay of 210 days. The Tribunal allowed a reasonable period of 29 days from the date of receipt of the notice for filing the supplementary return. Since the assessee failed to provide a valid reason for not filing within this period, the penalty for the delay was confirmed.

Conclusion:
The Tribunal set aside the orders of the lower authorities and allowed the appeal of the assessee partly. Penalties for the delay in filing the original returns for F.Y. 2012-13 to 2014-15 were confirmed, but penalties for the delay in filing the supplementary returns for these years were canceled. For F.Y. 2015-16, the penalty for the delay in filing the supplementary return beyond the reasonable period was confirmed.

Order Pronounced:
The appeals of the assessee were partly allowed, and the order was pronounced in the open court on 25th January 2019.

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