Tribunal overturns penalty for non-filing due to reasonable cause.

The Tribunal allowed the appeal, directing the obliteration of the penalty imposed under Section 271BA for non-filing of the accountant report under Section 92E of the Income Tax Act. The appellant, a Government of India PSU, successfully argued that there was a reasonable cause for the non-filing due to a genuine belief that the transaction was not international. The Tribunal considered the appellant's compliance efforts post-realization and waived the penalty, emphasizing that penalties should not be imposed for technical breaches or when non-compliance stems from a bona fide belief.

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Issues:
Penalty under Section 271BA for non-filing of accountant report under Section 92E of the Income Tax Act.

Analysis:
The appellant, a Government of India PSU providing telephone services, filed an appeal against the penalty imposed by the AO for not filing the accountant report as required under Section 92E. The appellant argued that there was a reasonable cause for the non-filing, as they believed the transaction was not international. The AO and CIT(A) upheld the penalty, stating the requirement under Section 92E was not met. The appellant contended that being a Government Undertaking, there was no intention to defraud or avoid disclosure. The appellant had filed Form No. 3CEB before the AO, indicating compliance. The issue of outstanding loans and advances between related entities was also considered. The Tribunal noted that the appellant rectified the non-compliance upon realizing the mistake, filing the required report.

The Tribunal referred to Sections 271BA, 92E, and 273B of the Act. Section 271BA imposes a penalty for failure to furnish the accountant report under Section 92E. Section 92E mandates obtaining and filing a report for international transactions. Section 273B provides for non-imposition of penalty in certain cases with reasonable cause. Citing the CIT Vs. MP Electricity Board case, the Tribunal emphasized that penalties should not be imposed for technical breaches or when non-compliance stems from a bona fide belief. Considering the appellant's status as a public sector undertaking and the compliance efforts post-realization, the Tribunal concluded that the penalty should be waived.

Therefore, the Tribunal allowed the appeal, directing the obliteration of the penalty imposed under Section 271BA. The judgment was pronounced on 14/02/2022 by the Accountant Member of the ITAT Delhi.

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