1997 (10) TMI 96 - AT - Income Tax

Successful Appeal Against Income-tax Act Penalty

The appeal against the penalty imposed under section 272A(2)(iii) of the Income-tax Act, 1961 for the assessment year 1989-90 was successful. The ... Assessment Year, Bona Fide, Failure To File Return, Tax At Source Issues involved: Appeal against penalty imposed u/s 272A(2)(iii) of the Income-tax Act, 1961 for assessment year 1989-90.Summary:The appellant contested the penalty of Rs. 1,78,650 imposed u/s 272A(2)(iii) of the Income-tax Act, 1961. The appellant argued that the proviso to section 272A(2) limits the penalty amount for failures in relation to tax returns. The appellant claimed that this provision should be applied retrospectively. It was emphasized that penalties should be strictly construed and imposed judiciously based on relevant circumstances.The appellant was required to deduct tax at source amounting to Rs. 4,580, which was duly paid to the Central Government on time. However, the appellant failed to furnish the prescribed form for deposit information, citing a genuine belief that it was not required. The appellant argued that the penalty of Rs. 1,78,650 was unjust considering the circumstances.The judgment highlighted the legal maxim 'IGNORENTIA LEGIS NON EXCUSAT' (ignorance of law is no excuse) but also noted the principle 'DE NON MINIMIS CURAT LEX' (Law does not take into account trivialities) to promote justice. The presiding member found that the appellant had no intention to violate the law, as the tax was deducted and paid on time, with only the form not being filed. Considering the bona fide belief of the appellant, the penalty was deemed unreasonable, and the Assessing Officer was directed to delete it.In conclusion, the appeal of the appellant was allowed, and the penalty u/s 272A(2)(iii) was set aside based on the genuine belief and compliance with tax obligations.