TaxTMI 
TaxTMI 
2006 (11) TMI 149
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....75 2,87,500 1991-92 17-9-1998 2510 2,51,000 1995-96 17-9-1998 1050 1,05,000 1996-97 17-9-1998 655 65,500 1997-98 15-9-1998 318 31,800 3. The appellant is a charitable trust which came to be established by a trust deed dated October 3, 1983. The appellant was granted registration under section 12A of the Act by the Commissioner of Income-tax, Delhi - 110 006, vide order dated October 31, 1983/November 1, 1983. The appellant-trust was created with an object of running a school to provide education to poor children living in slums and who cannot avail of the opportunity of going to municipal or public schools. 4. The appellant claimed that for the relevant assessment years its income was not taxable in view of the exemption under section 10(22) read with section 11 of the Act. According to the appellant, as per its audited account, its income for the relevant assessment years was as under : Assessment year Income Funds as on 31st March 1990-91 14,521 35,656 1991-92 1,097 35,753 1995-96 (-) 7,266 69,305 1996-97 13,364 82,689 1997-98 15,593 98,282 5. The appellant claimed th....
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....lant on the three dates as mentioned hereinabove, the Commissioner of Income-tax (Appeals) observed that "the learned Authorised Representative has brought no evidence on record to show that the aforecited notices were not received" . The Commissioner of Income-tax (Appeals) proceeded to conclude that : "Since the appellant has brought forth no evidence or convincing reasons to show that the appellant was prevented by sufficient rea sons from complying with the notices issued by the JDIT(E), I see no infirmity in the decision taken by the JDIT(E) in levying the aforesaid penalties which are hereby confirmed. The five appeals in question are thus dismissed." 9. The Commissioner of Income-tax (Appeals) nevertheless also dealt with the case on the merits and held as follows : "In view of the admitted claim of exemption under sections 11 and 12 by the appellant (and not under section 10(22)) in the returns of income filed, the appellant' s case is squarely covered by the provisions of section 139(4A) read with section 139(1), infringement whereof is clearly covered by the penalty proceedings under section 272A(2)(e). It is also seen that the instant appeal has ....
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....e issuance of a notice prior to imposition of the penalty was not mandatory under that provision, the Department had nevertheless issued three notices to the appellant despite which no response was forthcoming. Therefore, the appellant had been given sufficient opportunities. The imposition of penalty was, in the circumstances, totally justified. Contending that there was no question of equity in taxing statutes, Mr. Jolly submitted that the requirement of section 273B of the Act cannot be said to have been met in the present case and the penalty could not be waived. 14. The undisputed fact is that the appellant is a charitable trust. The Income-tax returns for the relevant assessment years were filed late. They were, however, nil returns and accepted as such by the Department. The only issue, therefore, is whether there was a justification for imposition of penalty on the appellant for its failure to file the returns within the time stipulated. 15. The provisions of the Act relevant for the present purposes are under : "139. Return of income.-(4A) Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable....
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....h notices were served on the assessee. There is no finding rendered by the Commissioner of Income-tax (Appeals) or the Income-tax Appellate Tribunal that the notices in question were in fact served on the assessee. Therefore, the only conclusion that can be drawn is that the assessee was not served these notices and was consequently not afforded the opportunity of being heard before the penalties were imposed. In our view, this by itself is sufficient to set aside the orders imposing the penalty on the appellant for the assessment years in question. 17. Respectfully adopting the reasoning of the Full Bench of this court in J.T. (India) Exports v. Union of India [2003] 262 ITR 269 which was rendered in the context of the Imports and Exports (Control) Act, 1947, we are of the view that there is an implied requirement of the principles of natural justice that before imposing a penalty under section 272A(2)(e) of the Act, notices are required to be both issued and served upon the assessee to enable it to defend itself in the penalty proceedings. It is trite that the imposition of any penalty has adverse civil consequences and has to be preceded by the affording of an opportunity of ....