TaxTMI 
TaxTMI 
TaxTMI 
2010 (2) TMI 1322
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere was no deliberate intention on the part of the assessee to file the returns of income with the time allowed u/s 139 (4A) of the IT Act, 1961. 3. The CIT(A) Guntur failed to note that the Income of the assessee was also exempt u/s 10(22) of the IT Act 1961 being a charitable trust promoting the cause of education and therefore there was no obligation to submit a return of income at its income was exempt from tax. 4. The CIT(A) guntur failed to note that the returns of income filed voluntarily for the first time which were regularized by issue of notices u/s 148 of the IT Act was a return filed u/s 139 and the assessment thereon was closed as 'NA' and therefore the CIT(A) Guntur ought to have held that there was no default whatsoever in not submitting the return of income by the assessee and thus the CIT(A) Guntur erred in confirming the levy of penalty. 5. The CIT(A) Guntur having found as a matter of fact that the JCIT, Kurnool found that all the returns of income filed by the assessee were 'Non est in law' failed to note that the question of levy of penalty or the machinery provisions relating to its calculation failed as no returns of income were deemed to be filed b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the levy of penalty after a long period of time was wholly unsustainable and thus the levy of penalty is to be quashed. 12. The proceedings for the assessment year 1997-98 were time barred by 31.3.2004 and therefore the question of assessment or levy of penalty was barred by the period of limitation and the levy of penalty at Rs.2,62,700 for the assessment year is wholly unsustainable and is to be cancelled. 2. Brief facts of the case are that the assessee is an institution and got its registration u/s 12A of the IT Act by CIT-II, Hyderabad vide F.No.HQ/CIT-II/12A/40/78-79 dated 3.2.1981. It has been running many educational institutions along with a few charitable ones. Shri G. Pulla Reddy Engineering College has been in the forefront among the institutions run by the trust. The G. P. Engineering college is located in Kurnool town. Several employees of GPREC filed returns of income attaching TDS certificates issued by GPREC on which the PAN of GPREC is quoted as AAAD0374R. On verification it was found that the PAN does not belong to GPREC /GPRCT but belongs to M/s Dota Society, Kurnool. In view of this, the TDS inspection was conducted by the ACIT, Circle-1, Kurnool of this R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in any particular ITO the employer is under an obligation to send the returns to such officer. In other cases the return is to be sent to the ITO within whose area or jurisdiction the officer of the person paying the salaries is situated. An order u/s 126 can be made only by the board and not by the CIT. Whereas a notice calling on the assessee to file returns u/s 206 was issued by an ITO acting under the order of the Commissioner u/s 124 and it was found that the officer of the assessee was not situate within the area assigned to that income tax Officer. That the notice was not valid and was liable to be quashed. 4.2 He relied on the judgement in the case of India Glycols Ltd. Vs. CIT (145 Taxman 549) (Cal.) wherein it was held that: Section 124 of the Income Tax Act, 1961 assessing officer jurisdiction of whether principal place of business of a company is termed and/or treated as that place wherefrom all control over business activities is exercised or where centre of power of corporate body is located and such principal place of business may or may not be a registered place of business - Held yes assessee company having its principal place of business at Calcutta had b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cational objects was also not material. The assessee was entitled to exemption under section 10(22) in respect of the income from the two schools. 4.6. He submitted that the assessing officer erred in computing the period of delay while it ought to have restricted and computed from the due date for filing of return of income. It is submitted that returns of income filed in Nov. 2004 are non-est and therefore, for default u/s 272(2)(e) should be recount as laid out in section 139(4) a valid return can be filed before the expiry of one year from the end of the relevant assessment year. Therefore, he submitted that the period of levy of penalty imposed end on 31.3.2000 for assessment year 1998- 99, 31.3.2001 for assessment year 1999-2000, 31.3.2002 for assessment year 2000-01 and 31.3.2003 for assessment year 2001-02. For the assessment year 1997-98 as period of 6 years had lapsed by 31.3.2004 and therefore equally the levy of penalty u/s 272A(2)(e) of the IT Act for the assessment 1997-98 is invalid. A valid return could be filed for 1997-98 u/s 139(4) by 31.3.1999. Therefore the period of delay if any, should be computed upto 31.3.1999 only and not to the date of initiation of pen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itiated on 28.10.2004 b) 148 issued on 9.12.2004 c) 143(2) issued on 13.12.2004 for assessment years 2003-04 d) Summons issued on 13.12.2004 to appear on 20.12.2004 e) On 20.12.2004, the AR appeared but did not raise the issue of jurisdiction. 6.4. The assessee voluntarily filed return of income in Form 3A at Kurnool and the assessing officer had the jurisdiction over the assessee as per section 124(5) which reads as follows: "Notwithstanding anything contained in this section or in any direction or order issued u/s 120 every assessing officer shall have all the powers conferred by or under this act on an assessing officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub section (1) or sub section (2) of section 120." 6.5. The main trustee resides at Kurnool, there is an engineering college at Kurnool run by the Trust and all the material accounts relating to the activities of the trust were found at the office in Kurnool. The assessee despite several opportunities given during penalty proceedings did not raise any objection regarding ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or making return or under first proviso to section 144 whichever is earlier. 7. In the instant case, the assessee did not file regular return u/s 139(1) of IT Act or 139(4A) applicable for trusts. He filed returns on various dates from 6.10.2004 to 11.10.2004 for the years under consideration. Notice u/s 148 was issued on 9.12.2004 for assessment years under appeal. The assessee replied vide letter 17.12.2004 to treat the return of income already filed as filed in response to notice u/s 148. The assessee did not file regular return in time and no such return as envisaged in clause (a) are filed. As per clause (b) he should have raised objection within the time allowed by notice dated 9.12.2004 u/s 148 i.e. before 19.12.2004 which the assessee did not do. 7.1. Section 124(3) is clear in its emphasis on time allowed as per notice u/s 148 or 142(1) are under first proviso to section 144 whichever is earlier. 7.2. It can be seen that clause (a) lays emphasis on one month of service of notice or completion of assessment, clause (b) is categorical on the time allowed under notice u/s 142(1) or 148 or 144. It may further be noted that there is no mention of notice u/s 143 (2) under cla....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e machinery of state is run. Collection of tax is preceded by assessment thereof. It is consequently desirable that the assessment proceedings should be completed expeditiously but does not mean the assessee put to unwarranted prejudice thereby taking into account the convenience of the assessee also. It is with this purpose in view that it has been provided in sub section (1) of section 127 that whenever possible opportunity of hearing may be given to the assessee while transferring a case from one place to another. Since the assessee does not suffer any inconvenience or prejudice if a case is transferred locally, no such opportunity has been prescribed. From these provisions, it is obvious that the board and the commissioner will exercise the power of allocation of functions to various authorities or officers in the exigency of tax collection with due regard to the convenience of the assessee. The allocation is a measure of administrative convenience. In such a situation, the concept of jurisdiction cannot be imported and, certainly, not in the sense of invalidating the resultant action on account of the defect in the exercise of functions. Being an enactment aimed at collecti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....return. This confirms us in the view that the scheme of the act does not contemplate an objection as to the place of assessment being raised on an appeal against the assessment after the assessment has been made". 7.6. From the various judgements cited above, it is clear that the matter of jurisdiction is only a matter of convenience and generally an administrative issue. The assessee grievance if any should be regarding the inconvenience in attending to the proceedings at Kurnool. This grievance would have been valid during the pendency of proceedings before the assessing officer once the proceedings are over, the issue of jurisdiction is only of academic importance unless and until the assessee shows that it made any difference on merits had he been assessed by DDIT(E) Hyderabad. In absence of any specific grievance by the assessee, the raising of jurisdictional issues is out of time limited prescribed in section 124(3). 7.7. It is submitted by A.R. that the penalty was levied by the JCIT of Income tax upto the date of the penalty order. The JCIT held that the returns filed by the assessee on 6.10.2004 for the assessment years 1997-98, 1998-99 and 1999-2000 and on 11.10.2004 f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. For the subsequent years, the assessee only pleaded that the subsequent years returns could not have been filed without finalizing the earlier years books of accounts sheet and hence non filing of returns for earlier years constituted a reasonable cause for subsequent years. 8.2. The D.R. contended that during the period under consideration the trust was continuously expanding its educational institutions and was establishing new colleges/new courses which clearly shows that the trust was very active in all spheres of its activities and it was pure negligence on the part of the trustees which cause inordinate delay in filing of return. The trustees by their own admission clarified that there are no major reasonable causes for the continued delay in filing of returns. The delay of eight years can in no way be attributed to the non availability of accounts staff in the light of the fact that all other activities of the trust were being carried on without any hindrance. It is submitted by D.R. that the JCIT, Kurnool had jurisdiction over the assessee to levy of penalty. Alternatively, the assessee objection to the jurisdiction is beyond the time limits prescribed u/s 124(3) and no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urn of income u/s 139(4A) of the IT Act. Once the assessee liable to file return of income under the provisions of Act and it fails to return of income then provisions of S.272A(2)(e) is applicable and arising of non liability of tax nothing to do with the provisions of this section. We are placing reliance on the judgement of Gujarat High Could Godiji Parshnathji Jain Vs. CIUT (226 ITR 798) wherein held that levy of penalty u/s 271(1)(a) for delay in filing return by charitable trust as provided u/s 139(4A) even when no tax was payable by a trust is justified. 8.6. In view of the above discussion, the assessee's argument that because of ultimate income is nil, it is not required to file return cannot be upheld. 8.7. Further argument of the assessee counsel is that the penalty if any should be imposed within a reasonable period from the end of assessment year and therefore initiation and levy of penalty after a long period of 8 years is wholly unsustainable. This argument have no merit since a plain reading of section 272A(2)(e) shows that there is no time limit prescribed under the Act for initiation of penalty under the said section. The levy of penalty under that section has n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g in mind that in considering the expression 'sufficient cause' , the principles advancing substantial justice is of prime importance. The sufficient cause within the contemplation of the provisions must be a cause which is beyond the control of the party invoking the aid of the provisions. The cause for the delay in filing the return which by due care and attention could have been avoided cannot be a sufficient cause. Where no negligence, nor action , or want of bona fide can be imputed to the assessee a liberal constructions of the provisions has to be made in order to advance substantial justice. Seekers of justice must come with clean hands. In the present case, we find that the assessee cannot justify the delay. Only the reason given is that non availability of accounting staff and there was no major reasonable cause as per the own admission given by Shri Subba Reddy, Trustee of the assessee whose statement reproduced in the page No.2 of the Penalty Order. It was stated by him that there was no specific reason for delay in filing the return of income, He has given general reason that staff conversant with the auditing procedure was not available. This was fortified by the furt....