TMI Blog2005 (4) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... te of the completion of the production of the film, whichever is earlier, a statement in the Form No. 52A containing particulars of all payments of over Rs. 5000 in the aggregate made by him or due from him to each such person as is engaged by him in such production. [Later on, the limit was revised to Rs. 25,000 vide Finance Act (2), 1998 with effect from 1-4-1999 and subsequently to Rs. 50,000 by Finance Act, 2000 with effect from 1-4-2001]. The assessee failed to submit such statement, however, during the course of assessment proceedings, such details were filed in September, 1996. It is the case of the assessee that during the course of assessment proceedings the Assessing Officer required the assessee to file his explanation about non-submission of declaration in Form No. 52A in respect of films produced by him and the assessee had submitted the following reply on 12-3-1999 : "Note on submission of declaration in Form 52A in respect of regional film Majala O Jamala We have produced film known as "Jamela O Jamala" in year 1994-95 and the said picture was ........... financial year 1995-96. The said picture was produced under the banner "Shri Tulsi Production". The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2A. Copy of the written submissions is enclosed herewith which is self-explanatory. As your honour are aware in view of language of section 275, penalty proceedings under Chapter XX-I have to be initiated in the course of any proceedings and have to be completed within specified period in which such proceedings are completed. The assessment for assessment year 1995-96 was completed on 27-8-1997 and assessment for assessment year 1996-97 was completed on 12-3-1999, during both of which no penalty proceeding were initiated. Further from the facts stated above, it will be clear that there was substantial compliance with section 285B and the breach, if any, is only technical and venial, not causing any loss to the revenue. The Supreme Court has held in Hindustan Steel v. State 83 ITR 26 that penalty is not to be levied merely because it is lawful to do so unless there is mala fide intent and penalty cannot be levied if the default is only technical and venial." In view of the above, I request you to drop the proposed. 5. However, the Assessing Officer levied penalty under section 272A(2)( c ) of the Income-tax Act, 1961 by computing the delay of 1979 days vide ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnical or venial breach. 7. He further referred to the objects of the provisions of section 285B of the Act which was brought to check inflation of expenditure by film producer and to enable the department to get information about recipient of payment for necessary action in their case. He contended that as the assessment has been framed at the declared loss and no addition has been made thereto, there was no inflation of expenditure by the assessee. Thus, he pleaded that the default, if any, was technical one and no penalty should have been imposed on the assessee. 8. On the other hand, the learned Departmental Representative pleaded that the assessee had failed to furnish the statement in Form No. 52A, therefore, he was liable to levy of penalty under the provisions of section 272A ( c ) for failure to submit said return. The levy of penalty could be avoided in the circumstances where the assessee is able to prove that there was a "reasonable cause": for the said failure, in accordance with the provisions of section 273B of the Act. No material has been brought on record by the assessee to prove that there was "reasonable cause" for such failure. Thus, he pleaded that pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee s case that whether there existed "reasonable cause" for the failure on the part of the assessee. Vide reply dated 15-9-2000 which has already been reproduced above, the submissions of the assessee with regard to the show-cause notice was that there is pre-decided value of the contract hence details of such contract could not be filed till the completion of the film. Full details were, however, furnished and the Assessing Officer accepted those details when the assessment was finalized as no penalty under section 272A was initiated. The second objection of the assessee in the said reply was that penalty proceedings were not initiated in the assessment order, therefore, penalty could not be levied. Further reference has been made to the decision of Hon ble Supreme Court in the case of Hindustan Steel ( supra ) and it was submitted that there was no loss to the revenue thus, there was a technical or venial breach which should not attract penal provisions. These submissions have been reiterated through out. During the course of hearing we asked the learned counsel of the assessee to state that what is the "reasonable cause" which is pleaded as an excuse for non-furnishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not to levy fine for the contravention of section 285A(1). Whereas, the section which is under consideration is 285B read with section 272A(2)( c ) and the word used in section 272A( c ) is "shall" in place of "may". 11. The decision in the case of Hindustan Steel Ltd. ( supra ) also cannot advance the case of the assessee as the failure to submit the statement as prescribed in section 285B cannot be said to be a technical or venial breach. The statement required to be submitted by the assessee contains important information on which department could act. As per object and reason for incorporating such provision, the said reason was brought into Statute to check inflation of expenditure by film producer and to enable department to get information about recipient of payment for necessary action for their case. Belated information submitted in this regard may tantamount to non-furnishing as department may not be able to take immediate benefit of the information given by the assessee. The submission of information during the course of assessment proceedings cannot substitute timely information as prescribed in the Act. Thus, it cannot be said that the breach was of technical o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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