9911796707
TMI Blog2011 (3) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... the prescribed time limit and asking the petitioner to show cause as to why an order imposing penalty under section 271FA of the Act should not be made. The petitioner gave its reply by a letter dated April 9, 2009, stating that the petitioner was a small co-operative bank situated in a mofussil area and did not have the assistance of chartered accountants for tax matters, it had inadequate and untrained staff not conversant with the legal provisions as well as the use of computers, etc. It was further the case of the petitioner that section 285BA had come into operation for the first time in the financial year 2005-06 and was relatively a new provision for the financial year in question. Since the co-operative banks were exempt from income-tax under the provisions of section 80P(2)(a)(i) up to the assessment year 2006-07, the petitioner was not aware of other provisions like section 285BA of the Act with regard to the filing of annual information return. The petitioner was under the general impression that co-operative banks were not subject to the provisions of the Act at all and under the said belief, the petitioner could not comply with the provisions of section 285BA of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid facts, the levy of penalty was not justified. In support of his submission the learned advocate placed reliance upon the decision of the Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC), for the proposition that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasicriminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. It was only after the second notice was issued on September 11, 2009, that the petitioner has filed the annual information return. In the circumstances, the petitioner has consciously disregarded its statutory obligation and as such, the respondent was justified in imposing the penalty. It was submitted that on the one hand, the petitioner contends that it is a small bank situated in a mofussil area, whereas in the same breath, the petitioner contends that for the year under consideration, the number of transactions were substantial which by itself, is a contradiction. According to the learned counsel, the provisions of section 285BA of the Act have been brought on the statute book in order to provide a mechanism whereby the flow of information regarding the material financial transactions entered by a taxpayer with other persons is automatic so that the same can be utilized for widening and deepening of the tax base. As the petitioner admittedly did not provide timely information, the remedial action also could not be taken. It is in this context that the petitioner's assertion that there was no loss in the revenue, pales into insignificance. It was urged that under the circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax authority or such other authority or agency as may be prescribed. Such annual information report is required to be furnished within the prescribed time after the end of the financial year. Sub-section (5) of section 285BA of the Act lays down that where a person who is required to furnish an annual information return under sub-section (1) has not furnished the same within the prescribed time, the prescribed income-tax authority may serve upon such person a notice requiring him to furnish such return within a period not exceeding sixty days from the date of service of such notice and he shall furnish the annual information return within the time specified in the notice. 9. In the facts of the present case, it is an undisputed position that in view of the provisions of section 285BA of the Act the petitioner was required to file annual information return in relation to the financial year 2006-07 on or before August 31, 2007, and that the petitioner had failed to comply with the said statutory requirement. The Department after noticing the default for the financial year 2007-08, issued notice under section 285BA(5) of the Act on December 17, 2008, in relation to that year. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed December 17, 2008, for that year. Upon such notice being served, the petitioner can no longer plead that it was unaware of the statutory provisions or its obligations under the same. However, even thereafter, the petitioner did not comply with the requirements of section 285BA by filing the annual information return. It was only when a second notice was issued on September 11, 2009, that the petitioner came out of its inertia and filed the annual information return. Thus, even if it is assumed that for the reasons stated above, the petitioner was not aware of its statutory obligation under section 285BA of the Act, but once the Department had issued notice under section 285BA(5) of the Act on December 17, 2008, it is thereafter not open for the petitioner to take the defence that it was not aware of its statutory obligation. Once the petitioner was made aware of its statutory obligation, the petitioner was required to file the annual information return within sixty days from the date of service of the notice under section 285BA(5) of the Act. However, it is apparent that the petitioner in conscious disregard to its statutory obligation, still did not file the annual information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 285BA lays down that where a person who is required to furnish annual information return, under sub-section (1) thereof, has not furnished the same within the prescribed time, the prescribed income-tax authority may serve upon such person a notice requiring him to furnish such return within a period not exceeding sixty days. It is an admitted position that in so far as the financial year 2006-07 is concerned, no notice under sub-section (5) of section 285BA of the Act had been issued by the prescribed income-tax authority. In the circumstances, the attention of the petitioner was not drawn to the provisions of section 285BA of the Act at the relevant time. However, once notice dated December 17, 2008, had been issued in relation to the financial year 2007-08, bringing to the notice of the petitioner the provisions of section 285BA of the Act and its statutory liability of filing the annual information return, it would, thereafter, not be open for the petitioner to plead ignorance of the provisions of the Act. In the circumstances, with effect from the date of service of notice dated December 17, 2008, under section 285BA(5) of the Act the petitioner was not entitled to ente ..... X X X X Extracts X X X X X X X X Extracts X X X X
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