TMI Blog2016 (11) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... idated and audited, and also filed Income Tax/TDS returns. The order of the Director of Income Tax (Intelligence and Criminal investigation) does not speak as to how the assessee stood to gain by contravening with the provisions of Section 285BA of the Act or the act of assessee resulted in any loss to the Revenue. No mala fides can be attributed to the assessee so as to invoke the penalty proceedings under section 271FA of the Act and the learned Director of Income Tax (Intelligence and Criminal investigation) should have taken note that the breach is only technical or venial breach of the provisions of the Act and such a breach could have flown from a bona fide ignorance of the assessee that he is liable to act in the manner prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnish an annual information return, in respect of such specified financial transaction which is registered or recorded by him during any financial year beginning on or after the 1st day of April, 2004 and information relating to which is relevant and required for the purposes of this Act, to the prescribed income-tax or authority or agency. Durgapur Steel Peoples Cooperative Bank Limited an assessee falling within the ambit of Section 285BA failed to comply with this legal requirement for the period of 2010-11. A notice dated 20.02.2013 was issued by the AO. The assessee complied with the requirement of Section 285BA by filing the annual information return by 15.3.2013, the same was accepted and the assessment was concluded. However, subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the obligations under the Act. 4. Basing on the above contentions, the point that arises for our consideration is whether there is sufficient cause for the assessee for noncompliance with the requirement of Section 285BA of the Act till the notice was served? 5. Facts are admitted. There is no dispute that the assessee, Durgapur Steel Peoples Cooperative Bank Limited is an entity falling within the ambit of Section 285BA of the Act, it failed to comply with this legal requirement for the period of 2011-12 as such a notice dated 20.2.2013 was issued by the AO questioning the same, and the assessee complied with the requirement of Section 285BA of the Act by filing the annual information return by 15.3.2013. Subsequently the Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, it would be a travesty of truth and justice to hold that the assessee knew or ought to have known the correct law and comply therewith, even though, in fact, he was not aware of the provisions. 7. It is well established by the decision of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 that the liability to pay penalty does not arise merely upon proof of default in complying with the statutory requirements and an order imposing penalty for failure to carry out a statutory obligation being the result of a quasi-criminal proceeding, 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 conscio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26. He brought to our notice a decision dated 20-02-2015 rendered by Lucknow Bench of the Tribunal in ITA No. 699/LKW/2013 (Raibereilly District Cooperative Bank Ltd vs Director of Income Tax (I C), Lucknow) on an identical point. 7. Lastly he placed reliance on the decision rendered by a Coordinate Bench of this Tribunal in ITA NO. 956 957/KOL/2013 wherein after referring to the decision above, the Tribunal allowed the assessee s appeal on the following reasoning:- 8. On a careful consideration of the matter, we find that except the instant alleged breach, nothing more is alleged against the assessee. As a matter of fact, the Director of Income Tax (Intel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that he is liable to act in the manner prescribed by the statute, and should not have invoked the penalty proceedings. We find every force in the argument of the learned AR and hold that the Penalty proceedings are liable to be set aside. We order accordingly, Both the appeals of the assessee are allowed . 8. While placing reliance on the above principles of law, learned AR contends that the breach in question is technical and venial one and not all intended or deliberate, and the explanation of the assessee as to their ignorance of obligation is sufficient cause within the meaning of Section 273B of the Act. 9. We have heard the arguments of both the sides and also perused the relevant material available on record. On a careful c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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