TMI Blog2023 (11) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year under consideration, namely, 2012-13, is not covered by the express mandate of the registration. Notwithstanding that, no benefit of exemption u/s. 11 was ever claimed in the return and, as such, there was no question of granting or denying such benefit also. In this view of the matter, the assessee cannot claim the benefit of exemption u/s. 11 for the year under consideration in any manner. Penalty u/s. 271(1)(c) - non filing the return of income within the stipulated time - shift of operations of the society from one city/station to another - Assessee furnished the return pursuant to notice u/s. 148 and the income declared was assessed as the total income - HELD THAT:- The main object of the assessee, consisting of surgeons across the country, is to attain higher Oral Maxillofacial surgical standards and to promote research in Oral and Maxillofacial surgery. The assessee was set up several years ago having and continuing to have its registered office in Pune. It, being an all India body of surgeons, keeps moving its area of operations and the relevant records on a certain frequency from one city to another. For the A.Y. 2012-13 to 2013-14, the operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the CIT(A) in National Faceless Appeal Centre (NFAC), Delhi confirming the penalty of Rs. 2,46,999/- imposed by the Assessing Officer (AO) u/s. 271(1)(c) of the Income-tax Act, 1961 (hereinafter also called the Act ) Act in relation to the assessment year 2012-13. 2. Tersely put, the facts of the case are that the assessee is an association for Oral Maxillofacial surgeons of India, which was set up several years ago having registered office in Pune. The return for the year under consideration was not furnished. The AO, on getting information about the assessee having made FDR of Rs. 5.00 lakh with State Bank of India, issued notice u/s. 148 of the Act. In response, the assessee filed return declaring total income at Rs. 7,99,352/-, claiming that it was engaged in promotion of research in Oral and maxillofacial surgery. In the absence of any registration u/s 12A of the Act, no benefit of exemption u/s. 11 was claimed. The assessment was completed at the returned income. Thereafter, penalty proceedings were initiated u/s. 271(1)(c) of the Act. The AO observed that the assessee was not granted registration u/s. 12A of the Act on the date of his passing the order. He, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finality without any challenge thereto. The benefit of proviso can be granted only when the assessment proceedings are pending on the date of grant of registration by the ld. CIT(E). We are confronted with a situation in which the registration was granted by the ld. CIT(E) on 18-05-2023 and the assessment proceedings got concluded, much before that, on 17-12-2019. Notwithstanding that, no benefit of exemption u/s. 11 was ever claimed in the return and, as such, there was no question of granting or denying such benefit also. In this view of the matter, the assessee cannot claim the benefit of exemption u/s. 11 for the year under consideration in any manner. 5. Now coming to the question of penalty u/s. 271(1)(c), it is seen that the assessee furnished the return pursuant to notice u/s. 148 and the income declared was assessed as the total income. The ld. CIT(A) has invoked Explanation 3 for confirming the penalty imposed by the AO u/s. 271(1)(c) of the Act, which reads as under : Explanation 3. Where any person fails, without reasonable cause, to furnish within the period specified in sub-section (1) of section 153 a return of his income which he is required to furnish un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty. Reverting to the facts of the present case, it is seen that, in principle, the Explanation 3 is applicable which has expressly been invoked by the ld. CIT(A) as well, as per the mandate of which, the amount of income assessed is deemed as concealment for the purposes of section 271(1)(c) of the Act. As the assessee admittedly did not file any return earlier for the year under consideration, it is covered within the scope of the Explanation 3. 7. It is pertinent to mention that mere assessment of income on the return filed pursuant to notice u/s. 148 does not per se call for imposition of penalty. The legislature has used the words without reasonable cause in the opening part of Explanation 3. The effect of these words is that the mandate of Explanation 3 would be magnetized and the penalty would be levied even on the declared income pursuant to notice u/s. 148, only when there was no reasonable cause for not filing the return within the time prescribed u/s. 153 of the Act. Au contraire, if there exists a reasonable cause for not filing the return u/s. 139, the directive of the Explanation 3 will not be triggered and the case would come out of this Explanation to be consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was stressed that the returns for all the subsequent years are being regularly filed in Pune. This shows that because of the regular shifting of the operations of the assessee-trust from one station to another and the resultant confusion about the correct person responsible for filing return, i.e. whether from the station where the operations were going on and records were kept or the registered office in Pune, the returns could not be filed for any of the assessment years prior to the A.Y. 2019-20. In our considered opinion, this constitutes a reasonable cause for which the return for the year under consideration could not be filed within the time prescribed u/s. 153 of the Act. Taking a wholistic view of the factual panorama of the case and the circumstances in which the return for the year could not be filed within the stipulated time, we are satisfied that this being a reasonable cause, brings the case out of the purview of Explanation 3. If this Explanation fails to apply and we come back to examine the case within the terms of Explanation 1, the sequitur is that no penalty can be imposed in the absence of any addition or disallowance in the determination of total income by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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