Raipur ITAT Restricts Section 272A(2)(e) Penalty to Section 139(4) Filing Period

Bethany Seva Sangam Vs ITO (ITAT Raipur)

Summary: The appeal concerned penalty under section 272A(2)(e) of the Income-tax Act, 1961 for failure by Bethany Seva Sangam, a trust running Bethany College & Nursing, to furnish its return of income for A.Y. 2012-13. The assessee had not filed the return by 30.09.2012. The assessment was subsequently reopened under section 147 and notice under section 148 was issued on 30.03.2019. The assessee filed a return on 24.07.2019 declaring Nil income, but the return was treated as invalid on the e-filing portal because ITR-V/e-verification was pending. The assessment was completed at Nil income. The Assessing Officer later levied penalty of Rs.2,55,800/- under section 272A(2)(e), calculated at Rs.100/- per day for 2,558 days. The CIT(Appeals) confirmed the penalty, rejecting the assessee’s explanation that its office bearers were priests/saints and teachers who were not familiar with the Income-tax Act and had believed that registration under section 12A and application of income to charitable activities meant that no return was required. The CIT(A) also rejected the plea of reasonable cause under section 273B.

Before the Tribunal, the assessee relied on its registration under section 12A, its subsequent filing conduct and several Tribunal and High Court decisions concerning reasonable cause. It also raised an alternative contention that penalty could not continue after expiry of the period during which a valid belated return could be furnished. The Tribunal did not accept the plea that the omission was a bona fide consequence of ignorance of the law. It noted that the trust had obtained registration under section 12A in 2001 and had filed returns for subsequent years, including A.Y. 2013-14 and A.Y. 2014-15, which the Tribunal considered inconsistent with the asserted lack of awareness. The Tribunal distinguished Akali Baba Phool Singh Educational Trust, Shyam Gopal Charitable Trust, Karandhai Tamil Sangam and HTSL Community Service Trust on their facts.