Merely because, the assessee did not furnish the report before the due date of filing of the return, that may not automatically attract the penalty

Pneumech Engineers Vs. ITO (ITAT Mumbai) – An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty to 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 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 the statute.

It is not the case of the A.O. that the Act of the assessee is deliberate or acted in conscious disregard of its obligation. As the penalty proceedings like the present one is quasi criminal proceedings, the A.O. has to make out the case that it was a deliberate act of the assessee. Merely because, the assessee did not furnish the report before the due date of filing of the return, that may not automatically attract the penalty.