Case Law Details
Sub Registrar Vs Director of Income Tax (Kerala High Court)
In the recent case of Sub Registrar Vs Director of Income Tax, the Kerala High Court upheld a penalty imposed under Section 271FA of the Income Tax Act, 1961 due to a significant delay in the filing of the Annual Information Return (AIR). Despite the petitioner’s argument about having a bonafide impression that his predecessor had already filed the AIR, the Court did not accept this as a “reasonable cause” for the delay.
The petitioner, serving as the Sub Registrar at Vadanappally, was penalized for not filing the return despite being obligated to do so under Section 285BA(1)(b) of the Income Tax Act. The petitioner assumed charge in July 2011, and the AIR for the year 2010-11 was due by August 2011. Upon receipt of a show cause notice in 2013, the petitioner discovered that the AIR had not been filed by his predecessor, as he had assumed. The return was finally filed in February 2013, resulting in a delay of 526 days.
Despite the petitioner’s appeal to the Income Tax Appellate Tribunal, the appeal was dismissed due to the Tribunal’s lack of jurisdiction to entertain it. The Tribunal noted that the petitioner should appeal to the CIT(A) instead, given the equivalent rank. The Kerala High Court, on hearing the case, stated that the petitioner’s reasoning doesn’t constitute a reasonable cause to excuse the delay and upheld the penalty imposed.
This verdict underscores the crucial importance of adhering to statutory requirements for the submission of annual returns. Ignorance of the law or assumptions about predecessors’ actions do not constitute a “reasonable cause” for delay.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
1. This writ petition is filed with the following prayers:-
A. Issue a Writ of Mandamus or such other appropriate Writ, order or direction setting aside Ext.P5 order passed by the Income Tax Appellate Tribunal and direct the Income Tax Appellate Tribunal, Cochin Bench to reconsider the appeal ITA No. 458/Coch/2013 for the assessment year 2011-12 filed by the petitioner afresh on merits.
Or in the alternative to prayer (A)
B. Issue a Writ of Mandamus or such other appropriate Writ, order or direction setting aside Ext. P2 order passed by the 1st respondent.
2. Heard the learned counsel for the petitioner and the learned standing counsel appearing for the respondents.
3. The petitioner, who was the Sub Registrar at the SRO, Vadanappally is aggrieved by the imposition of penalty under Section 271FA of the Income Tax Act, 1961 on the premise of non filing of a return, despite the petitioner having furnished explanation and shown sufficient and reasonable cause. It is submitted that under Section 285BA(1)(b) of the Income Tax Act, the petitioner is required to furnish Annual Information Return (AIR) in the prescribed form to the Income Tax Authority in relation to certain specified financial transactions. Under sub section 2 of Section 285BA, the information is to be furnished after the end of the financial year in a CD-ROM or any computer readable media.
4. It is submitted that the petitioner assumed charge as Sub Registrar at Vadanappally on 12.7.2011. The due date for furnishing of the report (AIR) for the year 2010-11 was 31.8.2011 for the year ending 31.3.2011. The petitioner was under the bona fide impression that the information would have already been submitted by his predecessor. On receipt of a show cause notice to appear on 11.1.2013, the petitioner made enquires and he took up the matter with M/s Karvy Data Management Services Ltd., an approved agency with whom the Government departments entrust the work of filing. It is only when the petitioner received an intimation from the 1st respondent that the petitioner came to know that the data has not been filed. A copy of the data was again generated and handed over to the said agency and uploaded on 6.2.2013.
5. It is submitted that despite the petitioner expressing his regret, the 1st respondent passed an order of penalty. The petitioner preferred Exhibit P4 appeal before the Income Tax Appellate Tribunal, Cochin Bench and the Tribunal, on the basis of earlier orders passed in ITA 180/Coch/13 dated 18.7.2013, came to the conclusion that Tribunal has no jurisdiction to entertain the appeal, even though the 1st respondent itself has in its order indicated that appeal lies to the Tribunal. The Tribunal also having indicated that the CIT(A) is equivalent in rank and that the remedy may not be efficacious, the petitioner approached this Court.
6. The learned counsel for the petitioner submits that Section 271FA of the Income Tax Act provides that penalty may be imposed in case of non-compliance with the provisions of Section 285BA(1)(b)of the Act. It is submitted that Section 273B of the Act provides that in a case where it can be shown that the delay in providing the details as required under Section 285BA(1) was on account of a reasonable cause, then the penalty is liable to be totally waived. It is, therefore, contended that the refusal on the part of the respondents to consider the reasonable cause shown by the petitioner and imposing penalty under Section 271FA is illegal and untenable. It is further submitted that the appeal preferred by the petitioner has also been disposed of without a proper consideration. It is contended by the learned counsel for the petitioner that the petitioner had submitted the appeal before the Tribunal as specifically stated in the order and that the refusal on the part of the Tribunal to consider the appeal was, therefore, unjustified.
7. A statement has been placed on record by the respondents stating that ignorance of law is not an excuse and that though it is an admitted fact that the petitioner was the Sub Registrar who took charge on 12.7.2011, no reason whatsoever has been shown for not filing the Annual Information Return in time. It is submitted that the fact of non-filing of the return in time is admitted. There is no requirement for any element of mens rea in the light of the specific language of the provisions. It is further stated that the contention raised by the petitioner that he was prevented from submitting the return in time has been specifically considered at paragraph 2 of Exhibit P2 and it was held that the reason stated by the Sub Registrar cannot be treated as sufficient reason for the inordinate delay in filing the returns. It is further contended that no appeal lies to the Tribunal from an order under Section 271FA.
8. Having considered the contentions advanced and in view of the specific provisions of the statute, I am of the opinion that the contentions raised by the petitioner that the issue of reasonable cause under Section 273B of the Act has not been considered by the respondents cannot be accepted. The respondents had specifically considered the contention raised by the petitioner and had held that the reasons stated by the petitioner do not constitute a reasonable cause to excuse their delay of 525 days in submitting the returns. It is also clear that though the provision permits the imposition of Rs.500/-per day as penalty only Rs.100/- per day has been inflicted. In the above view of the matter, I am of the opinion that the prayers as sought for in the writ petition are not liable to be granted. The writ petition fails and the same is accordingly dismissed.
