Tug of War for Limitation period for penalties not linked to assessment of Income like 271D/271E/271C imposable by Range Heads i.e. Joint Commissioners

Under Section 271D penalty is imposable by Joint Commissioner for failure to comply 269SS i.e. accepting loan or deposit for Rs. 20,000/- or more otherwise than through account payee cheque equal to amount of loan or deposit. Similarly Under Section 271E, there is penalty for repayment of the amount of loan or deposit otherwise than through account payee cheque, where loan or deposit is outstanding for Rs. 20,000 ruprees or more.

No Penalty can be levied for unexplained expenditure assessed on the basis of DVO Report

Sathe Biscuits 148 TTJ 10 (Pune)
Amit Estate Organizer (ITAT Ahemdabad) ITA 1206/AHD/2008
Apsara Talkies (Madras High Court) 155 ITR 303
TPK Ramalingam (Madras) 211 ITR 520

Delhi High Court judgment in the case of CIT vs. Zoom Communication (P) Ltd. 191 Taxman 179 (Del.). The Delhi High Court has held as under:- "It was held that so long as assessee has not concealed any material fact or any factual information given by him has not been found to be incorrect, he will not be liable to imposition of penalty u/s. 271(1)(c), even if claim made by him is unsustainable in law, provided that he either substantiate explanation offered by him or explanation, even if not substantiated, is found to be bona fide.

ITAT Ahmedabad, Bench-D in the case of Sun Petrochemicals Pvt. Ltd. Vs. ITO - ITA No. 1010/Ahd/2009 dated 05-06-2009 held that no interest can be charged when there is restrospective amendment in the Act. If no interest can be charged then the question of levy of penalty does not arise in view of restrospective amendment.

Penalty for not quoting PAN in F.16A upheld by ITAT Amritsar ITA/ASR/2012 DATED 17-07-2012.

No penalty can be levied where income is estimated Whitline chemicals (guj) ITA 496/2012 at 15-1-13 Vatika construction P ltd.ITA 1246/2010 at 11.10.12 P Rojes (Maid) 5.2.13 ITA 341/2010

Held by Karnatka High Court in Estate Sheriff Centre (23.06.14) 51 TMC 525, ITAT could not set aside penalty levied by IT authorities without pointing out any reasons

Held by Andhra HC in Sri Kamakshi Food Products 367 ITR 184 where debts written off on ground of being not tracable or being time barred not refiected in income penalty is impossible

Held by Andhra Pradesh high court in Sri Kamakshi Food Products (d) ltd (2-7-14) 52 TMC 57; 367 ITR 184 no penalty if no ,malafide intention in not disclosing interest liability written off by bank

Held by Karnatka High Court in Manjunatha Cotton & Ginning Factory (13.12.12) 35 TMC 250 -Imposition of penalty even if tax liability is admitted is not automatic -explanation though offered but not substantiated is found to be bonafide and all facts material to computation of income have been disclosed,no penalty to be imposed -notice u/s 274 should specifically state the grounds whether concealment or furnishing inaccurable particulars -Sending printed forms setting all grounds of section 271 would not satisfy requirement of law -Finding in assessment proceeding would not operate as resjudicata in penalty proceedings

Held by Karnatka High Court in Steel Centre (3.6.14) 51 TMC 127 ,where assessee was successful in getting confirmation letters from everyone merely because it could not produce some of creditors penalty could not be levied

Held by Uttrakhand HC in Deep Kukreti, where penalty was initiated on breach of understanding the assessee interest could be said to be jeopardized but after dropping of penalty proceeding assessee is no longer aggrieved

Para 63 of Karanatka High Court in Manju Nath Cotton & Ginning factory 359 ITR 565 on Penalty followed by Banglore Tribunal in H.LakshmiNarayan [2015] 61 taxmann.com 373 (Bangalore - Trib.)

63. In the light of what is stated above, what emerges is as under :

(a)		Penalty under section 271(1)(c) is a civil liability.
(b)		Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities.
(c)		Willful concealment is not an essential ingredient for attracting civil liability.

Ignorance of law, it is trite, is no excuse in law and if that be so, ignorance of law cannot also be a reasonable cause as contemplated under Section 273B. This view has been taken by the Apex Court in Sitaram Ramcharan v. M.N. Nagrashana AIR 1960 SC 2601.

Cuttuck Tribunal in N.K. Media Ventures 59 taxmann.com 365 following Mumbai Tribunal in Porwal Creative 50 SOT 148 has held that since no TDS return can be filed till payment of tax, no penalty u/S 272A(K) can be levied from due date of filing TDS return till date of tax payment. Although Section 234E had reigned over S. 272A(K) wef 01-07-2012, it contains similar provisions, hence Judgement might become applicable to 234E also-

Penalty of Rs. 10,000/- u/s 271(1)(b) for not complying with sec. 143(2)couldn't be imposed more than once for same default . The provision of Section 271(1)(b) is of deterrent nature and not for earning revenue. Hence penalty of Rs. 50000 confirmed by CIT (A) reduced to Rs. 10000 by Delhi Tribunal in Smt. Rekha Rani IT APPEAL NO. 6131 (DELHI) OF 2013 DATED 06-05-2015

No concealment penalty if sum treated as capital receipt was disclosed in notes to accounts and return

The respondent-assessee had originally paid an amount of Rs.54 Lakhs as a consideration for the development agreement in 1995. In the previous year relevant to assessment year, the respondent-assessee received from the vendor an amount of Rs. 1.65 Crores which included an amount of Rs. 54 Lakhs which was originally paid in 1995 by the assessee to the vendor. 

The department imposed tax on the assessee and the assessee accepted the position. However held by Bombay High Court in S.M. Construction [2015] 60 taxmann.com 135 (Bombay) following Supreme Court inCIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 and distinguishing CIT v. Zoom Communication (P.) Ltd. [2010] 327 ITR 510/191 Taxman 179 (Delhi) (para 9)disclosure of Rs. 1.11 Crores which was made by the petitioners as a part of its notes to accounts as well as letter dated 29 October 2005 alongwith its claim of not being taxable was filed along with the Return of Income. Thus there has been a complete disclosure of all facts as held by CIT(A) and the Tribunal

Law to be applied for penalty

Law to be applied for penalty is the law, when default is committed and not the law for assessment year when return is filed. Like if income is concealed the offence is committed when return is filed. Hence law applicable on day of filing return to apply. Brij Mohan 120 ITR 1, Rameshwar 130 ITR 51.
If income concealed in original return and then in response to section 148, again same return filed, there is no fresh concealment. Hence penal Provision on original return to apply. (Ram Achal Ram Sewak 106 ITR 144(All))

As per Article 20 of the Constitution, no person shall be subjected to penalty greater than that which might have been inflicted under the law in force at the commission of offence.

Hindustan Steel (1970) 25 STC 211 (SC) on Penalty

" ..................An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi criminal proceedings and penalty 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 concious disregard of its obligation. Penalty will also not be imposed 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 judicially and on a consideration of all the relevant circumstances. Even if minimum penalty is prescribed , the authority competent to impose penalty will be justified in refusing to impose penalty, when there is technical or venial breach of the provisions of the Act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute......."

INADVERTENT MISTAKES IN ITR

Mumbai seat of the Income Tax Appellate Tribunal `E’ Bench in the case of Sujata Trading Private Limited vs. Income Tax Officer, 8(3)(2), Mumbai [2015] 152 ITD 492 (Mumbai – Trib), the critical and decisive question that