Case Note & Summary
The Revenue appealed against the order of the Income Tax Appellate Tribunal, Mumbai, which had set aside the penalty imposed on the respondent-assessee for failure to file statements under Section 285B of the Income Tax Act, 1961. The respondent, a film producer, had undertaken production of the film 'Siyasat' during financial years 1988-89 to 1992-93. He was required to file statements in Form No.52A within 30 days from the expiry of each financial year. He failed to do so, leading to a show-cause notice dated 28th January 1993, served on 3rd February 1993. He submitted the statements on 2nd March 1993. In response to a subsequent notice, he explained that it was his first and last venture which had failed, and due to ignorance of legal formalities, he could not submit the statements. The Assessing Officer imposed a consolidated penalty of Rs.1,40,000/- under Section 272A(2). The Commissioner of Income Tax (Appeals) upheld the penalty. On further appeal, the Tribunal set aside the penalty, holding that due to ignorance of law, the assessee had failed to submit the statements, and as soon as he came to know of the requirement, he submitted them. The Revenue appealed to the High Court under Section 260A. The High Court framed the question of law: whether ignorance of law constitutes a reasonable cause for non-compliance. The Court held that ignorance of law is not a valid excuse and cannot be considered a reasonable cause. The Tribunal's order was set aside, and the penalty order was restored. The appeal was allowed.
Headnote
A) Income Tax - Penalty for Non-Filing of Statement - Section 272A(2) read with Section 285B of the Income Tax Act, 1961 - Ignorance of Law - The assessee, a film producer, failed to file statements in Form No.52A within the prescribed time. The Assessing Officer imposed a consolidated penalty of Rs.1,40,000/-. The Tribunal set aside the penalty on the ground that the assessee was ignorant of the legal requirement and filed the statements upon coming to know. The High Court held that ignorance of law is not a reasonable cause and restored the penalty. (Paras 1-5)
Issue of Consideration
Whether ignorance of law constitutes a reasonable cause for failure to file statements under Section 285B of the Income Tax Act, 1961, so as to avoid penalty under Section 272A(2) of the Act.
Final Decision
Appeal allowed. Order of the Income Tax Appellate Tribunal set aside. Penalty order of the Assessing Officer restored.
Law Points
- Ignorance of law is not a valid excuse for non-compliance with statutory requirements
- Penalty under Section 272A(2) for failure to file statement under Section 285B
- Reasonable cause must be genuine and not based on ignorance of law
