Penalty 272A(2)(c) on bank for delay in submitting information called u/s 133(6) deleted

Penalty u/s 272A(2)(c) imposed on a bank branch for delay in submitting information called u/s 133(6) deleted as bank branches are subject to various audit and always engaged in service of customers.

ABCAUS Case Law Citation:
ABCAUS 2193 (2018) (02) ITAT

Important Case Laws Cited/relied upon by the parties:
Hindustan Steel Ltd. vs. State of Orissa [1972] 83 ITR 26 (SC)

Brief Facts of the Case:
The petitioner assessee was a bank branch. During the year under consideration the Assessing Officer wanted certain information from the bank branch for which he issued a notice u/s 133(6) of the Income Tax Act, 1961 (the Act). The bank branch took adjournments for preparing the required information and after that again, after the gap of one and half year (approx), the Assessing Officer issued a second notice. However the reply had already been filed week before issuance of the second notice.

Consequently, due to the delay in furnishing the information, the AO imposed the penalty of Rs.100/- per day under section 272A(2)(c) of the Act for a period of one and half year by calculating the default from the date of issue of the first notice.

On appeal by the assessee, the CIT(A) confirmed the penalty.

Contentions made on behalf of the Appellant Assessee:
Before the ITAT, the bank submitted that though there was a delay in submitting the information, it could not amount to default in complying with the notice u/s 133(6) of the Act. It was submitted that the delay had occurred due to certain unforeseen circumstances as the internal audit of the branch was in progress and there was no malafide intention to delay the information demanded by the Assessing Officer.

Observations made by the Tribunal:
The Tribunal observed that the AO had ignored various adjournments granted by him and ultimately the information was also filed.

The ITAT further observed that bank branches are subject to various kinds of audit such as internal audit, tax audit and statutory audit and besides the bank is always engaged in day to day activities in service of its customers.

The Tribunal opined that keeping in view these facts and circumstances, the delay in filing of necessary information should not have invited penalty for default in complying the provisions of section 133(6).

The ITAT also noted that Hon’ble Supreme Court had held 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 conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Even if a minimum penalty is prescribed, penalty is not justified when there is a technical or venial breach or where the breach flows from a bona fide belief.

Decision/ Conclusion/Held:

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