IN INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHIR RAJENDRA, ACCOUNTANT MEMBER AND SHRI SHRI C.N. PRASAD, JUDICIAL MEMBER I.TA Nos.4324 to 4328/Mum/2015 ( Assessment Years: 2007-08 to 2011-12 M/s. Korpus Financial DCIT, C.C.-44, Services Pvt. Ltd., Mumbai Vs. 16,Gundecha Chambers, N.M. Road,Fort, Mumbai-400 023 PAN/GIR No. AACCK 4562A (Appellant) .. ( Respondent) Appellant by: Shri Neelkanth Khandelwal Respondent by: Shri Manjunatha Swamy Date of Hearing :26.07.2016 Date of Pronouncement : 21.09.2016 O R D E R PER C.N. PRASAD, JM: All these appeals are filed by assessee against common order of Ld. CIT(A)-50, Mumbai dated 31.03.2015 pertaining to assessment years 2007-08 to 2011-12. 2. only issue in all these appeals is that Ld. CIT(A) erred in sustaining action of Assessing Officer in levying penalty u/s. 271F of Act. 2 ITA Nos. 4324 to 4328/M/2015. 3. Brief facts are that search was conducted on 4.2.2011 in case of M/s. JIK Industries and at premises of CMD Shri R.G. Parikh. assessee company is subsidiary and group company of JIK Industries Ltd. , therefore it was covered u/s. 153C of Act as search documents and computer back up was found and seized in course of search proceedings notices u/s. 153C were issued to assessee on 30.4.2012 for filing return of income on or before 30 days for all these assessment years i.e. 2005-06 to 2011-12. assessee filed returns with delay of 3 to 4 months i.e. beyond date specified in notice issued u/s. 153C of Act. assessments were completed u/s. 143(3) R.W. Sec. 153C on 22.3.2012. 3.1. Since assessee filed returns beyond time specified in notice issued u/s. 153C, notice u/s. 271F was issued requiring assessee to show cause as to why penalty u/s. 271F should not be imposed for delay in filing returns. In response to notice, assessee filed letter dated 22.7.2013 stating that there were 8 assessees in its group and total 55 search assessments were in progress and returns of entire group were also required to be filed and therefore there is little delay in filing returns. It was also contended that Chairman/Chief Promoter of group was unwell/sick and was not attending to business regularly and he was hospitalized twice. Therefore, it was contended that there was no willful and deliberate delay on part of assessee in filing returns belatedly. It was also contended that assessee has reduced its accounting staff as was no much business and therefore no sufficient staff was left to deal with huge return filing work. It was 3 ITA Nos. 4324 to 4328/M/2015. also contended that assessee was regular and prompt in filing its returns since inception except on this occasion which was beyond its control. Therefore it was contended that no penalty u/s. 271F should be levied as Assessing Officer has discretion to impose penalty u/s. 271F of Act and it is not mandatory and automatic. However, not convinced with submissions of assessee, Assessing Officer proceeded to levy penalty u/s. 271F observing that assessee has failed to file returns within specified time without any reasonable cause. 4. On appeal, Ld. CIT(A) sustained penalty levied by Assessing Officer. 5. Ld. Counsel for assessee reiterated submissions made before authorities below and submits that there is no willful default in filing return belatedly and delay was occurred for following reasons: a. Appellant were regular and prompt in filing their return of income, since inception except this stray incident, that too beyond control of appellant. b. Appellant and their group companies were required to file total number of 55 returns, followed by search proceedings which necessarily required time. c. Chairman of Group/Chief Promotor of group was unwell/sick and was not attending business regularly and had to be hospitalized twice. d. There were no willful/deliberate delay on part of appellant. 4 ITA Nos. 4324 to 4328/M/2015. e. Provision of Sec. 271F were not applicable on facts and circumstances of case and if it is considered to be applicable, it may be appreciated that alleged delay was on account of reasonable grounds and does not warranted levy of penalty u/s. 271B r.w. Sec. 273. 5.1. Ld. Counsel for assessee further relying on decision of Hon ble Supreme Court in case of Hindustan Steel Ltd., Vs State of Orissa (83 ITR 26) submits that levy of penalty is not automatic. Assessing Officer has discretion to impose penalty and such discretion is to be exercised judiciously and no penalty should be imposed where there is technical or venial breach of provisions of Act. Ld. Counsel for assessee submits that here there is reasonable cause within meaning of Sec. 273B for not filing returns within time stipulated in notice u/s. 153C. Therefore he submits that penalty be deleted. 6. Ld. Departmental Representative vehemently supports orders of authorities below. 7. Heard both parties and perused orders of authorities below. Assessing Officer in this case levied penalty u/s. 271F for delay in filing return of assessee i.e. beyond stipulated period mentioned in notice issued u/s. 153C of Act. assessee submitted before authorities below that: a. Appellant were regular and prompt in filing their return of income, since inception except this stray incident, that too beyond control of appellant. 5 ITA Nos. 4324 to 4328/M/2015. b. Appellant and their group companies were required to file total number of 55 returns, followed by search proceedings which necessarily required time. c. Chairman of Group/Chief Promotor of group was unwell/sick and was not attending business regularly and had to be hospitalized twice. d. There were no willful/deliberate delay on part of appellant. e. Provision of Sec. 271F were not applicable on facts and circumstances of case and if it is considered to be applicable, it may be appreciated that alleged delay was on account of reasonable grounds and does not warranted levy of penalty u/s. 271B r.w. Sec. 273. 8. assessee also placed reliance on decision of Hon ble Supreme Court in case of M/s. Hindustan Steel Ltd Vs State of Orissa (supra) in support of its contention that penalty is not leviable in case of technical and venial breach. submissions of assessee were not appreciated by authorities below and penalty was levied by Assessing Officer u/s. 271F which was sustained by Ld. CIT(A). It was submission of assessee that returns were filed regularly and promptly since inception except on this occasion which was beyond control of assessee. It was submission of assessee that its group companies required to file total No. of 55 returns followed by search proceedings which necessarily required time and Chairman/Chief Promotor of group was unwell/sick and was not attending business regularly and was hospitalized twice. All these submissions of assessee were not disputed or disbelieved by Revenue. Therefore, we are of view that there was no willful or deliberate delay on part of assessee in filing returns. Therefore, there is reasonable cause 6 ITA Nos. 4324 to 4328/M/2015. for delay in filing returns. assessee was prevented with reasonable cause in not filing returns in time, ultimately returns were filed and assessments were completed u/s. 143(3) r.w. Sec. 153C of Act. 9. Hon ble Supreme Court in case of Hindustan Steel Ltd (supra) held as under: order imposing penalty for failure to carry out statutory obligation is result of quasi-criminal proceeding, and penalty will not ordinarily be imposed unless 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. Whether penalty should be imposed for failure to perform statutory obligation is matter of discretion of authority to be exercised judicially and on consideration of all relevant circumstances. Even if minimum penalty is prescribed, authority competent to impose penalty will be justified in refusing to impose penalty, when there is technical or venial breach of provisions of Act or where breach flows from bona fide belief that offender is not liable to act in manner prescribed by statute . Hon ble Supreme Court held that order imposing penalty for failure to carry out statutory obligation is result of quasi-criminal proceedings and penalty should not be imposed unless 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. It was also held that penalty also will not imposed merely because it is lawful to do so. In this case assessee filed returns belatedly and there is reasonable cause in filing return in time as stated above and further record does not show that assessee has acted either deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in 7 ITA Nos. 4324 to 4328/M/2015. conscious disregard of its obligation. In circumstances, we hold that assessee was prevented with reasonable cause in filing returns and there is no deliberate attempt to file returns belatedly. Thus, we delete penalty levied u/s. 271F of Act. 10. In result, appeals filed by assessee are allowed. Order pronounced in open court on 21st September, 2016. Sd/- Sd/- (RAJENDRA) (C.N. PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 21st September, 2016 . Rj , Sr. PS Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai M/s. Korpus Financial Services Pvt. Ltd. v. DCIT, C.C.-44, Mumbai