INCOME TAX ACT, 1961

Section 271BA

Penalty under section 271BA - Non filing of the report of the accountant as required by section 92E - No intention on the part of assessee to avoid payment -

Assessee was Government of India PSU and a major player in the country in Telephone Services. It had also host of services like internet service provider services, in services, integrated service digital network services, multimedia services, paging services and other value added services and to carry on the business of telephone, telegraph cable and wireless company, etc. It was also engaged in providing telecommunication services like internet, e-tendering, cyber cafe services and sale of ISP packs and Anmol Cards. AO levied penalty under section 271BA on account of non-filing of report of accountant as required under section 92E. Held: Provisions of section 273B can be invoked in the case of assessee as a reasonable cause for failure could be substantiated. Supreme Court in the case of Hindustan Steel Limited v. State of Orissa 1972 TaxPub(DT) 9 (SC) had held that authority competent to impose the penalty would be justified in refusing to impose the penalty when there was a technical or venial breach of the provision of the Act and where the breach flows from a bona fide belief that the offender was not liable to act in the manner prescribed by statue. Assessee is a PSU cannot be deemed to have any deliberate inclination to avoid payment of tax or to follow the statutory provisions. Hence, AO was directed to delete the penalty.

Followed:Hindustan Steel Limited v. State of Orissa 1972 TaxPub(DT) 9 (SC).