The Income Tax Appellate Tribunal (ITAT), Hyderabad bench has held that mere ignorance of law cannot be a reason to quash penalty under the Income Tax Act, 1961.
The assessee, an individual has approached the Tribunal with a sole substantive grievance that both the lower authorities have erred in law and on facts in imposing Section 271B penalty of Rs.1,50,000/-.
The assessee contended during the course of hearing that this assessee is drawing salary income on regular basis and it was only in the impugned assessment year that he had carried out corresponding transactions requiring audit report u/s.44AB of the Act. It was therefore, pleaded assessee’s ignorance only as a reasonable cause under section 273 for deleting the impugned penalty.
The Tribunal bench consists of Shri A.Mohan Alankamony, Accountant Member and Shri S.S.Godara, Judicial Member has observed that “It is an admitted fact that the assessee’s case is very well covered u/s.44AB of the Act as his turnover has indeed exceeded the basic threshold limit of Rs.40 lakhs in the relevant previous year. There is further no dispute that neither the assessee had got prepared his audit report nor the same had been furnished well within time to the assessing authority; as the case may be. We therefore hold that mere ignorance of law pleaded herein at the assessee’s behest hardly deserves to be treated as a reasonable cause for disturbing the impugned penalty as upheld in the CIT(A)’s lower appellate discussion. The same stands confirmed therefore.”
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