The Jaipur bench of the ITAT has held that although there is a presumption that “Ignorance of Law cannot be a defense,” there is no such presumption that everyone knows the Law.
A bench comprising Dr. S. Seethalakshmi, JM & Shri Rathod Kamlesh Jayantbhai, AM has held that the ignorance of law would be a reasonable cause for person who is quite illiterate, living in remote village, rarely coming in touch with law enforcing machinery and not required to discharge any statutory obligations under a particular law.
The Tribunal was hearing an appeal by the assessee who is an individual and having business of Building construction and dealing real estate at Jaipur and after construction completed sold the flats as per market price and maintaining Regular books of accounts which are duly supported by vouchers and Requisite records are duly audited by Auditor. When the income tax department initiated proceedings against himhe was not responding to the summons issued without any reasonable cause. Accordingly, the penalty was levied under section 272A(1)(c).
Before the Tribunal, the assessee submitted that he was a small business contractor and he was not aware of the notices sent to him. Once he received the notices, he was not aware of the procedure to levy tax and reply to the notice. He further submitted that there was delay in compliances with the summons.
After considering arguments from both the sides, the Tribunal held that there is no finding of the AO based on some contradictory evidence to disapprove that explanation offered by the assessee was false or the assessee was not able to substantiate the explanation furnished or fails to prove that such explanation is not bona fide and that all the facts relating to the same and material to the computation of his total income has not been disclosed by him.
“We further arrive at a conclusion that ignorance of law is certainly no excuse for a default committed but, at the same time, there is no presumption in law that everybody knows the law. The application of this rule would differ from case to case and person to person. In a given case, there may be a person who is quite illiterate, living in remote village, rarely coming in touch with law enforcing machinery and not required to discharge any statutory obligations under a particular law. Ignorance of law may be a good excuse in his case. As submitted by the Ld AR for assessee that there is no willful failure to comply the with summons u/s 131(IA) of the IT Act dated 04.10.2013. Subsequently, the assessee has filed the details called for & off course late, but looking to the inability or ignorance about dealing these type of notices, lienant view can be considered about the compliance made afterwards,” the Tribunal said while deleting the penalty order.
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