No penalty on non-filing of ITR if the managing trustee falls ill: ITAT

Case Details: National Institute of Women Child & Rural Health Trust v. JCIT - [2022] 136 taxmann.com 261 (Chennai - Trib.)

Judiciary and Counsel Details

• • Mahavir Singh, Vice President and G. Manjunatha, Accountant Member
  • S. Sridhar, Adv. for the Appellant. 
  • G. Johnson, Addl. CIT for the Respondent.

Facts of the Case

The assessee was a charitable trust registered under section 12AA of the Income-tax Act, 1961. For the assessment year 2010-11, the assessee had not filed the return of income in time. The Assessing Officer (AO) initiated penalty proceedings under section 272A(2)(e) and called upon the assessee to show cause as to why the order imposing the penalty should not be passed.

The assessee submitted that the Managing Trustee was falling ill from the year 2006 and up to the assessment year 2010-11, which had resulted in the delayed filing of return of income. However, AO was not convinced by the explanations and held that the ill health of the managing trustee does not come under reasonable cause. Accordingly, he levied the penalty under section 272A(2)(e) for failure to file the return of income.

On appeal, the CIT(A) upheld the order of AO. Aggrieved-assessee filed the instant appeal before the Tribunal.

ITAT Held

The Chennai Tribunal held that AO himself had recorded a finding that medical records submitted by the assessee show that Managing Trustee was suffering from illness for the period 2010-11. Illness of the Managing Trustee of the trust during the relevant period will come under reasonable cause as provided under section 273B for not filing the return of income within the due date specified under the Income-tax Act.

Assessee neither intentionally filed return of income belatedly nor derived any benefit by filing belated return. In fact, the assessee had an excess of expenditure over income for all these years. Thus, there was no loss of revenue to the Government by not filing return of income within the due date specified under the Act.

Accordingly, reasons given by the assessee for not filing return of income within the due date specified under section 139(4A) come under reasonable cause for not levying penalty under section 272A(2)(e).