ORDER
B.M. Kothari, A.M.
1. All these appeals by the Revenue are directed against the orders passed by Smt. Indira Bhargava, learned CIT(A), Udaipur cancelling the penalties levied on the said temple under s. 271(1)(a) and 273(1)(b) for asst. yrs. 1987-88 and 1988-89.
2. The assessee filed returns of income simultaneously for both the assessment years under consideration on 28th April, 1989. As against the due dates of 31st July, 1987 and 31st July, 1988 respectively. The delay for asst. yr. 1987-88 was of 20 months and for asst. yr. 1988-89 it was of 8 months. Penalties under s. 273(1)(b) for both the years were levied for failure on the part of the assessee trust to comply with the relevant provisions relating to furnishing of estimate of advance-tax payable by the assessee.
3. The CIT(A) cancelled these penalties mainly on the ground that the assessee-trust had applied under s. 12A of the Act to CIT, Jodhpur/Jaipur on 27th June, 1973. This application was not disposed of for a long period of 17 years. It was ultimately disposed of on 15th February, 1991 by the CIT, Jodhpur refusing registration to the appellant trust. The assessee remained confident that it would be granted registration under s. 12A of the Act and, therefore, the income of the appellant trust will not be liable to any tax. The trustees also remained under a bona fide belief that since its income is not taxable, they are not required to file any return. As the assessee became aware of the correct legal position when they contacted M/s Kalani Co., CA, Jodhpur who advised them to file the return regardless of the fact that the trust may not have any taxable income. The assessee soon thereafter got its accounts audited and furnished the return simultaneously for those two years on 26th April, 1989. The learned CIT(A) cancelled the penalties levied under s. 271(1)(a) on account of aforesaid bona fide belief, which was held by her as constituting sufficient and reasonable cause for such delay in filing the returns.
4. The learned CIT(A) also cancelled the penalties levied under s. 273(1)(b) for both the years on the ground that since the trust would be granted registration under s. 12A, no tax will be payable by them. The learned CIT(A) held that such a bona fide belief constituted sufficient and reasonable cause for not filling the statement/estimate of advance-tax payable by the assessee.
5. The learned Departmental Representative strongly relied on the reasons mentioned in the penalty orders. He submitted that ignorance of law cannot be a valid excuse. It is true that no person can be supposed to know all the laws in force but every person is supposed to know the law which relates to him. For example, some one who is driving the car is supposed to know the traffic rules. Likewise, a religious trust is supposed to know the provisions relating to public charitable trust and the provisions of IT Act, so far as it relates to the trusts. He also pointed out that no mens rea is required to be established for levy of penalty under ss. 271(1)(a) and 273(1)(b). In the present case the appellant trust had consulted a tax consultant, Shri M. R. Gemawat, who filed application under s. 12A as back as on 27th June, 1973. It cannot be said that the assessee was not aware of the relevant provisions of law. He thus strongly relied upon the reasons given in the penalty orders and urged that the order of the CIT(A) should be set aside and that of the AO should be restored.
6. Shri Vikas Balia, the learned Advocate, represented the respondent assessee. He pointed out that the assessee’s application under s. 12A of the IT Act, 1961 was rejected after a period of 18 years in the year 1991. The assessee preferred a writ petition against the said rejection of assessee’s application by the CIT. The Hon’ble High Court has granted stay for payment of demand. The writ petition is still pending. The assessee had voluntarily filed the return as soon as the trustees became aware of the relevant provisions of law requiring the charitable trust to file the returns of income regardless of the fact that the trust had no taxable income. Soon after getting such advice from M/s Kalani & Co., CAs the assessee got the accounts audited and filed the returns of income on 28th April, 1989. The assessee remained under a bona fide belief that their application under s. 12A will be accepted and no tax will be payable by the assessee-trust. The general impression in the mind of the taxpayers is that no return is required to be filed unless the income exceeds the taxable limit. Such a bona fide belief constitutes a reasonable cause justifying the cancellation of penalties under ss. 271(1)(a) and 273(1)(b). The learned counsel followed upon the judgment of the Hon’ble Supreme Court in the case of Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC) in which it has been held that even if it is lawful to do so, no penalty should be levied for a technical or venial breach unless it is established that the person concerned had acted in deliberate disregard of the provisions of law. He also placed reliance on judgments reported in CIT vs. K. N. Khan & Bros. (1973) 92 ITR 338 (All), CIT vs. R. K. Golecha (1988) 173 ITR 423 (Raj), 116 ITR 326 (sic), CIT vs. Rawat Singh & Sons (1979) 120 ITR 65 (Raj), 196 ITR 297 (sic), CIT vs. Ajit Singh Bhagat Sing (1985) 151 ITR 696 (Raj) and CIT vs. P. S. Mohideen Abdul Khader (1994) 210 ITR 735 (Mad) in support of his contention that once the CIT(A) has accepted the existence of the prima facie reasonable cause, the onus then shifted on the Revenue to establish that the defaults had occurred on account of guilty intention on the part of the assessee. The Department has not brought any such material to discharge such a burden. The learned counsel thus strongly supported the order of CIT(A).
7. Shri Balia also submitted that so far as penalties levied under s. 273(1)(b) are concerned, apart from the existence of the reasonable cause as discussed above there is no provision similar to s. 139(4A) relating to payment of advance tax by the charitable trust, who remained under a bona fide belief that their application under s. 12A will be accepted and no tax will be required to be paid by the trust in view of s. 11 of the Act. The learned counsel thus strongly supported the orders of the CIT(A).
8. I have carefully considered the submissions made by the learned representatives of the parties and have perused the orders of the Departmental authorities. I have also gone through the various judgments relied upon by the learned counsel. It is an undisputed fact that the applications submitted by the assessee under 12A of the Act in the year 1973 were pending before the CIT at the time when the returns of income and advance-tax for the years under consideration were required to be filed/paid. At a time when the application under s. 12A was pending before the CIT(A), the trustees of the appellant trust could entertain a bona fide belief that their application under s. 12A will be accepted and no tax will be required to be paid by the assessee trust. The assessee could also remain under a bona fide belief that since the income of the trust was not liable to tax no return of income is required to be filed. Such a belief, though a mistaken one, may well be a bona fide belief on the facts of the present case. The large number of temples/religious trusts, under such a bona fide belief have not even applied for registration under s. 12A of the Act and have not filed their returns. Such tempies located in small cities and villages are looked after by trustees who do not have adequate knowledge and experience of dealing with taxation matters. The assessee has made a categorical statement before the authorities below that they became aware about the requirement of voluntarily filing of the returns only when they happened to meet Shri Mehta of M/s Kalani & Co. CAs, Jodhpur and at his instance accounts were finalised and got audited and returns for asst. yrs. 1987-88 and 1988-89 were filed only on 28th April, 1989. This factual position explained by the trustees before the Departmental authorities has not been disputed. Such bona fide ignorance of the relevant provisions of law is a valid excuse and constitute sufficient and reasonable cause justifying the cancellation of such penalties. I am, therefore, of the considered opinion that the learned CIT(A) has rightly cancelled all the penalties in question. In my view, all these appeals by the Revenue have no merit.
9. In the result the appeals are dismissed.