The Ahmedabad bench of the ITAT has held that the assessee cannot be penalized on ground of a retrospective amendment under the Income Tax Act, 1961.
The assessee, Baroda Cricket Association, is an AOP (Trust) engaged in the activity of promoting the game of cricket. It filed its return of income for AY 2009-10 in question declaring total income in the negative at Rs.(-)1,57,21,610/- and thereafter filed the revised return on 31/03/2011 showing revised total income in negative at Rs.(-) 4,50,00,000/-.
The Assessing Officer observed that the receipts from carrying out activities in the nature of trade/commerce/business as specified in proviso to section 2(15) of the Act is excluded from the purview of section 11 & 12 in view of section 13(8) of the Act. The Assessing Officer accordingly imposed penalty of Rs.1,75,30,355/- on wrong claim of exemption under s.11 & 12 of the Act in defiance of law.
The question before the Court was that whether an assessee can be imputed with clairvoyance where some amendment has been brought with retrospective effect whereby tax liability is sought to be imposed on assessee.
The Tribunal held that “in the instant case, section 13(8) of the Act has been enacted by Finance Act, 2012 with retrospective effect from 01/04/2009. As per aforesaid enactment, benefit of section 11 & 12 will not be available to the assessee where such assessee is in receipt of income which falls under proviso to clause (15) of section 2 of the Act. Admittedly, the aforesaid amendment seeking to deny benefit of s.11 to the assessee was not in existence at the time of filing of return of income.”
“Further, Article 20(1) of the Constitution of India provides certain protection in this regard which states that no person can be convicted for any offence except for a violation of a law in force at the time of action charged an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of offence. Therefore, where the taxpayer complies with the law as actually existed at the earlier point of time prior to the retrospective change and files return in accordance with law as it existed at that date, imposition of penalty on the grounds of retrospective amendment would be unjustified,” the Tribunal said.
Subscribe Taxscan Premium to view the Judgment
