10 June 2024


Income Tax Appellate Tribunal

Arjun Dada Kharate, Vs. DCIT, Circle-1, Nashik



Direct Taxation

If Assessee has reasonable cause for non-filing of Income Tax Return, penalty is unsustainable

Present two appeals arise out of the orders passed by CIT(A), confirming penalty imposed under Section 271F of the Income-tax Act, 1961 ( IT Act) in relation to the assessment year 2011-12. The facts in the case of Arjun Dada Kharate are that he, along with other related persons, sold certain land/immovable property. The Assessee filed his return declaring total income. Since the return was beyond the time stipulated under Section 139(1) of IT Act, Assessee was served with a notice under Section 148 of IT Act. Assessment order was passed under Section 143(3) read with Section 147 of IT Act assessing total income at Rs.42,24,116. The Assessing Officer (AO) imposed penalty of Rs.5,000 under Section 271F of IT Act on the ground that, the Assessee failed to file his return of income within the time prescribed under Section 139(1) of IT Act. The Assessee made certain written submissions before the learned CIT(A) seeking deletion of penalty, which did not find favour with the learned first appellate authority, who affirmed the penalty.

It is seen from the impugned order that, the Assessee stated reasons before the learned CIT(A) for not furnishing the return under Section139(1) of the IT Act. The reasons referred to the Assessee being an agriculturist and illiterate; facing financial and family problems; under the impression that gain arising from sale of any agricultural land not chargeable to tax.

In the facts and circumstances of present case, it becomes apparent that, there was reasonable cause on the part of the Assessee in not filing return under Section 139(1) of IT Act, against which the penalty has been imposed and confirmed under Section 271F of the IT Act. Section 273B of the IT Act provides that, no penalty shall be imposed, under Section 271F of the IT Act where the Assessee establishes a reasonable cause for failure referred to in said section. In the given facts, there was a reasonable cause with the Assessee. This being the position, the case gets covered under Section 273B of the IT Act. As such, the penalty is ordered to be deleted.

Tags : Penalty Imposition Legality

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