2011 (9) TMI 445 - AT - Income Tax

Penalty under 271F - No taxable income in last four A/Y - Assessee filed affidavit that original returns have been filed - Held THat - section 271F are applicable when there is a violation of non-filing the return when notices u/s 153 read with section 153A are issued, Revenue could not prove beyond doubt that returns have not been furnished, thus penalty under 271F cannot be levied.

Summary

Issues involved:
Confirmation of penalty u/s 271F of Income-tax Act in multiple assessment years.

Detailed Analysis:
1. The appeals arose from the order of CIT (Appeals)-XXV confirming penalties u/s 271F for six assessment years (1999-00 to 2004-05). The primary issue in all years was the levy of penalties.

2. The grounds of appeal challenged the correctness and justification of the penalties imposed and sustained by the authorities. The appellant contended that the penalties were incorrect, illegal, void ab initio, and without jurisdiction, emphasizing the dismissal of the appeal and confirmation of penalties as unjustified.

3. The case originated from a search and seizure operation under section 132 of the Income-tax Act. The AO initiated penalty proceedings u/s 271F due to non-compliance with notices u/s 153A/153C and failure to provide evidence of filing income tax returns. The CIT (A) upheld the penalties citing non-compliance and non-cooperation of the assessee in the assessment and penalty proceedings.

4. The appellant argued that penalties u/s 271F were wrongly imposed and confirmed, highlighting the filing of regular returns and the unavailability of records due to the closure of the firm. The appellant contended that penalties should not apply as the income was below taxable limits, thus not necessitating return filing under section 139(1).

5. The appellant further argued that the penalty provisions should be strictly construed, citing relevant court decisions. Additionally, the appellant emphasized that penalties for not filing original returns within a reasonable time should not be imposed, referencing precedents supporting this argument.

6. The learned DR supported the lower authorities' decisions, while the appellant presented detailed arguments against the penalties imposed under section 271F.

7. The Tribunal analyzed the provisions of sections 153C and 153A, emphasizing the legal obligation to file returns of income as required. The Tribunal disagreed with the appellant's contentions, holding that penalties under section 271F were applicable for non-filing of returns under sections 153C and 153A. The Tribunal interpreted the phrase 'so far as may be' in section 153A to mandate compliance with section 139 provisions.

8. Considering the facts, affidavits, and arguments presented, the Tribunal concluded that the appellant did not merit penalties under section 271F. Therefore, the Tribunal allowed the appeals, setting aside the penalties imposed by the lower authorities in all assessment years.