2017 (10) TMI 1499 - AT - Income Tax

Penalty u/s 271F - failure to file the return of income on or before the end of the relevant assessment year - Admission of additional evidence - existence of reasonable cause under Section 273B - HELD THAT - Additional evidence now sought to be filed by the assessee before the Tribunal are necessary and required proper adjudication of the issues involved in the appeal. These evidence, according to the assessee, show that the assessee was dependent on its holding company for day to day affairs and for financial support including payment of self-assessment tax. The additional evidence is therefore admitted for consideration. Since the revenue authorities did not have an opportunity to examine the additional evidence now admitted by the Tribunal, we deem it proper to set aside the order of the CIT (Appeals) and remand the question of the existence of reasonable cause under Section 273B of the Act for fresh consideration by the Assessing Officer in the light of the additional evidence now admitted by the Tribunal. The Assessing Officer shall afford an opportunity of being heard to the assessee before deciding the issue. Appeal is allowed for statistical purposes.

Summary

Issues:
Appeal against penalty under Section 271F of the Income Tax Act, 1961 for Assessment Year 2012-13. Delay in filing return of income. Reasonable cause for delay. Admissibility of additional evidence.

Analysis:
The appellant, a software development company, filed the return of income for Assessment Year 2012-13 on 28.5.2013, missing the due date of 30.11.2012. The Assessing Officer imposed a penalty of ? 5,000 under Section 271F of the Act for the delay. The appellant explained that it faced financial constraints due to being a service provider to its US-based holding company, causing the delay in filing the return. The CIT (Appeals) upheld the penalty, deeming the reasons insufficient. The appellant appealed to the Tribunal, raising a procedural issue of delay in filing the appeal, which was condoned considering the circumstances. The Tribunal considered the delay technical and accepted the appeal for further review.

The Tribunal assessed the delay in filing the return and the reasons provided by the appellant. The delay was only one month and 28 days beyond the due date. The appellant cited financial difficulties as the cause, supported by additional evidence including audited financial statements and bank statements. The Tribunal admitted the additional evidence for proper adjudication. As the revenue authorities did not examine the evidence, the Tribunal set aside the CIT (Appeals) order and remanded the case to the Assessing Officer for reconsideration based on the new evidence, granting the appellant an opportunity to present their case.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of considering the reasonable cause for the delay in filing the return of income. The order was pronounced on 25th Oct., 2017.