2019 (10) TMI 983 - AT - Income Tax

Levying penalty u/s 271(l)(c) - assessee failed to furnish the return of income - HELD THAT - AO issued notice u/s 148 in March, 2015 and return from the very same sources of income stood already filed on 7.11.2012 wherein the TDS and self assessment tax upto the said date stood paid. It is also a fact pleaded on record that the assessee is not a habitual defaulter and this is one and only time wherein penalty u/s 271(1)(c) or any other penalty has been visited upon the assessee. When a copy of the return filed on 7.11.2012 which has been treated as non-est is compared with the assessed income as available in assessment order passed u/s 143(3)/148 of the Act, it is seen that the only addition made is addition by way of a disallowance of deduction u/s 80C of Insurance premium - in order to uphold the penalty order, the Revenue would want to argue that the explanation for filing of the return late was not on account of a bonafide inadvertent mistake. No evidence or argument to support such a prayer is on record. The fact that the late filing of return on 07.11.2012 was beyond time, hence non-est is not in dispute. The fact that the very same return from the same sources has been refilled in response to notice u/s 148 in March, 2015 is not in dispute. There is nothing on record to show that the assessee had, as opposed to an inadvertent mistake, any reason to conceal as the very same return has been refilled with no changes or additions. Thus, the arguments on behalf of the Revenue that without the issuance of notice u/s 148 in March, 2015, the assessee would not have filed its return in the peculiar facts cannot be accepted. The assessee has filed its return on 7.11.2012. It cannot be wished away. No doubt the said return is not a valid return in the eyes of law, however, it is a necessary evidence to be taken into consideration for examining the argument whether the non filing of a valid return was a case of bonafide, inadvertent mistake or deliberate act of concealment or furnishing of inaccurate particulars. AO has accepted the return from the very same sources of income and has only made the addition by way of a disallowance of deduction u/s 80C supports the consistent argument. In these facts, I find myself unable to uphold the order wherein the penalty for concealment has been levied and upheld. Accepting the explanation of the assessee who is also not a habitual defaulter, non-filing of return on time was on account of inadvertent bonafide mistake and accepting addition where the filing of appeal was more expensive is a valid explanation consistently on record. Penalty provisions are not attracted - Decided in favour of assessee

Issues:
1. Correctness of the order of CIT(A), Panchkula for the 2008-09 assessment year.
2. Levying penalty under section 271(1)(c) of the Act.
3. Justification for penalty despite no addition to the returned income.
4. Penalty imposition despite timely tax payments.
5. Request for any amendment in the grounds of appeal.

Analysis:

Issue 1: Correctness of CIT(A) Order
The appeal challenged the order of CIT(A), Panchkula for the 2008-09 assessment year. The assessee contended that the order was incorrect against the facts and law.

Issue 2: Penalty under Section 271(1)(c)
The key contention revolved around the penalty imposed under section 271(1)(c) of the Act amounting to ?72,630. The assessee argued that despite filing the return in response to notice u/s 148, the penalty was unjustified.

Issue 3: Penalty Justification without Additions
Despite no substantial addition to the returned income except a disallowance of ?33,330 under section 80C, the CIT(A) levied the penalty under section 271(1)(c). The assessee questioned the rationale behind this penalty imposition.

Issue 4: Penalty Imposition Despite Timely Tax Payments
The assessee highlighted that all due taxes were paid before the issuance of notice u/s 148. Despite this, the penalty under section 271(1)(c) was imposed, raising concerns regarding the justification for such penalty.

Issue 5: Request for Amendment in Grounds of Appeal
The appellant sought leave for any addition, deletion, or amendment in the grounds of appeal before the final disposal of the case.

The arguments presented by the assessee focused on the inadvertent mistake of late filing due to oversight, voluntary filing of the return with all taxes paid, and the absence of deliberate concealment. The contention was supported by evidence of tax payments and the re-filing of the return in response to notice u/s 148. The appellant emphasized being a first-time penalty recipient and not a habitual defaulter.

In contrast, the Revenue relied on the non-est status of the late-filed return and the orders of the lower authorities to justify the penalty imposition. However, no substantial evidence was presented to counter the assessee's explanation of inadvertent delay.

The final judgment favored the assessee, quashing the penalty under section 271(1)(c) based on the inadvertent mistake, absence of deliberate concealment, and the unique circumstances of the case. The decision highlighted the importance of considering the explanation offered, the absence of habitual default, and the lack of evidence supporting intentional misconduct.

In conclusion, the appeal was allowed, and the penalty was directed to be quashed based on the detailed reasoning provided during the hearing.

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