2020 (12) TMI 519 - AT - Income Tax

Penalty u/s. 271F - assessee failed to file his return of income within the time prescribed u/s. 139(1) - assessee made certain written submissions before the ld. CIT(A) seeking deletion of penalty, which did not find favour with the ld. first appellate authority, who affirmed the penalty - HELD THAT - 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. When we consider the entirety of the facts and circumstances obtaining in this case, it becomes apparent that there was reasonable cause on the part of the assessee in not filing return u/s. 139(1) against which the penalty has been imposed and confirmed u/s. 271F - Section 273B provides that no penalty shall be imposed, inter alia, u/s. 271F where the assessee establishes a reasonable cause for failure referred to in said section. There was a reasonable cause with the assessee in the terms given in para 5 of the impugned order. This being the position, the case gets covered u/s. 273B of the Act. As such, we order to delete the penalty. - Decided in favour of assessee.

Summary

Issues:
Penalty imposed under section 271F of the Income-tax Act, 1961 for failure to file return within the stipulated time.

Analysis:

Arjun Dada Kharate:
The appellant, along with related persons, sold land to a group in Nashik and filed the return beyond the time specified under section 139(1) of the Income-tax Act, 1961. The Assessing Officer imposed a penalty under section 271F for the delay. The appellant appealed to the ld. CIT(A) citing reasons for the delay, including being an agriculturist, illiterate, financial and family problems, and misunderstanding about tax liability on agricultural land sale gains. Upon review, the tribunal found reasonable cause for the delay as per section 273B, which states that no penalty shall be imposed if a reasonable cause is established. The tribunal concluded that the appellant had a valid reason for the delay and ordered the penalty to be deleted.

Bhima Dada Kharate:
The circumstances in the case of Bhima Dada Kharate mirrored those of Arjun Dada Kharate. Following the decision made in Arjun Dada Kharate's case, the tribunal also decided to delete the penalty imposed on Bhima Dada Kharate under section 271F.

In conclusion, the tribunal allowed both appeals and ordered the deletion of the penalties. The judgment was pronounced in the Open Court on 10th August 2020.