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2021 (4) TMI 690 - AT - Income TaxPenalty u/s 271F - failure of assessee to furnish the return of income by the end of the relevant assessment year in consideration - whether assessee has utilised the money for any other purpose other than meeting the urgencies is or other than for survival of business itself? - CIT-A deleted penalty levy - HELD THAT - There is a categorical finding returned by Ld.CIT(A) that assessee was unable to get loan from Citibank for meeting the expenses and Citibank also refused to extend the loan. Subsequently assessee was waiting for funds from the principle which was received only after 31/03/2013 by issue of series of 3 preferred stock. It has been observed by Ld.CIT(A) that the funds have been raised by assessee from issue of stock by the principle to the subsidiary, out of which the taxes were paid immediately and IT returns were furnished. We observe that Ld.CIT(A) has considered the financial difficulties faced by assessee in a very practical manner thereby deleting the penalty of ₹ 5000/- levied under section 271F of the act. This view is also supported by the ratio of Hon ble Supreme Court in case of CIT vs KTC Tires India Pvt Ltd 2005 (9) TMI 665 - SUPREME COURT . Under such circumstances the view taken by Ld.CIT(A) do not call for any interference and the same is upheld. - Decided against revenue.
Issues:
1. Appeal against order allowing the Assessee's appeal on Penalty u/s 271F 2. Failure of Assessee to pay tax dues despite having sufficient Cash and Bank balance 3. Lack of reasonable cause for delay in filing returns 4. Interpretation of provisions of Section 271F regarding non-levy of Penalty due to financial hardship Analysis: 1. The appeal before the ITAT Bangalore pertained to the order passed by the CIT(A) for the assessment year 2012-13, where the revenue challenged the decision on various grounds related to the penalty under section 271F of the Income Tax Act. 2. The revenue contended that the Assessee failed to furnish the return of income by the due date and did not pay the tax dues despite having sufficient funds. The delay in filing the appeal was condoned by the Tribunal. 3. The Ld.Sr.DR argued that the penalty under section 271F was rightly imposed by the Assessing Officer (AO) as the Assessee did not respond to the notice and had the necessary funds to pay the tax dues. The CIT(A) upheld the penalty. 4. However, the ITAT set aside the CIT(A)'s order and remanded the matter to the AO to reexamine the existence of a reasonable cause for the delay in filing returns. The Assessee provided additional evidence during the proceedings. 5. In the subsequent proceedings, the AO once again confirmed the penalty, leading the Assessee to appeal before the CIT(A), who relied on legal precedents to delete the penalty under section 271F. 6. The revenue, aggrieved by the CIT(A)'s decision, appealed before the ITAT. The Ld.Sr.DR argued that there was a significant delay in filing the return and presented the bank statements to support the claim of sufficient funds with the Assessee. 7. The ITAT examined the submissions and observed that the CIT(A) considered the financial difficulties faced by the Assessee, especially the inability to secure a loan from Citibank, leading to a delay in paying taxes. The ITAT upheld the CIT(A)'s decision based on practical considerations and legal precedents. 8. Ultimately, the ITAT dismissed the revenue's appeal, affirming the deletion of the penalty under section 271F. The decision was in line with the practical challenges faced by the Assessee, as highlighted in the legal analysis and precedents cited by the CIT(A). This detailed analysis of the judgment highlights the key issues, arguments presented, and the reasoning behind the decision of the ITAT Bangalore in the matter concerning the penalty under section 271F of the Income Tax Act for the assessment year 2012-13.
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