2024 (6) TMI 530 - AT - Income Tax

Penalty order u/s 271(1)(c) - assessee did not file the return of income u/s 139(1) of the Income-tax Act, 1961, but the return was filed after issue of notice u/s 148, the income declared by the assessee is not voluntary - HELD THAT - Amount of tax sought to be evaded shall be determined by taking into consideration the amount of tax on the total income assessed as reduced by the amount of advance tax, tax deducted at source, tax collected at source and self-assessment tax paid before the issue of notice u/s 148. The case of the assessee is covered by this clause (c) of Explanation 4 to Section 271(1)(c) and, hence, when the AO has determined the total tax on the income assessed at Rs. 2,08,142/- whereas the self-assessment tax paid by the assessee before the notice u/s 148 was issued is Rs.2,16,470/-, then balance would be nil and ,consequently, there would be nil amount of tax sought to be evaded for the purpose of levy of penalty u/s 271(1)(c). Accordingly, when the amount of tax to be evaded is nil in the case of the assessee, then question of levy of levy of penalty u/s 271(1)(c) does not arise and hence, the penalty levied by the AO u/s 271(1)(c) of Rs. 2,10,000/- is not justified and the same is deleted. Though assessee has advanced various contentions against the levy of penalty, however, the penalty found to be not justified and liable to be deleted, on the ground of no amount of tax sought to be evaded, then other pleas raised by assessee becomes academic in nature and we do not propose to decide each and every argument advanced by the assessee. Appeal of the assessee is allowed.

Summary

Issues Involved:
The judgment involves condonation of delay in filing appeal u/s 271(1)(c) of the Income-tax Act, 1961 due to medical reasons and the validity of penalty imposed by the Assessing Officer.

Condonation of Delay:
The appeal was filed with a delay of 165 days, supported by an affidavit explaining the medical conditions of the assessee, a 58-year-old lady suffering from various ailments. The medical record showed hospitalizations and treatments for different illnesses, justifying the delay. The Departmental Representative did not object to the delay due to medical problems. The Tribunal, after considering the reasons and medical evidence, condoned the delay as the assessee had sufficient cause for not filing the appeal within the limitation period.

Validity of Penalty:
The Assessing Officer levied a penalty u/s 271(1)(c) equivalent to 100% of the tax sought to be evaded, amounting to Rs. 2,10,000. The assessee contended that self-assessment tax was paid prior to the notice u/s 148, and as per Explanation 4(c), no penalty should be levied when there is no outstanding demand. The Authorized Representative argued that the penalty was not justified as there was no concealment of income and the tax was paid voluntarily. The Tribunal noted that the self-assessment tax was paid before the notice u/s 148, and as per the Explanation 4 to Section 271(1)(c), the tax sought to be evaded should be determined based on the tax paid before the notice. As the tax sought to be evaded was nil in this case, the penalty of Rs. 2,10,000 was deemed unjustified and deleted. The Tribunal allowed the appeal of the assessee based on this finding.

The judgment by the Appellate Tribunal ITAT Indore involved the condonation of delay in filing an appeal u/s 271(1)(c) due to medical reasons and the deletion of a penalty imposed by the Assessing Officer based on the tax sought to be evaded. The Tribunal found that the delay in filing the appeal was justified considering the medical conditions of the assessee, and therefore, condoned the delay. Additionally, the Tribunal ruled that the penalty was not justified as the tax sought to be evaded was nil, given that the self-assessment tax was paid before the notice u/s 148. Consequently, the penalty of Rs. 2,10,000 was deleted, and the appeal of the assessee was allowed.