2024 (7) TMI 1333 - AT - Income Tax

Penalty u/s. 271(1)(C) - Appellant assessee is non resident Indian and did not file the return of income for the assessment year 2014 15 - HELD THAT - Perusal of records show that the appellant assessee, being non resident Indian, was not required to furnish return of income u/s. 139(1) of the Act, if TDS on her only income of interest on investment, was deducted @12.5% as against 10% as per said DTAA between India UAE. The assessment order does neither contain any direction nor any satisfaction of the Assessing Officer for initiation of the penalty proceedings u/s. 271(1)(C) of the Act. The instant case is neither a case of concealment of income nor a case of furnishing of inaccurate particulars of income as the income declared by the assessee was accepted by the revenue. The submissions of the assessee, that she was under a bonafide belief that the tax at source was deducted properly and no additional tax was payable by her, being based on her legitimate expectation, deserves to be accepted. The penalty proceedings cannot thus be sustained under the law. The aforesaid point is thus determined in favour of the assessee and against the revenue.

Summary

Issues:
Penalty imposition under section 271(1)(C) of the Income-tax Act, 1961 for Assessment Year 2014-15.

Detailed Analysis:

1. Background and Facts:
The appellant, a non-resident Indian, was settled in Dubai with income from investments. The Assessing Officer initiated penalty proceedings under section 271(1)(C) of the Act for not filing the return of income for A.Y. 2014-15. The appellant contested the penalty imposition before the CIT(A) and further appealed against the decision.

2. Grounds of Appeal:
The appellant raised several grounds challenging the penalty imposition, including issues related to the initiation of penalty proceedings, the assessment order's validity, and the CIT(A)'s decision-making process. The appellant argued that there was no concealment of income and that the penalty was unjustified.

3. Legal Provisions:
The Tribunal referred to relevant sections of the Income-tax Act, including Section 115G and Section 271, which outline provisions related to penalty imposition for non-compliance or concealment of income. Section 271(1B) was also cited, which deems an order of assessment as satisfaction for initiating penalty proceedings.

4. Assessee's Submissions:
The appellant submitted that she had a bonafide belief that the tax was deducted correctly, based on the DTAA between India and UAE. She promptly paid the additional tax upon realizing the error. The appellant's age, status as an NRI, and compliance with tax laws were considered in her defense.

5. Tribunal's Decision:
The Tribunal found that the penalty imposition was unsustainable under the law. As the appellant's income details were available to the department, and there was no concealment or inaccurate reporting, the penalty was deemed unjustified. The Tribunal accepted the appellant's bonafide belief and set aside the penalty order, ruling in favor of the appellant.

6. Conclusion:
The Tribunal allowed the appeal, setting aside the penalty order dated 27.09.2022. The impugned order dated 08.11.2023 was quashed, emphasizing that the penalty proceedings were not justified given the circumstances of the case.

This detailed analysis highlights the key aspects of the legal judgment, focusing on the grounds of appeal, legal provisions, the appellant's submissions, and the Tribunal's decision regarding the penalty imposition under section 271(1)(C) of the Income-tax Act for the relevant assessment year.