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2024 (9) TMI 859 - AT - Income TaxPenalty u/s 271(1)(c) - assessee has not filed the ROI - bonafide belief of the assessee that income is non-taxable, and TDS was deducted on income - HELD THAT - The assessee was a non-filer of ROI for the impugned assessment year. But there was sufficient amount of TDS was deducted on income. After receiving the notice under section 148, the return was filed which was before receiving of the recorded reason and the tax was paid in full. In the assessment ld. AO accepted ROI and tax paid and no other findings for concealment of income was found. The assessee is a welfare fund and not in the activity of profit making. All the personnel are employed in the State of Maharashtra. We respectfully relied on the order of Sudhir kumar Chottu bhai 2000 (3) TMI 14 - BOMBAY HIGH COURT and City and Industrial Development Corporation of Maharashtra Limited 2012 (9) TMI 331 - ITAT MUMBAI The levy of penalty is unjustified. So, the penalty under section 271(1)(c) is quashed. Appeal of assessee allowed.
Issues:
Assessment of penalty under section 271(1)(c) of the Income-tax Act, 1961 for non-filing of income tax return by an AOP maintaining a fund for the welfare of Police of Maharashtra. Detailed Analysis: 1. The appeal was filed against the order of the National Faceless Appeal Centre (NFAC), Delhi, upholding the penalty of Rs 1,08,56,103 under section 271(1)(c) of the Act for Assessment Year 2014-15. The penalty was levied by the Assistant Commissioner of Income-tax, Ward-17(2), Mumbai. The assessee contended that the penalty should not have been confirmed as the bona fides of the appellants cannot be doubted. 2. The assessee, an AOP maintaining a fund for the welfare of the Police of Maharashtra, did not file the income tax return for the impugned assessment year initially. Upon receiving a notice under section 148, the return was filed, offering tax on professional fees and interest income. The assessment was completed under section 147/143(3) of the Act, with no separate addition made. The penalty proceedings were initiated under section 271(1)(c) of the Act, leading to a penalty of Rs 1,08,56,103 being levied at 100% of the tax sought to be evaded. 3. During the appeal hearing, the assessee argued that they had a bonafide belief that the income was non-taxable, as it was used for the welfare of state government employees. The assessee cited relevant case laws, including a judgment of the Bombay High Court, to support their contention that penalties should not be levied in cases of bonafide belief. The assessee emphasized that the fund was for welfare activities and not for profit-making purposes. 4. The Tribunal considered the arguments presented and noted that the assessee had not concealed income, as TDS was deducted on the income. The return was filed promptly after receiving the notice under section 148, and the tax was paid in full. Given the bonafide belief of the assessee and the nature of the welfare fund, the Tribunal relied on previous judgments to conclude that the levy of the penalty was unjustified. Consequently, the penalty of Rs 1,08,56,103 under section 271(1)(c) was quashed, and the appeal of the assessee was allowed. 5. The Tribunal pronounced the order on 28th August 2024, in favor of the assessee, thereby setting aside the penalty imposed by the revenue authorities. This detailed analysis covers the issues involved in the legal judgment, outlining the arguments presented, relevant case laws cited, and the final decision reached by the Tribunal.
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