2022 (7) TMI 623 - AT - Income Tax

Penalty u/s 271F - failure to file the return of Income within the assessement year - assessee having two PAN - HELD THAT - Assessee has filed her return of income at one place i.e. at Kolkata under her PAN AxxxxxxxxB and the transactions done under PAN AxxxxxxxxF are also duly reported and disclosed in the said return of income. No doubt has been shown by the revenue authorities on this contention of the assessee that the assessee has filed its return of income and also the assessee has substantiated the same by providing copies of the same to the revenue authorities during the assessment proceedings. Assessee has also taken the steps to surrender another PAN issued to her to show her bonafide intentions towards the tax compliance. Therefore, we are of the considered view that return of income was duly filed by the assessee and transaction under question were also disclosed which are subject to assessment by the AO, so penalty u/s 271F for failure to furnish the return of income u/s 139(1) of the act cannot be imposed on the assessee hence grounds of the assessee are decided in favour of the assessee, orders of the revenue authorities are set aside being against the principal of natural justice based on technicalities without proper consideration to the merits of the case. Thus, in our view penalty levied u/s. 271F of the Act is invalid. Penalty proceedings u/s 272A(1)(d) - HELD THAT - Penalty under section 272A (1)(d) can only be imposed on an assessee if the assessee fails to comply towards the notice issued under sub-section (1) of section 142 or sub-section (2) of section 143 of fails to comply with a direction issued under sub-section (2A)of section 142. However in the present case the assessee has shown a responsible conduct at all the times by responding towards the notices issued hence penalty under section 272A (1)(d) cannot be imposed. Accordingly ground rose under appeal No 91/CTK/2021 are allowed to the assessee, orders of the revenue authorities are set aside. Thus, in our view penalty levied u/s. 272A(1)(d) of the Act is unsustainable. The Assessing Officer is directed to delete the penalty - Appeal of assessee allowed.

Summary

Issues:
1. Validity and maintainability of appeal filed under incorrect PAN.
2. Jurisdictional issues related to penalty proceedings.
3. Imposition of penalty under sections 271F and 272A(1)(d) of the IT Act.
4. Compliance with notice under sections 142(1) and 143(2) of the IT Act.

Issue 1: Validity and maintainability of appeal filed under incorrect PAN:
The case involved appeals by the assessee against orders passed by the CIT(A) related to penalty proceedings under sections 271F and 272A(1)(d) of the IT Act. The CIT(A) dismissed the appeals on the grounds of invalidity and lack of maintainability due to the appeal being filed under a different PAN. The CIT(A) emphasized that the two PANs belonged to the same individual but were under the jurisdiction of different assessing officers. The appeal filed under the incorrect PAN was deemed legally untenable as it did not correspond to the order against which an appeal could be filed under section 246A of the IT Act. The CIT(A) concluded that the appeal was invalid and not maintainable in law, leading to its dismissal.

Issue 2: Jurisdictional issues related to penalty proceedings:
The penalty proceedings under sections 271F and 272A(1)(d) were initiated against the assessee for non-compliance with the notice under section 142(1) of the IT Act. The assessing officer imposed penalties based on the non-filing of returns and non-compliance with the notice. However, the assessee argued that she had filed returns under the correct PAN and had taken steps to surrender the erroneously issued PAN. The ITAT found that the assessee had complied with the notices and had filed returns under the correct PAN, leading to the conclusion that the penalties imposed were without merit and lacked legal basis. The ITAT directed the Assessing Officer to delete the penalties imposed under sections 271F and 272A(1)(d), thereby allowing the appeals of the assessee.

Issue 3: Imposition of penalty under sections 271F and 272A(1)(d) of the IT Act:
The ITAT analyzed the penalty provisions under sections 271F and 272A(1)(d) of the IT Act. It was established that penalties could only be imposed if there was a failure to comply with the notices issued under the relevant sections. In this case, the assessee had demonstrated responsible conduct by responding to the notices and filing returns under the correct PAN. Therefore, the penalties imposed under sections 271F and 272A(1)(d) were deemed unsustainable and invalid. The ITAT directed the Assessing Officer to delete the penalties, leading to the allowance of the assessee's appeals.

Issue 4: Compliance with notice under sections 142(1) and 143(2) of the IT Act:
The case involved the assessee's compliance with the notices issued under sections 142(1) and 143(2) of the IT Act. The assessee had responded to the notices and provided necessary documents to the assessing officer. It was highlighted that the transactions under question were duly reported and disclosed in the filed returns. The ITAT acknowledged the assessee's compliance with the notices and filing of returns under the correct PAN, leading to the decision to set aside the penalties imposed and allow the appeals.

In conclusion, the ITAT allowed both appeals of the assessee, directing the Assessing Officer to delete the penalties imposed under sections 271F and 272A(1)(d) of the IT Act. The judgment emphasized the importance of compliance with notice requirements and the jurisdictional aspects of penalty proceedings in tax matters.