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2022 (7) TMI 1002 - AT - Income TaxPenalty levied u/s 271F - assessee had failed to furnish return of income within due time as prescribed under the provisions of Section 139(1) - HELD THAT - As Before us, assessee vehemently submitted that the assessee was under bonafide belief that he is not having taxable income, therefore is not liable to file return of income. AR also submitted that subsequently, the assessee under legal advice, filed return of income, though it was filed belatedly. Thus, from the submission of assessee, we find that the assessee has a reasonable cause for not filing the return of income on the pretext that he is not having taxable income. AO has not brought on record that the assessee is habitual in filing return belatedly. We find that the assessee has shown reasonable cause for not filing the return of income before due date of return. Therefore, we direct the Assessing Officer to delete the penalty levied under Section 271F - Accordingly, the grounds raised by the assessee are allowed.
Issues:
1. Penalty under Section 271F for failure to furnish return of income within due time. 2. Failure to provide opportunity to reply before finalization of order. 3. Failure to pass order early and not keeping it in abeyance. 4. Validity of order passed by CIT(A) within the prescribed time. 5. Reasonable cause for not filing return of income within due date. Issue 1: Penalty under Section 271F The appeal was against the penalty levied under Section 271F of the Income Tax Act, 1961 for the Assessment Year 2011-12. The Assessing Officer initiated penalty proceedings as the assessee failed to furnish the return of income within the due time as prescribed under Section 139(1) of the Act. The penalty was imposed despite the assessee's explanation that the delay was due to a bonafide belief that there was no taxable income. The penalty was confirmed by the CIT(A)/NFAC, citing the legislative intent to encourage timely filing of returns. However, the Tribunal found that the assessee had a reasonable cause for the delay and directed the Assessing Officer to delete the penalty. Issue 2: Failure to provide opportunity to reply The assessee contended that the CIT(A) failed to provide an opportunity to reply before finalizing the order, attributing it to a system failure. However, this issue was not the primary focus of the Tribunal's decision, as the main contention revolved around the penalty under Section 271F. Issue 3: Failure to pass order early and not keeping it in abeyance The assessee raised concerns about the delay in passing the order by the CIT(A) and not keeping it in abeyance until the quantum appeal was decided. While these issues were mentioned in the grounds of appeal, they did not significantly impact the Tribunal's decision, which primarily focused on the penalty under Section 271F. Issue 4: Validity of order passed within prescribed time The assessee argued that the order passed by the CIT(A) was not valid as it was not within the time prescribed by the CBDT circular. However, the Tribunal's decision did not delve deeply into this issue, as the main consideration was the imposition of the penalty under Section 271F. Issue 5: Reasonable cause for not filing return of income The Tribunal considered the assessee's contention that there was a reasonable cause for not filing the return of income within the due date. The assessee claimed to have a bonafide belief that there was no taxable income, and upon receiving advice, filed the return belatedly. The Tribunal accepted this argument, finding that the assessee had shown reasonable cause for the delay and directed the deletion of the penalty under Section 271F. In conclusion, the Tribunal allowed the appeal, emphasizing the assessee's reasonable cause for the delay in filing the return of income and directing the deletion of the penalty imposed under Section 271F.
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