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2023 (3) TMI 342 - AT - Income TaxLevy of penalty u/s 271F - not filing return of income within time limit specified in the notice issued u/s 153A - reasonable cause for the delay in filing the Returns of income in response to the 153A - HELD THAT - We address this issue first namely the assessee s explanation pursuant to the search action u/s. 132 of the Act, various books of accounts, diaries, papers were seized by the Department which were voluminous and pertaining to different group concerns. Checking, cross checking and reconciliation of datas was a very lengthy process. There was considerable delay in furnishing seized documents was also a reasonable cause in filing the Returns of Income. Without the above information, the assessee was not able to file the Returns of income within the stipulated time limit of 30 days of the receipt of the notice. Further the assessee also gone to the Settlement Commission, where his application for settlement of the case was admitted on 14.08.2014 is also a valid reasonable cause , which prevented the assessee from filing the Returns of income, in response to the 153A notices. On this count, the penalty levied u/s. 271F r.w.s. 273B is legally not valid. Therefore we hereby delete the penalties levied u/s. 271F of the Act. Assessee appeal allowed.
Issues:
Penalty under section 271F of the Income Tax Act, 1961 for Assessment Years 2010-11 to 2012-13. Analysis: Issue 1: Penalty under section 271F The Assessee, engaged in the business of trading in precious metals, filed Returns of Income for Assessment Years 2010-11 to 2012-13 after a search operation under section 132(1) of the Act. The Assessing Officer (AO) made additions to the returned income and initiated penalty proceedings under section 271F for not filing the returns within the time specified in the notice issued under section 153A. The Assessee contended that section 271F is not applicable as the returns were filed in response to the notice under section 153A, which is a self-contained code for search cases. The Assessee argued that penalty under section 271F can only be imposed if the return is not filed before the end of the relevant assessment year. The AO, however, levied a penalty of Rs. 5,000 for each assessment year. The Assessee appealed against the penalty orders to the Commissioner of Income Tax (Appeals)-11, who confirmed the penalties. The Assessee then appealed to the ITAT, challenging the levy of penalty under section 271F. Issue 2: Reasonable Cause for Delay The Assessee argued that there was a reasonable cause for the delay in filing the returns in response to the notice issued under section 153A. The Assessee explained that due to the voluminous seized materials and the complexities of transactions, it took time to check, cross-check, and reconcile the data. The Assessee also opted for settlement with the Income-tax Settlement Commission, which further delayed the filing of returns. The ITAT considered this explanation and held that the delay in filing the returns was due to a valid reasonable cause. The ITAT found that the penalty under section 271F was not valid in this case and consequently deleted the penalties levied for all three assessment years. Conclusion The ITAT allowed the Assessee's appeal, ruling in favor of the Assessee and deleting the penalties imposed under section 271F for the Assessment Years 2010-11 to 2012-13. The ITAT held that there was a valid reasonable cause for the delay in filing the returns, which made the penalties legally invalid. The decision was pronounced on 25-01-2023.
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