The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) set aside penalty of Rs.5000 under Section 271F of the Income Tax Act, 1961 on grounds of non-filing of returns by the assessee bonafidely and did not witness any loss to the revenue as the proper tax was already paid.
The assessee was assessed at Rs.1,63,020/- on 03-10-2018 under section 147/144 of the Income Tax Act. Further, penalty amounting to Rs.5,000/- was imposed by the ITO on 29-03-2019 for failure to furnish return of income within the prescribed limit as per provision of Section 139(1) of the Income Tax Act. The assessee vide submission dated 23-02-2023 requested for relief on the ground that he is not liable for payment of any tax.
It was found from the ready reckoner that basic limit for taxation for the AY 2011-12 was Rs.1,60,000/- only. As income of the assessee exceeded the basic limit, he was mandatorily required to file return of income irrespective of the fact that TDS was already deducted and the appellant was not liable to pay any further tax. Therefore, penalty levied under section 271F of Income Tax Act was upheld by the Commissioner of Income Tax (Appeals). Aggrieved the assessee appealed before the tribunal.
After hearing both parties and persuading noticed that the assessee was required to file the return of income under section 139(1) of the Income Tax Act which he failed to do so. Therefore, after the initiation of reopening proceedings and while passing order of assessment the AO was of the opinion that the assessee was liable for penalty.
In first appeal, the CIT(A) found from the ready reckoner that basic limit for taxation for the year under consideration i.e. A.Y. 2011-12 was amounting to Rs.1.60 lacs and the income of the assessee was assessed at Rs.163,020/- on 3-10-2018 by the AO under section 144/147 of the Income tax Act.
Therefore, according to the Revenue, the assessee is liable for penalty. In this regard, the AR of the assesseee reiterated the same arguments as was raised by him before the lower authorities and further submitted that he was under bona fide belief that he was not required to file the return as his income was below the basic limit.
A Single bench member consisting of Sandeep Gosain (Judicial member) held that there was no loss to revenue on account of bona fide mistake on the part of the Revenue by not filing the return. Therefore, taking the liberal view of the matter in the peculiar circumstances, the penalty of Rs.5,000/- under section 271F of the Income Tax was set aside and consequently, the appeal of the assessee was allowed .
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