No Penalty If Assessee has reasonable cause for non-filing of Income Tax Return: ITAT [Read Order]

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The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that no penalty under section 271F of the Income Tax Act, 1961 is leviable since the assessee was under an impression that the sale proceeds of agricultural activities do not attract income tax and the same is a reasonable cause to escape from the penalty proceedings.

The assessee, along with other related persons, sold certain land/immovable property which is agricultural land, as per him. The Assessing Officer, during the course of assessment proceedings, imposed penalty under section 271F of the Act.

Before the appellate authorities, the assessee challenged the penalty order stating that the assessee being an agriculturist and illiterate; facing financial and family problems; under the impression that gain arising from sale of any agricultural land not chargeable to tax.

The Tribunal accepted the contention and held that “when we consider the entirety of the facts and circumstances obtaining in this case, it becomes apparent that there was the reasonable cause on the part of the assessee in not filing return u/s.139(1) of the Act, against which the penalty has been imposed and confirmed u/s.271F of the Act. Section 273B provides that no penalty shall be imposed, inter alia, u/s.271F where the assessee establishes a reasonable cause for failure referred to in said section. In the given facts, we find that there was a reasonable cause with the assessee in the terms given in para 5 of the impugned order.”

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