Penalties u/s 271(1)(b) and 271F of Income Tax Act cannot be Levied If there is “Reasonable Cause”: ITAT
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that the penalties under Section 271(1)(b) and 271F of the Income Tax Act 1961 could not be levied if there was a reasonable cause on the part of the assessee.
The assessee, Hakim Khan is an individual having commission Income earned from sale of buffaloes. The Assessing Officer received information that during the Financial Year 2010-11, the assessee had made a cash deposit in the bank account maintained by the assessee with Bank of India. However, the assessee had not filed any Return of Income.
Hence notice under Section 148 was issued and the assessee had not filed the Return of Income and the 142(1) notices issued were also not responded by the assessee. Therefore, an ex-parte assessment order was passed.
The Assessing Officer (A.O) not satisfied with the reply from the assessee levied a penalty under section 271(1)(b) of the Act and under section 271F also was issued for non-filing of the Return of Income.
N.J. Vyas on behalf of the revenue supported the orders passed by the Lower Authorities and pleaded to confirm the same and also dismiss the assessee’s appeals.
The Division Bench of Waseem Ahmed (Accountant Member) and T.R. Senthil Kumar (Judicial Member) observed that, Section 273B had encompassed that certain penalties “shall” not be imposed in cases where “reasonable cause” was successfully pleaded. It is observed that penalties imposable under Section 271(1)(b) and under Section 271F were also included therein.
The Bench deleted the penalty imposed holding that, “It is seen that the explanation offered by the assessee have been ignored by the A.O. as well as the Ld. CIT(A)-NFAC but confirmed the levy of penalties u/s. 271(1)(b) and u/s. 271F of the Act without considering u/s. 273B of the Act. Applying the provisions of Section 273B of the Act, we have no hesitation in deleting the penalties levied u/s. 271(1)(b) and u/s. 271F of the Act since “reasonable cause” is clearly demonstrated by the assessee.”
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