Penalty for Late Filing of Tax Return: ITAT quashes Order as Time-Barred [Read Order]

The Bangalore Bench of Income Tax Appellate Tribunal quashed a ₹54,700 penalty imposed under Section 272A(2)(e) of Income Tax Act,1961 for the late filing of a tax return, ruling it time-barred.

Ranjitsinh Narsinh Vaghela,appellant-assessee,challenged the National Faceless Appeal Centre (NFAC) order confirming a ₹54,700 penalty under Section 272A(2)(e) for late filing of the income tax return. The return, due on September 30, 2015, was filed on March 31, 2017.

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The appeal was delayed by 328 days, but the Registry did not raise a defect memo. The assessee stated that the NFAC order was not received via email and was assumed to be pending before the CIT(A). It only came to notice on October 13, 2024, through a refund intimation under Section 143(1). The appeal was filed immediately after checking the portal. Finding sufficient cause, the ITAT condoned the delay and proceeded with the appeal.

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The assessee’s counsel cited ITA No. 754/Bang/2023 (AY 2014-15), where the Bangalore Bench had ruled in favor of the assessee despite the late filing. Since the facts were identical, a similar ruling was requested.

The revenue counsel argued that the assessee, being a trust registered under Section 12A, was required to file its return on time, and since it was delayed, the penalty was rightly imposed and confirmed. The counsel urged that the orders be upheld.

The two member bench comprising Soundararajan K (Judicial Member) and Laxmi Prasad Sahu (Accountant Member) considered the submissions and records, noting that the appellant had filed its return with a delay of 547 days. It relied on its previous case for AY 2014-15, where the penalty order under Section 272A(2)(e) was found to be time-barred.

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It examined whether the penalty was imposed within the statutory time limit, referring to Section 275(1)(c) of the Act, which mandates that a penalty order must be passed within the later of either the financial year’s end in which proceedings were completed or six months from the penalty initiation date.

In the previous ruling, it was held that since the notice under Section 274 was issued on December 21, 2020, the penalty order should have been passed by June 30, 2021. However, it was issued on March 5, 2022, making it time-barred. While the department cited the Supreme Court’s COVID-19-related suspension of limitation periods, the tribunal accepted the contention that the initiation itself was delayed beyond a reasonable period.

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Relying on precedents such as Amit Sabharwal (ITA No. 886/Del/2018) and JKD Capital & Finlease Ltd. (ITA No. 780/2015), it ruled that the penalty was not imposed within a reasonable timeframe.

Given the similarity to the previous case, the tribunal applied the same reasoning and quashed the penalty order for the assessment year 2015-16.

To Read the full text of the Order CLICK HERE

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