SRI AMMAN TEXTILES,ERODE vs. ITO, WARD-2(1), ERODE

At the outset, we note that the real basis of imposing penalty for non-filing of return of income despite having substantial taxable income, which was disclosed only in response to the notice issued under section 148 of the Income Tax Act, 1961 [“Act” in short]. Admittedly, notice under section 148 of the Act was issued on 06.04.2022 and the assessee filed return of income on 06.05.2022 declaring total income of ₹.11,87,540/-, which was accepted in the reassessment vide order dated 26.10.2023 passed under section 147 r.w.s. 144B of the Act.

The ld. AR Shri N.C. Ravi Krishnan, Advocate contended that the assessee requires to file Form 68 within 30 days from the date of the assessment, but, however, it was filed on 07.03.2024 with a delay of 97 days. The ld. AR relied on the decision of the Hon’ble High Court of Madras in the case of Natarajan Anandh Kumar v. DCIT [2024] 338 CTR Mad) 492 and drew our attention to para 8 of the said decision. He submits that the assessee could not file Form 68 within the time due to sudden demise of family member on 07.10.2023 being spouse of Mr. C. Palanisamy, Senior Partner of the assessee-firm and mother of another Partner Mr. P. Rangasamy.

Heard both the parties and perused the material available on record. On careful reading of para 8 of the decision of the Hon’ble High Court in the case of Natarajan Anandh Kumar v. DCIT (supra), we note that the Hon’ble High Court was pleased to observe that since the return of income was accepted and consequently, the total tax liability therein was also accepted, it is a fit case to condone the delay filing the application for immunity from imposition of penalty. In the present case, we find that the assessment order was passed on 26.10.2023 and the assessee requires to file Form 68 claiming immunity within 30 days from the end of the month in which the assessment order was passed, thereby, it is clear that the assessee is required to file Form 68 on or before 30.11.2023, but, however, the assessee filed Form 68 only on 07.03.2024 with a delay of 97 days, which is evident from pages 23 & 24 of the paper book. Admittedly, the assessee filed return of income in response to the notice under section 148 of the Act, which is evident from para 3 of the assessment order dated 26.10.2023, which is on record. We note that the assessee explained the delay in filing Form 68, which is reproduced by the ld. CIT(A) in page 6 of the impugned order. On perusal of the same, we note that the assessee is a FIRM having two partners, father & son

Turning to the order imposing penalty, the said order proceeds on the basis that the assessed income is Rs. 18,18,870. The under reported income has been computed in terms of cl. (b) of sub-s. (3) of s. 270A. While undertaking this exercise, sub-s. (6) of s. 270A has not been taken into account. Sub-s. (6)(a) of s. 270A, in relevant part, is set out below:

As per cl. (a), the amount of income in respect of which the assessee offers an explanation, which is accepted as bona fide is liable to be excluded provided all material facts were disclosed. This case appears to fall within the scope of cl. (a) of sub-s. (6) of s. 270A. In any event, since the order

For reasons set out above, the impugned orders dt. 24th Aug., 2023 and 2nd Sept., 2023 are quashed. As a consequence, the first respondent is directed to re-consider the application for immunity from imposition of penalty on merits by taking into account the observations set out in this order. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.

On careful reading of the above, we find the facts and circumstances before the Hon’ble High Court in the case of Natarajan Anandh Kumar v. DCIT (supra) are similar and the findings thereon as rendered by the Hon’ble High Court is applicable to the facts of the present case. Thus, the delay of 97 days is condoned and the Assessing Officer is directed to reconsider Form 68 filed on 07.03.2024 placed at pages 23 & 24 of the paper book for immunity from imposition of penalty on merits by taking into account the observations of the Hon’ble high Court in the case of Natarajan Anandh Kumar v. DCIT (supra). Thus, the ground raised by the assessee is allowed. 8. In the result, the appeal of the assessee is allowed. Order pronounced on 13th March, 2026 at Chennai. (S.R. RAGHUNATHA) ACCOUNTANT MEMBER Chennai, Dated, 13.03.2026 Vm/-