RAHUL VASANT TAKALKAR,PUNE vs. ASSISTANT COMMISSIONER OF INCOME TAX CEN CIR -1(3), PUNE

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ITA 612/PUN/2021Status: DisposedITAT Pune04 October 2022AY 2011-126 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Section 271F is applicable only for failure to furnish a return of income under Section 139(1). The penalty levied for non-compliance with Section 148 was therefore invalid and quashed.

What were the facts?

A search action led to a notice under Section 148 for filing a return of income. The assessee failed to respond to multiple notices, leading to an assessment under Section 143(3) read with Section 147. Subsequently, a penalty was levied under Section 271F for not filing the return in response to the Section 148 notice.

What were the issues?

Whether a penalty under Section 271F can be levied for failure to file a return in response to a notice issued under Section 148, when the assessment was completed under Section 143(3) read with Section 147.

Which sections of the Income-tax Act were involved?

Section 271F,Section 148,Section 139(1),Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE “B” BENCH, PUNE

Before: SHRI S.S. GODARA & SHRI G. D. PADMAHSHALI

Pronounced: 04/10/2022

ORDER PER G. D. PADMAHSHALI, AM; The present appeal challenges the order of Commissioner of Income Tax (Appeals)-11, Pune [for short “CIT(A)”] dt. 31/08/2021 passed u/s 250 of the Income-tax Act, 1961 [for short “the Act”], which arisen out of order of penalty [for short “PO”] dt. 05/11/2018 passed by the Asstt. Commissioner of Income Tax, Central Circle-1(3) Pune [for short “AO”] u/s 271F of the Act. ITAT-Pune Page 1 of 6

Rahul Vasant Takalkar

1.

2. The grounds raised by the appellant in the present appeal is inconsonance with rule 8 of Income Tax Appellate Tribunal Rules, 1963 [for short “ITAT Rules”], hence reproduction thereof is dispensed with.

3.

Briefly stated the facts as borne out the records are; 3.1 A search action u/s 132(1) on the assessee on 16/08/2017 was carried out, wherein certain incriminating documents were seized relating to cash deposits and availment of bank finance, consequently a notice dt. 13/03/2018 u/s 148 of the Act, was served requiring assessee to file a return of income [for short “ITR”] in response thereto. In the event of failure, the Ld. AO after supplying the reasons for reopening of assessment, by service of further notice u/s 142(1)(i) r.w.s. 148 dt. 28/09/2018 called upon the assessee to file the ITR, which remained fruitless and un- responded. Following the principle of natural justice assessee was put to further notice u/s 142(1)(i) r.w.s. 129 of the Act, and upon no-response thereto, the total income for AY 2011-12 was assessed u/s 143(2) r.w.s. 147 of the Act. ITAT-Pune Page 2 of 6

Rahul Vasant Takalkar 3.2 Subsequently to culmination of assessment proceedings, a show cause notice u/s 274 r.w.s. 271F of the Act was served requiring to show case as to why a penalty u/s 271F for not filing ITR in response to notice u/s 148 be levied, when the same remained unattended, the Ld. AO finding no reasonable cause for not complying with notice u/s 148, culminated the penalty proceeding levying penalty u/s 271F for violation of provisions of section 148 of the Act.

3.3 In an appeal before learned first appellate authority [for short “FAA’’), the assessee opted out from responding to as much as nine hearing opportunities, therefore Ld. FAA confirmed the levy of penalty echoing the reasoning laid by the Ld. AO.

3.4 Aggrieved appellant brought up the present appeal before this Tribunal seeking deletion of penalty on the grounds laid in appeal memorandum.

4.

When the case was called up for physical hearing, none represented the assessee, bearing in mind hoary ITAT-Pune Page 3 of 6

Rahul Vasant Takalkar 24 of the ITAT-Rules, to adjudicate the matters ex-parte on merits, which empowers this Tribunal to decide the appeal filed by the appellant ex–parte on merits where the appellant does not appear in person or through an authorised representative and the same is done placing on record a no-objection from the learned departmental representative [for short “DR”] who candidly sought our attention to para 5.3 (last paragraph) on page 9 of the assessment order and solidified the contrary factual position as regards to filing of ITR u/s 148 based upon the assessment proceedings was finalised u/s 143(3).

5.

After hearing to rival contentions of both the parties; and subject to the provisions of rule 18 of Income Tax Appellate Tribunal Rules, 1963 [for short “ITAT, Rules”] perused the material placed on record, case laws relied upon by both the parties and duly considered the facts of the case in the light of settled legal position forewarned.

6.

Since sole and substance of controversy of present appeal seeks to adjudicate the liability u/s 271F for failure ITAT-Pune Page 4 of 6

Rahul Vasant Takalkar 139(1) of the Act, it is necessitate the reproduction of provision of penalty as; 271F. Penalty for failure to furnish return of income. If a person who is required to furnish a return of his income, as required under sub-section (1) of section 139 or by the provisos to that sub-section, fails to furnish such return before the end of the relevant assessment year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of five thousand rupees.

7.

As can be evident from the bare text of aforestated provision that, the scope vis-à-vis authority to levy a penalty therein is encircled and domineering round non- compliance of provisions of section 139(1) of the Act utterly and by no stretch of imagination it envisages non- compliance of provision of section 142(1)(i) r.w.s. 148 of the Act.

8.

In the present case, the impugned penalty order states that, the appellant failed to file his ITR in response to notice u/s 148 is glaringly perverse, as the assessment itself was culminated u/s 143(3) r.w.s. 147 of the Act, which reveals that, the Ld. AO has perfunctorily acted in levying and Ld. CIT(A) in confirming the penalty u/s 271F without ITAT-Pune Page 5 of 6

Rahul Vasant Takalkar first attending the elephant in the assessment, this de-fact shall alone suffice to quash the penalty in limine, however to rest the matter once for all we are of the considered view that, the provision of section 271F being calamitous, albeit commercial consequences, and illiberal, hence brooks no trivial or dilution therewith, as a result levy of penalty u/s 271F for non-compliance of otherwise than section 139(1) turns invalid and untenable in the eyes of law, and by holding so we delete the penalty levied u/s 271F of the Act, being extra-territorialis and bad in law.

2.

Resultantly, the appeal of the appellant assessee is allowed in terms of aforestated observation. In terms of rule 34 of ITAT Rules, 1963 the order is pronounced in the open court on this Tuesday 04th day of October, 2022.

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