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Facts
The assessee, a society for welfare of persons with HIV, filed its return for AY 2014-15 declaring 'Nil' income. The AO treated the return as invalid due to defects and initiated penalty proceedings under Section 272A(2)(e) for failure to furnish the return of income.
Held
The Tribunal held that Section 139(4A) mandates furnishing a return only if the total income exceeds the maximum amount not chargeable to tax. Since the assessee's income did not exceed this limit, there was no obligation to furnish a return, thus no failure and no penalty attracted.
Key Issues
Whether penalty under Section 272A(2)(e) is attracted for failure to furnish return of income under Section 139(4A) when the assessee's income does not exceed the basic exemption limit.
Sections Cited
272A(2)(e), 139(9), 139(4A), 11, 12
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI
Feeling aggrieved by order of first appeal dated 16.01.2025 passed by learned Commissioner of Income-tax-National Faceless Appeal Centre, Delhi [“CIT(A)”] which in turn arises out of penalty-order dated 28.01.2022 passed by learned National Faceless Assessment Centre, Delhi [“AO”] u/s 272A(2)(e) of Income-tax Act, 1961 [“the Act”] for assessment-year [“AY”] 2014-15, the assessee has filed this appeal on following grounds:
“1. The Ld. CIT(A) NFAC has erred in imposing penalty u/s 272A(2)(e) of Rs. 1,96,600/-due to delay in filling in ITR from due date of ITR 31.07.2014 to date when assessment was completed on 17.12.2019 i.e. 1966 days @ 100/- per day. 2. The penalty levied of Rs. 1,96,600/- may please be deleted. 3. The assessee craves to amend, alter or delete any of the ground of appeal
.”
2. The background facts leading to present appeal are such that the assessee is a society engaged in charitable purpose for welfare of persons with HIV. The assessee is holding registration u/s 12A/12AA granted by Commissioner of Income-tax, Ujjain vide Order dated 30.07.2014. For AY 2014-15, the assessee filed return of income on 23.05.2015 declaring a total income of Rs. Nil. The AO found certain defects in the return so filed and accordingly issued notice u/s 139(9) dated 10.09.2015 giving an opportunity to assessee to rectify defect. However, finding no response from assessee, the AO treated assessee’s return as “invalid” in terms of provision of section 139(9). Subsequently, the AO initiated penalty-proceeding u/s 272A(2)(e) for treating it as a case of assessee’s failure to furnish return of income u/s 139(4A) and ultimately imposed a penalty of Rs. 1,96,600/- (for 1966 days @ Rs. 100/- per day from 31.07.2014 to 17.12.2019) vide penalty-order dated 28.01.2022. Aggrieved, the assessee carried matter to CIT(A) but did not get any success. Now, the assessee has approached this Tribunal by way of next appeal.
We have heard learned Representatives of both sides and carefully perused the case record including the orders of lower-authorities and examined the facts of case in the light of applicable provisions of law.
At first, we refer the provision of section 139(4A) of the Act reading as under:
“(4A) Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2, shall, if the total income in respect of which he is assessable as a representative assessee (the total income for this purpose being computed under this Act without giving effect to the provisions of sections 11 and 12) exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act subsections may be, apply a shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1).”
Thus, section 139(4A) obligates an assessee to furnish return only if the total income (before giving exemption u/s 11/12) had exceeded the maximum amount not chargeable to tax. With the assistance of Ld. AR for assessee, we have found from audited financial statements available at Pages 16-20 of Paper-Book that the gross-receipts of assessee from different sources for the relevant AY 2014-15 were just Rs. 97,209/- and the amount applied to charitable purposes (i.e. expenses incurred) was Rs. 1,00,546/- leaving a net loss/deficit of Rs. 3,337/-. Thus, the total income of assessee (before claiming exemption u/s 11/12) was Rs. 97,206/- whereas the exemption limit (i.e. the maximum amount not chargeable to tax) for the Page 3 of 4 relevant year was Rs. 2,00,000/-. As the income of Rs. 97,206/- did not exceed the exemption limit of Rs. 2,00,000/-, the section 139(4A) did not obligate the assessee to furnish any return of income to department.
Although the assessee voluntarily filed return but the same was not required by section 139(4A). Therefore, when there was no obligation to furnish return, there was no failure and consequently no penalty was attracted. Ld. DR for revenue though relied upon the orders of lower authorities yet could not controvert this position of assessee’s case in the light of language of section 139(4A). Faced with this situation, we delete the penalty imposed by AO. The assessee succeeds in this appeal.
Resultantly, this appeal is allowed.
Order pronounced in open court on 25/09/2025