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Facts
The assessee, a non-resident, failed to file an income tax return for Assessment Year 2015-16. The Assessing Officer levied a penalty of Rs. 5,000 under Section 271F, which was upheld by the CIT(A). The assessee contended having no taxable income and not receiving the statutory notices.
Held
The Tribunal found that the assessee had no taxable income and the Revenue failed to prove proper service of notices. It concluded that the non-filing and non-response were due to circumstances beyond the assessee's control, constituting a reasonable cause. Therefore, the levy of penalty under Section 271F was not justified and was accordingly deleted.
Key Issues
Whether a penalty under Section 271F for non-filing of income tax return can be sustained when the assessee had no taxable income, notices were not properly served, and reasonable cause existed for the non-compliance.
Sections Cited
271F
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Income Tax Appellate Tribunal, COCHIN
Before: HON’BLE SHRI INTURI RAMA RAO & SHRI HON’BLE MANU KUMAR GIRI
आयकर अपीलीय अ�धकरण �ायपीठ, कोचीन IN THE INCOME TAX APPELLATE TRIBUNAL, COCHIN माननीय इंटूरी रामा राव, लेखा सद� एवं माननीय �ी मनु कुमार �ग�र, �ा�यक सद� के सम� BEFORE HON’BLE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI HON’BLE MANU KUMAR GIRI, JUDICIAL MEMBER आयकर अपील सं./ �नधा�रण वष� /Assessment Year: 2015-16 Prathapa Chandra Menon, The Asst. Commissioner of Menon Mar Madom, Vs. Income Tax, Ambalapuzha Fast EDB.O, Alappuzha. Ambalappuzha, Alappuzha – 688 561. PAN: CMZPM 2672R (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : None ��यथ� क� ओर से /Respondent by : Smt. Leena Lal, Snr A.R सुनवाई क� तार�ख/Date of Hearing : 06.11.2025 घोषणा क� तार�ख /Date of Pronouncement : 28.11.2025 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member):
The captioned appeal filed by the assessee is directed against order of the Ld. Commissioner of Income Tax (Appeal)/NFAC, Delhi [‘CIT(A)’ in short] dated 12.09.2025 for Assessment Year 2015-16 Prathapa Chandra Menon.
:- 2 -: confirming imposition of penalty u/s.271F of the Income tax Act, 1961 (‘Act’ in short).
The assessee has raised several grounds challenging the levy of penalty u/s 271F. In essence, the grievance of the assessee is that the penalty has been wrongly levied despite the fact that the assessee had no taxable income for the relevant assessment year.
The assessee is a non-resident, and the statutory notices allegedly issued by the AO were never received. The non-filing of return and non-response to notices were not wilful, and were due to circumstances beyond the assessee’s control. The penalty order violates the principles of natural justice.
Facts of the case is that the assessee, a non-resident individual, did not file a return of income for A.Y. 2015-16. The Assessing Officer issued penalty proceedings u/s 271F and imposed a penalty of Rs.5,000/- for failure to file the return within the prescribed time.
The assessee contended that he had no taxable income and that Prathapa Chandra Menon.
:- 3 -: the notices sent by the AO were not received. The CIT(A) upheld the penalty.
We have carefully considered the rival submissions and perused the record. The assessee has consistently maintained that he had no taxable income for the year. The Revenue has not brought any material on record to contradict this claim. When there is no taxable income, the obligation to file return is materially diluted, and penalty for non-filing becomes unsustainable in the facts of the case.
Further, the assessee is a non-resident, and it is plausible that notices issued at his last known address went unnoticed. The Revenue has not demonstrated proper service of notice. Penalty cannot be sustained when the assessee was deprived of an effective opportunity to comply. The non-response to notices was due to reasons beyond the assessee’s control. There is nothing on record to show that the default was intentional or deliberate. Penalty u/s 271F is imposable only where failure is without reasonable cause. In this case, reasonable cause exists. Considering the above facts and the settled legal position that penalty cannot be levied where there is reasonable cause, we hold that the levy of penalty u/s Prathapa Chandra Menon.
:- 4 -:
271F in the present case is not justified. Accordingly, the penalty of Rs. 5,000 levied u/s 271F is hereby deleted.
In the result, appeal filed by the assessee is allowed.
Order pronounced on 28th day of November, 2025 at Cochin.