THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2(1), VIJAYAWADA vs. ESWARA PRASAD NADIPALLI, VIJAYAWADA

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ITA 99/VIZ/2025Status: DisposedITAT Visakhapatnam22 August 2025AY 2018-196 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the deletion of the penalty by the Ld. CIT(A) was justified. It was an admitted fact that the assessee did not file the return voluntarily under Section 139(1) but did so in response to a notice under Section 148, disclosing the rental income available in Form 26AS. Crucially, there was no variation between the returned income and the assessed income. The Tribunal considered the assessee's submission that bank accounts were frozen due to non-payment of PF arrears for earlier years, which prevented the assessee from discharging the income tax payment for the impugned assessment year. The Tribunal agreed with the Ld. CIT(A)'s finding that the AO was not justified in imposing the penalty under Section 270A, as there was a bonafide cause for the non-filing of the return under Section 139(1) and no under-reporting of income attracting the penalty provisions. Therefore, no interference with the Ld. CIT(A)'s order was required, and the grounds raised by the revenue were dismissed.

What were the facts?

The Revenue is in appeal against the order of the Ld. CIT(A) for Assessment Year 2018-19. The assessee, an individual, did not file a return of income under Section 139(1) for AY 2018-19. Based on information regarding house property income of Rs. 1,00,80,000/-, the Assessing Officer (AO) initiated proceedings under Section 147 and issued a notice under Section 148. In response, the assessee filed a return admitting total income of Rs. 1,00,80,000/-. The AO assessed the income as per the return. Subsequently, the AO initiated penalty proceedings under Section 270A, citing the failure to file a voluntary return and imposing a penalty of Rs. 65,37,926/-. The Ld. CIT(A) allowed the assessee's appeal and directed the deletion of the penalty.

What were the issues?

1. Whether the Ld. CIT(A) erred in deleting the penalty of Rs. 65,37,926/- levied under Section 270A of the Income Tax Act, 1961, when the assessee failed to file the return of income under Section 139(1), leading to the escapement of income? Assessee's Contentions: - The rental income was captured in Form 26AS, and there was no under-reporting of income. - The assessee could not file the return voluntarily due to bank accounts being attached for non-payment of PF arrears in earlier years, preventing payment of income tax. - The return was filed under Section 148, disclosing income as per Form 26AS, and the assessment order was passed without additions. - The penalty is not justifiable. Revenue's Contentions: - The Ld. CIT(A) erred in deleting the penalty as it was justified due to the assessee's failure to file a return under Section 139(1), leading to income escapement. - The return was not filed voluntarily under Section 139(1). - If the notice under Section 148 had not been issued, the escapement of income would not have been unearthed, causing revenue loss. - The assessed income was based on departmental information, exceeding the maximum amount not chargeable to tax, thus attracting penalty under Section 270A for failure to furnish a return under Section 139(1).

Which sections of the Income-tax Act were involved?

Section 270A,Section 139(1),Section 147,Section 148,Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM

Before: SHRI RAVISH SOOD, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE

For Appellant: Shri CR. Hemanth Kumar, CA

आदेश /O R D E R

PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:

1.

This appeal is filed by the revenue against order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1071418559(1) dated 20.12.2024 for the

2.

Brief facts of the case are, assessee being an individual did not file the return of income for the A.Y. 2018-19. According to the information available with the department with regard to income of Rs.1,00,80,000/- from house property during the F.Y. 2017-18, the Ld. Assessing Officer [in short “Ld. AO”] initiated proceedings under section 147 of the Act and issued notice under section 148 of the Act. In response to the notice under section 148 of the Act, assessee filed his return of income on 23.05.2022 admitting a total income of Rs.1,00,80,000/-. After issuing the statutory notices under section 142(1) of the Act along with the questionnaire the Ld. AO assessed the income as per the return of income filed by the assessee. Subsequently, Ld. AO also initiated penalty proceedings under section 270A of the Act citing that assessee has not voluntarily has filed return of income under section 139(1) of the Act but has only filed in response to notice under section 148 of the Act and hence i.e., under reporting of income attracting the provisions of section 270A of the Act. He therefore proceeded to impose penalty of Rs.65,37,926/- under section 270A of the Act for under report of income form the impugned assessment year.

3.

On being aggrieved by the penalty order, assessee filed an appeal before Ld. CIT(A). Ld. CIT(A) in its detailed order considering the various judicial

Page No. 2

4.

On being aggrieved by the order of the Ld. CIT(A), revenue is in appeal before us by raising following grounds in its appeal: -

1. The order of the Ld. CIT(A) is erroneous on facts and in circumstances of the case.

2. The Ld. CIT(A) erred in deleting the penalty of Rs.65,37,926/- levied u/s.270A of the Income Tax Act, 1961, as the penalty levied is justified when the assessee failed to file the return of income under section 139(1) of the I.T.Act, 1961 leading to the escapement of income.

3. The Ld. CIT(A) erred in ignoring the fact that the return of income was not filed voluntarily u/s. 139(1) of the I.T.Act, 1961 for the A.Y.2018-19 4.. The Ld. CIT(A) erred in not appreciating the fact that if the notice u/s. 148 of the Income Tax Act, 1961 had not been issued to the assessee for the A.Y. 2018-19, the escapement of income by the assessee would not have been unearthed causing revenue loss.

5.

The Ld.CIT(A) erred in ignoring the fact that the income assessed wasbased on the information available with the department which is greater than the maximum amount not chargeable to tax, which leads to levy of Penalty u/s.270A of the I.T.Act, where no return of income has been furnished as per provisions of section 139(1) of the I.T. Act, 1961.

6.

The Ld. CIT(A) erred in allowing the assessee's grounds of appeal

and holding that the Assessing Officer is not justified in imposing the penalty imposed u/s.270A of the Income-tax Act, 1961.

7. Any other ground that may be urged at the time of appeal hearing.”

5. The only issue contested by the revenue is with respect to the deletion of penalty by the Ld. CIT(A). On this issue, Ld. Departmental Representative (hereinafter in short “Ld. DR”) heavily relied on the orders of the Ld. AO and argued that, if notice under section 148 of the Act was not issued assessee

Page No. 3 Eswara Prasad Nadipalli would not have filed return of income and hence to that extent there is under reportingof income by the assessee and therefore the penalty levied by the Ld.AO is justified.

6. Per contra, Ld. Authorized Representative (hereinafter in short “Ld.AR”) submitted that the rental income was duly captured in Form 26AS available with the department and there is no under reporting of income by the assessee. Further, he also stated that the bank account of the assessee was attached towards non-payment of PF by the assessee for the earlier years. Assessee could not file the return of income as he could not make the payment for tax, since the bank accounts are attached by the Government on account of non-payment of PF arrears. However, the assessee filed his return of income under section 148 of the Act duly disclosing the rental income as available in Form 26AS and the Assessment Order was passed without making any additions. Ld.AR therefore submitted that the penalty levied is not justifiable and hence prayed for its deletion and upholding the order of the Ld. CIT(A).

7.

We have heard both the sides and perused the material available on record. It is an admitted fact that the assessee has not filed his return of income voluntarily under section 139(1) of the Act but has filed in response to notice under section 148 of the Act by disclosing the rental income available in Form 26AS. It is also not disputed that there is no variation between the returned income and the assessed income. The only contentionof the revenue is that if Page No. 4 Eswara Prasad Nadipalli the notice under section 148 of the Act not been issued, assessee would not have declared the rental income and filed return of income. However, as submitted by the Ld.AR, the assessee’s bank account was frozen due to non-payment of PF for earlier years and hence assessee was not having funds to discharge payment of income tax arising out of the rental income for the impugned assessment year deserves consideration. Ld. CIT(A) in his detailed order by relying on various judicial pronouncement has held that the Ld. AO is not justified in imposing penalty under section 270A of the Act since the assessee was prevented with bonafide cause for non-filing return of income under section 139(1) of the Act. Further it is also observed that there is no difference between returned income and the assessed income attracting the provisions of levying penalty under section 270A for under-reporting of income. We are in agreement with the findings of the Ld. CIT(A) and hence no interference in the order of the Ld. CIT(A) is required. This ground raised by the revenue are dismissed.

8.

In the result appeal filed by the revenue is dismissed.

Order pronounced in the open court on 22nd August, 2025.

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