M/S DIVYA ENTERPRISE,SURAT vs. INCOME TAX OFFICER, WARD - 3(3)(2), SURAT
What did the Tribunal hold?
The Tribunal held that the assessee had no obligation to file a return of income as there was no taxable income. The bank statement for the relevant period showed no credit of the alleged loan amount. Therefore, the penalty under Section 271F was not justified.
What were the facts?
The Assessing Officer levied a penalty of Rs. 5,000 under Section 271F for non-filing of return of income. The AO reopened the case based on information that the assessee had taken an accommodation entry of a loan. The assessee claimed their business was closed since 2009 and had no taxable income.
What were the issues?
Whether penalty under Section 271F is justified when the assessee has no taxable income and did not receive the alleged loan. Whether the reopening of assessment and subsequent penalty were based on verified facts.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Assessee represented by Shri Arjav Vidani, CA Department represented by Shri Vinod Kumar, Sr. DR Date of Institution of appeal 28/03/2023 Date of hearing 20/04/2023 Date of pronouncement 21/04/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income Tax (Appeals) (in short, the ld. CIT(A)) dated 31/01/2023 for the Assessment Year (AY) 2014-15. The assessee has raised following grounds of appeal: “1. Learned Assessing Officer has erred in law ad fact by imposing penalty under Section 271F of Rs. 5,000/-
2. Your appellant prays and with your Honours pre permission reserve the right to add, alter, amend or withdraw ay of above ground of appeal.”
2. Brief facts of the case are that the Assessing Officer levied penalty of Rs. 5,000/- under Section 271F of the Income Tax Act, 1961 (in short, the M/s Divya Enterprise Vs ITO Act) vide order dated 29/06/2018 by holding that the case of assessee was reopened on the basis of information that the assessee has taken accommodation entry of loan from M/s Tishiya Trading Company, which is sister concern of Kamal Zaveri Group, which is a paper company, involving in providing accommodation entries. The assessee obtained unsecured loan of Rs. 15.00 lacs on 7th March 2014, from Tishiya Trading Company, which escaped the assessment and required to be taxed. The Assessing Officer after serving notice under Section 148 of the Act dated 01/03/2017 and serving various other notices, completed assessment under Section 144 r.w.s. 147 of the Act determining total income of Rs. 15.00 lacs. The Assessing Officer also initiated penalty under Section 271F of the Act by taking a view that the assessee has not filed return of income for the assessment year under consideration. Show cause notice for levy of penalty was issued to assessee on 22/12/2017. The Assessing Officer recorded that no reply of such show cause notice was filed by the assessee. The Assessing Officer accordingly passed the order under Section 271F dated 29/06/2018.
3. Aggrieved by the penalty under Section 271F of the Act, the assessee filed appeal before the ld. CIT(A)/NFAC. Before the ld. CIT(A), the assessee submitted its written submission vide submission dated 15/11/2022. The submission of assessee are recorded in para 7.2 of order of ld. CIT(A). In the submission, the assessee stated that the assessee M/s Divya Enterprise Vs ITO firm closed their business in the year 2009 and left Surat. The notice was served at the address which was left, in fact, the notice was not served on the assessee. The person who has occupied the erstwhile place of business, informed the assessee at their native place to comply the assessment proceedings. The assessee participated in the assessment proceedings which is duly acknowledged by the Assessing Officer in the assessment order. The case of assessee was reopened due to identical name with some other tax evader. The addition in the assessment order and penalty was levied without verification. The ld. CIT(A) after considering the submission of assessee, dismissed the appeal by holding that the Assessing Officer was justified in imposing penalty under Section 271F of the Act of Rs. 5,000/- for non-filing of return of income. Further aggrieved, the assessee has filed the present appeal before this Tribunal.
I have heard the submissions of learned Authorised Representative (ld. AR) of the assessee the learned Senior Departmental Representative (ld. Sr. DR) for the revenue. The ld. AR of the assessee submits that the business of assessee firm was closed in 2009. After closing of business of assessee, no income was accrued, earned or arise in favour of assessee. Since, there was no taxable income, the assessee has no obligation to file return of income. The case of assessee was reopened due to similarity of name of some other person. The assessee has not received any loan amount of Rs. 15.00 lacs as alleged by the Assessing Officer, while making
More judgments on Section 271F
- Anuragraiji Vallabhraiji Goswai, Surat vs Income Tax Officer, Ward-2(2)(1), SuratITA 643/SRT/2024[2008-09]Status: Disposed7 Oct 2026AY 2008-09
- Krunal Bharat Bha vs Ar, Ahmedabadvs.the Income Tax Officer…ITA 332/AHD/2026[2015-16]Status: Disposed30 Sept 2026AY 2015-16
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- Imran Khan, Chandigarh vs The Commissioner of Income Tax Appeals…ITA 689/CHANDI/2026[2016-17]Status: Disposed28 Sept 2026AY 2016-17
- Imran Khan, Manimajra vs The Commissioner of Income Tax Appeals…ITA 688/CHANDI/2026[2016-17]Status: Disposed28 Sept 2026AY 2016-17
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