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Facts
The assessee failed to file income tax return for AY 2015-16 despite purchasing an immovable property and having salary income. The assessment was reopened, and a return was filed declaring income which was accepted. Subsequently, penalty proceedings were initiated for alleged concealment of income.
Held
The Tribunal held that the failure to file the return of income does not automatically amount to concealment, especially when the assessee is a salaried employee and the income was declared upon notice. The penalty was levied without sufficient justification and consideration of the assessee's submissions.
Key Issues
Whether penalty under Section 271(1)(c) is leviable for non-filing of return when the income was subsequently declared and accepted, and whether it constitutes concealment of income.
Sections Cited
148A, 148, 147, 144B, 271(1)(c), 139(1), 1941A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘B’: NEW DELHI
(Assessment Year: 2015-16) Venkatesh Raghav Rao Hebbani, vs. ITO, Ward 34 (5), 37 13, Old Rajendra Nagar, Delhi. Delhi – 110 060. (PAN : ABKPH5634E) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Shubham Jain, CA REVENUE BY : Shri Rajesh Kumar Dhanesta, Sr. DR Date of Hearing : 01.07.2025 Date of Order : 26.09.2025 O R D E R
PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :
The assessee has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short] dated 26.11.2024 for the Assessment Year 2015-16.
Brief facts of the case are, assessee had not filed return of income for AY 2015-16. As per the information available on record with the Department, the assessee had purchased an immovable property of Rs1,21,00,000/- and the assessee is having salary income of Rs.23,78,037/-. Accordingly, the assessment was reopened by an order of section 148A(d) and notice u/s 148 of the Income-tax Act, 1961 (for short ‘the Act’) was issued on 30.03.2022. In response, assessee filed return of income 26.07.2022 declaring gross income of Rs.27,07,956/- and net taxable income of Rs.26,78,220/- claiming deduction u/s Chapter-VIA to the extent of Rs.29,739/-. Subsequently, the assessment was completed u/s 147/144B of the Act by accepting the returned income declared by the assessee.
Subsequently, penalty proceedings were initiated u/s 271(1)(c) of the Act and after considering the submissions of the assessee, during penalty proceedings, the AO proceeded to levy the penalty treating the declared income as concealed income and the assessee has filed return of income and declared the abovesaid income only after issuance of notice u/s 148 and failed to offer the income for tax voluntarily and levied the penalty of Rs.6,47,320/-.
Aggrieved assessee preferred an appeal before the NFAC, Delhi and after considering the submissions of the assessee, penalty was sustained.
5. Aggrieved assessee is in appeal before us raising following grounds of appeal :- “The appellant prefers this appeal against the order of the CIT(A) dated 26/11/2024, on the following grounds:
1. Penalty Proceedings Initiated without Justification:
The learned CIT(A) erred in confirming the penalty under Section 271(1)(C) of the Income Tax Act, without appreciating that the appellant's income was duly disclosed and accepted during reassessment proceedings, leaving no basis for concealment.
2. Misinterpretation of Concealment: The learned CIT(A) failed to appreciate that non-filing of the return of income within the due date under Section 139(1) does not automatically amount to concealment of income or furnishing of inaccurate particulars, as defined under Section 271(1)(c).
3. Bonafide Explanation Ignored: The learned CIT(A) overlooked the reasonable cause provided by the appellant, including financial hardships and delays due to valid reasons, which were supported by the principles established in CIT vs. Suresh Chandra Mittal (241 ITR 124) and CIT vs. Reliance Petroproducts (322 ITR 158).
4. Erroneous Confirmation of Penalty: The CIT(A) erred in confirming the penalty without appreciating that: TDS was already deducted by the employer. Relevant taxes on the immovable property transaction were duly paid under Section 194IA. No deliberate intention of concealment existed on the appellant's part.
Non-Applicability of Penalty Provisions: The penalty under Section 271(1)(C) is unsustainable as per Explanation 3 to the said section, where the failure to file a return was neither willful nor aimed at concealing income.
Violation of Natural Justice: The penalty order suffers from procedural lapses and violates the principles of natural justice, as the penalty was imposed without adequate consideration of the appellant's submissions.
7. Quantum and Grounds Open for Modification: The quantum of penalty is excessive and unwarranted, and the appellant reserves the right to add, modify, or withdraw grounds of appeal during appellate proceedings. PRAYER The appellant respectfully prays that:
1. The penalty of Rs. 6.47,320 levied under Section 271(1)(C) be quashed and set aside. 2. Any other relief that the Honorable Tribunal may deem fit in the interest of justice may also be granted.”
6. At the time of hearing, ld. AR of the assessee brought to our notice relevant facts on record and submitted that the assessee is a salaried employee and on issuance of notice, assessee filed return of income and declared the income and not concealed any income and prayed that the penalty may be deleted.
On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities.
Considered the rival submissions and material placed on record. We observe that the assessee had not filed return of income for the impugned assessment year under consideration. In response to notice issued u/s 148 of the Act, assessee filed return of income and declared the salary income and other income during the year under consideration. The AO has accepted the returned income and completed the assessment. The penalty was initiated on the basis that assessee has declared income only upon issuance of notice u/s 148 and had not offered income voluntarily. It is fact on record that assessee had not filed return of income, however, on receipt of notice issued u/s 148, assessee had filed the return of income and declared all the material facts and income before the AO and the same was accepted and completed the assessment. We observe that AO had not found any mistake on the income declared by the assessee in response to the notice issued u/s 148 of the Act and the same return was accepted without there being any mistake apparent on record. It is also fact that assessee is a salaried employee and could not file return of income due to personal reasons. However, the majority of the income declared by the assessee is out of salary income. Considering the fact that assessee is a salaried employee and all the salary was already declared by his employer, therefore, there is no concealment of income to the extent of salary. Merely because assessee had not filed return of income does not mean there is concealment of income. Therefore, we are inclined to delete the penalty levied.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on this 26th day of September, 2025.