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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
This appeal has been filed by the assessee against the order of the Ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi dated 02.03.2021 in respect of Assessment Year: 2010-11.
2. The assessee has raised the following grounds of appeal:
Pritpal Kaur v. ITO “1. That the order passed by CIT(A) is against law and facts of the case.
2. That ld. CIT(A) has wrongly held that Authorized Representative of the assessee appeared before AO in the penalty proceedings but not mentioned about the sale of property at which the appellant residing earlier because AR has never been appeared before A.O. as original assessment was made ex-parte u/s 144 of the Income Tax Act.
That ld. CIT(A) has wrongly held that efforts were made by A.O. to serve notices on alternative address available on the AST Module as there is no alternative address available on the AST module.
That ld. CIT(A) has wrongly imposed penalty of Rs.5000/- u/s 271F of the Income Tax Act.
5. That the assessee craves to add, amend, modify, delete the grounds of appeal, before the same is heard or disposed off.”
3. None appeared for the assessee in spite of granted sufficient opportunity of being heard. However, considering the small issue, we decided to hear the Ld. DR and adjudicate the appeal. The appeal has been filed late by 80 days before the Tribunal. The appellant explained in the reasons for the delay in filing the appeal with the support of an affidavit duly certified by registered notary that he was not physically well during the period from April to May, 2021 due to Spine Trouble and doctor has advised bed rest. The short delay of 80 days is condoned, in view of the bonafide reason of the medical ground and accordingly, the appeal is admitted for adjudication on merits.
Pritpal Kaur v. ITO 4. The grounds raised are vague and not specific to issue. However, the assessee’s main grievance is that the ld. CIT(A) has wrongly imposed penalty of Rs.5000/- u/s 271F of the Act, which is factually incorrect. In fact, the penalty is imposed u/s 271F by the AO and sustained by the ld. CIT(A).
Briefly the facts are that notice u/s 148 was issued by the AO on account of information in his possession of investment of mutual funds in the name of the appellant to the extent of Rs.6 lacs during Financial Year under consideration and no return of income in response to notice u/s 148 was filed by the appellant. Finally, the assessment was completed by the AO u/s 144 r.w.s. 147 of the Act. Simultaneously, penalty proceedings u/s 271F for non-filing of return of income was initiated by AO. The AO passed the penalty order on 21.05.2018 levying penalty of Rs.5,000/- u/s 271F of the Act.
Aggrieved by the penalty order u/s 271F, the appellant filed an appeal before the Ld. CIT(A) who has confirmed the penalty by observing as under:
3.2 I have considered facts on record and the submission of the AR. The main argument of the appellant that notices and the assessment order were served at the address 377, Shardanand Gali Court, Jalandhar which was sold by the appellant in the year 2008 and since decided to reside with her daughter at 618, Phase 2, Urban Estate, Chandigarh Road, Ludhiana. I find that the AR of the Pritpal Kaur v. ITO appellant appeared before the AO in the penalty proceedings but not mentioned about the sale of the property at which the appellant was residing earlier and even in Column No. 11 of the Form No. 35, no such mention has been made by the appellant. Now, in the appeal proceedings the AR of the appellant is submitting that the appellant has sold the property 377, Shardanand Gali Court, Jalandhar at which the AO has affixed the notices and assessment order. No further substantiation with evidence has been made either before AO or in the appellate proceedings. On the other hand the AO is mentioning in the assessment order that the notices were also sent at the alternative address available with the department on the AST Module. It is evident that AO has made effort to serve the notices. It was the duty of the appellant / AR of the appellant to be vigilant about the notices / proceedings before the AO.
3.3 In view of the above discussion, I do not find any merit in the argument made by the AR on behalf of the appellant in his written submission. By that provision of section 271F the assessee was supposed to file her return. The appellant clearly falls within the ambit of section 271F. Therefore, the penalty of Rs.5,000/- levied by the AO vide his order dated 21.05.2018 u/s 271F is sustained.
The assessee contends in grounds that ld. CIT(A) has wrongly held that Authorized Representative of the assessee appeared before AO in the penalty proceedings but not mentioned about the sale of property at which the appellant residing earlier because AR has never been appeared before A.O. as original assessment was made ex-parte u/s 144 of the Income Tax Act and that ld. CIT(A) has wrongly held that efforts were made by A.O. to serve notices on alternative address available on the AST Module as there is no alternative address available on the AST module. The assessee filed written submission which reads as under:
Pritpal Kaur v. ITO “Facts of the case are that the assessee is a widow lady and suffers from various health ailments. She is uneducated lady and is not having any source of income. Previously the assessee was residing at H. No 377, Shardanand Gali Court, Jalandhar which she sold in the year 2008 due to the fact that she was alone and was not having any source of income. After the sale of house she resided with her daughter at 618. Phase 2, Urban Estate, Chandigarh Road, Ludhiana. In the meantime the department has issued a notice for verification of mutual fund transaction for an investment of Rs.6,00,000. She could not receive the notice as she has left Jalandhar. The assessing officer has made the best judgment assessment u/s 144 of IT Act and has imposed penalty u/s 271F of IT Act amounting to Rs.5,000.
The assessee filed appeal before the Commissioner of Income Tax (Appeals) but CIT (A) has confirmed the penalty on two grounds.
That the AR of appellant appear before the AO in the penalty proceedings but has not mentioned about the sale of the property at which the appellant was residing earlier.
That the notice issued by the AO was sent at the alternative address available with the department on the AST Module. Both the above grounds on which the CIT (A) has confirmed the penalty are contrary to the facts of the case neither counsel of appellant appeared before the AO in penalty proceedings nor notices were served at any other address by the AO as there was no other address available with the department.
The assessee is not having any taxable income, neither in the current year nor in the preceding years as she was not having any source of income. She is dependent on her daughter for livelihood at Ludhiana. So it is just an equitable that the penalty should be deleted. The assessee relies upon the judgment of Hon’ble ITAT Delhi in the case of R.S. INVESTMENT vs. INCOME TAX OFFICER, copy of order is enclosed.” The ITAT Delhi Benches, Delhi in the case of R.S. Investment v. Income Tax Officer [2011] 30 CCH 0535 Del Trib dated 30.09.2011, has observed as under: “5. While pleading on behalf of the assessee, the learned Authorised Representative submitted that the levy of penalty under s. 271F has been wrongly levied and the same is wrongly confirmed by the CIT(A). The assessee Pritpal Kaur v. ITO has filed regular returns and in this regard, an affidavit of its partner, Shri Radhey Shyam Gupta was filed before the AO. Since the firm was closed down, the records relating to the firm was not available, the necessary copy could not be made available. There is no time-limit to file return under s. 153A. He further submitted that for non- filing of the return under s. 153A, the provisions of penalty under s. 271F shall not be applicable. The penalty under s. 271F can be levied only when an assessee is required to file return under sub-s. (1) of s. 139 or by the proviso to that sub-section only. These provisions are for violation of provisions of s. 139 of IT Act. The s. 271F was inserted w.e.f. 1st April, 1997 by Finance Act, 1997, which had been amended/substituted by Finance (No. 2) Act, 1998 and Finance Act, 2001. The s. w.e.f. 1st April, 2001 read as under: "271F. Penalty for failure to furnish return of income.—If a person who is required to furnish a return of his income, as required under sub-s. (1) of s. 139, fails to furnish such return before the end of the relevant assessment year, he shall be liable to pay, by way of penalty, a sum of five thousand rupees : Provided that a person who is required to furnish a return of his income, as required by the proviso to sub-s. (1) of s. 139, fails to furnish such return on or before the due date, he shall be liable to pay, by way of penalty, a sum of five thousand rupees." Thus, as per these provisions, a person who is required to file a return of income, as required sub-s. (1) of s. 139, fails to furnish such return before the end of the relevant assessment year, he shall be liable to pay, by way of penalty, a sum of five thousand rupees. The penalty can also be levied when a person is required to furnish a return of income as required by the proviso to sub-s. (1) of s.
Prior to 1st April, 2006, the firms were not required to be filed return under s. 139(1) if its total income or the total income of any other person in respect of which it is assessable under this Act during the previous year does not exceed the maximum amount, which is not chargeable to income-tax. Thus, prior to 1st April, 2006, assessee was not liable to file return where income was not taxable. The assessment orders passed for the years 1999- 2000, 2000-01, 2003-04 and 2004-05 show that the income has been assessed at nil in all these years. It was below the amount of taxable income. Therefore, the assessee was not under the obligation to file the return of income under s. 139(1) for which the penalty under s. 271F could be levied. Further even non-filing the return in response to s. 153C, penalty for failure to furnish the return of income cannot be levied under s. 271F. He pleaded that prior to the omission of s. 271(l)(a) by the Direct Tax Laws Act, 1989, the penalty was leviable for non-furnishing the return and the provisions at that relevant time in existence are as under :
Pritpal Kaur v. ITO "271 Failure to furnish returns, comply with notices, concealment of income, etc.—(1) If the ITO or the AAC in the course of any proceedings under this Act, is satisfied that any person—
(a) has without reasonable cause failed to furnish the return of his total income which he was required to furnish under sub-s. (1) of s. 139 or by notice given under sub-s. (2) of s. 139 or s. 148 or has without reasonable cause failed to furnish it without the time allowed and in the manner required by sub-s. (1) of s. 139 or by such notice, as the case may be, or."
For inserting the penalty provisions under s. 271F, the intention of the legislature was only to levy the penalty under s. 271F, only when a person is required to furnish a return of his income, as required under sub-s. (1) of s. 139 or by the proviso to that sub-section and fails to furnish the return upto the end of the relevant assessment year. Assessee is not falling under that as no time-limit is fixed to file the return under s. 153A. He also pleaded that as held by the various Courts, the penalty provisions must be construed strictly. For this proposition, he relied on the following decisions:
(i) CIT vs. T.V. Sundaram Iyengar & Sons (P) Ltd. 1976 CTR (SC) 25 : (1975) 101 ITR 764 (SC); (ii) Asstt. CIT vs. Velliappa Textiles Ltd. (2003) 184 CTR (SC) 193 : (2003) 263 ITR 550 (SC); (iii) Engineers Impex (P) Ltd. & Ors. vs. D.D. Sharma (2000) 161 CTR (Del) 25 : (2000) 244 ITR 247 (Del).
Further he also pleaded that if the penalty is levied for not filing the original return in time then also it cannot be levied after such a long period as held in the various decisions that penalty cannot be levied beyond a reasonable time. For this proposition, he relied on the following decisions:
(i) Krishna Bhatta vs. ITO (1981) 23 CTR (Ker) 142 : (1981) 132 ITR 21 (Ker); (ii) Government Pictures vs. Jt. CIT (2004) 84 TTJ (Coach) 718: (2004) 90 ITD 248 (Coach). (iii) Noble Pictures vs. Jt. CIT (2004) 84 TTJ (Coach) 718 : (2004) 90 ITD 248 (Coach)
Pritpal Kaur v. ITO 8. We have heard the Ld. DR, perused the material on record, impugned order, written submission and case law cited before us.
Admittedly, the appellant assesse participated in the penalty proceedings before the AO but she didn’t mention about the sale of the property at which the appellant was residing earlier and even in Column No. 11 of the Form No. 35, no such mention has been made by the appellant. At the stage of appellate proceedings before the CIT(A) and Tribunal, the appellant contention that the appellant has sold the property 377, Shardanand Gali Court, Jalandhar at which the AO has affixed the notices and assessment order was passed u/s 144 of the Act is of no help to her.
The appellant has not substantiated with evidence any bonafide reason either before AO or in the 1st appellate proceedings or before us to controvert the default committed in filing return of Income inviting penalty u/s 271F of the Act. The AO has specifically mentioned in the assessment order that the notices were also sent at the alternative address available with the department on the AST Module. Thus, it is evident that AO has made effort to serve the notices. In our view, the assesse is required to file return of income in time in compliance to section 139(1), 142(1), 153A and 148 of the Act to avoid the penal action under section 271F of the Act. The Pritpal Kaur v. ITO citation relied upon by the appellant are distinguishable on peculiar facts of the instant case.
On similar fact, Hon’ble HIGH COURT OF MADHYA PRADESH in case of Rohit Agrawal vs. Principal Commissioner of Income-tax-II [2017] 85 taxmann.com 15 (Madhya Pradesh) justified levy of penalty u/s 271F while confirming the 264 order passed by the PCIT where from an AIR Information submitted by the bank, it came to the knowledge of Income-tax Department that the deposit of an amount was credited in the assessee's saving account during the financial year 2009-10, therefore, after issue of notice under sections 148 and 142(1) an ex parte assessment order was framed, not only holding that the assessee was liable to pay tax but also penalty under sections 271F and 271(1)(c).
In the present case, the appellant assesse was in default by not filing return of income in prescribed time as per section 148 of the Act.
Consequently, it clearly falls within the ambit of section 271F. From the material available on record, it is clear that the appellant participated in the penalty proceeding, however failed to controvert the default committed in not filing return within prescribed time as per provisions of law. In view of that matter, the Ld. CIT(A) is justified in sustaining the penalty of Rs.
Pritpal Kaur v. ITO 5,000/- levied by the AO vide his order dated 21.05.2018 u/s 271F of the Act.
We, therefore, find no merit and substance in the appeal and same is, therefore, dismissed.
Order pronounced in the open court on 07.08.2023