Delhi ITAT Cancels Penalty U/S 271F, Didn’t Prove Liability for ITR Filing

The Delhi bench of the income-tax appellate tribunal (ITAT) has issued a positive decision in favour of an 83-year-old widow who was not required to file her IT return. The fine levied on her for failing to file her tax return was set aside by the tax tribunal.

This Gurgaon-based 80-year-old had never filed an I.T. return because she was a homemaker and had no taxable income, so it is understandable that she was shocked to receive a demand for Rs. 5,000 as a penalty for missing the deadline to file the ITR under the former section 271F of the I.T. Act. This action was made in relation to the 2011–2012 fiscal year. Even worse, the commissioner (appeals) failed to give clear instructions on this penalty.

It should be noted that as of April 1, 2018, section 234 F’s provisions have taken the place of those found in section 271F. The current fine for filing an I-T return after the deadline is Rs 5,000 (or Rs 1,000 for small taxpayers whose total income does not exceed Rs 5 lakh). She made the brave decision to engage in combat. She argued before the ITAT that the assessment order under section 144 and section 147 of the I-T Act was incorrectly framed by the I-T officer. The right process wasn’t followed. The evaluation is done in accordance with the I-T office’s “best judgment” based on the evidence at hand, and orders granted under this provision are ex-parte.

Later, despite the fact that she had appealed this decision and claimed that she was exempt from filing a return for the in question financial year, the Commissioner for Appeals did not take this into account as part of the impersonal appeals process. She informed the ITAT that this order was unconstitutional for a number of reasons.

She emphasized that the section 271F penalty is advisory rather than obligatory. The penalty order was arbitrarily issued, unconstitutional, and without jurisdiction since she had a “reasonable cause” for not filing the I-T return.

The language of the order issued by the Commissioner (Appeals) was examined by the two-person ITAT bench, which was made up of C M Garg, a member of the judiciary branch, and B R R Kumar, an accountant. The I-T officer may have waived the penalty in accordance with section 271F, but the sentence lacks any specifics. In its ruling last month, the ITAT court quashed the Rs 5,000 fine and stated, “We find the order of the Commissioner (Appeals) is approbated and reprobate without any rhyme or reason.”