MUMBAI: An 83-year-old widow, who was not liable to file her IT return, has obtained a favourable order from the income-tax appellate tribunal (ITAT), Delhi bench. The tax tribunal set aside the penalty imposed on her for not filing her tax return.
This Gurgaon-based octogenarian who had never filed an I-T return, as she was a homemaker and did not have taxable income, would have understandably been shocked to get a demand of Rs 5,000 — a penalty imposed under (erstwhile) section 271F of the I-T Act for not filing the tax return by the due date. This action was taken in respect of the financial year 2011-12. To make matters worse, the commissioner (appeals) did not provide a proper direction as regards this penalty.
It should be noted that the provisions of section 271F have been substituted with section 234 F from April 1, 2018. Currently, the penalty for late filing of an I-T return is Rs 5,000 (for small taxpayers whose total income is not more than Rs 5 lakh, it is Rs 1,000). The gutsy lady decided to fight it out. Before the ITAT, she submitted that the I-T officer made an error in framing the assessment order under section 144 read with section 147 of the I-T Act. A proper procedure was not followed. Orders passed under this section are ex-parte, and the assessment is carried out according to the ‘best judgment’ of the I-T office based on the available material.
Later, even though she had filed an appeal against this order and submitted that she was not liable to file a return for the financial year in dispute, the Commissioner (Appeals) under the faceless appeal mechanism, did not consider this fact. She submitted to the ITAT that this order was bad in law on various grounds.
She pointed out that the penalty under section 271F is directory and not mandatory. As she had a ‘reasonable cause’ for not filing the I-T return, the penalty order was arbitrary, illegal and without jurisdiction.