Penalty u/s 271F not leviable as post search there was delay in providing seized documents

Pankaj Chimanlal Lodhiya Vs ACIT (ITAT Rajkot)

ITAT Rajkot held that penalty under section 271F of the Income Tax Act not leviable as post search there was delay in providing seized documents. Further, Checking, cross checking and reconciliation of datas was a very lengthy process is also a reasonable cause for non-furnishing of income tax return.

Facts- AO initiated the penalty proceedings u/s. 271F of the Act vide notice dated 27.02.2020 requiring the assessee to show cause as to why penalty u/s. 271F of the Act should not be levied for not filing the Returns of Income. In response, the assessee vide letter dated 14.03.2020 submitted that penalty u/s. 271F of the Act can be levied only in case of failure to furnish return of income u/s. 139(1) of the Act and its provisos. The Assessee having filed original Returns of Income before the end of the relevant assessment years, therefore u/s. 271F penalty is not applicable in the present case.

AO in total disregard to the facts of the case and submissions made by the assessee, levied penalty of Rs. 5,000/- each for all the three Assessment Years vide orders dated 30.09.2020 u/s. 271F of the Act.

Conclusion- We address this issue first namely the assessee’s explanation pursuant to the search action u/s. 132 of the Act, various books of accounts, diaries, papers were seized by the Department which were voluminous and pertaining to different group concerns. Checking, cross checking and reconciliation of datas was a very lengthy process. Further there was considerable delay in furnishing seized documents was also a “reasonable cause” in filing the Returns of Income. Without the above information, the assessee was not able to file the Returns of income within the stipulated time limit of 30 days of the receipt of the notice. Further the assessee also gone to the Settlement Commission, where his application for settlement of the case was admitted on 14.08.2014 is also a valid “reasonable cause”, which prevented the assessee from filing the Returns of income, in response to the 153A notices. On this count, the penalty levied u/s. 271F r.w.s. 273B is legally not valid. Therefore we hereby delete the penalties levied u/s. 271F of the Act.

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