G M Builders Vs PCIT (ITAT Mumbai)
Assessee is a partnership firm who filed its return of income after 148 notice was issued. PCIT issued a notice after verification of the assessment records that the assessment was framed on the income declared in the return filed u/s 148. This implies that despite assessee’s income being greater than the maximum amount not chargeable to tax, he did not file the return of income and this return was furnished for the first time u/s 148. It was held that assessee has to be considered as a person who has under-reported its income u/s 270A(2)(b). However in the assessment framed, AO has not initiated the said penalty proceedings u/s 270A. Thus according to PCIT, the said assessment order is said to be erroneous in so far as it is prejudicial to the interest of Revenue u/s 263.
In response to notice issued during 263 proceedings, assessee submitted that the return of income could not have been filed due to non-cooperation of one of its partners who neither signed the accounts nor paid taxes payable by the firm. Assessee submitted that the firm had paid advance tax and declared profit which shows the intention of the firm that the return was to be filed and hence submitted that there was bona fide explanation which does not justify levy of penalty u/s 270A.
