Dinesh Kumar Vs Deputy Commissioner (ITAT Delhi)
Delhi ITAT: No Penalty Under Section 271(1)(c) Where Reopened Return Was Accepted Without Any Addition
The Delhi ITAT quashed the penalty levied under section 271(1)(c), holding that where the return filed in response to a notice under section 148 is accepted without any addition, levy of penalty merely because the assessee had not filed the original return is unjustified.
The assessee’s appeal had initially been dismissed by the CIT(A) on the erroneous ground that Form No. 35 had not been filed. Before the Tribunal, however, the assessee produced the acknowledgment of Form No. 35 and evidence of its filing. The ITAT also noted that the CIT(A)’s order itself reproduced the grounds of appeal and the assessee’s submissions, clearly demonstrating that the appeal had in fact been filed. The Tribunal held that the dismissal was based on a misconstruction of facts.
On merits, the Tribunal observed that the assessment had been reopened under section 148 because the Department noticed the sale of an immovable property on which TDS had been deducted. In response to the notice, the assessee filed a return declaring total income of ₹6.12 lakh, including long-term capital gains of ₹5.56 lakh, and the Assessing Officer accepted the returned income without making any addition. Nevertheless, penalty proceedings under section 271(1)(c) were initiated solely on the ground that the assessee had failed to file the original return despite having taxable income.
The Tribunal further noted that almost the entire tax liability stood discharged through TDS, leaving only a negligible difference of ₹7 between the tax payable and taxes already paid. In these circumstances, it found no justification for sustaining the penalty.
Considering that the issue was fully covered by the material already on record, the ITAT held that no useful purpose would be served by remanding the matter to the CIT(A). Accordingly, it quashed the penalty under section 271(1)(c) and allowed the assessee’s appeal.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is preferred by the assessee against the order dated 28.10.2025 of the Ld. Commissioner of Income Tax (A)-43, Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in DIN & Order No: ITBA/APL/S/250/2025-26/1082044910(1) arising out of the penalty order dated 26.09.2024 u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by Circle, International Tax 2(1)(2), for AY: 2016-17.
