Sarojben Urmishbhai Shah Vs ITO (ITAT Ahmedabad)
Section 271(1)(c) Penalty Deleted Where Non-Filing Had Reasonable Cause; Section 271(1)(c) Penalty Deleted as Explanation 3 Conditions Not Met; Return Filed After Section 148 Notice Does Not Automatically Attract Penalty: ITAT Ahmedabad
Summary: The appeal was filed by the assessee against the order dated 12.01.2026 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, confirming penalty of Rs.55,870/- under Section 271(1)(c) of the Income Tax Act, 1961. The appeal relates to Assessment Year 2016-17, as stated in paragraph 1 of the order.
The assessee had initially not filed a return of income. Subsequently, a notice under Section 148 of the Act was issued and the assessee filed a return declaring income of Rs.6,45,230/-. The income declared in the return filed in response to the Section 148 notice was accepted in the reassessment proceedings without any addition or disallowance. Despite this, penalty under Section 271(1)(c) was initiated and levied.
The CIT(A) confirmed the penalty on the reasoning that the assessee had taxable income but had not filed the return under Section 139 or paid tax thereon. According to the CIT(A), the return was filed only after the assessee was confronted by the Revenue through reassessment proceedings. The CIT(A) accordingly held that failure to furnish the return despite having taxable income fell within the purview of Section 271(1)(c).
