Shakaldev Mishra Vs Deputy /ACIT (ITAT Kolkata)
After the Amendment effected on 1st April, 1989, penalty under section 140A(3) is not imposable on non-payment of taxes on the returned income because that would be compensated by way of interest charged upon the assessee. The Tribunal has made reference to the CBDT Circular bearing No. 549 of 31.10.1989 particularly paragraph no. 4.17 and 4.18. Relying upon the coordinate bench decision in Heddle Knowledge Pvt. Ltd. vs. ITO, the penalty under section 140A(3) has been deleted.
In a significant ruling, the Income Tax Appellate Tribunal (ITAT) Kolkata has held that penalties for non-payment of taxes on returned income, as specified under Section 140A(3) of the Income Tax Act, cannot be imposed for assessment years after 1989-90. The decision was made in the case of Shakaldev Mishra Vs Deputy/Assistant Commissioner of Income Tax, regarding the assessment year 2014-15.
The appellant, Shakaldev Mishra, had filed an appeal against a penalty of ₹1,67,844 imposed by the Assessing Officer (AO) under Section 221(1) read with Section 140A(3) for non-payment of taxes on the returned income. This penalty had been upheld by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi.
Case Background
In his appeal before the ITAT, the appellant argued that the penalty was wrongly levied as the law no longer permitted such penalties post-AY 1989-90. Mishra’s counsel pointed to the precedent set by the ITAT Mumbai in the Heddle Knowledge Private Limited vs. ITO case (ITA No. 7509/MUM/2011), which dealt with a similar situation. The Mumbai tribunal had ruled that penalties under Section 140A(3) were no longer applicable after the amendment to the Income Tax Act.
