Delhi ITAT Set Aside Penalty Imposed on 83-Year-Old Woman for Failure to File Income Tax Return

the recent decision by the Delhi Bench of Income Tax Appellate Tribunal (ITAT) to set aside a penalty imposed on an 83-year-old woman for not filing her Income Tax Return.

Delhi ITAT Sets Aside Penalty Imposed on 83-Year-Old Woman for Not Filing Income Tax Return

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The Delhi Bench of Income Tax Appellate Tribunal (ITAT) recently made a significant decision in favor of an 83-year-old woman who was penalized for not filing her Income Tax Return. The Gurgaon-based super senior citizen, who had never filed an I-T Return as she was a homemaker and did not have taxable income, was shocked to receive a demand of Rs 5,000 as a penalty under section 271F of the Income Tax Act for not filing the tax return on time.

In her appeal against this order, the woman submitted that she was not liable to file a return for the financial year in dispute. Despite her arguments, the Commissioner (Appeals) under the faceless appeal mechanism did not consider this fact. Realizing the flaws in the order, she subsequently presented her case to the ITAT, highlighting various grounds on which the penalty should be deemed unlawful.

During the ITAT proceedings, the appellant emphasized that the penalty imposed under section 271F is directory and not mandatory, as she had a ‘reasonable cause’ for not filing the IT return. She went on to challenge the order, deeming it arbitrary, illegal, and lacking jurisdiction. Importantly, she noted that the provisions of Section 271F had been substituted with section 234F from April 1, 2018.

Pointing out errors made by the Income Tax Officer in framing the assessment order under section 144 read with section 147 of the IT Act, she argued that a proper procedure was not followed. Furthermore, she brought attention to the fact that orders passed under this section are ex-parte, and the assessment is carried out based on the ‘best judgement’ of the IT office using available material.

The two-member ITAT bench, composed of C.M. Garg (judicial member) and BRR Kumar (accountant member), reviewed the wording of the Commissioner (Appeals)’s order and ultimately quashed the penalty of Rs 5,000 in their decision. This verdict provides relief

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