Tribunal overturns penalty for late tax return citing financial difficulties as reasonable cause

The Tribunal allowed the appeal against the penalty imposed under Section 271F of the Income Tax Act for the delay in filing the return of income for Assessment Year 2012-13. The Tribunal considered the appellant's financial difficulties as a reasonable cause for the delay, admitted additional evidence supporting the reasons for delay, and remanded the case to the Assessing Officer for reconsideration based on the new evidence. The appellant was granted an opportunity to present their case, emphasizing the importance of considering reasonable causes for delays in filing returns.

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Issues:
Appeal against penalty under Section 271F of the Income Tax Act, 1961 for Assessment Year 2012-13. Delay in filing return of income. Reasonable cause for delay. Admissibility of additional evidence.

Analysis:
The appellant, a software development company, filed the return of income for Assessment Year 2012-13 on 28.5.2013, missing the due date of 30.11.2012. The Assessing Officer imposed a penalty of Rs. 5,000 under Section 271F of the Act for the delay. The appellant explained that it faced financial constraints due to being a service provider to its US-based holding company, causing the delay in filing the return. The CIT (Appeals) upheld the penalty, deeming the reasons insufficient. The appellant appealed to the Tribunal, raising a procedural issue of delay in filing the appeal, which was condoned considering the circumstances. The Tribunal considered the delay technical and accepted the appeal for further review.

The Tribunal assessed the delay in filing the return and the reasons provided by the appellant. The delay was only one month and 28 days beyond the due date. The appellant cited financial difficulties as the cause, supported by additional evidence including audited financial statements and bank statements. The Tribunal admitted the additional evidence for proper adjudication. As the revenue authorities did not examine the evidence, the Tribunal set aside the CIT (Appeals) order and remanded the case to the Assessing Officer for reconsideration based on the new evidence, granting the appellant an opportunity to present their case.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of considering the reasonable cause for the delay in filing the return of income. The order was pronounced on 25th Oct., 2017.

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