Penalty under section 271F deleted where land acquisition compensation was exempt from tax under section 96.

Penalty under section 271F was held unsustainable because the assessee had received only compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, which was treated as not taxable under section 96. Although the return was not filed within the due date under section 139(1), the non-filing penalty could not be supported where the underlying receipt itself was exempt from tax. The penalty was deleted, and the assessee succeeded on this issue.

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Issues: Whether penalty under section 271F of the Income-tax Act, 1961 was sustainable where the assessee had received only compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, which was not taxable under section 96 thereof.

Analysis: The assessee did not file the return within the due date under section 139(1) of the Income-tax Act, 1961. However, the amount received was found to be compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, and such compensation was held to be not taxable under section 96. In these circumstances, the basis for levying penalty for failure to file the return was not made out.

Conclusion: The penalty under section 271F was deleted and the assessee succeeded on this issue.

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