TaxTMI 
TaxTMI 
2026 (2) TMI 1306
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....financial transactions reflected in Form 26AS, the Assessing Officer initiated reassessment proceedings. Notice under section 148 of the Act was issued on 30.03.2021 after obtaining approval under section 151 of the Act. In response to the said notice, the assessee filed its return of income on 30.04.2021 declaring total income of Rs. 40,50,371/-. 3. Subsequently, notice under section 143(2) was issued. The proceedings were thereafter transferred to the Faceless Assessment Scheme and notices under section 142(1) were issued calling for details such as nature of business, bank statements, Form 26AS, partnership deed, audit report in Forms 3CB and 3CD and other relevant information. 4. After considering the material placed on record, the assessment was completed under section 143(3) read with section 147 and section 144B of the Act vide order dated 27.03.2022 determining the total income at Rs. 40,50,371/-, being the same income returned by the assessee in response to notice under section 148. 5. While completing the reassessment, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act for alleged concealment of income / furnishing of inaccurat....
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....illed, in terms of section 147 r.w.s. 148 of the Act. 3.2 It is submitted that in the facts and the circumstances of the case, and in law, the reassessment order is bad in law, illegal and void. WITHOUT PREJUDICE TO THE ABOVE 4. INITIATION AND COMPLETION OF PENALTY PROCEEDING IS BAD IN LAW, ILLEGAL AND WITHOUT JURISDICTION 4.1 The Ld. CIT (A) erred in confirming the action of the A.O. in initiating and levying penalty u/s. 271(1)(c) of the Act on the Appellant. 4.2 It is submitted that in the facts and the circumstances of the case, and in law, the levy of penalty is bad in law, illegal and void as the necessary conditions for initiating and levying the penalty were not fulfilled, in terms of section 271(1)(c) of the Act. 4.3 Without prejudice to the generality of the above, the CIT (A) erred in confirming the action of the A.O. in levying the penalty as the exact charge for levy of penalty was vague and ambiguous. 4.4 It is submitted that in the facts and the circumstances of the case, and in law, no such action was called for. WITHOUT FURTHER PREJUDICE TO THE ABOVE 5. LEVY OF PENALTY OF Rs. 12,51,564....
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....port furnished under section 44AB of the Act. It was pointed out that under Clause 26(i)(B)(b) of Form 3CD, there was a specific disclosure of liability towards Service Tax amounting to Rs. 27,08,250/-. It was submitted that this amount was duly considered while preparing the computation of income, a copy whereof is placed at page No. 3 of the paper book. The learned AR submitted that the said amount of Rs. 27,08,250/- was specifically included in the computation of income and consequently formed part of the total income declared in the return of income filed in response to notice under section 148 of the Act. It was thus contended that there was full and true disclosure of the material particulars relating to the said liability and there was no suppression or misstatement of facts. 12. It was further submitted that the profit and loss account and the balance sheet were already annexed to the tax audit report which had been filed within the extended due date. The learned AR emphasized that the entire financial statements were on record before the Department well within the prescribed time and that the accounts were duly audited. It was therefore argued that the allegation of con....
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....ise that the audit report was filed beyond time. It was submitted that this factual assumption is incorrect. The learned AR drew our attention to the reply filed before the Assessing Officer, wherein it was specifically pointed out that for the relevant assessment year the due date for furnishing the audit report in Form 3CB and Form 3CD had been extended by the CBDT vide order under section 119 from 30th September 2014 to 30th November 2014. It was demonstrated that the assessee had filed Form 3CB and Form 3CD on 29.11.2014, which was within the extended due date. Therefore, the allegation in the reasons recorded that the audit report was belated was factually erroneous. The learned AR further submitted that in the reply to the reasons, the assessee had clarified that the return of income was filed on 30.04.2021 in response to notice under section 148, and that the earlier non-filing was under the bona fide impression that the accountant had already filed the return along with the audit report. It was contended that the omission was unintentional and stood rectified immediately upon receipt of notice under section 148. 15. The learned AR further submitted that during the course....
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....271(1)(c), the Co-ordinate Bench examined the applicability of Explanation 3 and further held that even where the return was filed only in response to notice under section 148, penalty would not automatically follow if there existed a reasonable cause. 18. The learned Departmental Representative (DR), on the other hand, strongly supported the orders of the lower authorities. It was submitted that the assessee admittedly failed to file the return of income within the time prescribed under section 139(1) of the Act. The subsequent filing of return only in response to notice under section 148 clearly demonstrates non-compliance with the statutory obligation. 19. The learned DR further contended that the plea advanced by the assessee that the return was not filed due to an inadvertent mistake on the part of the accountant cannot constitute a valid or reasonable cause in the eyes of law. According to the learned DR, statutory compliance is the responsibility of the assessee, and negligence or oversight of an accountant does not absolve the assessee from the consequences of default. It was thus submitted that the failure to file the return within the prescribed time was without rea....
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....e prescribed time and no notice under section 142(1)(i) or section 148 has been issued within such period, and the Assessing Officer is satisfied that such person has taxable income. However, even Explanation 3 operates only where the failure to file return is "without reasonable cause". 26. Thus, the crucial issue is whether the assessee has established a reasonable cause for failure to file return within the time prescribed under section 139(1). 27. The learned AR has drawn our attention to the following facts: i. The tax audit report under section 44AB in Forms 3CB and 3CD was filed on 29.11.2014, within the extended due date prescribed by the CBDT under section 119. ii. The audited profit and loss account and balance sheet were thus on record. iii. The audit report contained specific disclosure of Service Tax liability of Rs. 27,08,250/-. iv. The computation of income had been prepared and the tax liability (net of TDS) was discharged even prior to formal filing of the return in response to notice under section 148. v. Immediately upon receipt of notice under section 148, the assessee filed a detailed reply, furnished computati....