TaxTMI 
TaxTMI 
2026 (9) TMI 837
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....g the year under consideration. Since the assessee did not file the return of income, the A.O reopened the assessment by issue of notice u/s. 148 of the Act. The assessee in response to notice u/s. 148 filed the return of income declaring Nil income after claiming exemption u/s. 10(23C)(iiiad) of the Act. The AO completed the assessment u/s. 147 of the Act accepting the income returned by the assessee. Subsequently, the AO initiated penalty proceedings u/s. 272A(2)(e) of the Act. The assessee submitted before the AO that the return of income was not filed by the assessee due to the bonafide belief that when the income is exempt there is no requirement to file the return of income. The assessee further submitted that due to non filing of the return, there is no loss to the revenue and there is no intention on the part of the assessee to conceal any income. Accordingly, the assessee prayed that the penalty be not levied. The A.O however did not accept the submissions of the assessee and levied penalty of Rs. 3,04,300/-. Aggrieved, the assessee filed further appeal before the CIT(A). The CIT(A) however confirmed the penalty by holding that: a) The appellant has undisputedly c....
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....ground reads as under: 8) Without prejudice, the Learned Commissioner (Appeals) also erred in not considering that for calculating the number of days of default, the period during which the Appellant could perform an act but failed to perform alone can be taken into account and as such, the period after expiry of time limit under Section 139(4) till the issue of Notice under Section 148 and also the period covered by Covid-19 Pandemic are to be excluded, as to be reasonable, just and fair. 4. The Ld. AR submitted that for the purpose of levy of penalty u/s. 272A(2)(e) of the Act the period as considered by the AO is not correct and that the penalty should be calculated only up to the period allowed u/s. 139(4A) of the Act. The Ld. AR further submitted that the assessee cannot file the return of income beyond the time line as specified u/s. 139(4A) of the Act and therefore levy of penalty beyond the time limit for the reason of non filing is not applicable since the assessee cannot file the return of income beyond the said time limit. The Ld. AR also submitted that an identical issue has been considered by the Raipur Bench of the Tribunal in the case of Bethany Seva Sang....
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....ion (4A) of section 139 of the Act, i.e., filing of the return of income, having been rendered as unworkable after the lapse of the period within which the return of income could be filed u/s.139 of the Act: therefore, the penalty for the period falling thereafter could not have been imposed. Our aforesaid conviction is fortified by the order of the ITAT, Hyderabad, in the case of G Pulla Reddy v. JCIT (2010) 47 DTR 1 (Hyd.). The Tribunal observed that for levying penalty u/s. 272A(2)(e), the period of default was to be counted up to the time limit laid down in section 139(4) of the Act. For the sake of clarity, relevant observations of the Tribunal are culled out as under: "8.8. Further the argument of the assessee counsel is that the penalty to be levied for non-filing the return of income to the period within which the assessee could have filed the return of income and it cannot be levied for an indefinite period till the default continues. We find force in this argument of the learned counsel for the assessee. The assessee cannot file a return of income after the time limit provided u/s. 139(4) of the IT Act. In such circumstances even if the assessee files the return ....
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....on the other hand, contended that the default continued till the return was actually filed in response to notice issued under section 148 and, therefore, the penalty has been rightly computed for the entire period. Section 272A(2)(e) provides for levy of penalty for every day during which the failure to furnish the return continues. However, the expression "during which the failure continues" has to be understood in the context of the statutory scheme governing the filing of returns. The obligation cast upon the assessee under section 139(4A) to furnish the return of income can be discharged only within the period prescribed under section 139. Once the time limit prescribed under section 139(4) expires, the assessee is no longer empowered under the Act to voluntarily furnish a valid return of income. Consequently, after the expiry of such statutory period, the obligation becomes incapable of voluntary compliance and the default, in our considered view, cannot be regarded as continuing indefinitely. Any return furnished thereafter is only in pursuance of proceedings initiated under section 148, which is an independent statutory mechanism. 7. We notice that an identical issue has ....