Top Stories Failure to Furnish Proper ITR: ITAT upholds penalty u/s 271(1) (c) of Income Tax Act ITAT upheld a penalty under Section 271(1) (c) of the Income Tax Act, 1961, for failure to furnish proper Income Tax Return (ITR) By Aiswarya Krishnadas – On February 22, 2024 8:33 am – 2 mins read The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) upheld a penalty imposed under Section 271(1) (c) of the Income Tax Act, 1961, for failure to furnish proper Income Tax Return ( ITR ).

The assessee was engaged in the business of real estate development. The case was selected for scrutiny and the assessing officer assessed rental income on the stock-in-trade of unsold flats and made an addition of Rs. 75, 40, 807/- under Section 143(3) of the Income-tax Act, 1961. However, in the assessment order, the Assessing Officer did not initiate penalty proceedings under Section 270A of the Income Tax Act, 1961. S. Sriram, representing the assessee submitted that to initiate or not to initiate penalty proceedings is within the discretionary authority and satisfaction of the Assessing Officer and the PCIT cannot replace the satisfaction of the Assessing Officer by his own satisfaction.

He also relied on the decision of the Delhi High Court in the case of Addl. CIT v. J.K. D’s Costa On the contrary, Chetan Kacha representing the revenue submitted that omission by the Assessing Officer to initiate penalty proceedings has squarely rendered the assessment order erroneous and prejudicial to the interest of Revenue. In support, he relied on the Allahabad High Court in the case of CIT v. Surendra Prasad Agrawal The corum of Kuldip Singh ( Judicial member ) and Om Prakash Kant ( Accountant member ) observed that failure to furnish returns, comply with notices, concealment of income, such person shall pay by way of penalty under Section 271(1)(c) of Income Tax Act,

Since, both the penalty under Section 271(1) Income Tax Act, as well as penalty under Section  270A Income Tax Act, could be initiated if the Assessing Officer or other authority prescribed may consider so under the proceeding of the Act. Therefore, the issue decided by Allahabad High Court ( supra ) respectfully following the finding, the grounds raised by the assessee are dismissed. In the result, the appeal filed by the assessee was dismissed.