Penalty Under Section 271F Deleted as Income Tax Return Filed Within Time

Penalty Under Section 271F Deleted as Income Tax Return Filed Within Time

Understanding Section 271F of the Income Tax Act

Section 271F of the Income Tax Act, 1961, prescribes a penalty for failure to furnish an income tax return within the prescribed deadline. Specifically, if a person required to file their Income Tax Return (ITR) as per Section 139(1) of the Act fails to do so before the end of the relevant assessment year, a penalty of up to ₹5,000 may be imposed by the Assessing Officer. This provision primarily applied to returns for assessment years prior to AY 2018-19.

The due date for filing ITR under Section 139(1) typically falls on July 31st for individuals not requiring an audit, with extensions applicable to businesses and audited entities. Filing beyond this date but within certain limits may attract penalties, but timely filing safeguards taxpayers from such punitive actions.

The Tribunal Ruling: Penalty Deleted for Timely Filing

The recent ruling by the Income Tax Appellate Tribunal (ITAT) Delhi is significant for taxpayers facing penalties under Section 271F. In a case concerning AY 2013-14, the Tribunal held that the assessee’s income tax return was filed within the permissible time under Section 139. Consequently, the penalty of ₹5,000 imposed under Section 271F was held unjustified and deleted.

This ruling underscores that penalty under Section 271F cannot be sustained if the return is filed within the time allowed under the Act. It reinforces the importance of the timelines stipulated under Section 139 and clarifies that no penalty should be levied if these statutory timelines are met.

Implications and Key Takeaways for Taxpayers

• Timely Filing is Crucial: Filing the income tax return within the prescribed time under Section 139(1) is essential to avoid penalties under Section 271F.
• Penalty Section Applicability: Section 271F penalties apply only to returns for assessment years before AY 2018-19. For later years, other penalty provisions such as Section 234F apply.
• Penalty Deleted When Return Filed On Time: The recent ITAT decision clarifies that if the return is filed within the permitted timeframe, the penalty under Section 271F is not justified.
• Awareness of Due Dates: Taxpayers should be aware of applicable due dates: generally July 31 for individuals, with extended dates for audit cases, to comply timely and avoid penalties.
• Penalty Amount: The penalty under Section 271F is a fixed amount of ₹5,000 regardless of tax amount due, unlike Section 234F which imposes a fee relative to income and delay.

Ultimately, the ruling provides relief to taxpayers who have complied within the legal timelines but faced penalties erroneously. It also serves as a reminder to ensure strict adherence to timing provisions under the Income Tax Act, protecting against unnecessary financial burdens.