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URGENT Penalty u/s 271F

CA Siddhi (PRACTICE) (257 Points)

23 July 2018

Dear All

One of our assessee has not filed return of income for AY 2012-13. during that year she had earned income from salary and TDS was deducted by the employer. After considering the investments, there was no tax or refund due to her and she was not liable for any tax payment. After 6 years, the AO has issued notice u/s 271F for why he/she should not impose penalty for non-filing of income tax return.

Q1. Can AO issue notice after 6 years?

Q2. If yes, what reply should be filed? and

Q3. If no, what response to be filed?

Kindly reply asap.

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1 Replies

Dilip Kumar Jana (74 Points)
Replied 23 July 2018

AO can issue notice and assessee has to furnish a written explanation. No penalty can be imposed without reasonable cause. It is a fact that there has been an inordinate delay in issuing the notice. If the motive lurking behind the notice is to realize penalty from an honest taxpayer, it would be highly unjustified. The assessee has paid tax by way of tds and she was not aware of the penal provision. Ignorance of law is definitely a reason though it is not an excuse. Where there is no revenue loss on failure to file return, penalty should be excused. It should be treated as a technical breach for which penalty would be unjustified. Generally penalty proceeding is dropped after an explanation is furnished.