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2022 (2) TMI 1429 - AT - Income TaxPenalty u/s 271(1)(c) - assessee has not filed the original return of income though he had taxable income(interest income) - bonafide belief - As per assessee return of income had not been filed by him since he was under the bona-fide belief that since tax has been deducted at source, there was no need for him to file the return of income - HELD THAT:- If on facts, the assessee is able to demonstrate that he has a reasonable cause for not filing return of income, then the assessee cannot be subject matter of penalty u/s 271(1)(c) of the Act. In order to invoke Explanation 3 to s. 271(1)(c), AO has to establish that there was no ‘reasonable cause’ on part of the assessee for non-filing of return of income. However, if from the facts of the case, it seems that assessee did not file return of income under a bona-fide mistake, then unless the AO brings anything further to the record, it is not a fit case of levy of penalty u/s 271(1)(c) of the Act. The assessee had earned interest income (being the only source of income for the captioned year) on which taxes had been duly withheld by the payer. Therefore, the assessee is conscious of the fact that the Income Tax Department is aware about his having earned income, but was of the mistaken view that once taxes have been deducted on this income, the assessee was not required to be filed return of income. Therefore, in our view, this is not a fit case for levy of penalty - Decided in favour of assessee.
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