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2023 (11) TMI 702 - AT - Income TaxPenalty u/s 271(1)(c) - assessee had not filed return of income despite having received salary income - case of the assessee is that it had filed return of income in response to the notice issued u/s 148 and disclosed the particulars of income and Merely because the assessee failed to file return of income under a wrong conception of law, should not be the basis for imposing the penalty - HELD THAT:- The undisputed facts are that the employer have deducted the tax on the salary and deposited in the bank accounts. So far the employer is concerned, there is no default reported by the lower authority. The default on the part of the assessee is regarding non-filing of the Income Tax return. The factum of receipt of salary came into notice of AO through 26AS. The explanation regarding non-filing of income tax return is stated that the assessee was under impression that if the tax is deducted at source, she is not required to file income tax return. But when she received notice u/s 148 of the Act, she duly filed her income tax return and disclosed all her income. In our considered view, the levy of penalty is not automatic. If the assessee makes out a case that the default was due to reasonable cause in that case, no penalty would be called for in terms of section 273B of the Act. The Hon’ble Supreme Court in the case of Motilal Padmavat Sugar Mills Co.(P.) Ltd. vs State of Uttar Pradesh & Ors. [1978 (12) TMI 45 - SUPREME COURT] observed that “it must be remembered that there is no presumption that every person knows the law.” The assessee has demonstrated reasonable cause for the default. We hold accordingly. The AO is hereby, directed to delete the impugned penalty. Decided in favour of assessee.
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