ITAT deleted a concealment penalty on a senior citizen, accepting her genuine reliance on a tax consultant as a reasonable cause for not filing the income tax return on time.
Vanshika verma | May 23, 2026 |
Senior Citizen Taxpayer Gets Relief as ITAT Accepts Reasonable Cause for Non-Filing of Return
Sarojben Urmishbhai Shah filed the present case against the ITO in ITAT, Ahmedabad, challenging the order passed by CIT(A) dated 12.01.2026 (AY 2016-17).
The taxpayer had not originally filed her income tax return under Section 139. Later, after receiving a notice under Section 148 during reassessment proceedings, she filed a return declaring an income of Rs. 645,230. The Income Tax Department accepted this income without making any additions.
Despite accepting the returned income, the assessing officer imposed a penalty for concealment of income. The National Faceless Appeal Centre (NFAC) also upheld the penalty, saying the taxpayer disclosed her income only after the department started reassessment proceedings.
However, the ITAT disagreed with this view. The tribunal explained that under Explanation 3 to Section 271(1)(c), a penalty cannot automatically be imposed just because a return is filed after a notice under Section 148. The law also requires examining whether there was a “reasonable cause” for not filing the return earlier.
The taxpayer argued that she was a senior citizen with limited knowledge of tax procedures and depended on her tax consultant to prepare and file her return. According to her, the consultant prepared the accounts but failed to file the return because of a dispute over fees. She also stated that she was not informed about the non-filing and came to know about it only after receiving the reassessment notice.
The tribunal accepted this explanation as a reasonable cause. It observed that both lower authorities ignored this important legal requirement and focused only on the fact that the income was disclosed during reassessment proceedings.
The ITAT held that since there was genuine and reasonable cause for delay in filing the return, the taxpayer could not be treated as having concealed income or furnished inaccurate particulars. Accordingly, the penalty was deleted, and the appeal of the taxpayer was upheld.
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