Taxpayer Wins Relief from ITAT After Facing Rs 3.74 Lakh Penalty for Delayed ITR Filing Following Job Change
Pravesh Aggarwal, a resident of Indrapuram, Ghaziabad, faced a hefty tax penalty of Rs 3.74 lakh after failing to file his income tax return (ITR) on time due to a delay in receiving his Form 16 from his previous employer. Aggarwal, who switched jobs during the financial year 2018-19 and earned a salary of Rs 30 lakh, believed he had fulfilled his tax obligations based on the details in his Form 26AS, which showed the TDS deducted from his salary.
The Income Tax Department took a strict stance on Aggarwal’s case, asserting that his non-filing could have led to unreported income. After receiving a notice from the department, Aggarwal filed his ITR on May 8, 2023, declaring an income of Rs 30.22 lakh. However, the Assessing Officer initiated penalty proceedings against him for under-reporting income, citing his failure to file the original ITR by the deadline.
Income Tax Department’s Penalty Notice
Aggarwal’s job transition left him without the necessary documentation, including Form 16, before the ITR deadline. Despite this, he assumed that the TDS reflected in Form 26AS meant he had no further filing obligations. The Income Tax Department reopened his tax assessment under Section 147 after issuing a notice under Section 148A(d) on April 19, 2023. The Assessing Officer imposed the penalty, arguing that Aggarwal had under-reported his income by not filing his ITR on time.
Aggarwal contested the penalty, claiming he acted in good faith, believing his tax liability was settled due to the TDS deductions. His appeal to the Commissioner of Appeals was rejected, leading him to escalate the matter to the Income Tax Appellate Tribunal (ITAT) in Delhi.
ITAT Delhi’s Ruling
The ITAT Delhi, comprising Judicial Member Anubhav Sharma and Accountant Member Manish Agarwal, ruled in favor of Aggarwal. They noted that a salaried employee should not face disproportionate penalties for late filing when TDS has already been deducted. The Tribunal acknowledged that Aggarwal’s reported income was accepted by the Income Tax Department, indicating no under-reporting had occurred.
The Tribunal emphasized that Aggarwal had a genuine belief that his tax obligations were met, as evidenced by the TDS details in Form 26AS. They concluded that the penalty imposed under Section 270A should be deleted, allowing all grounds of appeal raised by Aggarwal.
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