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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANT, AM & MS. KAVITHA RAJAGOPAL, JM
O R D E R Per Kavitha Rajagopal, J M:
This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2018-19.
As there was no representation on behalf of the assessee, we hereby proceed to decide this appeal by hearing the learned Departmental Representative ('ld.DR' for short) and on perusal of the materials available on record.
The solitary ground of appeal raised by the assessee is penalty u/s. 272A(1)(d) of the Act of Rs.50,000/- levied by the Assessing Officer ('A.O.' for short) and confirmed by the ld. CIT(A).
(A.Y.2018-19) Vimal Pukhraj Jain vs. AO NFAC 4. The brief facts are that the assessee is an individual and had filed his return of income dated 29.03.2019, declaring total income at Rs.6,92,940/-. The assessee’s case was selected for scrutiny and the assessment order u/s. 143(3) r.w.s. 143(3A) and 143(3B) of the Act dated 08.04.2021 was passed by the A.O. and the A.O. made an addition of Rs.49,87,000/- u/s. 68 of the Act on the ground that the assessee has failed to substantiate the source for purchase of property treating the same to be ‘unexplained credit’ u/s. 68 of the Act. The A.O. initiated penalty proceeding u/s. 272A(1)(d) of the Act for non compliance to notice u/s. 142(1) of the Act. The A.O. vide order dated 13.08.2021 levied penalty amounting to Rs.50,000/- u/s. 272A(1)(d) of the Act.
The assessee was in appeal before the ld. CIT(A) challenging the impugned penalty levied by the A.O.
The ld. CIT(A) then upheld the penalty levied by the A.O. on the ground that the assessee has failed to substantiate why he was non compliant before the A.O.
The assessee is in appeal before us, challenging the order of the ld. CIT(A).
The ld. DR for the Revenue contended that the assessee has stated that the assessee was non compliant before the A.O. as it was the Covid Pandemic period and the assessee himself was hospitalized due to the Covid-19. The ld. DR further stated that the assessee however has failed to produce any documentary evidences like medical certificate to substantiate his contention. The ld. DR relied on the order of the lower authorities.
(A.Y.2018-19) Vimal Pukhraj Jain vs. AO NFAC 9. We have heard the ld. DR and perused the materials available on record. It is observed that during the assessment proceeding, the assessee has purchased the property for Rs.44 lacs for which the A.O. contends that the stamp valuation authority has adopted the value to be Rs.49,87,000/- for which the A.O. had show caused the assessee to explain as to the difference in the stamp duty value and the purchase value. The assessee has been non compliant before the A.O. who then proceeded to make an addition of Rs.49,87,000/- being the sale consideration u/s. 68 as unexplained credits and initiated penalty proceeding levied u/s. 272A(1)(d) of the Act. The provision of section 272A(1)(d) of the Act is extracted hereunder for ease of ready reference:
Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc. 272A. (1) If any person,— (a) being legally bound to state the truth of any matter touching the subject of his assessment, refuses to answer any question put to him by an income-tax authority in the exercise of its powers under this Act; or (b) refuses to sign any statement made by him in the course of any proceedings under this Act, which an income-tax authority may legally require him to sign; or (c) to whom a summons is issued under sub-section (1) of section 131 either to attend to give evidence or produce books of account or other documents at a certain place and time omits to attend or produce books of account or documents at the place or time; or (d) fails to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or fails to comply with a direction issued under sub-section (2A) of section 142, he shall pay, by way of penalty, a sum of ten thousand rupees for each such default or failure.
From the above provision, it is evident that the A.O. shall levy a penalty of Rs.10,000/- for each default or failure to comply with the notice u/s. 142(1) of the Act or section 143(2) of the Act or fails to comply with the direction u/s. 142(2A) of the Act.
Here in the present case, the A.O. has issued notice u/s. 142(1) of the Act on five occasions, i.e., dated 22.01.2021, 15.03.2021, 19.03.2021, 22.03.2021 and 30.03.2021 for furnishing the details and the documents called for by the A.O. The assessee, on the other
(A.Y.2018-19) Vimal Pukhraj Jain vs. AO NFAC hand, contends that he was non compliant to the said notices as it was during the Pandemic period and due to which the assessee himself was hospitalized. It is also observed that the assessee vide letter dated 03.03.2021 has furnished copies of purchase deed dated 29.09.2017 and had also made written submission subsequently. The A.O. has passed the assessment order u/s. 143(3) r.w.s. 143(3A) and 143(3B) of the Act and not u/s. 144 of the Act, i.e., the best judgment assessment. It is evident that the assessee has made some compliance before the A.O. and it is not a case of the complete non compliance. As it is observed that when there is a reasonable cause for the said failure, the penalty imposed u/s. 272A sub section (1) of the Act is protected as per the provision of section 272B where the penalty shall not be imposed when the assessee has substantiated reasonable cause for such failure. In the present case in hand, the notice issued u/s. 142(1) of the Act was during the Covid Pandemic period which is a justifiable cause for the non compliance before the A.O. We, therefore, deem it fit to delete the impugned penalty levied by the A.O. and, therefore, the grounds raised by the assessee are allowed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 28.08.2023