M/S SANGEETA RUSHIKESH DOIPHODE,MUMBAI vs. INCOME TAX OFFICER-15(3)(1), MUMBAI

PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated 31.03.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2016-17 in relation to penalty of Rs.10,000/- levied u/s 271(1)(b) of the Income-tax Act, 1961 (in short ‘the Act’) for non-compliance of notice issued by the Assessing Officer during assessment procedings.

Smt. Sangeeta Rushikesh Doiphode Smt. Sangeeta Rushikesh 2 ITA No. 1976/Mum/2023

Smt. Sangeeta Rushikesh Doiphode Smt. Sangeeta Rushikesh 3 ITA No. 1976/Mum/2023

non-compliance of notice issue e of notice issued. Subsequently, the Assessing . Subsequently, the Assessing Officer also issued another show cause notice dated 05.08.2022 as Officer also issued another show cause notice dated 05.08.2022 as Officer also issued another show cause notice dated 05.08.2022 as why the penalty should not be levied. The why the penalty should not be levied. The submissions filed by the submissions filed by the assessee were rejected and the Assessing Officer levied the penalty rejected and the Assessing Officer levied the penalty rejected and the Assessing Officer levied the penalty observing as under:

“Order under section 271(1)(b) of the Income Tax Act, 1961 Order under section 271(1)(b) of the Income Tax Act, 1961 Order under section 271(1)(b) of the Income Tax Act, 1961 During the assessment proceedings for AY 2016 During the assessment proceedings for AY 2016-17, notice us. 142(1) 17, notice us. 142(1) dated 08.02.2022 was issued to the assessee dated 08.02.2022 was issued to the assessee to submit his submission to submit his submission with respect to the queries raised. I response to the notice u/s. 142(1), the with respect to the queries raised. I response to the notice u/s. 142(1), the with respect to the queries raised. I response to the notice u/s. 142(1), the assessee neither, filed any response nor filed any request for adjournment. assessee neither, filed any response nor filed any request for adjournment. assessee neither, filed any response nor filed any request for adjournment. 2. Observing the non 2. Observing the non-compliance from the assessee, penalty proceedings compliance from the assessee, penalty proceedings Us. 271(1)(b) of the IT Act, were initiated in this case by issuing notice cum 71(1)(b) of the IT Act, were initiated in this case by issuing notice cum 71(1)(b) of the IT Act, were initiated in this case by issuing notice cum show cause notice u/s. 274 r.w.s. show cause notice u/s. 274 r.w.s. 271(1)(b) dated 31.03.2022 requiring 271(1)(b) dated 31.03.2022 requiring the assessee to explain as to why penalty should not be levied for non the assessee to explain as to why penalty should not be levied for non the assessee to explain as to why penalty should not be levied for non- compliance. 3. Later, after the a fresh 3. Later, after the a fresh show cause notice dated, 05.08.2022 was show cause notice dated, 05.08.2022 was issued to the assessee issued to the assessee to respond as to why the non compliance penalty to respond as to why the non compliance penalty should not be levied. Assessee was given time to respond by 22.08.2022. should not be levied. Assessee was given time to respond by 22.08.2022. should not be levied. Assessee was given time to respond by 22.08.2022. However, Assessee has submitted his reply vide letter dated 09.08.22 However, Assessee has submitted his reply vide letter dated 09.08.22 However, Assessee has submitted his reply vide letter dated 09.08.22 which is considered but not acceptable. Assessee simply stated that he h is considered but not acceptable. Assessee simply stated that he h is considered but not acceptable. Assessee simply stated that he has filed an appeal with CIT(A) and request to keep the proceeding in has filed an appeal with CIT(A) and request to keep the proceeding in has filed an appeal with CIT(A) and request to keep the proceeding in abeyance, However it is to noted that these proceeding are of non abeyance, However it is to noted that these proceeding are of non abeyance, However it is to noted that these proceeding are of non- compliance penalty which has no bearing on the output compliance penalty which has no bearing on the output compliance penalty which has no bearing on the output of the CIT(A) proceedings. Assessee did not furnished any sufficient cause for non proceedings. Assessee did not furnished any sufficient cause for non proceedings. Assessee did not furnished any sufficient cause for non compliance. 4 Therefore, I am satisfied that the assessee has without reasonable cause Therefore, I am satisfied that the assessee has without reasonable cause Therefore, I am satisfied that the assessee has without reasonable cause failed to comply to the notice us. 142(1) dated 08.02.2022. I therefore hold failed to comply to the notice us. 142(1) dated 08.02.2022. I therefore hold failed to comply to the notice us. 142(1) dated 08.02.2022. I therefore hold that the assessee has failed to comply with a notice us. 142(1) dated assessee has failed to comply with a notice us. 142(1) dated assessee has failed to comply with a notice us. 142(1) dated 08.02.2022. and committed default u/s. 08.02.2022. and committed default u/s. 271(1)b) of the I.T. Act, 1961 on 271(1)b) of the I.T. Act, 1961 on one occasion. I, therefore, levy penalty u/s. 271(1)(b) of the Income Tax one occasion. I, therefore, levy penalty u/s. 271(1)(b) of the Income Tax one occasion. I, therefore, levy penalty u/s. 271(1)(b) of the Income Tax Act, 1961 of Rs. 10,000/ Act, 1961 of Rs. 10,000/- (Rupees Ten thousand only).” 3. On further appeal, the Ld. CIT(A) upheld the penalty levied On further appeal, the Ld. CIT(A) upheld the penalty levied On further appeal, the Ld. CIT(A) upheld the penalty levied, observing as under:

“5.2 It is clear from bare reading of the above provisions that whether or It is clear from bare reading of the above provisions that whether or It is clear from bare reading of the above provisions that whether or not the penalty as envisaged in Section 271(1)(b) of the Act is to be not the penalty as envisaged in Section 271(1)(b) of the Act is to be not the penalty as envisaged in Section 271(1)(b) of the Act is to be imposed, is a matter t imposed, is a matter to be determined by the Assessing Officer within the o be determined by the Assessing Officer within the meaning of Section. He may direct such penalty to be paid and conversely, meaning of Section. He may direct such penalty to be paid and conversely, meaning of Section. He may direct such penalty to be paid and conversely,

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it would be correct to say, he may choose not to so direct for such penalty it would be correct to say, he may choose not to so direct for such penalty it would be correct to say, he may choose not to so direct for such penalty to be paid. To determine whether the default was willf to be paid. To determine whether the default was willful or otherwise, the ul or otherwise, the explanation offered, if any, by the appellant shall be imposed, inter explanation offered, if any, by the appellant shall be imposed, inter explanation offered, if any, by the appellant shall be imposed, inter-alia, u/s 271(1)(b), where the assessee establishes a reasonable cause for u/s 271(1)(b), where the assessee establishes a reasonable cause for u/s 271(1)(b), where the assessee establishes a reasonable cause for failure referred to in the said section. failure referred to in the said section. 5.3 In the instant case, it is very clear from th In the instant case, it is very clear from the order that the appellant e order that the appellant was given sufficient opportunities to explain the non was given sufficient opportunities to explain the non-response to the notice response to the notice issued u/s 142(1) dated 08/02/2022. The appellant has responded issued u/s 142(1) dated 08/02/2022. The appellant has responded issued u/s 142(1) dated 08/02/2022. The appellant has responded requesting to keep the penalty proceedings us 271(1)(b) in abeyance till the requesting to keep the penalty proceedings us 271(1)(b) in abeyance till the requesting to keep the penalty proceedings us 271(1)(b) in abeyance till the disposal of the appeal filed against the assessment proceedings. The AO the appeal filed against the assessment proceedings. The AO the appeal filed against the assessment proceedings. The AO has examined the request, however, did not find sufficient cause for the has examined the request, however, did not find sufficient cause for the has examined the request, however, did not find sufficient cause for the non-compliance and decided to finalize the penalty proceedings initiated compliance and decided to finalize the penalty proceedings initiated compliance and decided to finalize the penalty proceedings initiated u/s 271(1)(b). 5.4 The submissions of the appella 5.4 The submissions of the appellant has been examined and found that it nt has been examined and found that it is not only the show cause notice that was issued on 31/03/2022 but is not only the show cause notice that was issued on 31/03/2022 but is not only the show cause notice that was issued on 31/03/2022 but subsequently one more opportunity was provided vide show cause notice subsequently one more opportunity was provided vide show cause notice subsequently one more opportunity was provided vide show cause notice dated 05/08/2022. Therefore, it can be safely concluded that sufficient dated 05/08/2022. Therefore, it can be safely concluded that sufficient dated 05/08/2022. Therefore, it can be safely concluded that sufficient opportunities and time have been given to the appellant to explain her case nities and time have been given to the appellant to explain her case nities and time have been given to the appellant to explain her case of non-compliance. During the course of appellate proceedings also the compliance. During the course of appellate proceedings also the compliance. During the course of appellate proceedings also the appellant has miserably failed to substantiate her failure of noncompliance appellant has miserably failed to substantiate her failure of noncompliance appellant has miserably failed to substantiate her failure of noncompliance to the statutory notice issued us 142(1) to the statutory notice issued us 142(1) and also failed to demonstrate that and also failed to demonstrate that there was sufficient cause for non there was sufficient cause for non-compliance. 5.5 In the light of the above findings, I find there is no merit in the grounds 5.5 In the light of the above findings, I find there is no merit in the grounds 5.5 In the light of the above findings, I find there is no merit in the grounds raised by the appellant, therefore, the penalty levied by the A is justified raised by the appellant, therefore, the penalty levied by the A is justified raised by the appellant, therefore, the penalty levied by the A is justified and the grounds and the grounds raised are dismissed.” 4. We have duly considered the contentions presented by both We have duly considered the contentions presented by both We have duly considered the contentions presented by both parties regarding the matter in dispute, and we have examined the parties regarding the matter in dispute, and we have examined the parties regarding the matter in dispute, and we have examined the pertinent records. Before this Tribunal, the learned counsel pertinent records. Before this Tribunal, the learned counsel pertinent records. Before this Tribunal, the learned counsel representing the assessee has raised two pri representing the assessee has raised two primary objections to the mary objections to the imposition of the penalty. imposition of the penalty. Firstly, it is contended that in the final , it is contended that in the final order issued under Section 271(1)(b) of the Act, the Assessing order issued under Section 271(1)(b) of the Act, the Assessing order issued under Section 271(1)(b) of the Act, the Assessing Officer referred the non Officer referred the non-compliance of the notice under Section compliance of the notice under Section 142(1) dated 08.02.2022. However, in the show 142(1) dated 08.02.2022. However, in the show-cause notice dated cause notice dated 05.08.2022 for levy of pena 05.08.2022 for levy of penalty, there was a mention of the non lty, there was a mention of the non- compliance compliance of of the the show-cause show cause notice notice dated dated 31.03.2022. 31.03.2022. Consequently, it is argued that no show Consequently, it is argued that no show-cause notice has been cause notice has been

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properly issued for the imposition of the penalty in relation to the properly issued for the imposition of the penalty in relation to the properly issued for the imposition of the penalty in relation to the non-compliance with the notice unde compliance with the notice under Section 142(1) dated r Section 142(1) dated 08.02.2022. Thus, the order under dispute is in contravention of 08.02.2022. Thus, the order under dispute is in contravention of 08.02.2022. Thus, the order under dispute is in contravention of the principles of natural justice and is therefore subject to the principles of natural justice and is therefore subject to the principles of natural justice and is therefore subject to annulment.

4.1 Secondly, the counsel for the assessee contends that the , the counsel for the assessee contends that the , the counsel for the assessee contends that the Assessing Officer, in the order un Assessing Officer, in the order under Section 271(1)(b) of the Act, der Section 271(1)(b) of the Act, erroneously stated that the assessee neither submitted any erroneously stated that the assessee neither submitted any erroneously stated that the assessee neither submitted any response nor requested an adjournment in response to the notice response nor requested an adjournment in response to the notice response nor requested an adjournment in response to the notice under Section 142(1) dated 08.02.2022. It is asserted that this under Section 142(1) dated 08.02.2022. It is asserted that this under Section 142(1) dated 08.02.2022. It is asserted that this statement is factually incorrect, a statement is factually incorrect, as the assessee did, in fact, s the assessee did, in fact, submitted submitted submitted the the the necessary necessary necessary documentation documentation documentation on on on 07.03.2022. 07.03.2022. 07.03.2022. Furthermore, it is argued that there was a justifiable reason for the Furthermore, it is argued that there was a justifiable reason for the Furthermore, it is argued that there was a justifiable reason for the 30-day delay in responding to the said notice. The assessee, a day delay in responding to the said notice. The assessee, a day delay in responding to the said notice. The assessee, a doctor employed by the Municipal Corporat doctor employed by the Municipal Corporation of Greater Mumbai, ion of Greater Mumbai, was occupied during the period of January and February 2022, was occupied during the period of January and February 2022, was occupied during the period of January and February 2022, when the third wave of Covid when the third wave of Covid-19 (Omicron) was at its peak, and the 19 (Omicron) was at its peak, and the notice under Section 142(1) dated 08.02.2022 was issued during notice under Section 142(1) dated 08.02.2022 was issued during notice under Section 142(1) dated 08.02.2022 was issued during that period. Due to the taxing work sched that period. Due to the taxing work schedule of the assessee and ule of the assessee and the adverse conditions caused by the pandemic, it was challenging the adverse conditions caused by the pandemic, it was challenging the adverse conditions caused by the pandemic, it was challenging to submit the response on the prescribed date. Additionally, efforts to submit the response on the prescribed date. Additionally, efforts to submit the response on the prescribed date. Additionally, efforts were made to provide the requested information through a tax were made to provide the requested information through a tax were made to provide the requested information through a tax consultant. However, the combination consultant. However, the combination of the Covid of the Covid-19-related

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challenges and the long hours spent attending to patients resulted challenges and the long hours spent attending to patients resulted challenges and the long hours spent attending to patients resulted in a delay in submitting the required information. in a delay in submitting the required information.

4.3 On the contrary, the learned Departmental Representative (DR) 4.3 On the contrary, the learned Departmental Representative (DR) 4.3 On the contrary, the learned Departmental Representative (DR) supported the orders issued by the lower author supported the orders issued by the lower authorities. ities.

4.4 In our considered opinion, the order issued by the learned 4.4 In our considered opinion, the order issued by the learned 4.4 In our considered opinion, the order issued by the learned Assessing Officer, which was upheld by the learned CIT(A), is Assessing Officer, which was upheld by the learned CIT(A), is Assessing Officer, which was upheld by the learned CIT(A), is untenable for two main reasons. Firstly, the learned Assessing untenable for two main reasons. Firstly, the learned Assessing untenable for two main reasons. Firstly, the learned Assessing Officer did not issue any show Officer did not issue any show-cause notice for the impositio cause notice for the imposition of a penalty in response to the non penalty in response to the non-compliance of the notice under compliance of the notice under Section 142(1) of the Act dated 08.02.2022. Consequently, the Section 142(1) of the Act dated 08.02.2022. Consequently, the Section 142(1) of the Act dated 08.02.2022. Consequently, the imposition of the penalty was carried out without affording the imposition of the penalty was carried out without affording the imposition of the penalty was carried out without affording the assessee an opportunity to be heard, thus violating the principles of assessee an opportunity to be heard, thus violating the princ assessee an opportunity to be heard, thus violating the princ natural justice. Secondly, considering the assessee’s role as a natural justice. Secondly, considering the assessee’s role as a natural justice. Secondly, considering the assessee’s role as a doctor with the Municipal Corporation and the extensive clinic doctor with the Municipal Corporation and the extensive clinic doctor with the Municipal Corporation and the extensive clinic hours during the Covid period, a valid and reasonable cause for the hours during the Covid period, a valid and reasonable cause for the hours during the Covid period, a valid and reasonable cause for the 30-day delay in submitting the requested information day delay in submitting the requested information under Section day delay in submitting the requested information 142(1) of the Act exists. Thus, invoking provision of section 273B of 142(1) of the Act exists. Thus, invoking provision of section 273B of 142(1) of the Act exists. Thus, invoking provision of section 273B of the Act, where a reasonable and sufficient reasonable and sufficient cause exits for non cause exits for non- compliance, no penalty could be levied. compliance, no penalty could be levied.

4.5 In light of the foregoing discussion, we hereby set aside the 4.5 In light of the foregoing discussion, we hereby set aside the 4.5 In light of the foregoing discussion, we hereby set aside the order issued by the learned CIT(A) regarding the matter in dispute the learned CIT(A) regarding the matter in dispute the learned CIT(A) regarding the matter in dispute and cancel the penalty imposed by the Assessing Officer. The and cancel the penalty imposed by the Assessing Officer. The and cancel the penalty imposed by the Assessing Officer. The grounds raised by the assessee are allowed. grounds raised by the assessee are allowed.

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