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Income Tax Appellate Tribunal, HYDERABAD BENCHES “SMC”, HYDERABAD
Before: SHRI LALIET KUMAR
O R D E R PER LALIET KUMAR, J.M. The appeal of the assessee for A.Y. 2017-18 arises from the order of Commissioner of Income Tax (Appeals) – 12, Hyderabad dated 10.07.2023 invoking proceedings under section 272A(1)(d) of the Income Tax Act, 1961 (in short, “the Act”).
The grounds raised by the assessee reads as under :
“1. On the facts and in the circumstances law, the Appellate orders as passed by the ld.CIT(A) is erroneous to the extent the order is prejudicial to the interest of the appellant. 2 On the facts and in the circumstance of the case, the Ld.CIT(A) has grossly erred in upholding the order of penalty which was passed without giving sufficient and reasonable opportunity of being heard. 3 On the facts and in the circumstance of the case, the Ld.CIT(A) ought to have held that the order passed is unsustainable as the Show Cause Notices were given only on 19-01-2022 and on 10-02-2022, which is insufficient and unreasonable opportunity. 4 The Ld. CIT(A) has erred in upholding the penalty order without properly appreciating the fact and law that the order was passed well after the extended period. 5 On the facts and in the circumstances of the case and also on legal front, the Ld. CIT(A) has grossly erred in upholding the penalty levied specifically for non-compliance to the Show Cause Notice issued u/ s 274 r.w.s. 272A(1)(d ) dt. 10-02-2022.
6 The ld. CIT(A) ought to have quashed the penalty order as unsustainable, on the specific reason that the AO has admitted before CIT(A) stating that the penalty was levied for not responding to the Show Cause Notice issued on 1002-2022. 7 The Ld.CIT(A) ought to have fairly appreciated the legal position that there is no penal action prescribed under the Act for non- response to the Show Cause Notice u/ s 274 of the Act and that the penalty levied for not responding to the Show Cause Notice u/s 274 of the Act is bad in law.
The Ld. CIT(A) ought to have appreciated the legal position that penalty is exigible for non-response to statutory notices/s 142(1) of the Act and not to nonresponse to Show Cause Notice u/ s 274 of the Act, which is an opportunity of hearing failing which the AO gets right to act on the main issue of 142(1) and pass the order as he deems fit and fair. 9 Without prejudice to the above main and substantive grounds of appeal
, on the facts of the case, the Ld. CIT(A) erred in upholding the order of levy of penalty on the issue of insufficient reason for failure to comply with notices u/ s 142(1).
10. The Ld.CIT(A) ought to have fairly and judicially appreciated the reasons given for not responding to the notices issued, as reasonable cause and required to delete the penalty levied as un-sustainable in law.”
Facts of the case, in brief, are that on verification of the data relating to the cash deposits during the demonetization period available in AIMS module of ITBA, substantial cash deposits were noticed in the case of the assessee during the demonetization period. Subsequently, notices u/ s. 142(1) of the IT Act for filing of return of income pertaining to AY 2017-18 were issued to the assessee by the AO. However, the assessee did not file valid return for the year under consideration. Accordingly, assessment order u/s. 144 dated 06.12.2019 was passed by the AO assessing the income at Rs.3,74,51,398/-. The assessee failed to give reply to the notice u/ s. 142(1) and thereafter, show cause notice dt.19.01.2022 and 10.02.2022 were issued to the assessee. However, the assessee did not comply with any of the notices issued. Hence, the AO has levied a penalty u/s.272A(1)(d) of Rs.10,000/- on the assessee.
Feeling aggrieved with the penalty order issued by the Assessing Officer, assessee filed an appeal before the ld.CIT(A), who dismissed the appeal of assessee by observing as under :
“I have considered the order of the Assessing Officer and the submissions of the appellant. It is seen that the appellant has not responded to the notices u/s 142(1) dated 04.12.2017, 11.12.2017, 20.09.2019 & 23.10.2019 and the show cause notices dated 19.01.2022 and 10.02.2022. Thereafter, the AO levied penalty of Rs. 10,000/- u/ s 272A(I)(d) of the Act vide the impugned order dated 26.03.2022 under appeal for non compliance of show cause notice dated 10.02.2022. The appellant has contended that the accountant was hospitalized due to ill health, and that is why, the appellant could not respond to the above said show cause notice. However, the appellant has failed to submit any medical certificate or any other documentary evidence in support of its contention. Further, there is no proof on record of the accountant being the 3 authorized representative and in case of accountant's ill health, the appellant could have made submissions online, but there were no online submissions made by the appellant in response to the said show cause notice dated 10.02.2022. Therefore, the appellant did not have any reasonable cause for the non-compliance of the show cause notice dated 10.02.2022 and hence, the contention of the appellant that the penalty is not leviable in view of the provisions of section 273B of the Act is incorrect. Accordingly, ground no.8 of the appeal is dismissed. Further, the appellant has failed to submit any proper reason with documentary evidences which were beyond its control for not responding to the said notice and mere ill health of the accountant is not a sufficient cause for failure to comply the notices and the appellant could have made online submissions. The appellant has also contended that he has complied with the show cause notice issued on 06.12.2019 and therefore, penalty u/s 272A(1)(d) should not be levied. However, it is seen that the impugned penalty order was passed for non-compliance of show cause notice dated 10.02.2022 and compliance of different notice cannot be considered as compliance for the said notice. Accordingly, grounds no.5, 6, 7 & 10 of the appeal are dismissed. In ground no.3, the appellant contended that the penalty order was passed beyond the time period as per section 275(1) of the Act as the said penalty proceedings were started on 06.12.2019 by issuing notice u/ s 274 r.w.s. 272A(I)(d) and the time limit to pass the penalty order was 06.06.2020, but the penalty order was passed on 26.03.2022. It is seen that the Hon'ble Supreme Court in Miscellaneous Application No.21 of 2022, Miscellaneous Application No.665 of 2021 and Suo Moto Writ Petition (C) No.3 of 2020 dated 10.01.2022, has held that the period from 15.03.2020 till 28.02.2022 shall be excluded from limitation period for any law in view of covid outbreak. The relevant part of said decision is reproduced as under: "It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23(4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.” Applying the said decision in the present case, the time limit for passing penalty order u/s 272A(I)(d) of the Act was 06.06.2020 as per the provisions of section 275 of the Act, however, since the period of 15.03.2020 to 28.02.2022 comes within the relaxation 4 period provided by Hon'ble Supreme Court, therefore, the time limit to issue pass the penalty order u/s 272A(I)(d) of the Act in the present case was extended by 83 days (15.03.2020 to 06.06.2020) till 26.05.2022 and the said penalty order was actually passed on 26.03.2022 i.e. well within the time limit. Accordingly, ground no.3 of the appeal is dismissed. In ground no. 2 9, the appellant contended that no reasonable opportunity of being heard was provided to furnish the information. However, it is seen that six notices dated 04.12.2017, 11.12.2017, 20.09.2019, 23.10.2019, 19.01.2022 and 10.02.2022 were already issued to the appellant to furnish information during assessment proceedings, which the appellant has failed to respond. Therefore, sufficient opportunity was provided to the appellant by the Assessing Officer to comply with the notices, but the appellant has failed to comply. Accordingly, grounds no. 2 & 9 of the appeal are dismissed. In view of the above, the penalty levied u/ s 272A(I)(d) of the IT Act of Rs. 10,000/- for non compliance of show cause notice dated 10.02.2022 is hereby confirmed. Accordingly, ground no.4 of the appeal is dismissed.”
Feeling aggrieved with the order of ld.CIT(A), assessee is now in appeal before me.
Before me, ld. AR for the assessee submitted that penalty is required to be imposed for willful breach to comply the notices u/s 142(1) of the Act. It was contended by the ld. AR that show cause notices dt.19.01.2022, 10.02.2022 and notice u/s 142(1) of the Act were nor served on the assessee and therefore, there is no reason to impose the penalty u/s 272A(1)(d) of the Act.
6.1. The second limb of the argument of the ld. AR before me is that the period during which the assessee was called upon to reply to the Assessing Officer or to the ld.CIT(A) was a covid period and therefore, the assessee was not able to properly follow the appeal filed before the ld.CIT(A). He relied upon the direction of Hon’ble Supreme Court in the Suo Motu proceedings in the case of M.A.No. 21/2022 in M.A.No. 665/2021 in SMW(C) No.3 of 2020 by order dated 10/01/2022 wherein it was held that in cases, where the limitation would have expired during the period between 15/03/2020 and 28/02/2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01/03/2022, and in the event of actual balance period of limitation remaining with effect from 01/03/2022 is greater than 90 days, that longer period shall apply.
6.2 Lastly, it was submitted by the ld. AR that the matter may kindly be remanded back to the ld.CIT(A).
On the other hand, ld. DR submitted that the assessee was a habitual defaulter and notices u/s 142(1) of the Act was issued on 04.12.2017 and 11.11.2017, 20.09.2010 and 23.10.2019. The Assessing Officer only after coming to the conclusion that there was a legal breach caused in compliance of notices by the assessee, penalty notice u/s 274 r.w.s 272(A)(a)(d) of the Act dt.06.12.2019 was issued by the Assessing Officer. As the assessee even did not respond to the said penalty notice, show cause notices dt.19.01.2022 and 10.02.2022 were issued to the assessee. The assessee despite the issuance of show cause notices, failed to comply the same, eventually, the Assessing Officer vide the impugned penalty order has levied penalty of Rs.10,000/- to the assessee.
8. It was further contended by the ld. DR that the assessee had preferred appeal before the ld.CIT(A) and in that appeal, the ld.CIT(A) has merely reproduced the submissions as mentioned before the Assessing Officer in the remand report. However, the submissions of the assessee were duly recorded at page 13 of his order which are mentioned hereinabove. It was also submitted that the assessee is a Film Star, and it was not expected of her to be non-compliant with the law.
In rebuttal, the ld. AR has submitted that the assessment is carried out by different persons in December, 2019 that too after lapse of three years and the files were moved to other officers and notice were issued by difference officers.
I have heard the rival arguments of the parties and perused the material on record. Admittedly, the assessee has not complied the notices u/s 142(1) of the Act on 04.12.2017 and 11.11.2017, 20.09.2019 and 23.10.2019, which in my opinion is the statutory duty of the assessee to comply. During this time i.e., 04.12.2017 to 23.10.2019, there was no covid was prevailing in the country, therefore, there was no reason for the assessee not to comply with the notices issued by the Assessing Officer by supplying the information / documents as called for. In my opinion, the assessee should be complying with and adhere to the time schedule granted by the Assessing Officer. Further, first wave covid had only started in March, 2020.
There is no reason for the assessee not to participate in the proceedings initiated pursuant to the notice issued on 06.12.2019. The assessee should be vigilant, however, that has not been done and as a consequence, the Assessing Officer issued show causes notice on 19.01.2022 and 10.02.2022.
11.1. In my view, during the period from 19.01.2022 to 10.02.2022, the Covid was there and the limitation was extended by the Hon'ble Supreme Court. Further, as referred by ld. AR, the Hon’ble Supreme Court in the case of M.A.No. 21/2022 in M.A.No. 665/2021 in SMW(C) No.3 of 2020 by order dated 10/01/2022 had extended the period of limitation. Therefore, the order was passed by the Assessing Officer during the Covid period without considering the directions of Hon'ble Supreme Court (supra).
11.2. Considering the totality of the facts and circumstances and respectfully following the directions of Hon'ble Supreme Court, whereby the period of replying to the statutory notices have been extended, I deem it appropriate to remand back the matter to the file of ld.CIT(A) with a direction to consider all these submissions of the assessee and pass a detailed speaking order after considering the submissions and the documents, if any, filed before the appellate proceedings, subject to the planting of 50 trees of Indian variety within a period of two months by assessee herself as a cost. The assessee shall furnish the proof of such planting of trees before the ld.CIT(A). The ld.CIT(A) shall pass a detailed speaking order after giving due opportunity of hearing to the assessee, in accordance with law. The assessee shall be at liberty to file documents, if any, as required for proving her case and the ld.CIT(A) shall consider the evidences, if any, filed by the assessee. Needless to say the ld.CIT(A) shall examine those documents / evidence filed by the assessee and also the other documents available on record. Accordingly, the appeal of assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 5th October, 2023.