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Facts
The assessee, a co-operative society, failed to respond to notices issued under Section 142(1) of the Income Tax Act. The reasons provided were the appointment of an administrator, termination of the Chief Accountant, change of Chartered Accountants, and ongoing major repair works on the building.
Held
The Tribunal found that the assessee's explanation for non-compliance was specific and justifiable, citing the appointment of an Administrative Board, changes in key personnel, and significant repair work. The Tribunal also noted that the assessee did not stand to gain from this non-compliance.
Key Issues
Whether the penalty imposed for non-compliance with notices under Section 142(1) is justified given the reasons provided by the assessee, such as administrative changes and building repairs.
Sections Cited
143(2), 142(1), 271A(1)(d)
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Income Tax Appellate Tribunal, MUMBAI BENCHES “G”, MUMBAI
Before: Justice (Retd.) C V Bhadang, Hon’ble & Shri Prabhash Shankar, Hon’ble
Per Justice (Retd.) C V Bhadang, President:
By this appeal the assessee is challenging the order dated 15.07.2025 passed by National Faceless Appeal Centre (NFAC) (‘CIT(A)’ for short) thereby confirming the imposition of penalty of Rs.40,000/- u/s. 271A(1)(d) of the Income Tax Act, 1961 (‘Act’ for short) by order dated 02.03.2023 by the Assessing Officer. This appeal relates to A.Y. 2020-21. The penalty has been imposed on account of non-compliance of notices issued to the appellant u/s. 142(1) of the Act.
None appear for the assessee. We have heard the learned DR. Perused record.
ITA 5645/Mum/2025 Shah And Nahar Industrial Premises A-1 Co-op Society Ltd.
The appellant-assessee is a co-operative society registered under Maharashtra Co-operative Society Act, 1960. The appellant was issued notice dated 29.06.2021 u/s. 143(2) of the Act to which the appellant did not file any response. According to the appellant notice was issued only in compliance of statutory requirement. Subsequently, three notices were issued to the appellant on 25.11.2021, 08.02.2022 and 16.02.2022 u/s. 142(1) of the Act. According to the appellant the first notice dated 25.11.2021 was not received by the appellant either by email or by post. So far as the two subsequent notices are concerned, the appellant could not file response on account of the fact that an administrator was appointed in December, 2019 on the appellant- society. Accordingly, the Administrative Board was formed, which had terminated the services of Chief Accountant Shri Sambhaji L Devte on 18.03.2020. The Administrative Board also changed the Chartered Accountants, who were previously handling the Income Tax and GST matters of the Society and appointed Mr. I P Mehta Chartered Accountant to handle the same. It was also contended that on the basis of Structural Audit Report, the society was required to carry out major repairs of the building for which the Administrative Board was in the process of inviting tenders and awarding contracts, which was eventually awarded to M/s. Build Tech India. The contractor was carrying out major repair work of the building. On account of these reasons the appellant could not respond to the subsequent notices dated 08.02.2022 and 16.02.2022 issued u/s. 142(1) of the Act.
The Assessing Officer as well as the learned CIT(A) has refused to accept the reasons for non-compliance. The CIT(A) has observed that the explanation is general in nature. In the opinion of the CIT(A) the explanation is unjustified, unwarranted and unsustainable and therefore not acceptable.
ITA 5645/Mum/2025 Shah And Nahar Industrial Premises A-1 Co-op Society Ltd. 6. The learned DR has supported the impugned order.
We do not find that the explanation was general in nature. It was specific in so far as appointment of the Administrative Board, discontinuance of the service of the earlier Chief Accountant as well as the repair work of the building, which in our opinion was sufficient reason for the appellant’s failure to respond to the notices u/s. 142(1) of the Act. It is necessary to note that the assessee does not stand to gain by such failure to respond to the notices. In any event, in the given facts and circumstances of the case, we find that the appellant has demonstrated sufficient and justifiable reasons for the non-compliance. The imposition of penalty u/s. 271A(1)(d) of the Act is thus unwarranted.
In the result, the appeal is allowed. The impugned order imposing penalty is set aside.
Order pronounced in the open court on 13th November,2025.