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Facts
The assessee, a female senior citizen, challenged an order confirming a penalty of Rs. 20,000/- levied under Section 271(1)(b) for non-compliance with statutory notices issued under Sections 142(1) and 143(2) of the Income Tax Act. The delay in compliance was attributed to the negligence of her chartered accountant, but the assessee eventually complied, and the assessment was completed under Section 143(3).
Held
The Tribunal observed that the assessee ultimately responded, and the initial non-compliance was due to the chartered accountant's negligence. Since the subsequent compliances were considered sufficient and a reasonable cause was demonstrated, the penalty levied under Section 271(1)(b) was held not sustainable.
Key Issues
Whether the penalty levied under Section 271(1)(b) for non-compliance with statutory notices is sustainable when the assessee demonstrates a reasonable cause for the delay.
Sections Cited
250, 271(1)(b), 142(1), 143(2), 274, 148, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI OM PRAKASH KANT
Date of Hearing 10.11.2025 Date of Pronouncement 12.11.2025 ORDER Per: SHRI. SANDEEP GOSAIN, J.M.:
The present appeals have been filed by the assessee challenging the impugned order dt. 09.05.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2014-15.
The only ground raised by the assessee relates to 2. challenging the order of Ld. CIT(A) in confirming the penalty levied u/s 271(1)(b) of the Act.
In this regard, we have heard the counsels for both the parties, perused the material placed on record, judgements cited before us and also the orders passed by Vijaya Prakash Nagori., Mumbai. the revenue authorities. From the records, we noticed that penalty in the present case was levied on account of the fact that assessee has not complied with statutory notices issued u/s 142(1) and 143(2) of the Act by the AO and thus AO went ahead and levied penalty amounting to Rs. 20,000/- u/s 271(1)(b) of the Act r.w.s 274 of the Act.
In this regard, Ld. AR submitted that assessee being female senior citizen had filed her return of income in respect to the notices issued u/s 148 of the Act. It was further submitted that there was delay in filing the reply to the statutory notices issued by AO because the chartered accountant who was handling the case could not file the reply in time. Finally the assessee had changed the said chartered accountant and filed the reply on 20.01.2023 along with all the details and thereafter AO recorded his satisfaction and passed the assessment under regular proceedings.
After having heard both the sides, we noticed that it is an undisputed fact that assessee being female senior citizen had ultimately responded to the notices and the reason for initial non-compliance was on account of the negligence on the part of the chartered accountant. In this case the assessee had not complied with the initial notices, but the assessment eventually was completed u/s 143(3) of the Act, therefore it goes to show that the subsequent compliances were considered as sufficient and therefore earlier default was effectively ignored. Even otherwise,in Vijaya Prakash Nagori., Mumbai. our view, the penalties are not automatic and can be waived if the assessee demonstrated a reasonable cause in non-compliance with statutory notices.
Since in the present case assessee has successfully demonstrated “reasonable cause” for initial non- compliance. Therefore, considering overall facts and circumstances we are of the view that penalty levied by AO u/s 271(1)(b) of the Act is not sustainable and thus we direct the AO to delete the same.
In the result the appeal filed by the assessee stands allowed.
Order pronounced in the open court on 12/11/2025