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Facts
The assessee appealed against orders challenging different orders passed by the National Faceless Appeal Centre (NFAC)/CIT(A) for the assessment year 2013-14. The assessee failed to appear for hearings, did not comply with notices, and did not furnish required information or explanations.
Held
The Tribunal held that the assessee failed to discharge the onus to comply with notices issued under Section 142(1) of the Income Tax Act. The penalties imposed by the Assessing Officer and sustained by the CIT(A) were found to be justified due to the assessee's non-compliance and failure to provide reasonable cause.
Key Issues
Whether the penalties imposed on the assessee for non-compliance with notices and failure to furnish information were justified, and whether the CIT(A)'s orders upholding these penalties were correct.
Sections Cited
250, 271(1)(b), 142(1), 147, 148, 143(3), 271(1)(c), 44AB, 271B, 139, 271F, 144, 144B
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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI OMKARESHWAR CHIDARA
Date of Hearing 14.10.2025 Date of Pronouncement 10.11.2025 ORDER Per Bench.:
These fourappeals have been filed by the assessee challenging the different impugned orders 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 2013-14.
Since all the four appeals are belongs to one assessee, hence, they have been clubbed, heard together and consolidated order is being passed forthe sake of convenience and brevity.
2 High Voit Electicals, Mumbai. A.Y 2013-14
At the time of hearing none appeared on behalf of the assessee when the case was called repeatedly. Even no application for seeking adjournment has been filed. From the records, we noticed that assessee had twice taken adjournments on one or the other reasons and the present date of hearing was fixed in the presence of the assesse but still assesse has chosen not to appear.
On the other hand, Ld. DR present in the court is ready with arguments, therefore we have decided to proceeded with the hearing of this appeal ex-parte.
From the records, we noticed that at the time of passing of penalty u/s 271(1)(b) of the Act, several opportunities were granted to the assessee for furnishing required evidences but assessee had not complied with the notices issued by the revenue. Since onus lies on the assessee to explain the charge of having failed to comply with the notice u/s 142(1) of the Act but the assessee could not offer any explanation therefore penalty was imposed. Even during the appellate proceedings the assessee could not substantiate the grounds raised in appeal therefore Ld. CIT(A) dismissed the appeal of the assessee by holding as under:
5.2 I have gone through the materialistic facts of the case and contention of the appellant. During the course of appellate proceedings, the appellant has furnished the statement of facts and form no. 35 along with his submission which has been taken on record. It is found that the appellant's case was 3 High Voit Electicals, Mumbai. reopened u/s 147/148 and during assessment proceedings for providing an opportunity of being heard, notices u/s 142(1) was issued on 19.10.2020 and 25.10.2020 to furnish certain details/information. The assessee did not furnish any details/information on the compliance dates. Hence, the assessee vide notice u/s 271(1)(b) dated 16.09.2021 and 09.12.2021 was show caused as to why an order imposing a penalty u/s 271(1)(b) of the IT Act, 1961 should not be made for failure to furnish the reply as required under section 142(1) of the IT Act, 1961. The assessee did not make any compliance of this notice. The AO has mentioned that on one occasion the Assessee furnished its reply but failed to furnish any reasonable cause with evidence. Hence reply of the assessee was not acceptable. Therefore, the AO was satisfied that assessee has failed to comply to statutory notices issued without any reasonable cause and accordingly, imposed a penalty of Rs. 10,000/- for each failure totaling to Rs.20,000/- for the above defaults.
5.3 During the appellate proceedings, the CIT(A) has gone through all the submissions and materials available in the office. The facts of the case are that there was double allotment of PAN and status mismatch is correct. However, in view of the surrounding circumstances as per records, the appellant has intentionally not changed the PAN AABFH1723L with the third parties from whom, the said information wrt transactional on the basis of which the case was opened, was received to the AO, which evidences it a clear case of suppression of receipts by the appellant wrt the PAN – AABFH1723L. It shows that the appellant's contention that the income has already been offered under the PANAABCH7678H does not hold any water and the appellant has not produced any verifiable evidence to substantiate this claim. Further, during the original assessment proceedings for A.Y.2013-14 u/s. 143(3) AABCH7678H, the appellant has never of the Act under the PAN produced this information (receipts on the PAN - AABFH1723L) before the AO on his own accord and only after the system captured receipts on the PAN - AABFH1723L that the department came to know about these receipts and thereafter the case was selected for re-assessment u/s. 147 of the Act. If the ITD system of the department did not catch the misadventure of the appellant, then this part of the income of the appellant could easily have escaped from the tax avenue.
4 High Voit Electicals, Mumbai.
5.4 It clearly shows that the appellant was aware about the notices issued to it during the assessment proceedings. Further, the appellant has also submitted response to one of the show cause notice issued to it. The onus was on the assessee to explain the charge of having failed to comply with the notice u/s 142(1) of the Income-tax Act 1961. However, the assessee took no steps to establish with evidence that there was any reasonable cause for non-complying with the notice u/s 142(1) of the Income tax Act 1961 and as it cannot be said that the assessee was preventive from complying with notices issued u/s 142(1) by sufficient cause. The AO, therefore, had to take the action on the basis of cause The la therefore, had to take t 5.5 Considering all the above cited facts, it is established that the AO was right in his observation and subsequent action of imposing penalty of Rs.20,000/- for the Asst. year 2013-14 u/s 271(1)(b) of the I.T. Act, 1961. Therefore, the ground of appeal raised by the appellant is disallowed.
6. In the result, the appeal is dismissed.
6. After hearing Ld. DR and after going through the orders passed by the revenue authorities, we find that assessee could not discharge his onus to comply with the notice u/s 142(1) of the Act, therefore Ld. CIT(A) rightly dismissed the appeal filed by the assessee. Even before us, no new facts or material has been placed in order to controvert or rebut the lawful findings recorded by Ld. CIT(A). Therefore we find no reasons to interfere into or to deviate from the lawful findings so recorded by Ld. CIT(A). hence the grounds raised by the assesse stands dismissed.
5 High Voit Electicals, Mumbai.
ITA No. 4463/Mum/2025, A.Y 2013-14
From the records, we noticed that assessee failed to substantiate the stand taken by him for not imposing penalty u/s 271(1)(c) of the Act and therefore penalty was imposed by the A.O. And even during the appellate proceedings the assessee could not demonstrate any reasonable cause for not imposing penalty therefore Ld. CIT(A) dismissed the appeal and the operative portion of the order of Ld. CIT(A) is reproduced herein below:
5.2 I have gone through the materialistic facts of the case and contention of the appellant. During the course of appellate proceedings, the appellant has furnished the statement of facts and form no. 35 along with his submission which has been taken on record. It is found that the decision on the appeal of the appellant dated 06/01/2022 against the order passed u/s 147 of the Income Tax Act, 1961 for the year under the consideration has been taken and the appellate order has been passed then there is no further need to keep the penalty in abeyance. Further, it is also relevant to mention here that the cardinal appeal filed by the appellant against the order was dismissed by the appellate order dated 19.06.2025 and the addition made by the AO vide its assessment order u/s 147 of the Income Tax Act, 1961 was sustained.
5.3 The facts of the case are that the appellant has not file its return of income for the A.Y 2013-14. As per the information available with the AO, the information received from the ITS details reflects credit card payment of Rs.3,62,292/-, undisclosed turnover of Rs.1,53,68,205/- which has been reported the Service Tax Return and receipt of Rs.68,64,865/- in the form of contract receipts during the FY 2012-13. Since, in this case no return of income has been filed for the year under consideration accordingly, no assessment was made and the only requirement to initiate proceedings u/s.147 of Income Tax Act, 1961 is the reason to believe, which was recorded. Accordingly, a notice u/s 148 was issued after prior approval of the competent authority on 18/03/2020.
6 High Voit Electicals, Mumbai.
5.3.1 During the assessment proceedings, the AO has issued multiple notices to the appellant. However, no compliance from the appellant was made in response to the notices u/s 148 & 142(1) of the IT Act during the entire Scrutiny proceeding despite several repeated request made and providing numerous opportunities to make compliances. Consequently, the AO has taken the liberal view and allowed all the possible expenses before reaching at a conclusion with respect to income of the appellant. Accordingly, the AO has estimated and assessed the total income of the appellant for A.Y.2013-14 that was determined at Rs.21,40,940/- and passed the assessment order under best judgment assessment u/s 144of the Income Tax Act, 1961. Since, the appellant has concealed the income, hence penalty proceeding was initiated by the AO issuing show cause notice u/s 271(1)(c) on 16.09.2021 of the. But no compliance was made of said notice. Thereafter, another notice u/s. 271(1)(c) dated 09.12.2021 was issued. But no compliance was made. Finally, the appellant has replied and stated that it is in an appeal, however, from the e-filing portal the AO has observed that there was no appeal pending of the assessee. Consequently, the AO has imposed a penalty of Rs.6,61,550/- i.e. 100% of the amount of tax sought to be evaded of u/s 271(1)(c) of the I.T.Act, 1961.
5.4 During the appellate proceedings, the CIT(A) has gone through all the submissions and materials available in the office. The facts from the appellate order are that there was double allotment of PAN and status mismatch is correct. However, the appellant has not intentionally changed the PAN – AABFH1723L with the third parties from whom, the said information on the basis of which the case was opened was received to the AO, which is clear case to suppress its receipts with the PAN - AABCH7678H. It shows that the appellant's contention that the income has already been offered under the PAN – AABCH7678H does not hold any water and the appellant has not produced any verifiable evidence to substantiate this claim. Further, during the original assessment proceedings for A.Y.2013-14 u/s. 143(3) of the Act under the PAN - AABCH7678H, the appellant has never produced this information (receipts on the PAN – AABFH1723L) before the AO by his own accord and only after the system captured receipts on the PAN - AABFH1723L that the department came to know about these receipts and thereafter the case was selected for 7 High Voit Electicals, Mumbai. re-assessment u/s. 147 of the Act. If the system of the department did not catch the misadventure of the appellant, then this part of the income of the appellant could be easily escaped from the tax avenue.
5.5 Moreover, the appellant did not make any compliance nor put this stand during the course of faceless proceedings for re- assessment. The appellant has deliberately did not allow the AO to verify his standregarding offering the income under the PAN - AABFH1723L while filing return under the PAN - AABCH7678H) during both the assessment and the re- assessment proceedings. Now after completion of the assessment proceedings, the assessee puts this stand without any cogent or verifiable proof. Despite making application with the department regarding double PANs, the appellant is using both the PANs for its transactions which are verified from the fact that the department has received information from third parties where the other PAN was used by the assessee. Considering all the facts, vide appellant order it was held that the AO was right in his observation and the grounds raised by the appellant were disallowed.
5.6 Section 271(1)(c) of the Act, to the extent it is relevant, provides for imposition of penalty in case the Assessing Officer, in the course of any proceedings under Act, is satisfied that any person had concealed particulars of his income or had furnished inaccurate particulars of such income. Explanation 1 to sub-Section (1) of Section 271 provides that where in respect of any facts material to the computation of the total income of any person, such person fails to offer an explanation or offers an explanation which is found to be false or he offers an explanation which he is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income, have been disclosed by him, then the amount added or disallowed in computing total income of such person, as a result thereof, shall for the purpose of clause (c) be deemed to represent the income in respect of which particulars have been concealed.
5.7 Hon'ble Delhi High Court in its decision in the case of Zoom Communication (P) Ltd, 191 Taxman 179 (Del), involving imposition of penalty u/s 271(1)(c) on account of claim made of 8 High Voit Electicals, Mumbai. legally unjustifiable deduction regarding which no debate or controversy was involved, has held as follows:
"19. It is true that mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bona fide. If the claim besides being incorrect in law is mala fide, Explanation 1 to section 271(1) would come into play and work to the disadvantage of the assessee.
The Court cannot overlook the fact that only a small percentage of the Income-tax Returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271(1)(c) of the Act. If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bona fide while making a claim of this nature, that would give a licence to unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assessed on the basis of self-assessment under section 143(1) of the Act and even if their case is selected for scrutiny, they can get away merely by paying the tax, which in any case, was payable by them. The consequence would be that the persons who make claims of this nature, actuated by a mala fide intention to evade tax otherwise payable by them would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have."
5.8 The legal position is squarely covered by the decision of the Hon'ble Apex Court in K.P. Madhusudhanan v. CIT [2001] 251 ITR 99. Therein, the Hon'ble Court affirmed the decision of the Kerala High Court in CIT v. K.Ρ. Madhusudanan [2000] 246 ITR 218. Considering the effect of the addition of the Explanation to section 271(1) of the Act and the amendment to section 271(1)(c)
9 High Voit Electicals, Mumbai. of the Act by deletion of the word "deliberately", the Hon'ble Kerala High Court came to the conclusion that whether penalty was liable to be imposed in a case where the assessee could offer no acceptable explanation for the income not disclosed or the inaccurate particulars he had furnished in his return, had to be examined and if found unacceptable, penalty was liable to be imposed. The Hon'ble Kerala High Court observed as follows:
"Section 271(1)(c) of the Income-tax Act, 1961, is attracted where, in the course of any proceedings under the Act, the Assessing Officer or the first appellate authority is satisfied that: (a) any person has concealed the particulars of his income; or (b) has furnished inaccurate particulars of such income. The expressions 'has concealed' and 'has furnished inaccurate particulars' have not been defined either in the section or elsewhere in the Act. However, notwithstanding differences in the two circumstances, they lead to the same effect, viz., keeping off a certain portion of income. The former is direct while the latter may be indirect in its execution. A conspectus of the Explanation added by the Finance Act, 1964, and the subsequent substituted Explanations makes it clear that the statute visualized the assessmentproceedings and penalty proceedings to be wholly distinct and independent of each other. In essence, the Explanation (both after 1964 and 1976) is a rule of evidence. Presumptions which are rebuttable in nature are available to be drawn. The initial burden of discharging the onus of rebuttal is on the assessee. Explanation 1 automatically comes into operation when, in respect of any facts material to the computation of total income of any person, there is failure to offer an explanation or an explanation is offered which is found to be false by the Assessing Officer or the first appellate authority, or an explanation is offered which is not substantiated. In such a case, the amount added or disallowed in computing the total income is deemed to represent the income in respect of which particulars have been concealed. As per the provision of Explanation 1, the onus to establish that the explanation offered was bona fide and all facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged with concealment. (Further) The Assessing Officer is (also) not obliged to intimate the assessee that Explanation 1 to section 271(1)(c) is proposed to be applied.
10 High Voit Electicals, Mumbai. 5.9 After going through all the materialistic facts of the case, appellate order and other material available before the undersigned, it is established that the additions made by the AO vide order passed on 16.09.2021 under section 147 r.w.s 144 read with section 144B of the IT Act for the A.Y. 2013-14 are sustained and the appellant has concealed its income. Therefore, the AO was right in initiating penalty u/s 271(1)(c). Considering all the above cited facts, it is established that the AO was right in his observation and subsequent action of imposing penalty of Rs.6,61,550/- i.e. 100% of the amount of tax sought to be evaded of u/s 271(1)(c) of the I.T. Act, 1961. Therefore, the ground of appeal raised by the appellant is disallowed.
6. In the result, the appeal is dismissed.
8. After having heard Ld. DR and also considering the material placed on record and also the orders passed by the Ld. CIT(A). We found that the addition made by the AO in the assessment proceedings were sustained and the assessee had concealed its income, therefore the AO had rightly initiated penalty proceedings and imposed the penalty u/s 271(1)(c) of the Act. Therefore, we find no reasons to interfere into the well reasoned orders passed by Ld. CIT(A). Even before us, no new facts or has been placed on record in order to controvert or rebut the lawful findings so recorded by Ld. CIT(A). Therefore, the grounds raised by the assesse stands dismissed.
At the very outset we noticed that assessee could not substantiate by furnishing any reasonable cause or evidences for not getting the books of accounts audited as the turnover of the assessee was more than the mandatory
11 High Voit Electicals, Mumbai. limit, therefore penalty was imposed. Even during the appellate proceedings the assessee could not substantiate the defence taken by him therefore Ld. CIT(A) dismissed the appeal of the assessee, the operative portion of Ld. CIT(A) is reproduced herein below:
5.2 I have gone through the materialistic facts of the case and contention of the appellant. During the course of appellate proceedings, the appellant has furnished the statement of facts and form no. 35 along with his submission which has been taken on record. It is found that the decision on the appeal of the appellant dated 06/01/2022 against the order passed u/s 147 of the Income Tax Act, 1961 for the year under the consideration has been taken and the appellate order has been passed then there is no further need to keep the penalty in abeyance. Further, it is also relevant to mention here that the appeal of the appellant was dismissed by the appellate order dated 19.06.2025, and the addition made by the AO vide its assessment order u/s 147 of the Income Tax Act, 1961 has been sustained by the First Appellate Authority. The appellant is a company and did not file its return. In this case, assessment proceedings in this case were initiated u/s 147/148 after recording reasons. The assessment u/s 147/144 in this case was completed on 16.09.2021 at assessed income of Rs.21,40,940/-. Since, the assessee has failed to file ITR and also failed to declared profit from contract receipts declared in service tax return totaling to Rs.2,22,33,070/- and the same was exceeds the limit for requirement of tax audit as per section 44AB of the IT Act. As the turnover of the assessee was more than the mandatory limit for requirement of get the books audited, the assessee was liable to get his accounts audited u/s 44AB from an accountant before the specified date and furnish the same by that date. But in this case assessee failed to get his accounts audited u/s 44AB in respect of previous year 2012- 13 relevant to A.Y. 2013-14 and fails to furnish a report of such audit as required u/s 44AB. The penalty proceedings were initiated by issuing show cause notice u/s 271B on 16.09.2021 for the compliance on 30.09.2021 but no compliance was made on the compliance date. On one occasion show case notice dated. 13.12.2021 was 12 High Voit Electicals, Mumbai. send to designated verification unit on 17.12.2021. However, the assessee furnished its reply but failed to furnish any reasonable cause withbefore the AO, therefore, reply of the assessee was not acceptable to the AO. As the turnover of the assessee was more than the mandatory limit for requirement of get the books audited, the AO has rightly imposed a penalty of Rs. 1,11,165/- u/s 271B of the IT Act, 1961. 5.4 After going through all the materialistic facts of the case, appellate order and other material available before the undersigned, it is established that the additions made by the AO vide order passed on 16.09.2021 under section 147 r.w.s 144 read with section 144B of the IT Act for the A.Y. 2013-14 are sustained and the appellant has failed to get his accounts audited u/s 44AB in respect of previous year 2012-13 relevant to A.Y. 2013-14 and fails to furnish a report of such audit as required u/s 44AB. Considering all the above cited facts, it is established that the AO was right in his observation and subsequent action ofimposing penalty of Rs.1,11,165/- u/s 271B of the IT Act, 1961. Therefore, the ground of appeal raised by the appellant is disallowed.
6. In the result, the appeal is dismissed.
10. After having heard Ld. DR, and also considering the orders passed by Ld. CIT(A) and the material placed on record, we found that the addition made by the AO were sustained and the assessee had failed to get his accounts audited u/s 44AB and failed to furnish a report of such audit required u/s 44AB. Therefore, we find no reasons to interfere into the well reasoned order passed by Ld. CIT(A) as no new material has been placed before us in order to controvert or rebut the lawful findings so recorded by Ld. CIT(A). Therefore the grounds raised in this appeal filed by the assessee stands dismissed.
13 High Voit Electicals, Mumbai.
ITA No. 4465/Mum/2025, A.Y 2013-14
At the very outset, we noticed that assessee failed to furnish the return of income during the year under consideration therefore penalty was initiated u/s 271F of the Act and assessee had not complied with the notices issued by the revenue, therefore ultimately penalty was imposed. Even during the appellate proceedings the assessee could not substantiate the grounds raised by him therefore Ld. CIT(A) dismissed the appeal and the operative portion of Ld. CIT(A) is reproduced herein below:
5.2 I have gone through the materialistic facts of the case and contention of the appellant. During the course of appellate proceedings, the appellant has furnished the statement of facts and form no. 35 along with his submission which has been taken on record. It is found that the assessee is a company and failed to file its return of income originally for the A.Y. 2013-14. Further, assessment proceedings in this case were initiated u/s 147/148 after recording reasons after sought approval from the competent authority and notice u/s 148 dated 18.03.2020 was issued and served upon the assessee. In compliance to notice issued u/s 148 the assessee again failed to file return of income. The assessment u/s 147/144 in this case was completed on 16.09.2021 at assessed income of Rs.21,40,940/- that clearly implies that total income of the assessee was at Rs.21,40,940/- which was more than the minimum threshold limit for filing return of income as required u/s 139 of the income tax Act, 1961. Therefore, the AO has imposed a penalty of Rs.5,000/- (Rs. Five Thousand only) for the Asst. year 2013- 14. 5.3 During the appellate proceedings, the CIT(A) has gone through all the submissions and materials available in the office. The facts of the case are that there was double allotment of PAN and status mismatch is correct. However, the appellant has not intentionally changed the PAN AABFH1723L with the third parties from whom, the said information on the basis of which the case was opened was received to the AO, which is 14 High Voit Electicals, Mumbai. clear case to suppress its receipts with the PAN - AABCH7678H. It shows that the appellant's contention that the income has already been offered under the PAN - AABCH7678H does not hold any water and the appellant has not produced any verifiable evidence to substantiate this claim. Further, during the original assessment proceedings for A.Y.2013- 14 u/s. 143(3) of the Act under the PAN - AABCH7678H, the appellant has never produced this information (receipts on the PAN AABFH1723L) before the AO by his own accord and only after the AABFH1723L that the system captured receipts on the PAN department came to know about these receipts and thereafter the case was selected for re-assessment u/s. 147 of the Act. If the system of the department did not catch the misadventure of the appellant, then this partof the income of the appellant could be easily escaped from the tax avenue. It clearly shows that the appellant was aware that it was liable to file income tax return because it has done transactions using this PAN that crossed the basic threshold limit of exemption of filing income tax return. Further, during the appellant proceedings the appellant has failed to submit any satisfactory explanation before the AO that can support the reasons for not filing return of income. 5.4 Considering all the above cited facts, it is established that the AO was right in his observation and subsequent action of imposing penalty of Rs.5,000/- for the Asst. year 2013-14 u/s 271F of the I.T.Act, 1961. Therefore, the ground of appeal raised by the appellant is disallowed.
6. In the result, the appeal is dismissed.
12. After having heard Ld. DR and considering the orders passed by Ld. CIT(A) and the material placed on record, we found that the assesse had failed to furnish the return of income therefore, we find no reasons to interfere into the well reasoned order passed by Ld. CIT(A) as no new material has been placed before us in order to controvert or rebut the lawful findings so recorded by Ld. CIT(A). Therefore ground raised in this appeal filed by the assessee stands dismissed.
15 High Voit Electicals, Mumbai. 13. In the result, all the four appeals filed by the assessee stands dismissed.