SIDHAANT AADHHATHRAO,GOVANDI, MUMBAI vs. ITO - 27(3)(1), VASHI, NAVI MUMBAI

The learned CIT(A) failed to appreciate that the quantum appeal is set aside for re-assessment and the order passed is invalid and hence no penalty survives. 2. Rival submissions of both the parties have been heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that the assessing officer (AO) levied penalty of Rs. 40,000/- under Section 272A(1)(d). The AO levied penalty for default of non-compliance with four show-cause notices, as mentioned in the penalty order itself. The Assessing Officer levied penalty at the rate of Rs. 10,000/- for each default. The assessee was not served with the notice issued by AO through e-mail. Hence, there was non-compliance before AO. The assessment was completed under section 144. The matter in appeal in the quantum assessment has been restored back to the file of the AO for de novo assessment. There was reasonable cause for non-compliance, which has been accepted in quantum appeal while restoring the matter back to AO. The assessee is a man of very meagre means and his annual income was Rs. 68,000/-, which was below the taxable limit. The case of assessee was reopened on the basis of information that there was transaction of purchase of property. The assessee has not made any investment in the property, rather it was purchased by his mother, and the name of assessee was inserted as a beneficiary. The ld AR of the assessee submits that penalty for all four defaults may be waived or a lenient view may be taken.

On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue supported the order of the lower authorities. 4. We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities carefully. We find that the learned CIT(A), as recorded in para 1 of his order, noted that four show-cause notices under Section 142(1) were issued and all remained non-responsive. We find that the learned CIT(A) has not recorded his satisfaction about the actual service of notices and the means of service. The assessee, in response to show-cause notice dated 21-01-2023, vide his reply, contended that he was not aware of the notice issued. His income was below the taxable income. The assessment was completed under Section 144. Considering the fact that the assessment was completed under Section 144, which has now been restored back to the file of the Assessing Officer, therefore, we do not find any justification in levying penalty for each of the defaults, particularly without recording specific satisfaction that the notices were actually served upon the assessee. Keeping in view the fact that the assessee has contended that his annual income was below the taxable limit, therefore, we do not find any justification for levying penalty for each of the occasions. Hence, penalty levied by the Assessing Officer is set aside, as sufficient cause for non- compliance has already been accepted while restoring the quantum assessment back to the file of the Assessing Officer. 5. In the result, grounds of appeal raised by assessee are allowed.

In the result, the appeal of the assessee is allowed. Order was pronounced in the open Court on 11/09/2026. /- /- Sd/- /- Sd/- Sd/- OM PRAKASH KANT PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated:11/09/2026 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order