NAGA MALLESWARI MANNAVA,GUNTUR vs. ITO, WARD-1, GUNTUR

Aggrieved by the order of penalty, the Ld. A.O. filed an appeal before the Ld. Commissioner of Income-tax [hereinafter in short “Ld.CIT(A)”] and the Ld.CIT(A) vide his order under section 250 of the Act dated 17.04.2025 concurred with the view of the Ld. A.O. and confirmed the penalty levied by the Ld. A.O. Consequently, the appeal of the assessee was dismissed by the Ld.CIT(A).

The assessee filed an appeal before the ITAT stating that the Ld.CIT(A) erred in confirming the penalty levied to the extent of Rs.30,000/- under the provisions of section 271(1)(b) of the Act on the ground that there is no compliance to the notice issued under section 142(1) of the Act. Subsequently the assessee has filed a petition requesting for admission of additional grounds of appeal wherein it was mentioned that for the A.Y. 2015-16 the notice under section 148 of the Act was issued on 05.04.2022 which is beyond the period of limitation prescribed under section 149(1) of the Act. Since the notice issued is barred by limitation, consequently the assessment framed thereon would be a nullity. Hence the consequential penalty proceedings under section 271(1)(b) of the Act has no legal foundation and it cannot be sustained. Since this is an issue which does not require any fresh verification of facts and all the details are already available on record, this additional ground may be taken on record and adjudicated, Ld. AR of the appellant submitted before the Bench.

The Learned Departmental Representative [hereinafter in short “Ld.DR”] has mentioned that the penalty under section 271(1)(b) of the Act levied by the Ld. A.O. is nothing to do with notice issued by Ld.AO under section 148 of the Act. The notice issued under section 148 of the Act and consequent assessment framed are all separate proceedings and it is not known what happened in the assessment for that assessment year in the appeal proceedings. Ld. AR of the appellant has also not mentioned anything about the outcome of the appeal on the issue of notice under section 148 of the Act. In view of the same, the Ld.DR has submitted that the penalty levied may be confirmed.

The contentions of both the parties are heard. The Bench concurs with the view of Ld.DR because the present proceedings under section 271(1)(b) of the Act are completely different from the issuance of notice under section 148 of the Act or 143(3) of the Act. The Ld. AR of the appellant did not dispute the fact that the assessee did not respond to the notices issued by the Revenue nor did he argue anything about the “reasonable cause” for not responding to the notices issued under section 142(1) of the Act. Since the issue under appeal is only with respect to levy of penalty for non-compliance of notices issued under section 142(1) of the Act, the same is to be adjudicated independent of the other issues raised by the appellant now, as they are not part of the penalty order. Any how, taking a lenient view, the penalty levied by the Ld. A.O. of Rs.30,000/- is reduced to Rs.10,000/- treating the three defaults as one default i.e., non- compliance to the notices issued under section 142(1) of the Act even though three separate notices were issued. In view of the same, the penalty order by the Ld. A.O. is reduced to Rs.10,000/- and the appellant gets relief of Rs.20,000/-.

In the result, appeal filed by the Assessee is partly allowed.