SUMIT GLOBAL PRIVATE LIMITED, RAIGARH,RAIGARH vs. DCIT, CENTRAL CIRCLE-2, RAIPUR, RAIPUR

These appeals for Assessment Years (‘AYs’) 2012-13 and 2013-14 filed by the assessee are directed against orders dated 15.09.2025 of Commissioner of Income Tax (Appeals), [‘CIT(A)’], Raipur-3 passed under section 250 of the Income Tax Act, 1961 (‘Act’). Sumit Global Pvt. Ltd. Vs. DCIT, CC-2, Raipur

Vide three grounds of appeal, the assessee has challenged the levy of penalty of Rs.20,000/- under section 271(1)(b) of the Act for non-compliance of notices issued under section 142(1) of the Act in both appeals.

The relevant facts, in brief, required for adjudication of these cases are that the assessee is engaged in arranging funds for Rashi Steel and Power Ltd., Bilaspur. It filed its Income Tax Return (‘ITR’) of AY 2012-13 on 21.09.2012 declaring loss of Rs.(-)38,176/- and ITR of AY 2013-14 on 17.09.2013 declaring NIL income. Search and seizure operations under section 132 of the Act were conducted in RKTC Group of cases. The business premises of assessee was also searched on 22.01.2019 along with RKTC Group of cases. Later, the assessee’s cases of both years were reopened under section 148 of the Act. During the course of reopened assessment proceedings of these years, the Ld. Assessing Officer (‘AO’) issued show-caused notices under section 142(1) of the Act on 16.07.2019 and 09.10.2019 in both years. However, the assessee did not ensure any compliance of these notices. The Ld. AO completed assessments of these years under section 144 r.w.s. 147 of the Act. Thereafter, the Ld. AO issued penalty notices under section 271(1)(b) of the Act twice in both cases, which were also not respond to. The Ld. AO, therefore, levied penalty of Rs.20,000/- under section 271(1)(b) of the Act for non-compliance of the two notices issued under section 142(1) of the Act for both years. Aggrieved, the assessee filed appeals before the Ld. CIT(A), who dismissed both appeals. Sumit Global Pvt. Ltd. Vs. DCIT, CC-2, Raipur

At the outset, Shri Veekas S Sharma, CA, Ld. Authorized Representative (‘AR’) of the assessee submitted that these appeals were filed belatedly (there were 16 days’ delay in filing both appeals). He prayed for condonation of delay in filing both appeals. Affidavits of the Director were filed, wherein it had been admitted that the delay took place due to CA who was looking after the income tax matters was busy in auditing and filing ITRs of various assessees. The Ld. AR placed reliance on the decisions Hon’ble Supreme Court in the cases of Vidya Shankar Jaiswal [Civil Appeal Nos. 1308 and 1309 of 2025 dated 31.01.2025] and Rafiq & Anr Vs Munshilal & Anr 1981 AIR 1400. 6. The justification of the appellant assessee for delay condonation in this case therefore, becomes relevant to determine whether the same reflects sufficient and reasonable cause on its part in not presenting these appeals within the prescribed time. In case of Collector, Land Acquisition vs MST Katiji (1987) 2 SCC 107, the Hon'ble Supreme Court has held that the expression ‘Sufficient Cause’ used by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner to sub-serves the ends of justice that being the life-purpose of the existence of the institution of Courts. It is further held by the Hon’ble Supreme Court that such liberal approach is adopted on one of the principles that refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. Similar view has been taken by the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal [Civil Appeal Nos. 1308 and 1309 of 2025 dated 31.01.2025]. As against this, when delay is Sumit Global Pvt. Ltd. Vs. DCIT, CC-2, Raipur

Shri Veekas S Sharma, CA, Ld. Authorized Representative (‘AR’) of the assessee submitted that the assessee was not aware of any of notices issued Sumit Global Pvt. Ltd. Vs. DCIT, CC-2, Raipur

Shri Piyush Tripathi, Ld. Sr. DR vehemently argued both cases and defended the impugned orders. He contended that the Director of assessee was a chartered accountant and non-compliances were tactful and intended to evade investigations. The assessee had not only failed to ensure compliance during the assessment proceedings but also in penalty proceedings. This clearly established defiance of law. He prayed for dismissal of both appeals.

We have heard both parties at length and have perused the material available on records. The Hon‘ble Supreme Court, in the case of Hindustan steel Ltd. 83 ITR 26 has held that an order-imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of his obligation. Before us, the Ld. AR submitted that there was reasonable cause for non-compliance on the part of assessee. It was submitted that the assessee had neither received any alert on the mobile number of Director nor on personal email of Director though both were mentioned in the ITR. Further, the assessee had not seen his Income Tax Portal regularly to know pending actions at its end, which resulted non-compliance. Our attention was also drawn to the fact that the assessee had never received any notice by post/hand.

Basically, penalty under Section 271(1)(b) of the Act is strictly an administrative or procedural penalty. It is levied for failing to comply with statutory Sumit Global Pvt. Ltd. Vs. DCIT, CC-2, Raipur

We have considered the entire facts of both cases and are satisfied with the reasons of non-compliance of the notices issued under section 142(1) of the Act in these cases as there is no deliberate defiance of law or is guilty of conduct contumacious or dishonest or act in conscious disregard of the legal obligation. We therefore, hereby set aside impugned orders and delete the penalties of both years.

In the result, both appeals of the assessee are allowed as above.

""थ"/ The Respondent

The Pr. CIT, Raipur (C.G.) 4. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 5. गाड" फाईल / Guard file.