THIMANNA NAGARAJ ,R T NAGAR vs. THE INCOME TAX OFFICER, WARD 6(3)(1) , KORAMANGALA

ITA 552/BANG/2026Status: DisposedITAT Bangalore28 September 2026AY 2015-165 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee's failure to comply with the two notices issued by the Assessing Officer was supported by reasonable cause. Considering the assessee is a small businessman with limited education, limited means to engage a tax consultant, and was represented by his accountant, the Tribunal found that his non-compliance was due to circumstances beyond his control. Therefore, the Tribunal directed the Assessing Officer to delete the penalty of ₹20,000 imposed under section 271(1)(b) of the Act. The Tribunal explicitly clarified that it had not examined the merits of the assessment, and thus the assessee's grounds concerning jurisdiction and the validity of the assessment order did not require adjudication at that stage. The ratio decidendi is that non-compliance with statutory notices can be excused if there is a reasonable cause, particularly for individuals with limited means and understanding.

What were the facts?

The assessee, Mr. Thimanna Nagaraj, filed an appeal against an order dated January 5, 2026, by the National Faceless Appeal Centre, Delhi. This order confirmed a penalty of ₹20,000 under section 271(1)(b) of the Income-tax Act, 1961, imposed by the Assessment Unit on August 21, 2023. The assessment year in question is 2015-16. The assessee, an individual, did not file a return of income for AY 2015-16. Information revealed cash deposits of ₹6,880,000 in his bank account. After an order under section 148A(d) and notice under section 148, the assessee did not comply. Despite further notices, including a show-cause notice, no response was received. The assessment was completed under sections 147, 144, and 144B, determining total income at ₹6,880,000 as unexplained money under section 69A. Penalties totaling ₹20,000 were imposed for non-compliance with notices under section 142(1). The CIT(A) condoned a delay of 608 days but upheld the penalty.

What were the issues?

1. Whether the order of the learned CIT(A), National Faceless Appeal Centre, confirming the penalty under section 271(1)(b) of the Income-tax Act, 1961, is bad in law and prejudicial to the appellant. 2. Whether the learned CIT(A) erred in dismissing the appeal without appreciating the jurisdictional grounds related to the main assessment order. 3. Whether the learned CIT(A) erred in dismissing the appeal without appreciating that the main assessment lacked merits, in light of decisions in Union of India v. Rajeev Bansal and Ramachandra Reddy Ravi Kurnar vs. Deputy Commissioner of Income-tax. Assessee's arguments: The penalty under section 271(1)(b) cannot be sustained because the assessment order lacked merit, citing Union of India v. Rajeev Bansal which states that notices issued after 01.04.2021 for AY 2015-16 are liable to be quashed. The assessee also argued that the Assessing Officer initiated proceedings under section 148A without following the faceless scheme under section 151A, citing Ramachandra Reddy Ravi Kurnar vs. Deputy Commissioner of Income-tax. The assessee, a small businessman with limited education, earned a livelihood selling snacks and deposited cash proceeds totaling ₹6,880,000. Due to limited education and lack of awareness, he did not file a return. He could not access email or afford a tax consultant, thus unable to respond to notices. The penalty for non-compliance was therefore unwarranted. Revenue's arguments: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 271(1)(b),Section 148A,Section 151A,Section 148,Section 142(1),Section 147,Section 144,Section 144B,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI PRASHANT MAHARISHI & SHRI SOUNDRARAJAN K.

PER SHRI PRASHANT MAHARISHI, VICE PRESIDENT

1.

The assessee Mr. Thimanna Nagaraj has filed this appeal against the order dated 5 January 2026 passed by the National Faceless Appeal Centre, Delhi, for assessment year 2015– 16, which confirmed the penalty of ₹20,000 imposed by the Assessment Unit under section 271(1)(b) of the Income-tax Act, 1961, by order dated 21 August 2023. ITA 552/BANG/2026 THIMANNA NAGARAJ

2.

The Assessee

The order continues below.

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