VIDYA RAJU SANAP,MUMBAI vs. ITO WARD 32(2)(1),MUMBAI, MUMBAI

There is a delay of 25 days in filing the present appeal. The assessee has filed an affidavit explaining that she had initially engaged a professional to pursue the proceedings but, owing to financial constraints, could not continue to retain his services and remained unaware that the appeal had already been disposed of. It was only upon receipt of another appellate order relating to penalty under section 271F that she consulted an advocate and came to know about the impugned order. Having regard to the explanation furnished on oath and considering the limited delay involved, we are satisfied that the delay was neither deliberate nor attributable to any want of bona fides. Accordingly, the delay is condoned and the appeal is admitted for adjudication.

The brief facts are that the assessment proceedings were initiated on the basis of information relating to the purchase of an immovable property for a consideration of ₹1,20,00,000. During the course of the assessment proceedings, the assessee allegedly failed to comply with the notice under section 143(2) dated 27.06.2023 and the notices under section 142(1) dated 19.10.2023 and 01.12.2023. The assessment was thereafter completed ex parte under section 147 read with section 144B, making an addition of

Before us, the assessee appeared in person and stated that she is not sufficiently educated and was wholly unaware of the notices or of the proceedings being conducted electronically. She further submitted that she has no independent source of income and that the investment in the property was entirely made by her husband from his own sources, including a housing loan and the proceeds from the sale of another property. According to her, her name was merely included in the property documents and the very basis on which the assessment proceedings were initiated against her is under challenge in the quantum proceedings. She thus submitted that the non-compliance was neither intentional nor deliberate but occurred because she had no knowledge of the notices and was not conversant with the electronic mode of proceedings. The learned Departmental Representative, on the other hand, relied upon the orders of the authorities below and submitted that, since the assessee had failed to

We have heard the parties and perused the material available on record. Section 271(1)(b) cannot be applied mechanically merely upon noticing a technical default in responding to a statutory notice. Section 273B expressly provides that no penalty under the said provision shall be imposable where the assessee proves that there was reasonable cause for the failure. Therefore, the explanation offered by the assessee, the circumstances in which the default occurred and whether the conduct reflects any deliberate or contumacious disregard of the statutory notices are all relevant considerations while determining the leviability of penalty.

In the present case, the penalty order itself records that the notices sought to be served physically through the Verification Unit could not be served because the address of the assessee could not be located and that the communication sent by speed post also remained unserved owing to an insufficient address. The assessment, penalty as well as the first appellate proceedings were thus substantially conducted ex parte. The assessee has now appeared personally before the Tribunal and explained that she is not sufficiently educated, has no independent source of income

Considering the totality of the facts and circumstances, particularly the admitted failure of physical service, the personal circumstances of the assessee and the absence of any material indicating deliberate disregard of the statutory notices, we are satisfied that the assessee had a reasonable cause within the meaning of section 273B. Accordingly, the penalty of ₹30,000 levied under section 271(1)(b) is unsustainable. The impugned order of the learned CIT(A) is,

In the result, the appeal of the assessee is allowed.