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Facts
The assessee, a small-time fruit vendor, did not file his return of income for AY 2017-18. His case was selected for scrutiny due to cash deposits during the demonetization period. The Assessing Officer (AO) issued notices under Section 142(1) which were not properly complied with, leading to a best judgment assessment and a penalty under Section 272A(1)(d).
Held
The Tribunal held that while there was non-compliance with statutory notices, it was not wanton or negligent, but rather a case of lack of sufficient compliance due to the assessee's limited understanding and circumstances. The Tribunal noted the disparity in law's implementation across different societal strata and directed the deletion of the penalty.
Key Issues
Whether the penalty levied under Section 272A(1)(d) for non-compliance with statutory notices is justified, considering the assessee's limited understanding and circumstances.
Sections Cited
272A(1)(d), 250, 142(1), 143(1), 144, 69A, 142(2A)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals), Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2017-18.
The assessee has challenged the penalty of Rs. 50,000/-, u/s. 272A(1)(d) of the Act, levied by the learned Assessing Officer (‘ld. AO’ for short) and upheld by the ld. CIT(A).
Briefly stated the assessee is an individual and has not filed his return of income for the year under consideration. The assessee’s case was selected for scrutiny based on the (A.Y. 2017-18) Suresh Chhotelal Jaiswal verification of data pertaining to ‘cash deposits during demonetization period’ from 09.11.2016 to 30.12.2016 available in AIMS module in ITBA, where the assessee is said to have made cash deposits aggregating to Rs. 11,89,367/-, which details are as below: Sr. Name of the Bank & Branch Account No. Amount (in Rs.) No.
Central Bank of India 3159817690 3,46,000/- 2. Central Bank of India 3037969233 3,32,000/- 3. Department of Posts 3384875189 4,20,000/- 4. The ld. AO issued notices u/s. 142(1) on several dates and then passed the assessment order u/s. 144 of the Act, dated 03.12.2019, being the best judgement assessment, where the ld. AO determined the total income at Rs. 11,89,370/-, after making an addition u/s. 69A of the Act, towards cash deposits made in the Central Bank of India and Department of Posts. The ld. AO also initiated penalty proceedings u/s. 272A(1)(d) of the Act, for non-compliance of statutory notices issued u/s. 143(1) of the Act.
Aggrieved the assessee was in appeal before the first appellate authority, challenging the impugned penalty levied by the ld. AO, who vide order dated 16.12.2024 upheld the penalty of Rs. 50,000/- levied by the ld. AO for non-compliance of statutory notice.
The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A).
The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee is engaged in selling fruits on the pavement earning a meagre income of Rs. 1,50,000/- per year and had not filed his return of income. The ld. AR further contended that the assessee does not have a permanent address of his own, due to which the statutory notices could not be served on the assessee. The ld. AR reiterated that the (A.Y. 2017-18) Suresh Chhotelal Jaiswal assessee has not been negligent or non-compliance of the notice was not wanton and prayed that the penalty be deleted.
The learned Departmental Representative (‘ld. DR’ for short) on the other hand relied on the orders of the lower authorities.
We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has challenged the penalty levied u/s. 272A(1)(d) of the Act, for failure to comply with notice u/s. 142(1) or 143(2) or failure to comply with the direction issued u/s. 142(2A) of the Act, where the assessee shall pay a penalty of a sum equal to Rs. 10,000/- for each such default or failure.
In the present case in hand, the ld. AO has levied penalty of Rs. 50,000/- for non- compliance of notices u/s. 142(1), dated 09.03.2018, 10.05.2019, 12.06.2019, 28.08.2019 and 19.10.2019. It is also pertinent to point out that the assessee has not made proper compliance during the assessment proceedings, the penalty proceedings and during the appellate proceedings but has complied with the notices by written submissions during these proceedings. The assessee in his reply has stated that he is neither cognizant of law and its intricacies and had submitted the details of bank statements after which the ld. AO passed the assessment order and the penalty order thereafter. It is also observed that the ld. CIT(A) in the quantum appeal has upheld the addition made by the ld. AO for which the ld. AR for the assessee submitted that the assessee has not preferred an appeal against the said order. The assessee from the statement of ld. AR seems to be a small-time fruit vendor selling fruits on the pavements and presumably is unaware of the proceedings but nevertheless made compliance (A.Y. 2017-18) Suresh Chhotelal Jaiswal before the lower authorities if not proper compliance. Had the assessee been vigilant about the consequences of such proceedings and had the privilege of engaging counsels to represent his case, he would have as well challenged the addition made by the ld. AO and upheld by the ld. CIT(A) which amounts to in lacs of rupees which, for a small vendor like the assessee is exorbitant. Having said that, it is not a case of non- compliance in toto but is merely a case of lack of sufficient compliance. This leaves us with a question that though law is equal to all, whether its implementation is also the same with all people belonging to different stratum of society who are not equal in terms of education, income or social status. We are aware of various decisions of the Hon’ble High Courts and Hon’ble Apex Court which has reiterated that the revenue cannot take undue advantage of the inability of the assessee and taking cognizance of the same, we deem it fit to direct the ld. AO to delete the impugned penalty levied in assessee’s case for the abovementioned observations.