PALLAVI MEHTA,MUMBAI vs. COMM OF INCOME TAX, MUMBAI

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ITA 1187/MUM/2022Status: DisposedITAT Mumbai29 June 20223 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the COVID-19 pandemic constituted a reasonable cause for the partial non-compliance. Therefore, the penalty levied under Section 271(1)(b) was directed to be deleted.

What were the facts?

The assessee failed to provide complete submissions in response to notices issued under Section 142(1) during assessment proceedings for multiple assessment years. The Assessing Officer levied a penalty of Rs. 10,000 for non-compliance, which was confirmed by the CIT(A).

What were the issues?

Whether the assessee had a reasonable cause for non-compliance with the notices issued under Section 142(1) due to the COVID-19 pandemic.

Which sections of the Income-tax Act were involved?

Section 271(1)(b),Section 142(1),Section 153A,Section 143(3),Section 273B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI

Before: SHRI AMIT SHUKLA & SHRI GAGAN GOYAL

Hearing: 29/06/2022Pronounced: 29/06/2022

O R D E R PER BENCH :

The aforesaid appeals have been filed by the assessee against separate impugned orders of even date, 28.03.2022, passed by learned Commissioner of Income Tax (Appeals)-50, Mumbai (in short ‘CIT(A)’) in relation to proceedings under Section 271(1)(b) of the Income Tax Act, 1961 (in short ‘the Act’) by levying penalty of Rs.10,000/-.

2.

Facts in brief emanating from the appellate order are that in the course of assessment proceedings under Section 153A/143(3) of the Act for the aforesaid assessment years, the Assessing Officer had issued notice under Section 142(1) on 09.01.2021 asking for various details from the assessee. The notice was served electronically and according to the Assessing Officer, assessee had filed part submissions or has not filed

2 to 1191/Mum/2022 Pallavi Mehta detailed submissions to explain the case. While levying penalty the Assessing Officer has observed as under :- “3. Despite issuing penalty show cause for non-compliance the assessee has not filed all points/questionnaire asked in notice u/s 142(1) of the I.T. Act. Therefore, the assessing officer has left with no other option but to levy the penalty in this case. As the assessee has not bothered to respond the notice(s) issued in this case therefore, the undersigned assessing officer is satisfied that this is a fit case for levy of penalty u/s 271(1)(b) and hereby levy a penalty of Rs.10,000/- u/s 271(1)(b) for failing in complying with notice(s) issued under section 142(1) of the Income Tax Act, 1961. issue. Demand notice and Challan accordingly.”

3.

The ld. CIT(A) has confirmed the penalty simply stating that the appellant-assessee has failed to avail the opportunity of being heard offered by the Assessing Officer and assessee cannot be said to be aggrieved person in terms of provisions of Section 246A of the Act.

4.

A perusal of the submissions which was rendered before the Assessing Officer and ld. CIT(A), as incorporated in the appellate order, shows that the assessee had stated that, due to pandemic situation of Covid-19, the movement and attendance of the staff of authorised representatives and Chartered Accountant’s was seriously affected. There was practical difficulty in all these appeals as either the staff or their family members were infected with Covid and, therefore, even if part compliance was made, it was not a case for levy of penalty under Section 271(1)(b) of the Act.

5.

Once the assessee has given such a reason and during that time the entire country was going through the pandemic situation of Covid-19 restrictions and despite that, assessee has made part compliance and later on, assessment has been completed under Section 153A/143(3) of the Act, then we do not find any reason as to why such a harsh step of initiating and 3 to 1191/Mum/2022 Pallavi Mehta levying of penalty under Section 271(1)(b) of the Act should be imposed for part non-compliance. In fact, the Hon'ble Supreme Court taking cognisance of the pandemic situation had extended the time limit from 15.03.2020 till 28.02.2022, though for the purpose of limitation. Now, the Assessing Officer is alleging that the assessee did not fully comply with notices dated 09.01.2021 and even the ld. CIT(A) did not find it to be reasonable cause, which in our opinion is a too stringent view under these circumstances. Accordingly, we hold that there was sufficient reasonable cause within the ambit and scope of Section 273B of the Act and, therefore, penalty levied under Section 271(1)(b) of the Act of Rs.10,000/- in all the assessment years is directed to be deleted.

6.

In the result, all the appeals of the assessee are allowed.

Order pronounced in the open court on 29.06.2022.

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