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Facts
The assessee filed an appeal against the order for AY 2016-17. There was a significant delay in filing the appeal, which was condoned by the Tribunal due to the assessee's ill health and business impact during the Covid-19 pandemic. The original assessment was completed, but the case was reopened, and during reassessment, the assessee failed to respond to statutory notices.
Held
The Tribunal acknowledged the delay in filing the appeal and condoned it due to the circumstances caused by the Covid-19 pandemic. While the AO initiated penalty proceedings for non-compliance with notices, the Tribunal found a reasonable cause for non-compliance for three out of four notices due to the pandemic.
Key Issues
Whether the penalty levied for non-compliance with notices during the Covid-19 pandemic period is justified, given the 'reasonable cause' presented by the assessee.
Sections Cited
143(3), 144, 147, 271(1)(b), 142(1), 273B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA
This appeal is filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), dated 20.12.2023 and pertains to assessment year 2016-17.
At the outset, we find that there is a delay of 403 days in the appeal filed by the assessee, for which petition for condonation of delay along with reasons for delay has been filed. After considering the petition filed by the assessee and also hearing both the parties, we find that the assessee was suffering from ill health due to Covid 19, Pandemic and the business also affected by the covid impact and hence there is a reasonable cause for the assessee in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of these appeals and admit appeals filed by the assessee for adjudication. 997/Chny/2025
The following grounds of appeal are raised by the assessee: a) The penalty order of the ld.CIT(A) is contrary to the law, facts and circumstances of the case. b) The ld.CIT(A) has erred in levying penalty for not responding to notices during the pandemic period. c) The ld.CIT(A) has failed to initiate such penalty in the assessment order and hence invalid.
4. The brief facts of the case are that the assessee is an individual and had filed his return of income for the A.Y. 2016-17 on 30.11.2016 declaring a total income of Rs.83,41,140/-. The original assessment was completed u/s.143(3) of the Income Tax Act, 1961 ( the Act ) on 31.12.2018 after making an addition of Rs.40,80,500/-. Subsequently the assessment was reopened and completed u/s.144 r.w.s. 147 of the Act on 30.03.2022 determining total income of Rs.1,73,14,640/-. During the reopened assessment the AO issued statutory notices. However, the assessee did not respond to the notices of the AO. Subsequently, the penalty proceedings u/s.271(1)(b) was also initiated for non-compliance of notices issued.
During the reassessment proceedings the AO had issued statutory notices to file the required details for completing the assessment. However, the assessee had not responded to the said notices and hence the AO levied the penalty of Rs.40,000/- u/s.271(1)(b) of the Act for default in complying for four notices. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld. CIT(A), NFAC, Delhi.
The ld. CIT(A) also passed an exparte order on 2016-17 due to non- participation in appellate proceedings. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us.
The ld.AR submitted that the notices calling for information were issued by the AO to the assessee during the pandemic Covid 19 period affected to 997/Chny/2025 the whole world. Hence, operation of business itself was a big challenge during that period and hence non-compliance to the notices were not intentional. Therefore, the penalty levied under section 271(1)(b) of the Act for non-compliance of notices was not warranted as there was a reasonable cause to the assessee as per the provisions of Section 273B of the Act. In light of the above, the ld.AR prayed for setting aside the order of ld.CIT(A) by deleting the penalty levied.
Per contra, the ld.DR relied on the orders of the ld.CIT(A) and prayed for confirming the same since the assessee is a regularly non-compliant on the statutory notices issued by the AO as well as the ld.CIT(A).
We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The fact with regard to the impugned dispute are that the assessee failed to comply to the notices issued by the AO for the A.Y. 2016-17 during the reassessment proceedings. Accordingly, the penalty u/s.271(1)(b) of the Act has been levied for non- compliances to the notices issued u/s.142(1) of the Act at Rs.10,000/- per notice for 4 notices i.e. Rs.40,000/-. On appeal to the ld.CIT(A), the penalty has been confirmed due to non-participation of the assessee in the appellate proceedings for A.Y.2016-17. On perusal of notices issued by the AO during the reassessment proceedings, we find that there was a huge impact of Pandemic Covid 19 in the entire nation during that period and the non- compliances had ‘reasonable cause’ on account of Covid 19 for notices issued upto December 2021. In the present facts and circumstances of the case, the AO has erred in levying penalty u/s.271(1)(b) for 4 times for non-compliances to the notices issued. In our considered view the assessee had a reasonable cause for non-compliance for three notices holding that the assessee had shown the ‘reasonable cause’ as per section 273B of the Act and hence we are inclined to delete the penalty to the tune of Rs.30,000/- and sustain the 997/Chny/2025 penalty of Rs.10,000/- u/s.271(1)(b) of the Act by setting aside the order of the ld.CIT(A).
In the result, the appeal filed by the assessee for A.Ys. 2016-17 is partly allowed.
Order pronounced in the court on 13th August, 2025 at Chennai.