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Facts
The assessee, engaged in the business of distributing mobile recharge vouchers and SIM cards, failed to file returns and respond to statutory notices during assessment proceedings. Penalties were levied under Section 271(1)(b) for non-compliance with notices issued under Section 142(1). The CIT(A) partly allowed the appeals, reducing the penalties.
Held
The Tribunal held that the assessee had a reasonable cause for non-compliance with notices due to the impact of the Covid-19 pandemic, as per Section 273B of the Act. Therefore, the penalties were deleted.
Key Issues
Whether the assessee had a reasonable cause for non-compliance with statutory notices during the Covid-19 pandemic, thereby warranting deletion of penalties under Section 271(1)(b) read with Section 273B.
Sections Cited
147, 144, 144B, 272A(1)(d), 271(1)(b), 142(1), 273B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K, HON’BLE & SHRI S.R. RAGHUNATHA, HON’BLE
PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
These three appeals filed by the assessee is directed against the separate order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), dated 01.05.2024 and pertains to assessment year 2014-15, 2015-16 & 2016-17. These appeals are heard together and for the sake of convenience we are adjudicating all the appeals together by passing a common order.
3110 to 3112/Chny/2024
The following grounds of appeal are raised by the assessee: a) The penalty order is bad in law and against the principles of natural justice. b) The appellant had reasonable cause u/s.273B for non- compliance. c) Erroneous interpretation of law in levying separate penalties for multiple notices. d) The penalty is disproportionate and fails to consider mitigating factors. e) Violation of natural justice and procedural fairness.
At the outset, we find that there is a delay of 127 days in all the three appeals filed by the assessee, for which petition for condonation of delay along with reasons for delay has been filed for the all the AYs separately. After considering the petitions filed by the assessee and also hearing both the parties, we find that the assessee was suffering from injury in right ankle and could not move 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.
3110 to 3112/Chny/2024 4. The brief facts of the case are that the assessee is an individual and a non filer and carrying on the business of distribution and sale of mobile recharge vouchers and sim cards under the trade name M/s.Anna Cell Com. The assessee was in receipt of commission income and based on the information the case was reopened for assessment and issued statutory notices. However, assessee neither filed his return of income nor responded to the notices of the AO. Accordingly, the AO completed the assessment u/s.147 r.w.s.144 r.w.s.144B of the Act. Subsequently, the penalty proceedings u/s.272A(1)(d) was also initiated for non-compliance of notices issued.
During the assessment 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 u/s.271(1)(b) of the Act for all the three assessment years by passing an order as detailed below: Asst. Year Date of Penalty Order Penalty 2014-15 19/09/2022 Rs.30,000/- 2015-16 19/09/2022 Rs.30,000/- 2016-17 22/09/2022 Rs.20,000/- Aggrieved by the order of the AO, the assessee preferred an appeal before the ld. CIT(A), NFAC, Delhi.
3110 to 3112/Chny/2024
After considering submission made by the assessee the ld. CIT(A) passed a separate three orders dated 01.05.2024 and partly allowed the appeal of the assessee as detailed below: Asst. Year Date of Penalty Order Penalty 2014-15 01/05/2024 Rs.10,000/- 2015-16 01/05/2024 Rs.20,000/- 2016-17 01/05/2024 Rs.10,000/- Aggrieved by the order of the ld. CIT(A), the assessee is before us for all the three assessment years 7. 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 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. Further, I was advised wrongly that the TDS has already been made from the income earned and hence no need to comply to any of the notices. 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, 3110 to 3112/Chny/2024 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 as the ld.CIT(A) has already given a reasonable relief by allowing the appeal of the assessee partly.
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. 2014-15, 2015- 16 & 2016-17 during the assessment 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 all the three assessment years at Rs.30,000/-, Rs.30,000/- and Rs.20,000/- respectively. On appeal to the ld.CIT(A), the penalty has been reduced to Rs.10,000/-, Rs.20,000/- and Rs.10,000/- for A.Ys. 2014-15, 2015-16 & 2016-17 respectively, finding that there was reasonable cause for non-compliance of the few notices. On perusal of notices issued by the AO during the assessment proceedings, we find that there was a huge impact of Pandemic Covid 19 in the entire nation during that period and the ld.CIT(A) has considered the non- compliances had ‘reasonable cause’ on account of Covid 19 for few notices and deleted the penalty and sustained the balance penalty for 3110 to 3112/Chny/2024 few notices, even though all the notices were issued during the existence of pandemic. Therefore we cannot countenance the action of the ld.CIT(A) in treating the non-compliances of notices in two different views, when the assessment proceedings were taken place during the existence of Covid 19 in the country. In the present facts of the case and in view of the above discussion, we are inclined to set aside the order of the ld.CIT(A) and delete the penalty levied u/s.271(1)(b) of the Act for all the three A.Y. 2014-15, 2015-16 & 2016-17 of Rs.10,000/-, Rs.20,000/- and Rs.10,000/- respectively, holding that the assessee had shown the ‘reasonable cause’ as per section 273B of the Act.
In the result, all the three appeals filed by the assessee for A.Ys. 2014-15, 2015-16 & 2016-17 are allowed.