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Facts
The assessee filed the return for AY 2013-14 and was levied a penalty of Rs. 30,000/- under Section 271(1)(b) for non-compliance with notices issued under Section 142(1). The assessee's contentions included that the registered email ID was not hers, and the proceedings were handled by her consultant.
Held
The Tribunal held that while the initial assessment was rightly done under Section 144 due to non-compliance, imposing penalty for each instance of non-compliance was not justified. Section 273B allows for waiver of penalty if there's a reasonable cause for failure.
Key Issues
Whether the penalty under Section 271(1)(b) for each instance of non-compliance with notices under Section 142(1) was justified, or if a single penalty for the first default was sufficient, considering the provisions of Section 273B.
Sections Cited
271(1)(b), 142(1), 144, 273B, 250, 271(1)(b), 271, 271A, 271AA, 271B, 271BA, 271BB, 271C, 271CA, 271D, 271E, 271F, 271FA, 271FAA, 271FAB, 271FB, 271G, 271GA, 271GB, 271GC, 271H, 271I, 271J, 272A, 272AA, 272B, 272BB, 272BBB, 273
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Income Tax Appellate Tribunal, PUNE BENCHES “A”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertain to Assessment Year 2013-14 and is directed against the order dated 25.10.2024 passed by the National Faceless Appeal Centre, Delhi [in short ‘NFAC’) u/s.250 of the Income-tax Act, 1961 (in short ‘the Act) which inturn is arising out of the Penalty order dated 23.09.2022 passed u/s.271(1)(b) of the Act.
The only grievance of the assessee in this appeal is that the CIT(A) erred in confirming the penalty of Rs.30,000/- levied by the Assessing Officer u/s.271(1)(b) of the Act.
Facts of the case, in brief, are that the assessee is an individual and has filed the return for the A.Y. 2013-14 on 24.10.2013 declaring income of Rs.8,17,239/-. The Assessing Officer levied penalty of Rs.30,000/- u/s.271(1)(b) of the Act as the assessee did not respond to notices issued by him u/s. 142(1) of the Act on three occasions, ie., on 30.06.2021. 13.01.2022 and 25.02.2022 but then made partial compliance. Subsequently, the assessment was completed exparte u/s.147 r.w.s.144 of the Act. The assessee preferred appeal before the ld.CIT(A) (Appeals) against levy of penalty contending inter alia that (i) email-id registered on income-tax portal does not belong to the assessee (ii) filed her replies to the notices after the due dates, (iii) assessee was unaware of the notices as the entire assessment proceedings was handled by her consultant and (iv) she was also not aware of the failure to respond to the notices. However, no reprieve was given by the ld. CIT(A) by observing as under :
“6. DECISION: I have considered the facts of the case, the grounds of appeal and written submissions made by the appellant. The appellant has raised a number of grounds which are adjudicated as follows: 6.1 The first ground relates to the contention that there is no absolute failure on the part of the appellant and the appellant subsequently after due date replied to the notices in question. This argument, however, is not tenable as the assessment had to be completed in this case u/s.144 because of the noncompliance of the appellant. And even the show cause notices u/s.274 r.w.s. 271(1)(b) dated 30.03.2022 and 03.08.2022 remained un- responded to. This ground is accordingly rejected. 6.2 The second ground relates to the contention that initially email ID registered on income tax portal did not belong to the appellant hence she could not revert to the notices on time and that the entire assessment proceedings were handled by appellant's erstwhile consultant. This ground is also not acceptable because the notices will always be issued to an assessee on the email id registered on the portal and if he/she chooses to provide the email of the consultant, it is a matter between the assessee and the consultant. Having given the email id of the consultant on the portal, the appellant cannot turn back and disown the email id to escape the legal consequences of her failure. This ground is accordingly rejected.
6.3 The third ground relates to the contention that notice u/s 274 r.w.s. 271(1)(b) dated 30.03.2022 does not mention as to which notice the appellant did not comply with. Further, notice u/s 274 r.w.s. 271(1)(b) dated 03.08.2022 mentions that penalty initiated is for concealment of particulars of income. Thus, according to the appellant the satisfaction for initiation of penalty proceeding are inadequate. This contention however cannot be accepted because the satisfaction for initiation of penalty proceedings are recorded in the assessment order and notices u/s 274 r.w.s. 271(1)(b) dated 30.03.2022 and 03.08.2022 are not the satisfaction but the show causes levying the penalty for which the satisfaction was to be recorded in the assessment order. This ground is accordingly rejected. 6.4 The next ground relates to the plea that the appellant had requested that the penalty proceeding be kept in abeyance. However, copy of no such request made by the appellant has been enclosed with the submission of the appellant. Thus, this contention is also without any evidence. This ground too is, accordingly, rejected. ME
6.5 I am accordingly inclined to confirm the penalty levied by the AO.”
Ld. Counsel for the assessee reiterated the submissions made before the CIT(A) and submits that there is no justification in levying penalty for each default of non- compliance to the notices issued u/s.142(1) of the Act.
Ld. Departmental Representative supported the orders of lower authorities.
We have heard both sides and perused the record placed before me. The sole issue agitated in this appeal is whether on the facts and circumstances of the case the authorities below were justified in levying penalty u/s.271(1)(b) for default on the part of the assessee in responding to notices issued u/s.142(1) of the Act. In this regard, we need to look into the provisions of law concerning on the same, i.e. section 271(1)(b) and section 273B of the Act.
"Section 271 FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICES, CONCEALMENT OF INCOME, ETC.
(1) If the Assessing Officer or the Commissioner (Appeals) in the course of any proceedings under this Act, is satisfied that any person –
(a) Omitted) xxxxxxxxxxxxx xxxxxxxxxxxxx "273B. Penalty not to be imposed in certain cases.
273B. Notwithstanding anything contained in the provisions of clause (b) of sub-section (1) of section 271, section 271A, section 271AA, section 271B , section 271BA, section 271BB, section 271C, section 271CA, section 271D, section 271E, section 271F, section 271FA, 25[section 271FAA,] section 271FAB, section 271FB, section 271G, section 271GA, section 271GB, 26[section 271GC,]section 271H, section 271-I, section 271J, clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub- section (1) of section 272AA or section 272B or sub-section (1) or sub-section (1A) of section 272BB or sub-section (1) of section 272BBB or clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.10. From a perusal of the above provisions, we can understand that, notwithstanding anything contained in the provisions of clause (b) of Sub-section (1) of section 271, no penalty shall be imposed on the person or the assessee as the case may be, for any failure referred to in the said provision, if he proves that there was reasonable cause for the said failure. So it can be understood that penalty cannot be imposed, if the assessee is able to prove that there was reasonable cause for the said failure of not complying with the notice served on them under sub-section (1) of section 142 of the Act.
We note that the assessee has stated various reasons which prevented the assessee to appear before the Assessing Officer namely (i) email-id registered on income-tax portal does not belong to the assessee (ii) filed her replies to the notices after the due dates, (iii) assessee was unaware of the notices as the entire assessment proceedings was handled by her consultant and (iv) she was also not aware of the failure to respond to the notices. We also observe that section 273B of the Act provides that if there is reasonable cause for the said failure of not complying with the notice u/s.142(1) of the Act, then penalties can be waived off. It is also a fact that the assessee has submitted replies to the notices but belatedly. Considering these facts, we deem it proper that the penalty of Rs.10,000/- could be imposed for the first default made by the assessee in this regard u/s.271(1)(b) of the Act but could not be imposed for each and every notice issued u/s. 142(1), which remained uncomplied with. Although the provision of Section 271(1)(b) is of deterrent nature and not for earning revenue. Any other view taken shall lead to the imposition of penalty for any number of times (without limits) for the same default. This does not seem to be the intention of the legislature in enacting the provisions of Section 271(1)(b) of the Act. In case of failure of the assessee to comply with the notice u/s.142(1) of the Act, the remedy with the Assessing Officer lies with framing of "best judgement assessment" under the provisions of Section 144 of the Act, as has been rightly done in the instant case but not to impose penalty u/s. 271(1)(b) of the Act again and again for the same default. In this view of the matter, we hold that the authorities below were not justified in levying penalty for each default in not responding to the notices issued u/s.142(1) of the Act. We therefore set aside the order of ld.CIT(A) and restrict the penalty levied u/s.271(1)(b) of the Act to the first default of the assessee in not complying with the notice u/s.142(1) of the Act. Accordingly, the penalty imposed is restricted to Rs.10,000/- as against Rs. 30,000/- confirmed by the ld. CIT(A). The grounds of appeal of the assessee are thus partly allowed.
In the result, the appeal of the assessee is partly allowed. Order pronounced on this 05th day of March, 2025.