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Facts
The assessee initially filed an income tax return for AY 2016-17. Following a revision petition under Section 264, the PCIT set aside the original assessment order (Section 143(3)) for fresh adjudication. The Assessing Officer subsequently issued two notices under Section 142(1), but the assessee failed to comply, leading to a penalty of Rs.20,000/- under Section 271(1)(b), which was upheld ex-parte by the CIT(A).
Held
The Tribunal found that the assessee had a 'reasonable cause' for non-compliance with the Section 142(1) notices, citing the COVID period, non-functional e-portal, and the assessee's posting in a remote area without proper communication facilities. Applying Section 273B, the Tribunal concluded that the penalty levied under Section 271(1)(b) was not justified and directed its cancellation.
Key Issues
Whether the penalty levied under Section 271(1)(b) for non-compliance with statutory notices was justified, considering the assessee's claim of 'reasonable cause' under Section 273B.
Sections Cited
143(3), 264, 142(1), 144, 271(1)(b), 273B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE “A” BENCH : PUNE
Before: SHRI RAMA KANTA PANDA & SHRI VINAY BHAMORE
This appeal filed by the assessee is directed against the order dated 09.05.2024 of the Ld. CIT(A)-National Faceless Appellate Centre [in short “NFAC”], relating to assessment year 2016-2017.
Although a number of grounds have been raised by the assessee, however, these all relate to the ex-parte order of the Ld. CIT(A) in confirming the penalty of Rs.20,000/- levied by the Assessing Officer u/sec.271(1)(b) of the of the Income Tax Act, 1961 (in short "the Act").
2 ITA.No.1466/PUN./2024 3. Facts of the case, in brief, are that assessee had originally filed his return of income on 30.03.2018 declaring total income of Rs.75,55,050/-. The Assessing Officer passed the order u/sec.143(3) on 25.10.2018 accepting the returned income. Subsequently, on realizing that certain errors have crept in the return filed while computing the capital gain, the assessee filed a revision petition u/sec.264 of the Act before the PCIT. The PCIT considered the said petition of the assessee and set aside the order passed u/sec.143(3) of the Act to the file of Assessing Officer to compute the income as per the provisions of law. Subsequently, the Assessing Officer issued two notices u/sec.142(1) on 07.03.2021 and 17.03.2021 respectively. Since the assessee did not make any compliance, the Assessing Officer, in the order passed u/sec.144 r.w.s.264 of the Act, determined the total income of the assessee at Rs.75,55,050/-.
3.1. In the meantime, due to non-compliance to the notice issued u/sec.142(1), the Assessing Officer initiated penalty proceedings u/sec.271(1)(b) of the Act. In absence of any compliance from the side of the assessee to the notices issued, the Assessing Officer levied penalty of Rs.20,000/- being penalty of Rs.10,000/- for each default for two defaults.
3.2. Since the assessee did not respond to the notice issued by the Ld. CIT(A) during appellate proceedings, the Ld.
3 ITA.No.1466/PUN./2024 CIT(A) in the ex-parte order passed by him, sustained the penalty levied by the Assessing Officer.
Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal.
We have heard the rival arguments made by both the sides and perused the material on record. We find it is an admitted fact that the Assessing Officer passed the original assessment order u/sec.143(3) on 25.10.2018 determining the total income of the assessee at Rs.75,55,050/- which was the returned income. We find a revision petition was filed by the assessee u/sec.264 of the Act. The PCIT restored the issue to the file of Assessing Officer for afresh adjudication and the Assessing Officer in the order passed u/sec.144 r.w.s.264 of the Act determined the same income i.e., Rs.75,55,050/-. It is also an admitted fact that the two statutory notices u/sec.142(1) of the Act were issued by the Assessing Officer on 07.03.2021 and 17.03.2021 respectively, which were during the Covid period, for which, the assessee has a ‘reasonable cause’ for not appearing before the Assessing Officer. We find due to non submission to the statutory notice issued by the Ld. CIT(A), he passed an ex-parte order sustaining the addition made by the Assessing Officer. It is the submission of the Learned Counsel for the Assessee that adequate opportunity of hearing was not granted by the Ld. CIT(A) and since the e-
4 ITA.No.1466/PUN./2024 portal was not functioning, therefore, the assessee could not respond to the statutory notice issued by the O/o.CIT(A). It is also the submission of the Learned Counsel for the Assessee that the assessee, who worked as a Major General in Indian Army, is no more and is being represented by his wife Mrs.
Balbir Kaur Birdie and the penalty so levied by the Assessing Officer and confirmed by the Ld. CIT(A) should be deleted.
5.1. We find some force in the above arguments of the Learned Counsel for the Assessee. It is an admitted fact that Mr. Sandeep Singh Birdie was a Major General in the Indian Army serving for 34 years. It is also an admitted fact that the assessee has participated in the original assessment proceedings and the Assessing Officer has passed the order u/sec.143(3). It is also an admitted fact the order u/sec.144 r.w.s.264 of the Act was passed assessing the same income which was determined by the Assessing Officer in the order passed u/sec.143(3) of the Act. Since the two statutory notices u/sec.142(1) were issued during the Covid period and since the assessee was posted in a far-off place and such area was not having proper telephone and internet facility, therefore, under these circumstances, we are of the considered opinion that there was a ‘reasonable cause’ on the part of the assessee for such non-compliance to the statutory notices issued by the Assessing Officer.
5 ITA.No.1466/PUN./2024 5.2. We find the provisions of sec.273B reads as under :
“Notwithstanding anything contained in the provisions of [clause (b) of sub-section (1) of] [section 271, section 271-
A] [section 271AA] section 271-B, [section 271BA] [section
271-BB], section 271C, [section 271CA] section 271D, section 271E, [section 271F, [section 271FA,] [section 271FA] [section 271FAA.] [section 271FAB,] [section 271FB] [section 271G,] [section 271GA,] (section 271GB,] [section 271GC,] [section 271H,] [section 271-1,] [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.]” [emphasis supplied] 5.3. Considering the totality of the facts and peculiar circumstances of the case and considering the fact that assessee was a Major General in Indian Army serving the Nation for 34 years, we are of the considered opinion that the 6 ITA.No.1466/PUN./2024 levy of penalty u/sec.271(1)(b) of the Act is not justified. We, therefore, set aside the order of the Ld. CIT(A) and direct the Assessing Officer to cancel the penalty.
In the result, the appeal of the Assessee is allowed.
Order pronounced in the open Court on 14.01.2025.