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Facts
The assessee filed a return of income for AY 2013-14, which was later reopened under Section 147. Despite initial compliance, the assessee failed to respond to subsequent notices under Section 142(1), leading to an ex-parte assessment under Section 147 read with Section 144. The Assessing Officer then imposed a penalty of Rs.20,000/- under Section 271(1)(b) for non-compliance, which was upheld by the CIT(A).
Held
The Tribunal found the assessee's non-compliance casual and not justified by the Supreme Court's Covid-19 extension. However, it held that the Assessing Officer incorrectly imposed a single penalty of Rs.20,000/- for multiple failures. The Tribunal clarified that Section 271(1)(ii) stipulates a penalty of Rs.10,000/- for each failure, and separate notices should be initiated for multiple failures. Thus, the penalty was reduced to Rs.10,000/-.
Key Issues
Whether the penalty imposed under Section 271(1)(b) for non-compliance with notices under Section 142(1) was justified and correctly quantified for multiple failures.
Sections Cited
147, 148, 142(1), 144, 271(1)(b), 271(1)(ii), 151
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH, AHMEDABAD
Before: SHRI T.R. SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA
O R D E R PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC) [hereinafter referred as ‘CIT(A)’] dated 09.01.2025 for the Assessment Year (A.Y.) 2013-14 in the proceedings under Section 271(1)(b) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
The brief facts of the case are that the assessee had filed his return of income for the A.Y. 2013-14 on 16.08.2013 declaring income of Rs.3,72,342/-. The case was subsequently reopened under Section 147 of the Act and a notice under Section 148 of the Act was issued on (Assessment Year: 2013-14) Harshadkumar Bhogilal Raval vs. ITO Page 2 of 5 31.03.2020. There was no compliance to the said notice. Further, subsequent notices issued under Section 142(1) of the Act by the AO were also not complied by the assessee. Though the assessee had sought adjournment in response to the first notice u/s 142(1) of the Act dated 03.01.2021, no compliance was made to the subsequent two notices issued on 31.03.2021 and 16.08.2021. The assessment was completed u/s 147 r.w.s. 144 of the Act on 25.09.2025 at a total income of Rs.1,20,42,242/-. The Assessing Officer had also initiated penalty proceedings under Section 271(1)(b) of the Act for non-compliance to the notices u/s 142(1) of the Act. Thereafter, a separate penalty order u/s 271(1)(b) of the Act was passed on 12.01.2022 imposing a penalty of Rs.20,000/- on the assessee.
Aggrieved with the penalty order, the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.
Now, the assessee is in second appeal before us. The following grounds have been taken by the assessee in this appeal: -
“i. Hon. CIT(A) NFAC has erred in not deciding the Penalty on merits of the case and simply dismissed the appeal on the ground of delay in filing appeal. ii. The Non-compliance was for non-reply to Notice u/s.142(1) dt. 31/03/2021 and 16/08/2021. Hon. SC has suo moto declared that period from 15/03/2020 to 28/02/2022 shall stand excluded for the purpose of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. Iii The assessment completed by Ld. A.O. u/s.147 r.w.s. 144 of the Act dt. 25/09/2021 is without jurisdiction, since approval u/s. 151 was granted by PCIT instead of JCIT. iv. The Act do not prescribe Penalty u/s. 271(1)(b) for multiple defaults.”
(Assessment Year: 2013-14) Harshadkumar Bhogilal Raval vs. ITO Page 3 of 5 5. Shri Divya S. Agarwal, the Ld. AR of the assessee, submitted that the first notice u/s 142(1) of the Act was duly complied and an adjournment application was filed. However, no compliance could be made to the subsequent notices issued on 31.03.2021 and 16.08.2021 due to prevailing Corona pandemic. He further submitted that Ld. CIT(A) was not correct in dismissing the appeal on the ground of delay without adjudicating the appeal on merits. The Ld. AR further submitted that the Assessing Officer was not correct in imposing penalty of Rs.20,000/- for the two failures on the part of the assessee without initiating two separate penalty proceeding.
Per contra, Shri Abhijit, Ld. Sr. DR, submitted that the assessee was well aware of the fact about the assessment proceedings and the notices were also received by him. In fact, compliance was made to the first notice and an adjournment application was filed. However, no compliance was made thereafter and the assessee has also not explained the reasons for the non-compliances. Therefore, the penalty u/s 271(1)(b) of the Act was rightly imposed by the Assessing Officer.
We have considered the rival submissions. It is not the case that the assessee was unaware about the assessment proceeding or that the notices issued u/s 142(1) of the Act were not received by him. In fact, the assessee had complied to the first notice issued u/s 142(1) of the Act and had sought adjournment. However, there was no compliance to the subsequent two notices and the reason for the non-compliances was also not explained. Thereafter, the Assessing Officer had also issued notice in the course of penalty proceedings and the matter was fixed for hearing on 08.12.2021. However, the assessee neither made any compliance nor any written submission was filed, in the course of penalty proceeding.
(Assessment Year: 2013-14) Harshadkumar Bhogilal Raval vs. ITO Page 4 of 5 This reflects a very casual approach of the assessee. Before the Ld. CIT(A) also, no compliance was made and the reasons for non- compliance to the notices before the Assessing Officer was not explained. The assessee has referred to the general extension granted by the Hon’ble Supreme Court for the period from 15.03.2020 to 28.02.2022 due to Covid pandemic. The extension granted by the Hon’ble Supreme Court was in respect of filing of appeals. There was no stipulation in this extension that the assessee will not be required to comply to the notices issued by the Assessing Officer. We, therefore, do not find any reasonable explanation for the non-compliance made by the assessee to the notices issued u/s 142(1) of the Act in the course of assessment proceedings as well for the non-compliance in the course of penalty proceedings. At the same time, the Assessing Officer was not correct in imposing the penalty of Rs.20,000/-. The provision of Section 271(1)(ii) of the Act stipulates that for the failure to comply to the notice u/s 142(1) of the Act, a penalty of Rs.10,000/- can be imposed for each failure. However, in order to impose penalty for multiple failures, separate notice u/s 271(1)(b) of the Act was required to be initiated for each failure. We, therefore, deem it proper to reduce the quantum of penalty imposed by the AO to Rs.10,000/- only. Accordingly, the appeal filed by the assessee is partly allowed.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open Court on this 21st August, 2025.