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Facts
The assessee, a non-resident, failed to file her return of income for AY 2017-18. Her case was flagged for reassessment under Section 147 based on information about a property purchase involving unaccounted cash. Multiple notices were issued but remained unanswered, leading to an ex-parte assessment and a penalty under Section 272A(1)(d) for non-compliance.
Held
The Tribunal held that the assessee was not effectively served with the notices, and the non-compliance was due to lack of service and knowledge, not willful default. Therefore, the imposition of penalty was unwarranted as the assessee had no opportunity to correct the default.
Key Issues
Whether penalty under Section 272A(1)(d) is leviable when statutory notices were not effectively served on the non-resident assessee.
Sections Cited
147, 148A, 148, 142(1), 272A(1)(d), 273B, 144, 69, 156
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
(Assessment Year: 2017-18) Jayshree Nilam Patel, Vs. Income Tax Officer, 6-B, Swastik Society, Ward-1, International Taxation, Navrangpura, Ahmedabad Ahmedabad-380009 [PAN No.BVMPP2973B] (Appellant) .. (Respondent) Appellant by : Shri Mehul Thakkar, AR Respondent by: Smt. Malarkodi R., Sr. DR Date of Hearing 08.07.2025 11.08.2025 Date of Pronouncement O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-13, (in short “Ld. CIT(A)”), Ahmedabad vide order dated 27.02.2025 passed for A.Y. 2017-18.
The assessee has raised the following grounds of appeal:
“1. That the Learned Assessing Officer has erred in law and on facts in imposing a penalty of Rs.20,000/- under section 271A(1)(d) of the Income-tax Act, 1961. The Learned Commissioner of Income Tax (Appeals) has further erred in confirming the said penalty without properly appreciating that there existed a reasonable cause for the default, as envisaged under section 273B of the Act.
2. The appellant craves leave to add, alter or delete any ground either before or in the course of hearing of the appeal.”
The brief facts of the case are that the present appeal is preferred by the assessee, Ms. Jayshree Nilam Patel, against the order of penalty levied under section 272A(1)(d) of the Income Tax Act, 1961, by the Learned Assessing Officer (A.O.) on account of non-compliance with notices issued under section 142(1) of the Act. The facts giving rise to the present appeal Jayshree Nilam Patel vs. ITO Asst.Year –2017-18 - 2– are that the assessee is a non-resident Indian who has been residing abroad for the past 30 years. For the Assessment Year 2017-18, the assessee did not file her return of income. However, the Department had flagged her case for reassessment under section 147 of the Act based on information received from the Directorate of Income Tax (Systems) through the INSIGHT Portal. The information pertained to a search conducted under section 132 of the Act on 11.04.2017 in the case of the Navratna Group, a reputed real estate group in Gujarat, wherein it was found that the assessee had purchased a unit in the "Kalhaar Blues and Greens" project developed by Navratna Organisers and Developers Pvt. Ltd. (NODPL). The developer had, in its application before the Hon’ble Income Tax Settlement Commission (ITSC), admitted to receiving unaccounted cash (on-money) for the sale of villas, including those for which conveyance deeds had been executed. On the basis of this information, the assessee’s case was picked up for reassessment and a show cause notice under clause (b) of section 148A of the Act was issued. The order under section 148A(d) was passed on 04.07.2022, and a notice under section 148 of the Act was issued directing the assessee to file her return of income. Thereafter, multiple notices under section 142(1) of the Act were also issued. However, all these communications went unanswered. The A.O. consequently completed the assessment ex-parte under section 147 read with section 144 of the Act on 30.05.2023, observing that the assessee had adopted a non-cooperative approach. An addition of Rs. 3,17,87,500/- was made to the total income under section 69 of the Act and finalized after no objections were filed before the Dispute Resolution Panel.
Following the completion of the assessment, the A.O. initiated penalty proceedings under section 272A(1)(d) of the Act by issuing notices dated 30.05.2023 and 02.11.2023. These, too, were not responded to by the assessee for the same reason-lack of service or knowledge of such notices. The A.O. thereafter imposed a penalty of Rs. 20,000/- under section
In appeal, CIT(Appeals) confirmed the levy of penalty. With the following observations:
“8.5 On plain reading of the section 272A(1)(d) of the Act, it is found that any assessee has failed to comply with a notice u/s. 143(2) or 142(1) etc., he will be liable for levy of penalty u/s.272(1)(d) of the Act. It is worthwhile to mention here that in the instant case, the appellant had not only failed to comply with a notices issued u/s. 142(1) of the Act dated 09.01.2023 & 18.01.2023 but also failed to comply with reminder notice & two show cause notices u/s.274 r.w.s. 272A(1)(d) of the Act during the course of assessment /penalty proceedings It is necessary to mention that the appellant is non-cooperative in making compliances of the statutory notices issued by the Department and due to the said reason, the AO had passed expartee/best judgement assessment order u/s.144 r.w.s. 147 of the Act on 30.05.2023. 8.6 In view of the above discussions and factual matrix of the case, the penalty u/s.272A(1)(d) of the Act levied by the AO amounting to Rs.20,000/- is confirmed, us, the grounds of appeal no. 1 & 2 are dismissed.”
6. The assessee is in appeal before us against order passed by CIT(Appeals) confirming levy of penalty u/s 272A(1) of the Act. Having considered the facts on record and the submissions made by the ld. counsel for the assessee before us, the case of the assessee is that she was never effectively served with the notices, whether under sections 148A(b), 148, 142(1), or the penalty notices. The assessee, being a non-resident, had no reason to anticipate assessment proceedings for the relevant year as her total income was not liable to be taxed in India, the assessee being a non-resident for the past thirty years. Even in quantum proceedings, CIT(Appeals) has restored the matter to the file of the Assessing Officer for de novo consideration. We note that the assessee was unaware of any of these proceedings, and came to know about them for the first time only upon receipt of a demand notice under section 156 via email on 29.11.2023 from the office of the Income Tax Officer, Ward 1, International Tax, Ahmedabad. A copy of this email has been placed on record. Moreover, no material has Jayshree Nilam Patel vs. ITO Asst.Year –2017-18 - 4– been brought on record by the Ld. DR to demonstrate that proper service of notice was effected in accordance with the procedure prescribed under the Act, especially considering the assessee’s non-resident status. It is also material to observe that the very foundation of penalty under section 272A(1)(d) i.e., willful default in compliance with statutory notice has not been established in this case. The non-compliance is clearly attributable to lack of service and consequent lack of knowledge, rather than deliberate defiance or negligence. The imposition of penalty under these circumstances would result in penalizing the assessee for a default she was unaware of and had no opportunity to correct.
7. In view of the above and in the interest of justice, the appeal is allowed and the penalty of Rs. 20,000/- levied under section 272A(1)(d) of the Income Tax Act, 1961, is hereby cancelled.
In the result, the appeal filed by the assessee is allowed. This Order pronounced in Open Court on 11/08/2025
Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 11/08/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��थ� / The Respondent. संबंिधत आयकर आयु� / Concerned CIT 3. आयकर आयु�(अपील) / The CIT(A)- 4. 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,