LALJI YADAV,LUCKNOW vs. ITO-1(2), LUCKNOW

Subsequently, show cause notices were issued to the assessee on 15.03.2021, 31.05.2021 and 23.12.2021 asking the assessee to explain why penalty under section 272A(1)(d) should not be levied upon him for failure to comply with three notices under section 142(1) of the Act dated 30.11.2017, 25.06.2019 and 29.08.2019. In response, the assessee submitted that since he had gone in appeal before the NFAC, the penalty proceedings should be kept in abeyance. The ld. AO observed that the penalty had not been initiated in relation to a matter which was dependent on the quantum, but for the failure of the assessee to comply with the notices. Therefore, he declined to keep the penalty proceedings in abeyance and he asked the assessee to show evidence that non-compliance during the assessment proceedings and initiation of penalty under section 272A(1)(d), was an issue before the ld. CIT(A). As the assessee did not respond to that notice also, he levied the penalty of Rs.30,000/- upon the assessee for failure to comply with three notices during assessment proceedings.

The assessee went in appeal before the ld. CIT(A). It was submitted that as all the penalty notices issued by the ld. AO had fallen during Covid-19 period, the assessee could not contact his counsel to file an appropriate reply. The assessee also submitted that the Act of the ld. AO in levying Lalji Yadav A.Y. 2017-18 penalty for three violations of the notice under section 142(1) was uncalled for and as a subsequent notice under section 142(1) was issued, it was deemed that non-compliance of earlier notices was condoned. However, the ld. CIT(A), in consideration of the assessee’s appeal noted that the appeal filed by the assessee was delayed without sufficient cause and he declined to condone the delay. He also noticed that he had issued three notices to the assessee and the assessee had not filed any response to the same and only requested adjournments. Therefore, the ld. CIT(A) decided not to give further opportunity to the assessee and proceeded to decide the issue on the basis of the materials available on record. After perusing the penalty order passed by the ld. AO, the ld. CIT(A) came to the conclusion that the assessee had not made any compliance to statutory notices issued by the ld. AO. Even during the penalty proceedings, he had not furnished any explanation for the non-compliance and only requested for time on the ground that an appeal had been filed. When the ld. AO had asked him to explain how the said appeal was linked to the penalty for non-compliance, the assessee had not responded. The assessee had also not responded during the course of appeal proceedings. Therefore, the ld. CIT(A) held that the assessee was habitually non-cooperative in making compliances to statutory notices issued by the Department. Quoting from the judgments of the ITAT Ahmedabad Bench in the case of M/s Raj Enterprises in he pointed out that in this particular case, the assessment was completed under section 144 and therefore, the ratio of that judgment would not apply. He thereafter, placed reliance upon the judgment of the Hon’ble Patna High Court in the case of CIT vs. Standard Mercantile Company (1986) 160 ITR 630 (Pat) wherein the Hon’ble High Court had held that where the assessee had failed to furnish any evidence for non-production of documents, the imposition of penalty under section 271(1)(b) was justified. He held that the case of the 4 Lalji Yadav A.Y. 2017-18 assessee was squarely covered by the judgment of the Hon’ble Patna High Court and therefore, he confirmed the penalty of Rs.30,000/- levied upon the assessee under section 272A(1)(d). Aggrieved with the same, the assessee has come before us in appeal.

Sh. P.K. Kapoor, C.A. appearing on behalf of the assessee submitted that the assessee had gone in appeal against the orders passed by the ld. AO under section 144 and the Tribunal, in the course of hearing that appeal, had considered the reasons for non-compliance by the assessee during assessment proceedings. In such proceedings, it had been argued that the assessee had been prevented by compelling medical conditions and the Covid-19 Pandemic for making compliance to notices issued by the ld. AO during assessment proceedings and the ld. CIT(A) during appellate proceedings. Reliance was placed on medical certificates issued by, “Batra Hospital and Medical Research Centre” New Delhi and, “G.D. Memorial Nursing Home” Jaunpur and on the affidavit of the assessee. Ld. AR submitted that the Tribunal had recorded a finding that after perusing the medical certificates issued by Batra Hospital and Medical Research Centre, New Delhi and G.D. Memorial Nursing Home, Jaipur as also the affidavit filed by the assessee, it was satisfied that there was sufficient reasons on the part of the assessee for non-compliance with the notices issued by the ld. AO during the assessment proceedings and by the ld. CIT(A) during the appellate proceedings. Therefore, the Tribunal had sent the matter back to the file of the ld. AO for de novo assessment after affording reasonable opportunity to the assessee. A paper book was also filed containing this affidavit and the medical certificates in question. From a perusal of the medical certificate issued by Batra Hospital, it appears that during the period of assessment proceedings, the assessee was suffering from recurrent Lalji Yadav A.Y. 2017-18 symptomatic atrial fibrillation (AF), requiring multiple cardio versions and complete rest from October, 2019 to December, 2019. It was also submitted that the assessee had undergone mitral valve replacement operation in 2017 at the Batra Hospital and Medical Research Centre and the assessment proceedings had been initiated for the assessment year 2017-18 vide notice under section 142(1) dated 30.11.2017. Therefore, the failure to comply with notices during the assessment proceedings was due to assessee’s ill health. The ld. AR also drew our attention to the order of the Hon’ble Supreme Court of India in Suo Moto Writ Petition No. 3 of 2020 to argue that the ld. CIT(A) was completely unjustified in holding that the appeal of the assessee before him was delayed or barred by limitation. The ld. AR therefore, submitted that since the ITAT had rendered a finding that there were justifiable reasons for the non-compliance, the penalty under section 272A(1)(d) had no legs to stand on.

On the other hand, Sh. Amit Kumar, ld. DR pointed out that the assessee had been habitually non-compliant and in fact argumentative. He had declined to file the return saying that he was not liable to file it and instead of taking any grounds of ill health, he had asked the Department to furnish him information so as to enable him to file the replies. Therefore, it was quite clear that the assessee was indulging in deliberate non-compliance and the penalty deserved to be confirmed in his hands on account of this repeated non-compliance.

We have duly considered the facts and circumstances of the case. The Coordinate Bench of the ITAT has already applied its mind to the fact of non- compliance to the various notices by the assessee during the assessment period and concluded that the assessee was prevented by reasonable cause from making compliance to the said notices. It has accordingly remanded the