VIMALA DEVI BAHETI,NEEMUCH vs. INCOME TAX OFFICER, WARD-NEEMUCH, NEEMUCH

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ITA 387/IND/2025Status: DisposedITAT Indore28 November 2025AY 2016-176 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held in favour of the assessee on both appeals. For ITA No. 387/Ind/2025, concerning the penalty under Section 271(1)(b), the Tribunal found merit in the assessee's submission that the non-compliance with the notices was due to the death of her counsel and the subsequent negligence of the persons handling his office. Citing Section 273B, which allows for waiver of penalty if a reasonable cause is proven, the Tribunal concluded that there was a reasonable cause for the non-compliance. Consequently, the penalty of Rs. 30,000 was deleted. For ITA No. 388/Ind/2025, regarding the penalty under Section 271F for non-filing of the return, the Tribunal accepted the assessee's argument that her total income did not exceed the maximum amount not chargeable to tax. As there was no compulsory obligation to file a return under Section 139(1), the penalty under Section 271F was not attracted. The penalty of Rs. 5,000 was accordingly deleted. The ratio decidendi is that genuine reasons stemming from circumstances beyond the assessee's direct control, such as the death of a legal representative and subsequent administrative lapses, can constitute a reasonable cause for non-compliance, and that penalty for non-filing of return is not applicable if no statutory obligation exists.

What were the facts?

The assessee, Vimala Devi Baheti, filed two appeals (ITA Nos. 387 & 388/Ind/2025) against penalty orders for Assessment Year 2016-17. The first appeal (ITA No. 387/Ind/2025) challenges a penalty of Rs. 30,000 imposed under Section 271(1)(b) for non-compliance with three notices issued under Section 142(1). The assessee contended that notices were sent to an old email ID of a deceased counsel, and the persons handling his office were negligent. The second appeal (ITA No. 388/Ind/2025) challenges a penalty of Rs. 5,000 imposed under Section 271F for alleged non-filing of the return of income. The assessee argued that her total income did not exceed the maximum amount not chargeable to tax, thus not requiring a compulsory filing under Section 139(1). Both penalties were upheld by the CIT(A) before reaching the Tribunal.

What were the issues?

1. Whether there was a reasonable cause for the assessee's non-compliance with the notices issued under Section 142(1), thereby invoking the provisions of Section 273B for waiver of penalty under Section 271(1)(b)? - Assessee's contention: The non-compliance was due to the death of her counsel, Shri T.C. Airan, in October 2021, and the subsequent negligence of the individuals managing his office. The notices were sent to the deceased counsel's email ID and physical address, which the assessee forwarded to his office. She argued that this constituted a "reasonable cause" under Section 273B. - Revenue's contention: The revenue relied on the orders of the lower authorities. 2. Whether the penalty under Section 271F is leviable when the assessee's total income did not exceed the maximum amount not chargeable to tax, and thus there was no obligation to file a return under Section 139(1)? - Assessee's contention: The assessee is primarily an agriculturist and her total income for AY 2016-17 did not exceed the taxable threshold. Therefore, she was not obligated to file a return under Section 139(1), and consequently, there was no failure attracting penalty under Section 271F. - Revenue's contention: The revenue relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 271(1)(b),Section 142(1),Section 273B,Section 148A(b),Section 148A(d),Section 147,Section 148,Section 144,Section 271F,Section 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI B.M. BIYANI

For Appellant: Shri Harshit Choukse, CA & AR
For Respondent: Shri Ashish Porwal, Sr. DR
Hearing: 26.11.2025Pronounced: 28.11.2025

आदेश/ O R D E R

Per Bench:

1.

The captioned (2) appeals filed by same assessee challenge the penalties imposed by AO and upheld by CIT(A). At the request of parties, both of these appeals were heard simultaneously and are being disposed of by this order.

2.

This appeal is directed against order of first-appeal dated 04.02.2025 passed by learned Commissioner of Income-tax-NFAC, Delhi [“CIT(A)”] which in turn arises out of penalty-order dated 18.07.2024 passed by learned

Page 1 of 6 & 388/Ind/2025 – AY 2016-17 Assessment Unit of Income-tax Department [“AO”] u/s 271(1)(b) of Income- tax Act, 1961 [“the Act”] for assessment-year [“AY”] 2016-17.

3.

The assessee in present case is aggrieved by a penalty of Rs. 30,000/- imposed by AO u/s 271(1)(b) for non-compliances of three (3) notices dated 09.08.2023, 31.08.2023 and 12.09.2023 issued u/s 142(1) during scrutiny-proceedings. Ld. AR for assessee submitted that initially the AO issued notice dated 21.02.2023 u/s 148A(b) to assessee seeking information about sale transaction of immovable property on the basis of information directly received from office of sub-registrar. The notice issued by AO remained unattended by assessee and therefore the AO passed ex- parte order dated 13.03.2023 u/s 148A(d) and proceeded to issue notice u/s 148 to re-open assessee’s case u/s 147. Thereafter, the AO issued notice dated 17.03.2023 u/s 148 followed by aforesaid three (3) notices dated 09.08.2023, 31.08.2023 and 12.09.2023 u/s 142(1) and finding no response from assessee, ultimately framed assessment u/s 144. Further, during first-appeal also, there was non-representation by assessee which led the CIT(A) to pass ex-parte order. Ld. AR submitted that the authorities issued notices to email id: tcairan@gmail.com which was an email id of asessee’s old counsel “Shri TC Airan” registered in database of assessee in departmental record. Further, the authorities also issued physical notices to address of assessee and the assessee forwarded those notices to the office of “Shri T.C. Airan” counsel but “Shri T.C. Airan” expired in October, 2021 and the persons handling his office did not take care, hence non-

Page 2 of 6 & 388/Ind/2025 – AY 2016-17 compliances occurred. Thus, in nutshell, Ld. AR submitted that the non- compliances to the notices issued u/s 142(1) by AO for which the penalty of Rs. 30,000/- has been imposed upon assessee was due to counsel’s death and subsequent careless approach of persons handling consel’s office and not to assessee. Ld. AR submitted that the assessee is a lady; basically an agriculturist and resident of a small village. He submitted that the assessee relied upon the persons handling counsel’s office in a bonafide manner. He submitted that the default is for the reason narrated and therefore there was a “reasonable cause” in terms of section 273B, hence the assessee should not be saddled with the liability of penalty of Rs.

30,000/-. Ld. DR for revenue relied upon the orders of lower-authorities yet left the matter for the wisdom of bench. After a careful consideration and on examination of facts narrated by Ld. AR as well as on perusal of the copies of notices filed by Ld. AR before bench and in absence of any contrary fact or material on record, we find merit in the pleading made by Ld. AR for assessee for non-compliances of the notices. In that view of matter, we agree that there was a reasonable cause for non-compliances of notices in so far as assessee is concerned. We find that the provision of section 273B reads as under:

“273B. Notwithstanding anything contained in the provisions of clause (b) of sub-section (1) of section 271, ……., 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.”

Page 3 of 6 & 388/Ind/2025 – AY 2016-17 Therefore, having regard to the provision of section 273B, we delete the penalty imposed by AO. The assessee succeeds in this appeal.

ITA No. 388/Ind/2025:

4.

This appeal is directed against order of first-appeal dated 04.02.2025 passed by learned Commissioner of Income-tax-NFAC, Delhi [“CIT(A)”] which in turn arises out of penalty-order dated 28.06.2024 passed by learned Assessment Unit of Income-tax Department [“AO”] u/s 271F of Income-tax Act, 1961 [“the Act”] for assessment-year [“AY”] 2016-17.

5.

The assessee in present appeal is aggrieved by a penalty of Rs. 5,000/- imposed by AO u/s 271F alleging that the assessee had committed a default of non-filing of return of income of AY 2016-17.

6.

Ld. AR for assessee, however, submitted that the assessee is mainly engaged in agricultural activity and the total income of asesese did not exceed the maximum amount not chargeable to tax and therefore the assessee was not required to file return u/s 139(1). Therefore, the assessee did not file any return of AY 2016-17 under consideration. The Ld. AR further submitted that even in immediate preceding AY 2015-16, the assessee filed return to Income-tax department declaring agricultural income of Rs. 2,15,675/- and total income of Rs. 1,15,710/- only and as can be seen the assessee’s total income did not exceed the maximum amount not chargeable to tax and thus the assessee filed return voluntarily without having any compulsion u/s 139(1). Thus, Ld. AR successfully showed that Page 4 of 6 & 388/Ind/2025 – AY 2016-17 the assessee was not having any obligation to file return u/s 139(1) and therefore there is no failure in terms of section 271F and pleaded that the AO is not justified in imposing penalty upon assessee. Ld. DR for revenue relied upon orders of lower-authorities yet left the matter for the wisdom of bench. After a careful consideration and on examination of facts as narrated by Ld. AR, we find a strong merit in the pleading made by Ld. AR for assessee that when the assessee’s total income did not exceed the maximum amount not chargeable to tax, the assessee was not under compulsory obligation to file any return. Accordingly, the penalty u/s 271F is not attracted. Therefore, we delete the penalty imposed by AO. The assessee succeeds in this appeal.

7.

Resultantly, these appeals are allowed.

Order pronounced in open court on 28/11/2025

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