RAJYESHWAR RETAIL TRADE SYSTEMS PVT LTD,INDORE vs. ACIT CENTRAL-2, BHOPAL, BHOPAL

{
"clean_text": "आयकर अपीलीय अधिकरण, इंदौर न्यायपीठ, इंदौर\nIN THE INCOME TAX APPELLATE TRIBUNAL\nINDORE BENCH, INDORE\nBEFORE B.M. BIYANI, ACCOUNTANT MEMBER\nAND\nSHRI PARESH M JOSHI, JUDICIAL MEMBER\nITA No.33/Ind/2025 (AY: 2018-19)\nRajyeshwar Retail Trade\nSystems Pvt. Ltd,\n852 Sudama Nagar,\nInfront of Jain Mandir,\nIndore\n(PAN:AAECR4394M)\n(Appellant)\nAssessee by\nRevenue by\nDate of Hearing\nDate of Pronouncement\nबनाम / ACIT Central-2,\nVs.\nBhopal\n(Revenue)\nShri Harsh Vijaywargiya, ARs\nShri Ashish Porwal, DR\n30.07.2025\n31.07.2025\nआदेश/ORDER\nPer Paresh M Joshi, J.M:\nThis is an appeal filed by the assessee Under Section 253 of\nthe Income Tax Act, 1961 (hereinafter referred to as the “Act” for\nsake of brevity) before this Tribunal. The assessee is aggrieved by\nthe order dated 29.11.2024 in appeal No.CIT(A)-3,\nBhopal/17/12499/2017-18 which is hereinafter referred to as\nthe \"Impugned order”. The relevant Assessment Year is 2018-19\nand the corresponding previous year period is from 01.04.2017 to\n31.03.2018.\nRajyeshwar Retail Trade Systems Pvt Ltd\nITA No.33/Ind/2025 - A.Y. 2018-19\n2.\nFACTUAL MATRIX\n2.1 That as by way of an Assessment Order made u/s\n272A(1)(d) of the Act, a penalty of Rs. Ten thousand was\nimposed on the assessee for non-compliance of the provision of\nSection 142(1) of the Act. That the aforesaid order bears No.\nITBA/PNL/F/272A(a)(d)/2020-21/1031057951(1) that the same\nis dated 26.02.2021 which is hereinafter referred to as the\n\"impugned penalty order”. The core issue was penalty of\nRs.10,000/- on account of non-compliance to the provision of\nSection 142(1) of the Act by the assessee.\n2.2 That the assessee being aggrieved by the “impugned penalty\norder\" prefers first appeal u/s 246A of the Act before the Ld.\nCIT(A) who by the “impugned order” has dismissed the 1st\nappeal of the assessee on grounds and reasons stated therein.\nThe core ground and reason for dismissal of the first appeal was\nas under in the “impugned order\":-\n“4.1 Ground No.1 to 2 I have considered the penalty order, issue\ninvolved in assessment and the ground of appeal raised by the\nappellant against the penalty order. In this case penalty of a\nsum of Rs.10,000/- was levied on appellant u/s 272A(1)(d) of the\n“Act”. During the assessment proceedings it has been observed\nthat the assessee did not comply to the notices and did not\nfurnish any reply despite of numerous opportunities provided to\nthe appellant. Accordingly, the Assessing Officer held that the\nassessee has failed to comply with the notice under section\n142(1) of the “Act” and levied penalty of amount Rs.10,000/- u/s\n272A(1)(d) of the Act for the A.Y 2018-19.\n4.1.2 On Perusal of assessment records, I find that during the\nassessment proceedings, the appellant always failed to comply\nthe notices issued to him. As per record, several opportunities\nhave been given to the appellant during the assessment\nproceedings. Further, the Ld. A.O has passed the assessment\norder u/s 144 of the I.T. Act which proves that the appellant was\nprovided ample opportunities to substantiate its claim, however,\ndespite several opportunities being granted from time to time,\nthere has been absolutely no compliance on the part of the\nappellant to give detailed explanation regarding grounds of\nappeal taken for the year under consideration. The appellant's\noverall attitude towards compliance during assessment as well\nas penalty proceeding has been absolute non compliance. It is\nvery unreasonable that repeatedly the appellant prefers not to\ncomply the notices issued by the Assessing Officer. Accordingly,\nthe plea of the appellant that penalty levied u/s 272A(1)(d) for\nthe A. Y under consideration without giving reasonable\nopportunity of being heard is not sustainable and therefore, the\nclaim of the appellant on these grounds are not acceptable.\n4.1.3 In view of above discussions, I find no merit on the grounds\nraised by the appellant. Therefore, the levying of the above\npenalty is fully justified and proper and in accordance with the\nprovisions made under the Income Tax Act. Accordingly, the\nappeal on ground No.1 to 2 are dismissed.\n4.1.4 Ground No.3:- Being general in nature, this ground does\nnot require any specific adjudication.\n5.\nAccordingly, the appeal is dismissed.\"\n2.3 That the assessee being aggrieved by the “impugned order”\nhas preferred the instant second appeal before this tribunal and\nhas raised following grounds of appeal in Form No.36 against the\n\"impugned order” which are as under:-\n\"1. That on the facts and in the circumstances of the case Ld.\nCIT(A)-3, Bhopal has erred in confirming the penalty levied by\nLd.AO amounting to Rs.10,000/- u/s 272A(1)(d) of Income Tax Act,\n1961.\n2.\nThat on the facts and in the circumstances of the case Ld.\nA.O has erred in passing and Ld. CIT(A)-3, Bhopal has erred in\nconfirming the impugned order without affording any\nopportunity of being heard against the principles of natural\njustice.\n3. That the assessee craves leave to add, amend, alter or\ndelete any of the grounds of appeal and all the above grounds\nare without prejudice to each other.”\nRecord of Hearing\n3.1 The hearing in the matter took place before this Tribunal on\n30.07.2025 when the Ld. AR for and on behalf of the assessee\nappeared and interalia contended that the “impugned order\" is\nillegal, bad in law and not proper. It thus deserves to be set aside\nby this Tribunal in exercise of its appellate power. It was\ncontended that the notice u/s 142(1) of the Act was issued to the\nassessee on 16.03.2020 where the assessee was requested to\nsubmit the information/documents as per questionnaire along\nwith books of accounts by 15.04.2020. It was mentioned in\nthe said notice that compliance by 15.04.2020 is a must failing\nwhich the assessee would be liable to a penalty u/s 271(1)(b) of\nthe Act. A show cause notice for penalty u/s 272A(1)(d) of the\nAct dated 29.12.2020 was issued to the assessee requiring him\nto show cause on or before 04.01.2021 as to why penalty of\nRs.10,000/- should not be levied upon the assessee for non-\ncompliance of notice u/s 142(1) of the Act. However the assessee\ndid not avail this opportunity and no reply was furnished.\nTherefore vide “impugned penalty order” a penalty of\nRs.10,000/- was imposed u/s 272A(1)(d) of the Act for non-\ncompliance of Section 142(1) notice. The Ld. AR therefore\ncontended that compliance on 15.04.2020 was impossible as\nCovid-19 had set in and there was national lock down\ndeclared. Even when show cause notice dated 29.12.2020 was\nissued u/s 272A(1)(d) lock down was continuing one. Under\nthese circumstances question of complying with the notice u/s\n142(1) of the Act does not arises on or before 15.04.2020. The\nLd. AR finally prayed that the “impugned order" imposing\npenalty of Rs.10,000/- should be set aside. The Ld. DR for and\non behalf of the Revenue contended that during Covid-19 there\nwas a national lock down from 15.03.2020 therefore the Ld. AR\nhas rightly contended that it was impossible for anyone to\ncomply with the notice u/s 142(1).\n4.\nObservations, findings & conclusions.\n4.1 We now have to decide the legality, validity and the\nproprietary of the “Impugned Order” basis records of the case\nand rival contentions canvassed before us.\n4.2 We have carefully perused the records of the case.\n4.3 We basis records of the case and after hearing and upon\nexamining the contentions are of the considered view that as\nand by way of a notice u/s 142(1) which was issued on\n16.03.2020 the Covid-19 was already in place globally and\nnational lock down was declared. The due date for compliance\nwas 15.04.2020. Naturally the assessee could not comply with\nthe requisitions which were made as it was an act of\nimpossibility at that point of time. To expect assessee to comply\nwith the notice u/s 142(1) dated 16.03.2020 by 15.04.2020 was\ntherefore impossible due to Covid-19 which had affected the\nworld across nations. Hence we are of the considered opinion\nthat imposition of penalty of Rs.10,000/- on assessee u/s\n272A(1)(d) of the Act was an exercise in nullity. An action\nwholly untenable in law. Law cannot compel a citizen to do\nimpossible particularly during Covid-19.\n4.4 We now reproduce Section 272A which deals with subject\npenalty issue and same is reproduced below:-\n\"[Penalty for failure to answer question, sign statements, furnish\ninformation, return or statements, allow inspections etc.]\n272A(1) If any person\n(d) fails to comply with a notice under sub section (1) of\nSection 142 or sub section (2) of Section 143 or fails to comply\nwith a direction issued under sub section (2A) of Section 142\nhe shall pay by way of penalty a sum of Rs. Ten Thousand for\neach default or failure\".\nWe hold that use of the word \"shall” (supra) u/s 272A(1)(d)\nis mandatory and there is no discretion with the authorities.\nNow therefore question before us is whether the word “shall\"\n(supra) should be strictly construed or liberally construed\nparticularly so when entire period from 16.03.2020 to\n15.04.2020 during which the assessee was asked to meet\nrequisitions vide notice dated 16.03.2020 was covered by Covid-\n19 and national lock down was declared. To expect an\nassessee to comply was an act of impossibility at the material\ntime and place hence the word “shall” must be liberally\ninterpreted for Covid-19 period. Accordingly we set aside the\nimpugned order which has upheld “impugned penalty order\".\nWe also additionally hold that by virtue of the Section 273B of the\nAct which deals with “penalty not to be imposed in certain\ncases” we find that the Section 272A(d) stands covered therein\nand the said section states that no penalty shall be imposed on\nthe person for any failure referred to in the said provisions if the\nassessee proves that there was a reasonable cause for the said\nfailure. The AR of the assessee by taking plea of Covid-19 has\ndemonstrated before us reasonable cause of failure to comply\nwith the notice u/s 142(1). Hence “impugned order” by virtue of\nSection 273B too does not stand which is a non-obstinate clause.\n5.\nOrder\n5.1 In view of aforesaid we set aside the “impugned order” and\nallow the appeal of the assessee.\n5.2 In the result, the appeal of the assessee is allowed.\nOrder pronounced in open court on 31.07.2025.\n \n(B.M. BIYANI)\nACCOUNTANT MEMBER\nIndore\nदिनांक/ Dated : 31/07/2025\nDev/Sr. PS\n \n(PARESH M JOSHI)\nJUDICIAL MEMBER\nCopies to: (1) The appellant\n(2) The respondent\n(3) CIT\n(4) CIT(A)\n(5) Departmental Representative\n(6) Guard File\nBy order\nSenior Private Secretary\nIncome Tax Appellate Tribunal\nIndore Bench, Indore",
"summary": {
"facts": "The assessee was imposed a penalty of Rs. 10,000 under Section 272A(1)(d) for non-compliance with a notice issued under Section 142(1) of the Income Tax Act. The CIT(A) upheld the penalty. The assessee appealed to the Tribunal.",
"held": "The Tribunal held that the period for compliance with the notice (16.03.2020 to 15.04.2020) fell within the nationwide lockdown due to Covid-19, making compliance impossible. Therefore, the penalty imposed was set aside.",
"result": "Allowed",
"sections": [
"253",
"142(1)",
"272A(1)(d)",
"246A",
"144",
"271(1)(b)",
"273B"
],
"issues": "Whether the penalty for non-compliance with a notice issued during the Covid-19 lockdown, when compliance was impossible, is sustainable."
}
}