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Facts
The assessee, a government company, failed to file its return of income for A.Y. 2017-18, leading to an ex-parte assessment with a substantial addition and a penalty of Rs. 50,000/- under section 272A(1)(d) for non-compliance with notices. The assessee attributed the non-compliance to administrative hurdles, including the delayed appointment of a managing director. The CIT(A) upheld the penalty.
Held
The Tribunal condoned the delay in filing the appeal, acknowledging the assessee's status as a government undertaking facing administrative hurdles. It held that once the addition had already been made by the AO, imposing a penalty under section 272A(1)(d) for non-compliance with notices was not justified and resulted in a miscarriage of justice. Therefore, the impugned penalty order was set aside, and the AO was directed to delete the penalty amount.
Key Issues
Whether the penalty levied under Section 272A(1)(d) for non-compliance with assessment notices was justified given the administrative difficulties faced by a government undertaking, and whether there was sufficient cause for condonation of delay in filing the appeal.
Sections Cited
250, 272A(1)(d), 148, 147, 144B, 142(1), 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI. BR BASKARAN & SHRI. RAJ KUMAR CHAUHAN
O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the order dated 06.12.2023 of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)”], passed under section 250 of the Income Tax Act, 1961 Maulana Azad Alpasankyank Arthik Vikas Mahamandal Maryadit; A.Y. 2017-18 [hereinafter referred to as “the Act”] confirming the order dated 27.09.2022 passed u/s. 272A(1)(d) of the Act passed by the Ward 2(2)(3), Mumbai (hereinafter referred to as “AO”) for the A.Y. 2017-18 by imposing penalty therein.
The facts in brief are that the assessee company is a government company incorporated as Maharashtra State’s Channelizing Agency of Government of India’s National Minorities Development and Finance Corporation run by the Union Minority Affairs Ministry. The assessee has not filed its return of income for A.Y. 2017-18 and case was reopened on the basis of information available in AIMS MULTI YEAR NMS of ITBA Portal regarding the assessee has received interest income of Rs. 1,38,565/-. Purchase shares (including share application money) to the tune of Rs. 50,00,000/- and has purchased time deposits (other than a time deposit made through renewal of another time deposit) amounting to Rs. 95,24,63,853/- during the year under consideration. Notice u/s. 148 of the Act was issued on 24.03.2021 to which assessee did not file any reply and scrutiny assessment was carried out ex parte as per Section 147 r.w.s. 144B of the Act and addition of Rs. 61,34,22,428/-. Since the assessee did not comply with notice u/s. 142(1) of the Act issued on 5 dates during the Maulana Azad Alpasankyank Arthik Vikas Mahamandal Maryadit; A.Y. 2017-18 course of assessment proceedings, the penalty proceedings u/s. 272A(1)(d) of the Act was initiated. The assessee has not filed any reply to the penalty notice and the Ld. AO thus imposed the penalty of Rs. 50,000/- as find mentioned in para no. 7 of the order.
Aggrieved by the said order, appeal was filed before the Ld. CIT(A) who has dismissed the appeal vide impugned order and confirmed the order of the Ld. AO.
Accordingly, the assessee is in appeal before us and has raised following grounds:
1. “In the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) [through the National Faceless Appeals Centre) has erred in confirming the action of the Ld. Assessing Officer in levying penalty amounting to Rs. 50,000/- under section 272A(1)(d); disregarding the factual and legal matrix of the case.” 5. Before proceeding further, we proceed to decide the application for condonation of delay wherein it is stated that the assessee being a government company could not appoint the managing director on time and for that reasons due to departmental hurdles, the appeal could not be filed within the period of limitation. In support of Affidavit of Managing Director of the assessee company has also been filed who has given the Maulana Azad Alpasankyank Arthik Vikas Mahamandal Maryadit; A.Y. 2017-18 detailed reasons seeking condonation of delay on the ground that there is sufficient cause for condonation of delay.
We have heard the submissions and perused the record. The impugned order is dated 26.06.2023 and appeal was filed on 07.05.2024. Nothing contrary to the contents of the affidavit of the assessee has been brought on record by the revenue. We have considered the submissions of the assessee and the contents of the affidavit. The fact that the assessee is a government undertaking incorporated for looking after the work of the minority welfare, we are inclined to take a lenient view and the delay in filing the appeal is accordingly condoned.
We have also heard the Ld. AR on behalf of the assessee and Ld. DR on behalf of the department on merit. It is argued on behalf of the assessee that once the addition has been made by the Ld. AO, the imposing of the penalty in these given facts and circumstances of the case were not warranted and justified and has resulted into miscarriage of justice.
The Ld. DR on behalf of the revenue has submitted that the assessee remained negligent and did not respond to the various notices issued during the scrutiny assessment as well as during the penalty proceedings and has
We have considered the submissions. Section 272A(1)(d) of the Act provides as under:
“Section 272A(1) If any person,— (d) fails to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or fails to comply with a direction issued under sub-section (2A) of section 142, he shall pay, by way of penalty, a sum of ten thousand rupees for each such default or failure.”
As is evident from the ingredients of the provisions extracted above that the penalty can be imposed if the assessee has failed to comply with the notice issued during the assessment proceedings. The justification on behalf of the assessee for noncompliance is that it is being a government undertaking, the employee/Managing Director etc. could not be appointed and the work of the government company could not be looked after due to administrative hurdles.
We are of the considered opinion that in these given facts and circumstances the end of justice requires that the assessee should not be penalized once the addition has already been made by the Ld. AO. In the peculiar facts and circumstances of the case, imposing of penalty in this Page | 5
For these reasons, the impugned order is not legally sustainable in the eyes of law and is accordingly set aside. The Ld. AO is directed to delete the penalty amount.
In the result, appeal filed by the assessee is allowed in the above terms.
Order pronounced in the open court on 14.10.2024
Sd/- Sd/- (BR BASKARAN) (RAJ KUMAR CHAUHAN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Mumbai / Dated 14.10.2024 Karishma J. Pawar, (Stenographer) Copy of the Order forwarded to:
1. 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mumbai