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Facts
The assessee's case was reopened for scrutiny assessment, and during proceedings, there was non-compliance with notices. The Assessing Officer levied a penalty of Rs. 20,000/- under Section 271(1)(b) for non-compliance with notices under Section 142(1). The CIT(A) upheld the penalty.
Held
The Tribunal held that the assessee demonstrated that the non-compliance with notices was due to a reasonable cause, and therefore, the Assessing Officer ought not to have imposed the penalty. The Tribunal directed the Assessing Officer to delete the penalty.
Key Issues
Whether the penalty levied under Section 271(1)(b) for non-compliance with statutory notices under Section 142(1) was justified, especially when the non-compliance was due to a reasonable cause, and if the service of notice through registered mobile ID is valid.
Sections Cited
271(1)(b), 142(1), 250, 147, 144, 144B, 251
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JABALPUR BENCH “SMC”, JABALPUR
Before: SHRI KUL BHARAT
PER KUL BHARAT, VICE PRESIDENT.:
This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 15.10.2024, pertaining to the assessment year 2016-17. The assessee has raised the following grounds of appeal: -
1. On the facts and in the circumstances of the case, the order of the ld. CIT(A) under sec. 250 dated 18.06.2024 confirming the levy of penalty of Rs. 20,000/- levied under sec. 271(1)(b) of the Income-tax Act, 1961 by the Assessing Officer vide order dated 21/09/2022 for A.Yr. 2016-17 is unjustified, unwarranted, arbitrary and against the principles of natural justice.
2. On the facts and in the circumstances of the case, the ld. CIT(A) erred in holding that uploading notices under sec. 142(1) on registered mobile ID is valid service of notice is unjustified, arbitrary and against the principles of natural justice and therefore, the order of the ld. CIT(A) deserves to be set aside.
3. On the facts and in the circumstances of the case, the levy of penalty of Rs. 20,000/- for alleged non-compliance with statutory notices under sec. 142(1) of the Act is unjustified and unwarranted, particularly when the non-compliance was on account of sufficient and reasonable cause and therefore, such penalty deserves to be cancelled.
Page 2 of 4 4. The appellant craves leave to add, alter, modify any ground of appeal at the time of hearing.”
2. Briefly stated facts are that the case of the assessee was reopened and taken up scrutiny assessment. During the course of assessment proceedings, there was no compliance on behalf of the assessee. Therefore, the Assessing Officer initiated penalty proceedings u/s 271(1)(b) of the Income Tax Act 1961 (“Act”, for short) for non-compliance of notice u/s 142(1) of the Act dated 10.12.2021 and 03.02.2021. Thereafter, the Assessing Officer vide penalty order dated 21.09.2022 levied a penalty of Rs.20,000/-. Aggrieved by this order, the assessee preferred appeal before the Ld. CIT(A) who sustained the penalty and dismissed the grounds raised by the assessee. Now the assessee is in appeal before this Tribunal.
Apropos to the grounds of appeal, the Ld. Counsel for the assessee contended that the Ld. CIT(A) in the quantum proceedings has set aside the assessment for making assessment afresh. A copy of the order passed in the quantum proceedings has also been placed on record. Therefore, she prayed that the impugned penalty may be deleted.
On the other hand, the Ld. the Ld. Departmental Representative (DR) supported the orders of the lower authorities.
I have heard rival submissions and perused the material available on record. It is seen from the record that the Ld. CIT(A) in quantum proceedings has set aside the assessment order. The relevant finding of the Ld. CIT(A) is extracted below: -
“5.0 ANALYSIS OF THE FACTS AND ADJUDICATION OF THE GROUNDS: 5.1 On perusal of the assessment order u/s. 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act, 1961 passed by the Assessing Officer, it is observed that the order was passed ex-parte due to non-compliance to the notices issued. The AO has passed the assessment order by making addition of Page 3 of 4 Rs.2,65,199/- towards undisclosed cash credits, Rs.10,00,000/- towards unexplained money u/s.69A and Rs.1,18,300/- towards undisclosed agricultural income u/s.56 of the Income Tax Act, 1961. During the appellate proceedings, the assessee submitted that sufficient opportunity was not t provided by the Assessing officer to produce his submissions. 5.2 As per Amendment to Section 251 vide Finance Act, 2024, with effect from 1st day of October, 2024, the CIT (A) may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment, where such appeal is against an order of assessment made under section 144. 5.3 Considering the facts and circumstances of the case and the submissions of the assessee, the assessment order passed by the AO u/s. 147 r.w.s.144 r.w.s. 144B of the Income Tax Act, 1961 is set aside and is referred back to the AO for making a fresh assessment. Needless to add, the AO shall afford adequate opportunity of being heard to the assessee before passing the assessment order de novo. In view of this, the ground No.1 to 5, 9 & 10 are ALLOWED FOR STATISTICAL PURPOSES.”
Having considered the submissions of the Ld. Counsel for the assessee and the material placed on record. I am of the considered view that the assessee has successfully demonstrated that the non-compliance of the notices as issued was due to reasonable cause. Under these facts, the Assessing Officer ought not to have imposed the impugned penalty. Therefore, I hereby direct the Assessing Officer to delete the penalty. Grounds of appeal of the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 18/09/2025.