RAJKUMAR ASNANI,JAIPUR vs. ITO WARD 2(2), JAIPUR

vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M.

This appeal filed by assessee is arising out of the order of the Ld. CIT(A), National Faceless Appeal Centre, Delhi dated 07.11.2023 [hereinafter “Ld.CIT(A)/NFAC”] for the assessment year 2017-18.

2. The assessee has raised the following grounds of appeal:-

"1. The impugned penalty order u/s 272A (1)(d) dated 26-09-2022 as well as notices are bad in law and on facts of the case, being barred by limitation, for Raj Kumar Asnani vs. ITO want of jurisdiction and various other reasons and hence the same may kindlybe quashed.

2. Rs.20,000/-: The Id. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the penalty of Rs. 20,000/- imposed by the Id. AO u/s 272A(1)(d) of the Act, also erred in not considering the request and material available on record. Hence the penalty so imposed by the AO and confirmed by the Id. CIT(A) is totally contrary to the provisions of law and facts on the record and hence the same may kindly be deleted in full.

3. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.”

5.1 I have perused the form no.35, grounds of appeal, the impugned penalty order, the written submissions and the facts of the case.

The Assessing Officer has imposed the penalty on the basis of the absence of any plausible reason from the appellant regarding omission of compliance of statutory notices issued u/s 142(1) on 18.11.2021 and 14.02.2022. The appellant in its submissions has contended that the failure was because of the notices not being served physically on him. Besides this the appellant has not furnished any otherdocument in support of its contention.

5.3 The provision of section u/s 272A(1) are reproduced as under:

Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc.

272A. (1) If any person, -

(a) being legally bound to state the truth of any matter touching the subject of his assessment, refuses to answer any question put to him by an income-tax authority in the exercise of its powers under this Act, or (b) refuses to sign any statement made by him in the course of any proceedings under this Act, which an income-tax authority may legally require him to sign; or (c) to whom a summons is issued under sub-section (1) of section 131 either to attend to give evidence or produce books of account or other documents at a certain place and time omits to attend or produce books of account or documents at the place or time; or (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, 5.4 It is noted that the appellant has been negligent in the re-assessmentproceedings u/s 147 and penalty proceedings u/s 272A(1)(d). It is the duty of the tax payer to update the correct details for communication with the department. Hence it cannot take this plea that the notices sent on email were not communicated to the appellant because of some vague reasons, it is not liable to be penalized u/s 272A(1)(d).

5.5 The appellant has relied upon various judicial pronouncements which are not applicable in the case of the appellant as the appellant has not being able to ENT establish reasonable cause for its omission to comply to the notices dated 18.11.2021 and 14.02.2022.

5.6 In view of the above, the penalty u/s 272A(1)(d) is upheld and the grounds of appeal of the appellant are dismissed.

6. In the result, the appeal of the appellant is dismissed.” As the assessee did not receive any favour from the appeal filed before Ld. 5. CIT(A). The present appeal filed against the said order of the Ld. CIT(A) before us on the grounds as reiterated here in above. To support the grounds so raised the Ld. AR of the assessee has placed reliance on the written submission which is extracted herein below:-

FACTS: 1. The brief facts of the case are that the appellant-assessee is a a regular I.T assessee from last so many years. The appellant assessee is engaged in the business of home appliances trading in all kinds of home appliances viz. TVs, Refrigerators, Mixis, Telephone, Fan & Coolers etc in the name of M/s Asnani Home Appliances. The assessee has not filed his return of income for this year due to negligence’s of accountants or counsels. The ld. AO has issued the notices u/s 148 in this case on dt. 27.03.2021 on the reasons that “ As per the information available in AIMS, the assessee has deposited cash for Rs. 1,09,58,000/- in his account number 00081801000688 in Fingrowth Corporate Bank Ltd. In the name of M/s Asnani Home Raj Kumar Asnani vs. ITO Appliances during the financial year 2016-17 relevant to AY 2017-18. The assessee has not filed return of income for the AY 2017-18. Therefore considering that the cash deposits to the extent of Rs. 1,09,58,000/- has escaped assessment, The ld. AO has noted that the notice u/s 142(1) was issued on dt. 18.11.2021 and 14.02.2022 respectively, which was served upon the registered email address. The ld. AO stated that the assessee has not furnished the information. The ld. AO has also issued the show cause notice u/s 144 on dt. 11.03.2022 delivered on email on dt. 12.03.2022 fixing the date of hearing on dt. 14.03.2022, but in want of information with the assessee could not file the reply. Hence the ld. AO has proceeded the exparty assessment. While passing the order the ld. AO has commutated or worked out income Rs. 8,76,640/- and accordingly the assessment was completed u/s. 144 rws 147 of Income tax Act, 1961, against which the assessee has filed the appeal which is under hearing before the CIT(A) NFAC we already filled our WS and details in that case. After passing the order the ld. AO has issued the notice u/s 272A(1)(d)on dt. 27.03.2022 on the date of assessment order for the non compliances to the notice u/s 142(1) dt. 18.11.2021and 14.02.2022. As this notice has also not been served upon the assessee physically. Thereafter the ld. AO has again issued the notice on dt. 29.08.2022. As this notice has also not been served upon the assessee. Thus the ld. AO has penalty of Rs.20,000/- is imposed u/s 272A(1)(d) for failure to furnish or comply with the notice u/s 142(1) dt. 18.11.2021 ,and 14.02.2022. And imposed the penalty of Rs.20,000/-. In first appeal assessee has filed the WS, details and legal position of law. However the ld. CIT(A) did not feel satisfy with the reply and conformed the penalty by stating that “The appellant has been negligent in the re-assessment proceedings u/s 147 and penalty proceedings u/s 272A(1)(d). It is the duty of the tax payer to update the correct details for communication with the department. Hence it cannot take this plea that the notices sent on email were not communicated to the appellant because of some vague reasons, it is not liable to be penalized u/s 272A(1)(d). The appellant has relied upon various judicial pronouncements which are not applicable in the case of the appellant as the appellant has not being able to establish reasonable cause for its omission to comply to the notices dated 18.11.2021 and 14.02.2022.

SUBMISSIONS: 1. No notices has been served upon the assessee :At the very outset it is submitted that admittedly the assesseeis doing business and a regular IT assessee and filling his return of income regularly from last many years, however for this year the return could not be furnished Raj Kumar Asnani vs. ITO by the negligence’s of counsel and accountant. As both the notices have been at the email address of the counsel and the assessee was under impression that the counsel is taking care the IT matter. The notices sent on the email could not be communicated to the assesseee by one and other reasons. As the assessee was not sing those email and otherwise if had received he could have responded the same. As the notices have not been served physically. 1.2 He had also no knowledge of any proceedings initiated against him, notices issued and order passed for the assessment year 2017-18. And also there was no mensrea/malafide intention for non compliance of assessing officer notices. The assessee has come to know only when he had received the penalty orders. 1.3. Further it is also admitted facts that the there was Covid-19 period till March 2022 and the Honble Supreme Court had extend the due date of many proceeding or filling the appeal and other matters. Thus there was also exist a reasons cause. During the Covid-19 period the Govt. and Courts was also having liberal view. And it is also reason that when the Honble Supreme Court had extend the time limits in various matters, then also no penalty should be imposed for non compliance of notices in those periods. 1.3 Due to all these reason the assessee could not make compliance of notice and the ld. AO nowhere provided any documentary proof that the notices were served on him physically. Therefore we had requested to the ld.CIT(A) that “the ld. AO may kindly be asked to produce the documentary evidences of service of all the notices upon the assessee physically”. Hence no penalty can be imposed. 1.4 Thus no penalty should be imposed on a poor innocent assessee, when there was no fault and guilty mind has been established. The default if any was the counsel who could not communicated properly about the notices to the assessee. Thus there was no melafide intention of the assessee nor counsel for not to comply the notices, when it is an admitted facts that the assessee is a regular IT assessee from last so many years and till regularly filling his ITR . Further when the assessee has come to no he himself engaged the counsel and making the compliance the notices and filling the return regularly.

3. The ld. CIT(A) has not considered and rebutted our these contention or plea rather in very summarily manner has rejected the same and only stated that the reason given by the appellant is vague and there is no reasonable cause. The ld. CIT(A) has failed to state how there was no reasonable cause when the assessee explained the same in detailed. The ld. CIT(A) has confirmed the penalty in a very causal manner, which is clearly appearing from the order of the ld. CIT(A). 4. "Section 272A FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICES, CONCEALMENT OF INCOME, ETC. (1) If the Assessing Officer or the Commissioner (Appeals) in the course of any proceedings under this Act, is satisfied that any person - (a) (Omitted) (b) Has failed 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; or (i) (Omitted) (ii) In the cases referred to in clause (b), in addition to any tax payable by him, a sum which shall not be less than one thousand rupees but which may extend to twenty-five thousand rupees for each such failure; Section 273B in The Income- Tax Act, 1995 "273B. Penalty not to be imposed in certain cases.- Notwithstanding anything contained in the provisions of clause (b) of sub-section (1) of section 271, section 271A, section 271AA, section 271B , section 271BA, section 271BB, section 271C, section 271CA, section 271D, section 271E, section 271F, section 271FA, section 271FB,section 271G, clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA or section 272B or sub-section (1) or sub-section (1A) of section 272BB or sub-section (1) of section 272BBB or clause (b) of sub- section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or Raj Kumar Asnani vs. ITO 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." From a perusal of the above provisions, we can understand that, notwithstanding anything contained in the provisions of clause (b) of Sub-section (1) of section 271, no penalty shall be imposed on the person or the assessee as the case may be, for any failure referred to in the said provision, if he proves that there was reasonable cause for the said failure. So it can be understood that penalty cannot be imposed, if the assessee is able to prove that there was reasonable cause for the said failure of not complying with the notice served on them under sub- section (1) of section 142 of the Act. The meaning of reasonable cause has been stated in the case of woodward Governor India Pvt Ltd Vs CIT and Ors (2002) 253 ITR 745 (Delhi).para 5 & 6, is reproduced below:- "What would constitute reasonable cause cannot be laid down with precision. It would depend upon factual background and the scope for extremely limited and unless the conclusions are perverse based on conjectures or surmises and/ or have been arrived at without consideration of relevant material and/or have been arrived at without consideration of no scope for interference. Reasonable cause, as applied to human action is that which would constrain a person of average intelligence and ordinary prudence. The expression "reasonable" is not susceptible of a clear and precise definition; for an attempt to give a specific meaning to the word not space. It can be described as rational according to the dictates of reason and is not excessive or immoderate. The word "reasonable" has in law the prima facie meaning of reasonable with regard to those circumstances of which the actor, called on to act reasonably, knows or ought o know (see In re, A Solicitor (1945) KB 368 (CA).Reasonable cause can be reasonably said to be a cause which prevents a man of average intelligence and ordinary produce, acting under normal circumstances, without negligence or inaction or want of bona fides. In the case of Azadi BachaoAndolan v. Union of India 252 ITR 471 (Delhi), Delhi, the Hon'ble High Court held that is (reproduced below):- "Section 273B starts with a non obstante clause and provides that notwithstanding anything contained in several provisions enumerated therein including section 271C, 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 A clause beginning with "notwithstanding anything" is sometimes appended to a section in the beginning with a view to give the enacting part of the section in case of conflict an overriding effect over the provision of Act mentioned in the non obstante clause (see Orient Paper and Industries Ltd v State of Orissa, AIR 1991 SC 672) A non obstante clause may be used as a legislative device, to modify the ambit of the provision of law mentioned in the non obstante clause, or to override it Raj Kumar Asnani vs. ITO in specified circumstances (see T R Thandur v Union of India, AIR 1996 SC 1643) The true effect of the non obstante clause is that in spite of the provision or Act mentioned in the non obstante clause, the enactment following it will have its full operation or that the provisions embraced in the non obstante clause will not be an impediment for the operation of the enactment (see SmtParayankandiyalEravathKanapravanKalliani Amma v K Devi, AIR 1996 SC 1963) Therefore, in order to bring in application of section 271C in the backdrop of section 273B, absence of reasonable cause, existence of which has to be established by the assessee, is the sine qua non Levy of penalty under section 271C is not automatic Before levying penalty, the concerned officer is required to find out that even if there was any failure referred to in the concerned provision the same was without a reasonable cause. The initial burden is on the assessee to show that there existed reasonable cause which wag the reason for the failure referred to in the concerned provision Thereafter the officer dealing with the matter has to consider whether the explanation offered by the assessee or the person, as the case may be, as regards the reason for failure, was on account of reasonable cause 'Reasonable cause" as applied to human action is that which would constrain a person of average intelligence and ordinary prudence It can be described as probable cause It means an honest belief founded upon reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinarily prudent and cautious man, placed in the position of the person concerned, to come to the conclusion that the same was the right thing to do The cause shown has to be considered and only if it is found to be frivolous, without substance or foundation, the prescribed consequences follow. The above being the position, the Commissioner's non-consideration of the plea raised by the assessee about the existence of reasonable cause vitiated the order On that score, we find the order passed by the Commissioner to be non- maintainable." From a perusal of the records it reveals that no notice u/s 142(1) was served, failure of the assessee to comply with such notices cannot be said to be a default which may justify the levy of penalty u/s 271(1)(b) of the Act. The ld. AO as well as ld. CIT(A) also nowhere stated that these notices has been served upon the assessee.

6.Therefore in view of the above submissions the penalty so initiated impose may kindly be deleted in full and oblige.”

Raj Kumar Asnani vs. ITO 9. Further we note that the Ld. AO has issued notice u/s 142(1) on 18.11.2021 and 14.02.2022 respectively, which was served upon the registered email address and the AR for the assessee submitted that assessee has not furnished the any reply for the above notices. Again the Ld. AO issued a show cause notice u/s 144 on 11.03.2022 by email on 12.03.2022 fixing the date of hearing on 14.03.2022, but the assessee could not file the reply. Finally the AO has passed the ex-parte assessment u/s. 144 rws 147 of Income tax Act, 1961and worked out the income of assessee as Rs. 8,76,640/-.

Raj Kumar Asnani vs. ITO From the submission by the Ld AR for the assessee we note that there was Covid- 19 period till March 2022 and the Hon’ble Supreme Court had extended the due date of many proceeding or filling the appeal and other matters. During the Covid- 19 period the Government and Courts was also having liberal view. The Hon’ble Supreme Court had extend the time limits in various matters, then also no penalty should be imposed for non compliance of notices in those periods and Appeal of Quantum is pending.

Order pronounced in the open court on 04/10/2024.

Sd/- Sd/- ¼jkBkSM+ deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 04/10/2024 *Santosh आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- Raj Kumar Asnani, Jaipur. 1. 2. izR;FkhZ@ The Respondent- ITO, Ward-2(2),Jaipur. 3. vk;dj vk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File By order,

सहायक पंजीकार@Aेेजज. त्महपेजतंत