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Facts
The assessee's appeals arise from separate orders confirming the levy of penalty under Section 270A and 272A(1)(d) of the Income Tax Act, 1961. The penalty under Section 270A was for alleged underreporting of income derived from a Mother Dairy milk booth. The penalty under Section 272A(1)(d) was for non-compliance with notices issued under Section 142(1).
Held
The Tribunal held that the penalty under Section 270A was not sustainable because the Assessing Officer was unclear about whether the case involved underreporting or misreporting, and also because the income was estimated without rejecting the assessee's books of accounts. The penalty under Section 272A(1)(d) was deleted as there was a reasonable cause for non-compliance with the notices, which were addressed to an outdated military address.
Key Issues
Whether the penalty levied under Section 270A for underreporting of income is sustainable when the AO was uncertain about the nature of the default and estimated income without rejecting books. Whether the penalty levied under Section 272A(1)(d) for non-compliance with notices is justified when there was a reasonable cause for non-receipt of notices.
Sections Cited
270A, 272A(1)(d), 142(1), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH, AGRA
Before: SMT. ANNAPURNA GUPTA & SHRI SUNIL KUMAR SINGH
Per Annapurna Gupta, Accountant Member:
1. Both the appeals pertain to the same assessee and arise against separate orders of the Ld. Commissioner of Income Tax (Appeals), (hereinafter referred to as “CIT(A)”), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi dated 28.03.2023 & 24.03.2023 confirming the levy of penalty under Section 270A of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and 272A(1)(d) of the Act on the assessee.
Since, both the appeals relate to the same assessee, therefore, both the appeals were taken up together for hearing and are being disposed off by this common consolidated order.
We shall first deal with assessee’s appeal in pertaining to levy of penalty u/s.270A of the Act.
ITA No.95/Agr/2023 A.Y 17-18
The grounds raised by the assessee read as under:
“1. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi bas erred in law and on facts in sustaining the Penalty of Rs.19.381/- arbitrarily imposed by the A.Q. u/s 270A of the Income Tax Act, 1961 for under reporting of income, therefore the said Penalty is unsustainable and liable to be deleted.
2. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining the Penalty of Rs. 19,381/- arbitrarily imposed by the A.O. u/s 270A of the Income Tax Act, 1961, without correctly considering and appreciating the facts on records, therefore the same is liable to be deleted.
3. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining the Penalty Order passed under section 270A of the Income Tax Act, 1961 by the A.O. is insupportable in law and on facts and is also contrary to the principles of natural justice and equity.
4. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining the Penalty of Rs. 19,381/- u/s 270A of the Income Tax Act, 1961 is much too high and excessive and deserves to be deleted.
5. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining the Penalty Order which is without Jurisdiction, void ab-initio and liable to be quashed. 2 | P a g e
6. That the impugned Assessment order is un sustainable in law therefore the Penalty imposed under section 270A of the Income Tax Act, 1961 by the A.O. is also unsustainable in law and liable to be deleted.
7. That any other relief or reliefs as your honour may deem fit in the facts and circumstances of the case be granted.
8. Your humble appellant craves leave to add, amend or withdraw of any Grounds of Appeal on/or before hearing of appeal.”
5. Perusal of the orders of the authorities below reveal that penalty was levied on the assessee by the Assessing Officer(AO) u/s.270A of the Act for having under reported his income in consequence to misreporting. The income which was so found to be under reported in consequence to misreporting,was his income derived from the business of selling of milk and other products of Mother Dairy from a booth relating to Mother Dairy run by him. The income from this activity was estimated by the AO by applying a net profit rate of 1.30% to the turnover of the assessee resulting in an estimation of profit from the business amounting to Rs.1,88,184/-.
The order passed by the AO levying penalty u/s.270A of the Act read alongwith assessment order passed in the case of the assessee reveals that the AO, noting that the assessee had filed return of income declaring income from the Mother Dairy milk booth activity belatedly beyond the time prescribed in law, held the return so filed to be not a valid return.Thereafter, the AO gathered information pertaining to turnover of the assessee from the impugned activity from Mother Dairy itself and applied an estimated net profit rate of 1.30% to the same, determining and assessing the profits 3 | P a g e earned from the same to be Rs.1,88,184/-.Further penalty proceedings u/s 270A of the Act were initiated. In the proceedings for levy of penalty no compliance was made by the assessee to the various notices issued by the AO. Therefore the AO, on the basis of material on record before him,held that it is a fit case for levy of penalty u/s 270A of the Actfor underreporting since the income assessed was greater than the basic exempt income and there was conscious underreporting/ misreporting of income.Accordingly,he levied penalty on the assessee in terms of Section 270A of the Act @ 50% of the tax payable on the underreported income, amounting to Rs.19,381/-, which was confirmed by the Ld. CIT(A).
6. Having heard both the parties, we are not in agreement with the Ld.CIT(A) that this is a fit case for levy of penalty u/s.270A of the Act.Reason being that:
i. The AO while levying penalty was not sure whether it was a case of under reporting of income inviting penalty @30% in terms of the provisions of Section 270A(7) of the Act or it was a case of misreporting of income as a consequence of under reporting inviting penalty @ 200% of tax sought to be evaded in terms of the provisions of Section 270A(8) of the Act.
A perusal of the provisions of section 270A of the Act reveals that it
identifies two different set of defaults for attracting penalty, both inviting different quantum of penalty. The section recognizes underreporting of income as one default and underreporting as a consequence of misreporting,as the other default, with the first default attracting penalty at the rate of 30% of the tax payable on the underreported income and the other default attracting penalty at the rate of 200% of the tax payable on such income.While subsection (1) to (7) of section 270A deal with underreporting of income, sub section (8) & (9) deal with underreporting as a consequence of misreporting.This is evident from a bare perusal of the provisions of section 270A of the Act, reproduced hereunder:
“270A. (1) The Assessing Officer or 95[the Joint Commissioner (Appeals) or] the Commissioner (Appeals) or the Principal Commissioner or Commissioner may, during the course of any proceedings under this Act, direct that any person who has under-reported his income shall be liable to pay a penalty in addition to tax, if any, on the under-reported income. (2) A person shall be considered to have under-reported his income, if— (a) the income assessed is greater than the income determined in the return processed under clause (a) of sub-section (1) of section 143; (b) the income assessed is greater than the maximum amount not chargeable to tax, where no return of income has been furnished or where return has been furnished for the first time under section 148; (c) the income reassessed is greater than the income assessed or reassessed immediately before such reassessment; (d) the amount of deemed total income assessed or reassessed as per the provisions of section 115JB or section 115JC, as the case may be, is greater than the deemed total income determined in the return processed under clause (a) of sub-section (1) of section 143; (e) the amount of deemed total income assessed as per the provisions of section 115JB or section 115JC is greater than the maximum amount not chargeable to tax,
5 | P a g e where no return of income has been furnished or where return has been furnished for the first time under section 148; (f) the amount of deemed total income reassessed as per the provisions of section 115JB or section 115JC, as the case may be, is greater than the deemed total income assessed or reassessed immediately before such reassessment; (g) the income assessed or reassessed has the effect of reducing the loss or converting such loss into income. (3) The amount of under-reported income shall be,— (i) in a case where income has been assessed for the first time,— (a) if return has been furnished, the difference between the amount of income assessed and the amount of income determined under clause (a) of sub-section (1) of section 143; (b) in a case where no return of income has been furnished or where return has been furnished for the first time under section 148,— (A) the amount of income assessed, in the case of a company, firm or local authority; and (B) the difference between the amount of income assessed and the maximum amount not chargeable to tax, in a case not covered in item (A); (ii) in any other case, the difference between the amount of income reassessed or recomputed and the amount of income assessed, reassessed or recomputed in a preceding order: Provided that where under-reported income arises out of determination of deemed total income in accordance with the provisions of section 115JB or section 115JC, the amount of total under-reported income shall be determined in accordance with the following formula— (A — B) + (C — D) where, A = the total income assessed as per the provisions other than the provisions contained in section 115JB or section 115JC (herein called general provisions); B = the total income that would have been chargeable had the total income assessed as per the general provisions been reduced by the amount of under-reported income; C = the total income assessed as per the provisions contained in section 115JB or section 115JC; D = the total income that would have been chargeable had the total income assessed as per the provisions contained in section 115JB or section 115JC been reduced by the amount of under-reported income: Provided further that where the amount of under-reported income on any issue is considered both under the provisions contained in section 115JB or section 115JC and under general provisions, such amount shall not be reduced from total income assessed while determining the amount under item D. Explanation.—For the purposes of this section,— (a) "preceding order" means an order immediately preceding the order during the course of which the penalty under sub-section (1) has been initiated;
(b) in a case where an assessment or reassessment has the effect of reducing the loss declared in the return or converting that loss into income, the amount of under- reported income shall be the difference between the loss claimed and the income or loss, as the case may be, assessed or reassessed. (4) Subject to the provisions of sub-section (6), where the source of any receipt, deposit or investment in any assessment year is claimed to be an amount added to income or deducted while computing loss, as the case may be, in the assessment of such person in any year prior to the assessment year in which such receipt, deposit or investment appears (hereinafter referred to as "preceding year") and no penalty was levied for such preceding year, then, the under-reported income shall include such amount as is sufficient to cover such receipt, deposit or investment. (5) The amount referred to in sub-section (4) shall be deemed to be amount of income under- reported for the preceding year in the following order— (a) the preceding year immediately before the year in which the receipt, deposit or investment appears, being the first preceding year; and (b) where the amount added or deducted in the first preceding year is not sufficient to cover the receipt, deposit or investment, the year immediately preceding the first preceding year and so on. (6) The under-reported income, for the purposes of this section, shall not include the following, namely:— (a) the amount of income in respect of which the assessee offers an explanation and the Assessing Officer or 96[the Joint Commissioner (Appeals) or] the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, is satisfied that the explanation is bona fide and the assessee has disclosed all the material facts to substantiate the explanation offered; (b) the amount of under-reported income determined on the basis of an estimate, if the accounts are correct and complete to the satisfaction of the Assessing Officer or 96[the Joint Commissioner (Appeals) or] the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, but the method employed is such that the income cannot properly be deduced therefrom; (c) the amount of under-reported income determined on the basis of an estimate, if the assessee has, on his own, estimated a lower amount of addition or disallowance on the same issue, has included such amount in the computation of his income and has disclosed all the facts material to the addition or disallowance; (d) the amount of under-reported income represented by any addition made in conformity with the arm's length price determined by the Transfer Pricing Officer, where the assessee had maintained information and documents as prescribed under section 92D, declared the international transaction under Chapter X, and, disclosed all the material facts relating to the transaction; and (e) the amount of undisclosed income referred to in section 271AAB. (7) The penalty referred to in sub-section (1) shall be a sum equal to fifty per cent of the amount of tax payable on under-reported income. (8) Notwithstanding anything contained in sub-section (6) or sub-section (7), where under- reported income is in consequence of any misreporting thereof by any person, the penalty
7 | P a g e referred to in sub-section (1) shall be equal to two hundred per cent of the amount of tax payable on under-reported income. (9) The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:— (a) misrepresentation or suppression of facts; (b) failure to record investments in the books of account; (c) claim of expenditure not substantiated by any evidence; (d) recording of any false entry in the books of account; (e) failure to record any receipt in books of account having a bearing on total income; and (f) failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply. (10) The tax payable in respect of the under-reported income shall be— (a) where no return of income has been furnished or where return has been furnished for the first time under section 148 and the income has been assessed for the first time, the amount of tax calculated on the under-reported income as increased by the maximum amount not chargeable to tax as if it were the total income; (b) where the total income determined under clause (a) of sub-section (1) of section 143 or assessed, reassessed or recomputed in a preceding order is a loss, the amount of tax calculated on the under-reported income as if it were the total income; (c) in any other case, determined in accordance with the formula— (X-Y) where, X = the amount of tax calculated on the under-reported income as increased by the total income determined under clause (a) of sub-section (1) of section 143 or total income assessed, reassessed or recomputed in a preceding order as if it were the total income; and Y = the amount of tax calculated on the total income determined under clause (a) of sub-section (1) of section 143 or total income assessed, reassessed or recomputed in a preceding order. (11) No addition or disallowance of an amount shall form the basis for imposition of penalty, if such addition or disallowance has formed the basis of imposition of penalty in the case of the person for the same or any other assessment year. (12) The penalty referred to in sub-section (1) shall be imposed, by an order in writing, by the Assessing Officer, 97[the Joint Commissioner (Appeals) or] the Commissioner (Appeals), the Commissioner or the Principal Commissioner, as the case may be.”
The provisions of law, as noted above, identifying two separate set of defaults, it was incumbent on the AO to identify the specific default
committed by the assessee, the present being penal proceedings. 8 | P a g e
However as noted above the AO himself was not sure of the default
committed by the assessee.
This is evident from the order of the AO levying penalty
u/s.270A of the Act, wherein at para 9, he records and holds that the assessee had under reported income which is in consequence of misreporting, (.whichas notedabove, attracts penalty @ 200% of the tax sought to be evaded), but in the very next line the AO holds that the assessee is liable to penalty @50% of the tax payable on under reported income in terms of the provisions of Section 270A(8) of the Act. It is to be noted that as per the provision of Section 270A(8) of the Act, penalty is levied for misreporting as a consequence of under reporting @200% of the tax payable on the under reported income. Thus the AO apparently is using the terms “underreporting” and“misreporting as a consequence of underreporting” loosely, seemingly and blissfully unaware of the different connotations and implications of the two terms, that too while penalizing the assessee for a default.
It is clearly evident therefore, that the AO himself is not clear
whether it is a case of under reporting of income or a case of mis-
9 | P a g e reporting as a consequence of under reporting. For this reason alone, the penalty levied in the present case, we hold is not sustainable.
Even otherwise, taking into consideration the fact that the AO
has levied penalty @30% of the under reported income and considering that the AO has levied penalty for the default of under reporting of income, we find that the assessee’s case is saved from the levy of penalty by virtue of Sub-section (6) of Section 270A of the Act which states that under reported income shall not include the amount of under reported income determined on the basis of an estimate, if the accounts are correct and complete to the satisfaction of the Assessing Officer, but the method employed is such that the income cannot be properly be deduced therefrom. The Provisions of Section 270A(6) Clause (b) is reproduced hereunder:
“(6) The under-reported income, for the purposes of this section, shall not include the following, namely:— (a) …………. (b) the amount of under-reported income determined on the basis of an estimate, if the accounts are correct and complete to the satisfaction of the Assessing Officer or 96[the Joint Commissioner (Appeals) or] the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, but the method employed is such that the income cannot properly be deduced therefrom;”
We have noted that in the facts of the present case, the assessee had submitted his complete financial statement to the AO relating to the business of dealing in milk and milk products of Mother Dairy through a 10 | P a g e booth run by him. These facts stand recorded in the assessment order at Page No.2. Thus, the assessee was in possession of complete books of accounts, from which these financial figures had been derived.But it is revealed from the assessment order that without finding any infirmity in the books of accounts or for that the matter rejecting the books of accounts, the AO has estimated the income of the assessee by applying a net profit rate of 1.30% to the total turnover of the assessee. Therefore, the estimation of income by the AO in the present case which has invited the levy of penalty u/s.270A(3) of the Act allegedly for under reporting of income,we find issaved by exception provided in Sub-section (6) of Clause (b) of the section 270A , since, the estimation is not accompanied by rejection of the books of accounts of the assessee and the AO is apparently satisfied with the Books of accounts of the assessee.
For the above reason, therefore, we hold,the addition made in the hands of the assessee by estimating profits earned from his business, could not have invited penalty for under reporting of income as per section 270A(1) r.w.s subsection (7) .
As for the levy of penalty for misreporting as a consequence of under reporting of income, we find that Section 270A(9) of the Act specifically identifies the circumstances of misreporting as a consequence of underreportingin Clause (a) to(f)as under:
“(9) The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:— (a) misrepresentation or suppression of facts; (b) failure to record investments in the books of account; (c) claim of expenditure not substantiated by any evidence; (d) recording of any false entry in the books of account; 11 | P a g e
(e) failure to record any receipt in books of account having a bearing on total income; and (f) failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply.”
The AO in his order levying penalty doesnot point out which specific case is fulfilled in the assessee’s case. Therefore, we hold that it was not even a case fit for levy of penalty for misreporting as a consequence of under reporting also.
In the light of the above discussion, we hold that the penalty levied in the present case is not sustainable in law and direct deletion of the same.
In the result, the appeal filed by the assessee is allowed.
The grounds raised by the assessee read as under:
That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining the Penalty of Rs.10,000/- arbitrarily imposed by the A.O. u/s 2702A(1)(d) of the Income Tax Act, 1961 for non compliance of notice issued u/s 142(1) of the Income Tax Act, 1961, therefore the said Penalty is unsustainable and liable to be deleted.
2. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining the Penalty of Rs. 10,000/- arbitrarily imposed by the A.O. u/s 272A(1)(d) of the Income Tax Act, 1961, without correctly considering and appreciating the facts on records, therefore the same is liable to be deleted.
3. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining the Penalty Order passed under section 272A(1)(d) of the Income Tax Act, 1961 by the A.O. is insupportable in law and on facts and is also contrary to the principles of natural justice and equity. 4. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining the Penalty of Rs. 10,000/- u/s 272A(1)(d) of the Income Tax Act, 1961 is much too high and excessive and deserves to be deleted.
That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining the Penalty Order which is without Jurisdiction, void ab-initio and liable to be quashed.
That the impugned Assessment order is un sustainable in law therefore the Penalty imposed under section 272A(1)(d) of the Income Tax Act, 1961 by the A.O. is also unsustainable in law and liable to be deleted.
7. That any other relief or reliefs as your honour may deem fit in the facts and circumstances of the case be granted. 8. Your humble appellant craves leave to add, amend or withdraw of any Grounds of Appeal on/or before hearing of appeal.”
21. The grievance of the assessee before us is against the levy of penalty u/s.272A(1)(d) of the Act amounting to Rs.10,000/- for non-compliance of notice issued u/s.142(1) of the Act.
22. Before us, Ld. Counsel for the assessee has stated that there was a reasonable cause with the assessee for not complying with the notice and in this regard he referred to his written submissions filed before us as under:
“The assessee is a retired Armed Forces Personnel its known fact that till its postal address an individual is in active serve of armed forces the unit locations are confidential, therefore the letters addressed to individual serving in again unit first reach in Armed Post Office (APO) and from there same are dispatched to Unit location. Mr. Tasavver Hussain retired on 14.09.2011 (Copy of Certificate is enclosed at P.B. No.1-3). During the year under consideration the assessee was running a Mother Dairy Milk Booth No. 751 at Pocket ET-F, NandNagri, Delhi-110093, which was allotted to him under Defence Quota, therefore, notice under section 142(1) of the Income Tax Act, 1961 dated 17.01.2018(P.B. No.4) and notice under section 142(1) of the Income Tax Act, 1961 dated 09.09.2019 (P.B. No.5-6) are addressed at 15 Rajput C/o 56 APO 100000. These notices never reached the assessee. After retirement the assessee's address was 1/105 Talaiya Lane Fatehgarh, Farrukhabad, which was duly reflected in the return of income e-filed vide e-filing Acknowledgement No. 172358431240919(P.B. No.7-54) Notice under section 142(1) of the Income Tax Act, 1961 dated 17.01.2018 required the assessee to file Return of income till 16.02.2018. Moreover, since the assessee was retired defence personnel, he was not aware of the procedural aspect of the Income Tax Proceedings, even Hon'ble Punjab and Haryana High Court in the case of Munjal BCU Centre of Innovation and Entrepreneurship, Ludhiana Vs. Commissioner of Income Tax Exemptions, Chandigarh in CWP-2102802923 (O&M) has held that assessee is not expected to keep the e-Portal of the department open all the time so as 13 | P a g e to have knowledge of what the department is supposed to be doing. The Hon'ble Punjab & Haryana High Court considered the provisions of section 282(1) of the Income Tax Act, 1961 and Rule 127(1) of the Income Tax Rules, 1962 and held that simply by placing the communication on the e-portal does not amount to giving of opportunity of being heard. Copy of the said Judgment is enclosed at P.B. No.55-61 As soon as the assessee came to know about the assessment proceedings the assessee has duly complied with the notice issued under section 142(1) of the Income Tax Act, 1961 dated 17.01.2018 and filed return of income along with Audit Report which has duly been acknowledged by the Ld. A.O. in the Assessment Order passed under section 143(3) of the Income Tax Act, 1961(P.B. No.62-65). On Page 2 of the impugned Assessment Order, which is reproduced as under: - (Quote) A show cause notice dated 23.08.2019 was issued u/s 144 of the LT. Act, 1961 and served upon the assessee at 15 Rajput, C/o 56 APO, 100000, Farrukhabad through speed post no. EU053799715IN as well as e-filing portal of the assessee, whereby the date of compliance was fixed on 05.09.2019. In compliance to the above mentioned notice dated 23.08.2019, the assessee filed an online request on 27.08.2019 through his e-filing portal to adjourn the case. Vide this office notice dated 09.09.2019 issued w/s 142(1), the next date for compliance was fixed on 16.09.2019. On 24.09.2019, through his e-filing portal the assessee filed his reply and submitted that "Assessee is retired from Indian armed force and running a milk booth of Mother dairy in Delhi. Assessee was not aware of Income Tax compliance. Assessee is presently living in Delhi and notice was served on the address of his job location. When assessee came to know about the income tax letter he immediately start to collect the required information to furnish, It is hereby submitted that cash deposited in assessee account was on account of cash received on behalf of mother dairy which was swiped to mother dairy on the same day A correct profit and loss account is attached hereby for your consideration along with computation of income. Tax has been duly calculated and deposited." The assessee also furnished copy of balance sheet, profit & loss account and computation of income for A.Y. 2017-18. Further, notice dated 23.10.2019 was issued w/s 142(1) requiring him to furnish certain information/documents and in response to the notice, the assessee filed his replies. On enquiry with departmental e-filing portal, it has been observed that the assessee e-filed his Income Tax Return for A.Y. 2017-18 on 24.09.2019 showing total income of Rs. 4,47,350/-. Since the assessee has filed Income Tax Return for A.Y. 2017-18 after the due date, hence the same has been treated as invalid return, however the information furnished by the assessee has been considered except the income from business, for computation of income for A.Y. 2017-18....." (Unquote) It is significant to point out that the Ld. A.O. has not closed the Window for e-filing Return of Income for the Assessment Year 2017-18 thereby extended the period in 14 | P a g e which the assessee could e-file the return of income, the return of income was duly acknowledged vide e-filing Acknowledgement No. 172358431240919, copy enclosed at P.B. No.7 therefore the rejection of return of income by the A.O. is unsustainable in law. The above facts clearly show that the default in not complying with the notice under section 142(1) of the Income Tax Act, 1961 dated 17.01.2018 was neither intentional nor deliberate. The assessee was prevented from reasonable and sufficient cause as the notice under section 142(1) of the Income Tax Act, 1961 dated 17.01.2018 addressed at Unit Location at 56 APO never reached to the assessee since he was already retired. The assessee participated inassessment proceedings and filed replies. The assessere acted bonafidely by complying to notice under section 142(1) of the Income Tax Act, 1961 dined 17.01.2018 albeit after the due date prescribed in notice under section 142(1) of the Income Tax Act, 1961 dated 17.01.2018.”
We have gone through the submissions demonstrating reasonable cause for not complying with the notice on account of which penalty of Rs.10,000/- was levied u/s.272A(1)(d) of the Act and are convinced that the assessee had reasons for not complying with the notices and the fault could not be placed at the door of the assessee. He has pointed out that the notice which went uncomplied was addressed to his Armed Forces address, being an ex serviceman. But since he had since retired from the Armed Forces and was running his Mother Dairy booth in Delhi while he was residing in Farrukhabad, e-filing the return of income mentioning the address at Farrukhabad, therefore, the notice never reached him and went unattended. He has also pointed out that thereafter when he became aware of the ongoing assessment proceedings, he complied with all other notices.
The above facts have not been controverted by the Revenue. It is, therefore, clear that the default in not complying with the notices was neither intentional nor deliberate and there was reasonable and sufficient cause for non-compliance with the same and noting the fact the he, thereafter, participated in the assessment proceedings and filed reply, we completely agree with the Ld. Counsel for the assessee that there is no 15 | P a g e case for levy of penalty u/s.272A(1)(d) of the Act. Penalty so levied of Rs.10,000/- is, therefore, directed to be deleted.
In the result, appeal filed by the assessee is allowed.
In the combined result, both appeals of the assessees are allowed.
Order pronounced in the open court on 19.05.2025.