ANSHU SHARMA ,JAIPUR vs. INCOME TAX OFFICER, WARD 1(3), JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 73/JP/2023 fu/kZkj.k o"kZ@Assessment Years : 2017-18 cuke Anshu Sharma Income Tax Officer Vs. 183 Raghukunj, Nemi Sagar Ward 1(3), Jaipur Vaishali Nagar, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: DZXPS 6002 P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Praveen Saraswat (CA) jktLo dh vksj ls@ Revenue by : Smt Monisha Chaudhary (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 21/03/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 11/04/2023 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM

This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi dated 13/01/2023 [here in after (NFAC)] for assessment year 2017-18 which in turn arise from the order dated 16.12.2019 passed under section 143(3) of the Income Tax Act, by the ITO, Ward 3 (5), Jaipur.

2 Anshu Sharma vs. ITO, Ward 1(3), Jaipur 2. Succinctly, the fact as culled out from the records is that e-return declaring income of Rs. 2,31,510/- was e-filed by the assessee on 28.07.2017. The case was selected for limited scrutiny by CASS. Notice u/s 143(2) was issued to the assessee on 29.09.2018 which was duly served upon the assessee on its registered e-mail id as well as by speed post. Notice u/s 129 & u/s 142(1) were issued by the undersigned on 22.08.2019 alongwith annexure of queries to file reply on or before 30.08.2019. But no reply was filed by the assessee on the said date of hearing. Thereafter, one more opportunity was granted to the assessee vide this office notice u/s 142(1) dated 01.10.2019 to file reply on 11.10.2019, but again no compliance was made by the assessee.

3. Again to provide natural justice, one more opportunity for reply was granted to the assessee by issuing final show cause notice u/s 142(1) of the I.T. Act, 1961 to the assessee on 01.11.2019 to file reply by 11.10.2019. In response, the assessee filed reply online on 04.11.2019 relevant to scrutiny reasons received from assessee on ITBA system.

4. Aggrieved from the order of the ld. AO levying penalty of Rs. 20,000/- u/s 272A(1) (d) of the Income Tax Act. The assessee has preferred an 3 Anshu Sharma vs. ITO, Ward 1(3), Jaipur appeal before ld. CIT(A). The relevant finding of the ld. CIT(A) recorded in para 6 of his order and the same is reproduced herein below. “6.0 ANALYSIS OF THE FACTS AND ADJUDICATION OF THE GROUNDS:

6.1 The assessee has raised six grounds of appeal, out of which Ground No. 6 is general in nature and, hence, do not call for adjudication. Ground Nos. 1 to 5 are raised against the AO's action in levying a penalty of Rs.20,000/- u/s, 272A(1)(d) of the Act. These grounds are taken up for discussion and adjudication in the subsequent paragraphs of this order.

6.2 Coming to the factual-matrix of the case, for the impugned AY 2017-18, the assessee filed the return of income electronically on 28.07.2017, declaring a total income of Rs.2,31,510/-. During the time of assessment proceedings, appellant failed to comply with the two initial notices issued u/s 142(1). Later, responded and submitted the information called for against the notices 142(1) and show cause notice issued to the appellant during the assessment proceedings COME TAX REPORTMEN 6.3 In view of the above, AO completed the assessment u/s. 143(3) of the Act dated 16.12.2019. Further, the AO initiated the penalty proceedings against the assessee u/s.272A(1)(d) of the Act dated 01.01.2019. above the Accordingly, the AO passed the impugned penalty order u/s. 272A(1)(d) of the Act dated 18.02.2022.

6.4 Coming to the merits of the penalty case, as seen from the documentary evidence placed on record, it is amply clear that, prior to imposition of the impugned penalty u/s. 272A(1)(d) of the Act, the AO issued a show cause notice to the assessee calling for her objections, if any. However, the assessee did respond only once as under-

"I am not a computer literate person and I do not have regular access to my e-mail account i.e. asbjgwels@email.com. Notice might have been mailed at the said address but the same were never received by me.” Now, during the appellate proceedings vide statement of facts/Grounds of appeal, she had stated that in one occasion the notice u/s 142(1) was not delivered to her mail. However, the same plea was not made before the AO to counter the same during the penalty proceedings. Further, the registered mail id was not changed during the assessment proceedings and the mail was delivered when the scrutiny initiation notice i.e., 143(2) was served on her & appellant responded as per her submissions in appellate proceedings to the notice u/s 143(2). Further, all other notices were also 4 Anshu Sharma vs. ITO, Ward 1(3), Jaipur served on her through the same mail id. The same mail id is being continued in the present appeal proceedings as per the Form No.35 filed by the appellant.

6.5 At this juncture, it may be noted that the assessee did not offer any acceptable reasons. The appellant is regular in filing of the returns of income. Therefore, she is expected to be knows the procedures of service of the notices and to comply with the same. Appellant is aware of the selection of her to the scrutiny when the notice u/s 143(2) is served on her. She had responded to that notice. As seen from the assessment order, it is evident that there is a sufficient gap between the date of issuance of notice u/s 143(2) and notices calling for information u/s 142(1). The notices u/s 143(2) & 142(1) are sent to e-filing portal and e-mail. The service of the notice in the e-filing portal or e-mails would have been alerted through SMS of the registered mobile also..

6.6 If the argument of the appellant is accepted that she is a house wife and not having the computer knowledge: filing of the returns also could also become late or not filed at all. But, the assessee is filing the returns regularly. This shows that the appellant's representative is taking care of the filing the returns and making the compliances to the scrutiny prior and after the selection of case for the scrutiny. Once the compliance is made to the notice issued u/s 143(2) as submitted in the written submissions, the same appellant cannot take a plea that she is not aware of the procedures in e-compliance with the Department.

6.7 Accordingly, after having analyzed the fact-situation, it is amply clear that:

(1) It is demonstrated that the assessee received the statutory notices u/s. 142(1) of the Act dated 22.08.2019 and 01.10.2019 issued by the AO through the mail id- asbjgwels@email.com. It is an admitted fact that even after the receipt of the statutory notice 142(1) of the Act, the assessee did not comply with the terms of the notices and, therefore, the assessee did not furnish the information and documentary evidence sought for by the AO.

(ii) In view of the non-compliance with the notice issued u/s. 142(1) of the Act, the AO was forced to provide the opportunities during the assessment proceedings inspite of not seeking the adjournment by the appellant. The same is considered as disrespect on part of the appellant to the statutory provisions inter alia notices issued & served to carryout legal procedure.

(iii) The reasons submitted by the appellant are not considered to be real for non- compliance to the notices issued u/s 142(1). No one stops the assessee to ask

5 Anshu Sharma vs. ITO, Ward 1(3), Jaipur for extension of time to comply with the notices in furnishing the information. Subsequent compliance to the notices or compliance with the subsequent notices calling for the same information would not be a concern while deciding the penalty imposable u/s 272A(1)(d). The taxpayer is expected to furnish the information as called for in the notice issued u/s 142(1) or seek the adjournment with filing the reasons for such adjournment on or before the due date specified in the notice issued u/s 142(1)

(v) Even during the course of appellate proceedings, the assessee has not adduced any evidence to demonstrate that there was reasonable cause for her failure to comply with the statutory notice issued u/s. 142(1) of the Act within the meaning of Sec.273B of the Act. There is also a complete non-compliance to the notices issued u/s 250 of the Act. Till now, the appellant had been served with 5 notices. Whereas, there is an occasional response for the appeal proceedings pending as on date on quantum appeal filed against the additions made u/s 143(3) at the same time no compliance for the appeal proceedings on hand. This shows that the appellant is not much concerned about the small penalty levied vis-à-vis demand raised in the order u/s 143(3).

6.8 In view of the above, I don't find fault with the AO in initiating the penalty proceedings as well as levying the penalty u/s. 272A(1)(d) of the Act, for the assessee's failure to respond to the notices and not offering any acceptable reasons for her failure to respond to the notices u/s 142(1) in two occasions. Therefore, it is amply clear that the assessee has not fulfilling the conditions envisaged u/s. 273B of the Act. Accordingly, I endorse the action of the AO in levying a penalty of Rs.20,000/- u/s. 272A(1)(d) of the Act.

6.9 The appellant has not brought out any facts relating to the circumstances which prevented her from compliance during the assessment proceedings. On verifying the facts from the records it appears that there is a gross negligence or deliberate inaction or lack of bonafide on part of the appellant. Thus, the grounds of appeal raised by the assessee on this issue are dismissed.”

5. As the assessee did not find any favour from the order of ld. CIT(A). The assessee has preferred this appeal before this Tribunal on the grounds reproduced herein below.

6 Anshu Sharma vs. ITO, Ward 1(3), Jaipur “1. Ld. CIT and AO ignored the reasonable cause, while levying penalty, that non- compliance of the notice u/s 142(1) was not deliberate or wilful on the part of the assessee and, being a house-hold lady, was not aware with the computer operations and could not come to know about the said the so called notice.

2. Ld. CIT and AO have ignored the reasonable cause that year 2019 was the first year of switching to digital mode of serving from physical service of notice, and the small assessees can not be expected to be aware with such innovations in the short period.

3. Ld. CIT and AO have not appreciated the fact that after coming to know about the notice on 01/11/2019 from her CA, there was no failure in compliance of future notices by assessee and all required information for the purpose of assessment were submitted on 04/11/2019 and 08/11/2019, well before the appointed date of 11/11/2019. The assessment order was completed on 16/12/2019 u/s 143(3)

5. That the appellant craves leave to reserve to itself the right to add, alter, amend, substitute, withdraw and/or any ground(s) of appeal at jor before the time of hearing.”

6. To support various contentions raised by the ld. AR, he has relied upon the relevant written submission and the same is reproduced herein below. “The penalty amounting Rs. 20000/- u/s 272A(1)(d) has been levied by the Assessing Officer for non-compliance to the notices issued u/s 142(1) of the Act and the same was upheld by Ld. CIT(A). Appellant makes following submissions in support of Grounds:

7 Anshu Sharma vs. ITO, Ward 1(3), Jaipur issuing compliance Compliance issued u/s No. of reply at the notice by assessee Income Tax portal 29/08/2018 04/09/2018 03/09/2018 143(2) 03091810300987 22/08/2019 30/08/2019 Could not be 142(1) compiled due to non-receipt 01/10/2019 11/10/2019 04/11/2019 142(1) 04111911979261 08/11/2019 08111912038377 01/11/2019 11/11/2019 02/11/2019 142(1) 02111911964381 08/11/2019 08111912038922

The facts narrated above would show that the assessee has not wilfully ignored the notices issued by the Assessing Officer. The non-compliance of the notices issued under section 142(1) of the Act was for the bonafide reasons explained above.

6. Ld. AO had erred in levying the penalty also. Appellant takes the liberty to reproduce the provisions of said Section:

272A. (1) If any person,— (d) fails to comply with a notice under sub-section (1) of section 142 or sub-sect ion (2) of section 143 or fails to comply with a direction issued under sub-sectio n (2A) of section 142,he shall pay, by way of penalty, a sum of ten thousand rup ees for each such default or failure.

AO had levied the penalty @ Rs. 10000/- for each failure to respond to two (2) notices i.e. dated 22/08/2019 and 01/10/2019 . Appellant submits that `failure’ took place only for the one notice dated 22/08/2019. In case of notice dated 01/10/2019, though the compliance was delayed i.e. on 04/11/2019 and 08/11/2019 but there was no failure to comply. Copies of acknowledgement attached as Page No. 5 and 6 shows the date of notices 9 Anshu Sharma vs. ITO, Ward 1(3), Jaipur 7. Appellant places reliance on the judgement of Hon’ble co-ordinate Mumbai bench in the case of ITA NO.1870/MUM/2020 (A.Y.2017-18) Triumph International Finance India Limited, order pronounced on 10/03/2022. Copy of the order is being attached with this submission (at page No. 7 to 10) , before your honours. Hence, the appeal of the assessee deserves to be allowed.”

10 Anshu Sharma vs. ITO, Ward 1(3), Jaipur 8. Per contra, the ld. DR relied upon the order of the lower authorities and submitted that the assessee is already in filing ITR on e-filing system and therefore, considering the fact of the case no systematical view can be taken in the matter.

5. The first appellate authority has rejected the explanation furnished by the assessee for non-compliance of the notice issued under section 142(1) of the Act merely for the reason that during penalty proceedings under section 272A(1)(d) of the Act, the assessee has not stated the reasonable cause. We are not in agreement with the findings of CIT(A). The assessee has explained that about ongoing assessment proceedings the assessee came to know only on receipt of order u/s 272A(1)(d) of the Act and demand notice. The explanation furnished by the assessee before the CIT(A) and before the Tribunal is consistent. We are satisfied that nonappearance of the assessee in response to the initial notice under section 142(1) of the Act was not deliberate. The year 2019 being the initial year of shift towards digital and electronic mode, the mistake appears to be bonafide. The assessee has been able to show reasonable cause for the failure to comply with statutory notice u/s. 142(1) of the Act. Thus, in our view penalty levied u/s. 272A(1)(d) of the Act is unsustainable. The Assessing Officer is directed to delete the penalty.

12 Anshu Sharma vs. ITO, Ward 1(3), Jaipur Bench in the case as relied upon. We delete the levy of penalty of Rs. 20,000/-. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 11/04/2023.