BHRIGU NATH PANDEY,,VARANASI vs. DC/ACIT, R - 02,, VARANASI

PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER:

raised by assessee in memo of appeal filed with Income Tax Appellate Tribunal, Varanasi (hereinafter called “the tribunal”), reads as under: “1. Because it was fully explained that the assessee had been a professor in Law in BHU and he was always been invited by other universities for examination purposes and during the date of hearing in the month of December he was on tour for exam purposes.

2. Because it was fully explained that the Assessing Officer has completed the assessment proceedings in October and told that there is now no occasion for his appearance. That due to change in incumbent of the office another notice was sent to the assessee and meanwhile he was out of station busy in examination purposes and could not appear.

3. Because the Ld. Assessing Officer has erred and acted illegally in levying the penalty to the tune of Rs. 60,000/- and Ld. CIT(A) has erred and acted illegally in confirming the same.

4. Because the penalty order is bad both on facts and law and not maintainable.” The brief facts of the case are that the assessee filed e-return of income 3. on 19th July, 2017 declaring total income of Rs. 25,60,940/-. The case of the assessee was selected by Revenue for framing limited scrutiny assessment through CASS with reasons of ‘cash deposits during the year and cash withdrawals’ , and statuary notice were issued by AO to the assessee under Section 143(2) , dated 13th August, 2018 fixing hearing for 30th August, 2018 which is claimed by AO to have been duly served to the assessee through registered e-mail of the assessee . There was no response by the assessee to the afore-said notice. Subsequently, notices under section 142(1) of the 1961 Act were issued on 14th January, 2019, 31st July, 2019 and 4th September Assessment Year: 2017-18 Shri Bhrigu Nath Pandey v. DCIT/ACIT, Range-2, Varanasi, U.P. 2019 for compliance on 21st January, 2019, 15th(16th) August,2019 , and 6th September, 2019 respectively, which were also claimed by AO to have been duly served upon the assessee through registered e-mail of the assessee . In response to the aforesaid statuary notices , the assesse did not comply on e- proceedings of ITBA Portal. However, as per AO, the assessee had physically filed written reply with copy of bank account statement and letter to bank only on 6th September, 2019. There was a change of incumbent AO , and notices under section 142(1) of the 1961 Act were issued to assessee by AO to the assessee, on 15th October, 2019, 15th November, 2019 and 23rd November, 2019 for compliance on 21st October, 2019, 21st November, 2019 and 28th November, 2019 respectively, which were also claimed by AO to have been duly served upon the assessee through registered e-mail of the assessee. The assessee , however, did not also comply with the aforesaid statuary notices. Therefore, a show cause notice dated 09.12.2019 for compliance on 11th December, 2019 was issued by AO which was also claimed by AO to have been duly served upon the assessee through registered e-mail of the assessee. The afore-said show cause notice is reproduced by AO in the assessment order dated 17th Dec., 2019 passed by AO under Section 144 of the 1961 Act, at Page No. 2-18. But, the assessee did not comply with the aforesaid show cause notice dated 9th December, 2019 which was claimed by AO to have been duly served on the assessee through registered e-mail of the assessee. Since, there was no compliance on the part of the assessee and the matter was getting time barred, the AO framed best judgment assessment against the assessee u/s 144 of the 1961 Act , wherein income assessed was Rs. 85,60,940/- against returned income of Rs.25,60,940/- . The AO made addition to the income of the assessee to the tune of Rs. 60,00,000/- under the Assessment Year: 2017-18 Shri Bhrigu Nath Pandey v. DCIT/ACIT, Range-2, Varanasi, U.P. provisions of Section 69A being unexplained money , as the AO had notices that the cash was deposited in the assessee’s bank account No. 10654944611 with State Bank of India during the Demonetization period i.e. between 9th November, 2016 to 30th December, 2016, which as per AO the assessee failed to explain the sources of said cash deposit. The AO also invoked penalty provisions under Section 272A(1)(d) of the 1961 Act against the assessee for failure to comply with notices issued under Section 142(1) as outlined in the assessment order dated 17.12.2019 , in para 1 & 2 of the assessment order .

4. The penalty proceedings u/s 272A(1)(d) of the 1961 Act were accordingly initiated by the AO against the assessee for failure to comply with notices issued u/s 143(2), dated 13.08.2018 and for failure to comply with notices dated 14.01.2019, 31.07.2019, 15.10.2019, 15.11.2019 and 23.11.2019 all issued by AO u/s 142(1) of the 1961 Act. The AO issued show cause notice dated 17.12.2019 u/s 274 read with Section 272A(1)(d) of the 1961 Act to the assessee asking assessee as to why penalty u/s 272A(1)(d) of the 1961 Act be not imposed on the assessee . The said show cause notice was claimed by AO to have been duly served on the assessee. The assessee did not reply to aforesaid show cause notice. The AO also issued one more show cause penalty notice to the assessee under Section 272A(1)(d) of the 1961 Act , dated 21.05.2021 as the final opportunity. The assessee responded to the said notice by submitting a reply on 24.05.2021 through ITBA portal. The assessee in its reply submitted before the AO to keep penalty proceedings in abeyance as the first appeal against quantum assessment was pending before ld. CIT(A). The assessee also explained before the AO that the assessee attended all proceedings before the AO, and when there was a change of incumbent just before the case was getting time barred, the assesseee was at that time at 4 Assessment Year: 2017-18 Shri Bhrigu Nath Pandey v. DCIT/ACIT, Range-2, Varanasi, U.P. Kolkatta as a Dean of School of Law of Justice, Adamas University, Kolkatta, and therefore could not attend the proceedings nor could submit adjournment application, and the assessment was framed ex-parte by AO inspite of all the documents submitted in the proceedings conducted by the AO before change of incumbent. The assessee prayed before the AO to keep penalty proceedings u/s 272A(1)(d) of the 1961 Act in abeyance till the disposal of appeal or the proceedings may be dropped. The AO rejected the contention of the assessee and observed that proper and adequate opportunity of heard was given by Revenue to the assessee to provide details and information regarding cash deposited during demonetization period ,but it is the assessee who failed to provide requisite details and ignored the plea’s of the revenue to furnish the information/details in required format. The AO observed that the details submitted by assessee during assessment proceedings were not sufficient. The AO also observed that contentions of the assessee that it attended every proceedings during assessment proceedings is not correct. The AO also observed that had the assessee had made online compliances , the assessment would have been framed u/s 143(3) and not u/s 144 of the 1961 Act. The AO during penalty proceedings also rejected the contentions of the assessee of being busy with professional engagements at Kolkatta during relevant time and he could not attend the hearings, as in view of AO the details were required to be filed only online through ITBA portal and no physical representation/appearance was required. The AO also rejected the contention of the assessee to keep penalty proceedings u/s 272A(1)(d) in abeyance, in view of the first appeal filed against quantum assessment been pending before ld. CIT(A), as in view of the AO there is no mention of the penalty proceedings initiated u/s 272A(1)(d) of the 1961 Act in the grounds Assessment Year: 2017-18 Shri Bhrigu Nath Pandey v. DCIT/ACIT, Range-2, Varanasi, U.P. of appeal filed by the assessee before ld. CIT(A) challenging quantum appeal. The AO was of the view that even if the assessee gets relief in appeal against quantum assessment, it would have no effect so far as non-compliances to the statutory notices issued u/s 143(2) and 142(1) during assessment proceedings are concerned , as the aforesaid non compliances attract penalty u/s 272A(1)(d) of the 1961 Act. Thus, the AO held that the assessee has failed to offer any reasonable explanation against the imposition of penalty u/s 272A(1)(d), and the AO imposed penalty u/s 272A(1)(d) of the 1961 Act , as under , vide penalty order dated 10/02/2022 passed by AO u/s 272A(1)(d) of the 1961 Act: Penalty u/s 272A(1)(d) of the I.T. Act, 1961 for non-compliance of Rs. 10,000/- notices u/s Rs. 143(2) dated 13.08.2018 Penalty u/s 272A(1)(d) of the I.T. Act, 1961 for non-compliance of Rs. 50,000/- notices u/s 142(1) dated 14.01.2019, 31.07.2019, 15.10.2019, 15.11.2019 and 23.11.2019 Total amount of penalty levied U/s 272A(1)(d) Rs. 60,000/- (Rupees Sixty Thousands Only)

5. Being aggrieved by penalty of Rs. 60,000/- levied by AO vide penalty order dated 10/02/2022 u/s 272A(1)(d) of the 1961 Act, the assessee filed first appeal before Learned CIT(A) , who dismissed the appeal filed by the assessee vide appellate order 15/06/2022 , by holding as under: “ DETERMINATION AND DECISION

4. During the appellate proceedings, this office issued notice u/s 250 of the Income Tax Act, 1961 on 11.05.2022 to submit documentary evidence if any other than the evidence produced during the course of proceedings before the Income Tax Authority. However, the assessee has not been submitted any additional submission and simply submitted that decide the appeal as per statement of Facts and Grounds of Appeal and material available on record.

5. I have carefully considered the fact of the case and submission of the appellant. It is seen, that the Ld. A.O has imposed penalty u/s 272A(1)(d) for 6 Assessment Year: 2017-18 Shri Bhrigu Nath Pandey v. DCIT/ACIT, Range-2, Varanasi, U.P. default of the appellant for non-compliance of notices u/s 143(2) dated 13.08.2018 and non-compliance of notices u/s 142(1) dated 14.01.2019, 31.07.2019, 15.10.2019, 15.11.2019 and 23.11.2019 asking assessee to file details. No replies to the aforesaid notices have been furnished by the assessee, however thereafter also despite availing opportunity, the assesse, failed to comply with the notices. Thereafter, show cause notice for non-compliance levying penalty under section 272A(1)(d) was issued dated 17.12.2019, which also remained uncomplied with. Further, the assesse was served one more show cause notice for the penalty notice u/s 272A(1)(d) dated 21.05.2021 as the final opportunity. In the compliance of this notice, the assesse furnished submission on 24.05.2021 through ITBA portal in his submission, the assesse requested to keep the proceedings in abeyance as he had filed an appeal against the assessment order u/s 144 of the Act, 1961. However, on perusal of the grounds of appeal filed before CIT (Appeal) in the form 35, it is observed that the assesse has not made any appeal against the initiation of the penalty proceedings u/s 272A(1)(d) of the Act. There is no mention of the penal proceedings initiated for the non- compliance by the assesse. Moreover, even if the assesse gets reprieve against the additions made in the assessment order, by the CIT (Appeals) , that would not leave any effect on the issue of non-compliance to the statutory notices u/s 143(2) and 142(1) of the Income Tax Act, 1961, which has attracted the penal provisions of section 272A(1)(d) of the Act in this case. The appellant has taken following grounds of appeal against the assessment order us Tad of the Act:- 1."Because it was fully explained that the assesse has made a withdrawal of Rs 60 lakhs on 13.10.2016 to acquire the agricultural land in his native village, but due to demonization the amount could not be transferred to the intending seller and therefore it was deposited in the bank a/c on 20.12.2016 The id Assessing Officer has erred and acted legally in not placing reliance on the same

2. Because the ld. Assessing Officer has erred and acted illegally in adding back Rs. 60 lakhs in the income of the assessee under section 69A of the Act, and also erred and acted illegally in applying the provision of section 115BBE of the Act

3. Because the Assessment order is bad both in facts and in law and not maintainable" From the above, it is clear that the assessee has failed to submit any reasonable explanation against the imposition of penalty u/s 272A(1)(d) in his case. 7 Assessment Year: 2017-18 Shri Bhrigu Nath Pandey v. DCIT/ACIT, Range-2, Varanasi, U.P. Thus, it is clear that, during assessment proceedings, notice u/s 142(1) and 143(2) were issued and served upon the appellant but nobody appeared on the date nor any written reply furnished by the appellant. Therefore, the AO Initiated penalty u/s 272A(1)(d) and accordingly issued a notice but nobody attends the office nor any reply was filed in response to this notice. Further, to provide fair opportunity of being heard, the assesse was served one more show cause notice for the penalty notice u/s 272A(1)(d) as the final opportunity. In the compliance of this notice, the assesse furnished submission through ITBA portal wherein the assesse requested to keep the proceedings in abeyance as he had filed an appeal against the assessment order u/s 144 of the Act, 1961. However, on perusal of the grounds of appeal filed before CIT (Appeal) in the form 35, it is observed that the assesse has not made any appeal against the initiation of the penalty proceedings u/s 272A(1)(d) of the Act. Therefore. The AO levied penalty amounting to Rs.60,000/- upon the appellant on each non compliance. The assessee has not filed any plausible explanation for non-compliance of notices. In my considered opinion the appellant, was given several opportunities by Assessing Officer, which were not availed by the appellant. Therefore, after perusing the above said position of the case and considering facts of the case, the penalty levied by the Assessing Officer is hereby confirmed and appellant's relevant grounds of appeal are dismissed.

6. In the result, the appeal of the appellant is dismissed.”

6. Still aggrieved , the assessee filed second appeal before the tribunal, challenging the solitary issue in this appeal concerning levy of penalty of Rs. 60,000/- u/s 272A(1)(d) of the 1961 Act. The learned Counsel for the assessee opened argument before Division Bench and submitted that the issue involved in this appeal is concerning levy of penalty of Rs. 60,000/- u/s 272A(1)(d) for non-compliances by the assessee of the notices issued by the AO u/s 143(2) and 142(1) of the 1961 Act during assessment proceedings . The ld. Counsel for the assessee submitted that the first appeal against the quantum assessment order passed by AO under Section 144 of the Act is pending before ld. CIT(A). It was submitted that the assessee is a Retired 8 Assessment Year: 2017-18 Shri Bhrigu Nath Pandey v. DCIT/ACIT, Range-2, Varanasi, U.P. Professor in Law who is very renowned. It was submitted that the assessee is very busy person even post retirement, as his services are still being availed by various renowned universities/institutions from time to time. To buttress his submission, the ld. Counsel for the assessee has placed on record some of the credentials of the assessee by way of paper book containing 29 pages as well email dated 12.08.2022 & 13.08.2022, which suggests his association with Faculty of Law, Delhi University Bar Council of India, Dean, Adamas School of Law, Adamas Univesrity,Kolkatta Mahatama Gandhi Antartashtriya Hindi Vishwavidalaya, Law College Dehradun, Uttaranchal University, Dr. Bhimrao Ambedkar Law University, Jaipur , Chotanagpur Law College, Ranchi, Hemvati Nandan Bahuguna Garhwal University, Uttrakhand. The above details are submitted by way of additional evidences, which are now placed on record in file. Thus, the ld. Counsel for the assessee submitted that in connection with these professional assignments, the assessee has to travel a lot which keeps him away from his home town. It was submitted that the assessee is an aged person about 74 years old. The ld. Counsel for the assessee submitted that the assessee is also present in the Court Room before the Division Bench. It was submitted that the assessee is a Retried Professor of Law with Banaras Hindu University. It was submitted that the assessee is not having deep knowledge of computers, and he is digitally not very literate. The notices were sent electronically by emails . It was also submitted that appeal against quantum assessment is pending before Learned CIT(A). Our attention was drawn to Section 275 of the 1961 Act. It was also submitted that merely because initiation of penalty u/s 272A(1)(d) is not challenged before ld. CIT(A) challenging quantum assessment , will not preclude assessee from ITA No.30/VNS/2022 Assessment Year: 2017-18 Shri Bhrigu Nath Pandey v. DCIT/ACIT, Range-2, Varanasi, U.P. agitation penalty levied by authorities below and right of appeal cannot be infringed in any manner. 6b. The ld. Sr. DR submitted that there was no need of personal attendance during assessment proceedings , and assessee could have easily complied to the notices issued by AO u/s 143(2) and 142(1) of the 1961 Act during assessment proceedings by filing replies electronically online through ITBA Portal though e-filing. The Learned Sr. DR relied on the appellate order passed by ld. CIT(A) upholding penalty . The ld. Sr. DR submitted that Department has also filed paper-book in which various notices issued by the AO are placed on record along with show cause notices issued by AO during assessment proceedings, in all containing 46 pages, which is now placed on record in file.

7. We have considered rival contentions and perused the material on record. We have observed that the assessee’s case for the impugned assessment year 2017-18 was selected by Revenue for framing limited scrutiny assessment u/s 143(3) read with Section 143(2) of the 1961 Act. The case was selected by Revenue under CASS as there were cash deposits as well cash withdrawal by the assessee during the year under considerations. The AO issued several notices u/s 143(2) and 142(1) of the 1961 Act as well show cause notices during the assessment proceedings by emails to the registered email id of the assessee , wherein the assessee was directed to file replies to various queries raised by the AO electronically through ITBA portal. These statutory notices remained un-complied with by the assessee , except on one occasion when the assessee filed part reply before the AO through manual/physical mode, which as per AO was merely a part reply. The best judgment assessment was framed by AO u/s 144 of the 1961 Act vide assessment order dated 17.12.2019 , wherein addition of Rs. 60 lacs towards cash deposit in bank account by 10 Assessment Year: 2017-18 Shri Bhrigu Nath Pandey v. DCIT/ACIT, Range-2, Varanasi, U.P. assessee was considered by AO as unexplained money u/s 69A and added to income of the assessee. Penalty proceedings were initiated against the assessee by AO u/s 272A(1)(d) of the 1961 Act. Statutory notices were issued by the AO, which ultimately culminated to the levy of penalty of Rs. 60000/- by AO against the assessee , vide penalty order dated 10.02.2022 passed by AO u/s 272A(1)(d) of the 1961 Act, for following defaults in complying with statutory notices: Penalty u/s 272A(1)(d) of the I.T. Act, 1961 for non-compliance of Rs. 10,000/- notices u/s Rs. 143(2) dated 13.08.2018 Penalty u/s 272A(1)(d) of the I.T. Act, 1961 for non-compliance of Rs. 50,000/- notices u/s 142(1) dated 14.01.2019, 31.07.2019, 15.10.2019, 15.11.2019 and 23.11.2019 Total amount of penalty levied U/s 272A(1)(d) Rs. 60,000/- (Rupees Sixty Thousands Only)

The first appeal against penalty order dated 10.02.2022 , was dismissed by ld. CIT(A) vide appellate order dated 15.06.2022. The first appeal against quantum assessment is claimed by the assessee to be still pending before ld. CIT(A). The assessee has contended before us that he is an aged person of 74 years being Senior Citizen. It is submitted that he is not well versed with computers and there were difficulties in compliance with the notices issued by the AO, owing to being digitally not well literate. The sole reply filed before AO by the assessee during assessment proceedings was through physical mode. The assessee has also stated in Form No. 35 filed before ld. CIT(A) in statement of fact, that he is a retired professor and a very old person and is not very well acquainted with computers and emails etc. . It is also stated in Form No. 35 that email on which notices were sent was on his counsel Late Shri D.N. Sharma who was not well and of old age , these notices were never 11 ITA No.30/VNS/2022 Assessment Year: 2017-18 Shri Bhrigu Nath Pandey v. DCIT/ACIT, Range-2, Varanasi, U.P. communicated to him. It is also stated that the notices sent by post were duly complied with. The assessee is a retired Professor from Banaras Hindu University. He is still actively involved with various eminent universities and institutions, evidence is placed on record. It is also claimed that due to his engagements with these universities/institutions, he is keeping busy and also requires travels which keeps him away from home town. The switchover of assessment proceedings to electronic mode and now faceless assessments are very laudable steps initiated by GOI, but at the same time there will be some teething problems for the citizens to adapt to new situations especially the older generation , which is required to be kept in mind while imposing penalty. The bonafide or other wise malafide of non compliance is also required to be kept in mind. The tax and interest are statutory levies, while penalty imposable u/s 272A(1)(d) is subject to Section 273B. Thus, if the tax- payer is able to demonstrate reasonable cause for failure then no penalty is exigible. If in each case for failure to comply with statutory notices issued by the authorities , the penalty is mandatorily to be imposed u/s 272A(1)(d) on the tax-payers, then Section 273B will become otiose. It all depends upon the facts and circumstances of the case which requires investigation of complete facts , so as to ascertain that whether the tax-payer is able to demonstrate the reasonable cause as is contemplated u/s 273B or not. The Authorities must look into the entire facts and then arrive at conclusion whether it is a fit case for imposition of penalty u/s 272A(1)(d). Thus, we consider it fit to set aside the appellate order passed by ld. CIT(A) and restore this matter back to the file of ld. CIT(A) for fresh adjudication, after considering all the relevant facts and circumstances , and then arrive at conclusion whether it is a fit case for levy of penalty u/s 272A(1)(d) of the 1961 Act. Needless to say that proper Assessment Year: 2017-18 Shri Bhrigu Nath Pandey v. DCIT/ACIT, Range-2, Varanasi, U.P. and adequate opportunity of being heard be provided by ld. CIT(A) to the assessee in set aside remand proceedings . The evidences which are submitted by assessee in its defense shall be admitted by ld. CIT(A) , which shall be adjudicated on merits in accordance with law. We clarify that we have not commented on the merits of the issue. Thus, the appeal filed by the assessee is allowed for statistical purposes. We order accordingly.