KUSUM,DELHI vs. ASSESSING OFFICER, VIKAS BHAWAN, DELHI

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ITA 6159/DEL/2024Status: DisposedITAT Delhi28 August 2025AY 2016-175 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had provided sufficient reason for the non-compliance with the notices. The notices were sent to the email ID of the assessee's deceased spouse, and the assessee did not deliberately avoid them. The Tribunal accepted the assessee's explanation that the non-compliance was due to the circumstances arising from the demise of her spouse and the subsequent management of the business. Therefore, the penalty levied by the AO under Section 271(1)(b) was deemed liable to be deleted. The Tribunal found that the assessee did not deliberately avoid the notices. Consequently, the appeal of the assessee was allowed, and the penalty levied by the AO and confirmed by the NFAC was deleted. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The assessee, an individual and proprietor of M/s. Pramod Engineering, filed a return for AY 2016-17 declaring an income of Rs. 8,73,910. Information suggesting bogus purchases of Rs. 38,03,975 led to the reopening of the case under Section 147. A notice under Section 148 was issued on 31.03.2021, to which the assessee did not reply. The Assessing Officer (AO) made an addition of Rs. 38,63,915 under Section 69C for bogus purchases. The assessee also failed to appear before the AO in response to statutory notices dated 12-11-2021, 03-02-2022, and 26-03-2022. Consequently, the AO levied a penalty of Rs. 10,000 for each default, totaling Rs. 30,000, under Section 271(1)(b). The National Faceless Appeal Centre (NFAC), Delhi, dismissed the assessee's appeal against this penalty order dated 15.09.2022.

What were the issues?

1. Whether the levy of penalty under Section 271(1)(b) is illegal due to non-service of notices (question of law). 2. Whether the levy of penalty under Section 271(1)(b) was made without due application of mind, based on conjecture and surmises by the AO (question of mixed law and fact). 3. Whether the order of the AO is bad in law and liable to be quashed (question of law). Assessee's contentions: The assessee argued that there was no deliberate avoidance of notices. The appeal before the NFAC had been allowed, and the matter was remanded to the AO. The non-compliance with notices was due to the demise of the assessee's spouse from COVID-19, after which the business was managed by her. Notices were mistakenly mailed to the email ID of her deceased spouse, leading to non-compliance. Revenue's contentions: The Revenue contended that the assessee failed to appear before the AO in compliance with the notices, and therefore, the penalty was rightly levied.

Which sections of the Income-tax Act were involved?

Section 271(1)(b),Section 147,Section 148,Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “C”, DELHI

Before: SH. SUDHIR KUMAR & SH. MANISH AGARWAL

Hearing: 28/08/2025

Date of hearing: 28/08/2025 Date of Pronouncement: 28 /08/2025 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER:

This appeal by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [hereinafter referred to as “NFAC”] vide order dated 26.12.2024 pertaining to A.Y. 2016-17 arising out the penalty order dated 15.09.2022 u/s.271 (1)(b) of the Income-tax Act, 1961, (in short ‘the Act’).

2.

The assessee has raised the following grounds in appeal as under:

1. On the facts and circumstances of the case and in law the levy of penalty under section 271(1)(b) is illegal in the wake of non service of the notices.

2. The facts and circumstances of the case and in law the levy of penalty under section 271(1)(b) is without due application of mind purely on the conjecture and surmises of the AO.

3. The facts and circumstances of the case and in law, the order of Ld. AO is bad in law and liable to be quashed.

3.

The brief facts of the case are that the assessee is an individual and a proprietor of M/s. Pramod Engineering. The assessee has filed return of income declaring total income at Rs.8,73,910/- on17-10-2016 for the A.Y.2016- 17. Information received the department that the assessee made bogus purchase aggregating to Rs.38,03,975/- during the year under consideration.

4.

The case of the assessee was reopened u/s. 147 of the Act and notice u/s. 148 was issued on 31.03.2021. The assessee did not file any reply in response to the notice. The AO completed the assessment and penalty proceedings also initiated against the assessee.

5.

The AO made the addition of Rs.38,63,915/- on account of the bogus purchase u/s. 69C of the Act. The assessee did not appear before the Assessing Officer in the compliance of the statutory notice dated 12-11-2021, 03- 02-2022, and 26-03-2022. The Assessing Officer levied the penalty of Rs.10,000/- for each default amounting Rs.30,000/-. Aggrieved the order of the Assessing officer, the assessee filed the appeal before the Ld. NFAC who vide order dated 26.12.2024 dismissed the appeal of the assessee.

6.

Aggrieved by the order of the NFAC, the assessee is in appeal before us.

7.

The Ld. AR of the assessee submitted that assessee has not been deliberately avoid the notice. The appeal of the assessee has been allowed by the Ld. NFAC against the assessment order and matter was remanded back to the AO. He further submitted that post demise of her spouse due the COVID, business was looking after by her and the notice was mailed on the email ID of her demise spouse and by this reasons the notices were left non-complied.

8.

The Ld. DR has submitted that the assessee has not appeared before the AO in the compliance of the notice. The penalty was rightly levied on the assessee 9. We have heard the rival contentions and perused the material available on record. From the perusal of the order of the u/s. 271(1)B) of the Act reveals that assessee did not comply the notices before the AO and the AO levied the penalty of Rs.10,000/- for each failure. The assessee has not complied the notice because the notice was mailed on the ID of her demise spouse. The assessee has shown the sufficient reason for non-compliance of the notices. The assessee did not avoid the notice deliberately, therefore, penalty levied by the AO is liable to be deleted. Thus, the appeal of the assessee is allowed and penalty levied by the AO and confirmed by the Ld. NFAC is deleted.

8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court 28.08.2025.

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