2022 (12) TMI 390 - AT - Income Tax

Penalty levied u/s 271(1)(b) - non-compliance of the notice issued during the course of assessment proceedings - assessee contended that she is a salaried person and tax was deducted by the employer on the salary and therefore no return of income was filed by her in the regular course of income and due to change in her residential address, the notices issued could not be served upon her - HELD THAT - We find that the AO has not mentioned any mode of the service of the notice dated 05.10.2019 u/s 142(1) of the Act before levy of the penalty. It is the responsibility of the Assessing Officer to confirm whether the notice was sent by notice server or through post or through e-mail and ensure whether same was served upon the assessee. No such fact has been brought on record by the AO - Further, we find that assessee has raised the change of address as one of the reasonable cause for non-compliance of notice u/s 142(1) of the Act. We find that in the instant case before us also ex-parte assessment has been completed against the assessee due to noncompliance of the notices and in which the assessee has substantiated change of the address as the main reason. Therefore, respectfully following the finding of case of Balram Kumar Mahendra 2012 (6) TMI 10 - ITAT DELHI - we direct the Assessing Officer to delete the penalty levied u/s 271(1)(b) of the Act on the ground of being the reasonable cause for non-compliance of the notice u/s 142(1) of the Act. The grounds of the appeal of the assessee are accordingly allowed.

Summary

Issues:
Penalty under section 271(1)(b) of the Income-tax Act for non-compliance of notice u/s 142(1) - Change of address affecting notice receipt - Reasonable cause for non-compliance.

Analysis:

Issue 1: Penalty under section 271(1)(b) for non-compliance of notice u/s 142(1):
The appeal was filed against the penalty levied under section 271(1)(b) of the Income-tax Act due to non-compliance with the notice issued u/s 142(1). The Assessing Officer held the assessee liable for the penalty. The assessee argued that due to a change of address, she could not comply with the notices issued, including the one for reopening of assessment. The Ld. First Appellate Authority confirmed the penalty, stating that the assessee did not provide a reasonable cause for non-compliance. However, the Assessing Officer did not specify the mode of service of the notice u/s 142(1) before levying the penalty. The assessee cited the change of address as a reasonable cause for non-compliance, supported by a Tribunal decision. The Tribunal ruled that non-appearance due to non-receipt of the notice can be a reasonable cause for non-compliance, citing Section 273B of the Income-tax Act. The Tribunal directed the Assessing Officer to delete the penalty, considering the change of address as a valid reason for non-compliance.

Issue 2: Change of address affecting notice receipt:
The assessee contended that the change in her residential address led to non-receipt of the notices, affecting compliance. The Tribunal acknowledged the change of address as a significant factor contributing to non-compliance. The Tribunal emphasized the importance of confirming the service of notices to ensure proper communication with the assessee. The change of address was considered a valid reason for the failure to comply with the notice u/s 142(1), leading to the decision to delete the penalty imposed under section 271(1)(b).

Issue 3: Reasonable cause for non-compliance:
The Tribunal analyzed the concept of a reasonable cause for non-compliance with statutory obligations under the Income-tax Act. Citing Section 273B, the Tribunal highlighted that non-appearance due to non-receipt of notices can constitute a reasonable cause. Referring to a previous Tribunal decision and an apex court ruling, the Tribunal emphasized that penalties should not be imposed for technical breaches or when the offender acts in good faith. The Tribunal concluded that the change of address, causing non-compliance with the notice u/s 142(1), was a reasonable cause for the assessee, warranting the deletion of the penalty under section 271(1)(b).

In conclusion, the Tribunal allowed the appeal of the assessee, directing the Assessing Officer to delete the penalty levied under section 271(1)(b) based on the reasonable cause of non-compliance due to the change of address affecting notice receipt.