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2022 (12) TMI 545 - AT - Income TaxLevy of penalty u/s 271(1)(b) - Best judgment assessment - Scope of the term used shall - email notices sent to old ITP s email address - genuineness and reasonable cause in the case of the assessee - Non-compliance of such notices - assessee could not attend the assessment proceedings as well as penalty proceedings which result in best judgment assessments - assessee was duly served upon a notice u/s 153C on the registered email, requiring the assessee to file a Return of Income in response to the notice - HELD THAT - As clearly demonstrated that the hearing notices were been sent to the email [email protected] which was belong to the former Tax Consultant of the assessee. Further, no physical notices were been served upon the assessee, thereby even to comply to the 153C notices itself by the assessee. Further perusal of the ex-parte assessment orders make it clear that the assessee has never filed Return of Income in response to 153C notices, however, the Assessing Officer concluded the 153C assessments based on the original returns filed u/s 139(1) by the assessee for five Assessment Years and made additions only two Assessment Years 2016-17 and 2017-18 based on some seized materials. In our considered opinion, the assessee could not said to be in default, when the assessee was not served with the notices. The assessee also pleaded that he is not aware of the faceless assessment proceedings and the ITBA portal of the Income Tax Department which has resulted in filing statutory appeals before the CIT(A) with a delay of 96 days. Thus, without proper service of notices to the assessee, the assessee cannot be levied with penalty under Section 271(1)(b) for non-compliance of such notices. For the above reasons we hold that the levy of penalty under Section 271(1)(b) is unjustified and therefore, the same are deleted. Appeal filled by assessee allowed.
Issues Involved:
1. Levy of penalty under Section 271(1)(b) of the Income Tax Act, 1961 for non-compliance with notices. 2. Validity of service of notices to an incorrect email address. 3. Justification for non-compliance based on "reasonable cause" under Section 273B of the Act. Detailed Analysis: 1. Levy of Penalty under Section 271(1)(b): The core issue revolves around the imposition of penalties under Section 271(1)(b) due to the assessee's failure to comply with notices issued under Sections 142(1) and 153C for the Assessment Years 2013-14 to 2019-20. The Assessing Officer (AO) levied a penalty of Rs. 10,000/- for each assessment year due to non-compliance with the notices. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed these penalties, leading to the current appeals. 2. Validity of Service of Notices: The assessee contended that all notices were sent to an old email address "[email protected]," which belonged to a former Authorized Representative. The assessee had updated the new email address "[email protected]" in Form 35 and argued that the failure to receive notices was due to this oversight. The CIT(A) acknowledged the delay in filing appeals due to this reason but upheld the penalties, citing precedents where penalties were confirmed for non-compliance. 3. Justification for Non-Compliance Based on "Reasonable Cause": The tribunal examined whether the non-compliance could be justified under Section 273B, which states that no penalty shall be imposed if there is a "reasonable cause" for the failure. The tribunal found that the notices were indeed sent to the old email address and not served physically. This oversight led to the assessee missing the notices, resulting in ex-parte assessment orders. The tribunal noted that the assessee had not been aware of the faceless assessment proceedings and had filed statutory appeals with a delay of 96 days. Tribunal's Observations and Decision: Assessment and Penalty Orders: - The tribunal observed that the AO completed assessments under Section 144 based on original returns filed under Section 139, except for the years 2016-17 and 2017-18, where additions were made based on seized materials. - Penalties were imposed for non-compliance with notices, but the tribunal found that the notices were not properly served to the assessee. Reasonable Cause and Discretionary Nature of Penalty: - The tribunal emphasized that the imposition of penalties is discretionary and not automatic, as clarified by Section 273B. - The tribunal found that the assessee had a reasonable cause for non-compliance due to the incorrect email address issue. Conclusion: - The tribunal held that the levy of penalties under Section 271(1)(b) was unjustified due to the genuine and reasonable cause presented by the assessee. - All penalties for the assessment years 2013-14 to 2019-20 were deleted. Final Order: - The appeals filed by the assessee were allowed, and the penalties under Section 271(1)(b) were deleted. Pronouncement: - The order was pronounced in the court on 09.12.2022 at Ahmedabad.
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