2024 (8) TMI 749 - AT - Income Tax

Penalty u/s 272A(1)(d) - non-compliance of notices u/s 142(1) - Assessee argued no notice u/s 142(1) have ever been served and as such, the entire proceedings are illegal and without justification - CIT(A) rejected the contention of the assessee on the ground that the AO has clearly mentioned service of notice through E-mail which is valid service, and such the appeal has been dismissed - HELD THAT - We find from the copy of the order sheet, submitted before us which is downloaded from the Income Tax Departmental portal, that notice u/s 142(1) were issued on 01.08.2019 and second notice on 23.09.2019 has been issued but the service date of such notice in the service column has been left blank, so, it is not clear whether the notice has at all been served on the assessee or not. Since, it is the case of imposition of penalty each failure has to be viewed and considered separately. In such cases, there should be separate penalty notices for each separate failure and in this case, there should have been two separate penalty proceedings for two separate defaults. But we find from the penalty order passed u/s 272A(1)(d) dated 03.08.2021 that a consolidated order of penalty has been passed in a consolidated manner for two separate defaults u/s 142(1) which cannot be termed as legally valid, as per provision of section 271(1)(b)(ii) r.w.s. 272A(1)(d) of the Act 61. As in absence of proof of actual service of notices u/s 142(1) available in the portal submitted by the assessee, willful and intentional default, on the part of the assessee cannot be proved. We are of the opinion that penalty imposed for two separate defaults u/s 142(1) vide a consolidated penalty order is not legally valid, and is deleted. Assessee appeal allowed.

Summary

Issues:
1. Imposition of penalty under section 272A(1)(d) for non-compliance of notices u/s 142(1).
2. Validity of electronic service of notice.
3. Justification of penalty imposed by the AO.
4. Compliance with legal procedures in penalty imposition.

Analysis:
1. The appeal was filed by the assessee against the penalty imposed by the AO under section 272A(1)(d) for non-compliance with notices u/s 142(1). The AO issued notices for compliance on specific dates, but the assessee failed to respond, leading to ex parte assessment and penalty initiation.

2. The contention raised by the assessee was that no notice u/s 142(1) was served, as claimed by the AO through electronic means. The assessee, an agriculturist, argued that he was not well-versed with electronic communication and denied receiving any such notice. The tribunal observed discrepancies in the service dates of the notices, casting doubt on their actual delivery.

3. The CIT(A) upheld the penalty, citing the AO's assertion of valid electronic service. However, the tribunal found insufficient evidence to support the claim of service through email. The tribunal highlighted that penalties for non-compliance should be imposed separately for each default, which was not done in this case, rendering the penalty order legally invalid.

4. Relying on legal precedents and statutory provisions, the tribunal concluded that the penalty imposed for two defaults without separate penalty proceedings was not justified. Due to the lack of concrete evidence of notice service and procedural irregularities, the tribunal allowed the appeal, thereby deleting the penalty of Rs. 20,000 imposed on the assessee.

This judgment emphasizes the importance of proper notice service, adherence to procedural requirements, and individual penalty imposition for each default to ensure legal validity and justification in penalty imposition.