2023 (4) TMI 486 - AT - Income Tax

Levying penalty u/s 272A(1) - non-compliance of the notice issued under section. 142(1) - HELD THAT - It is not disputed that the assessee has participated in the assessment proceedings and ultimately the order has been passed u/s 143(3) of the Act. The only notice with the remained uncompiled which is on account of the fact that the assessee is a lady not accustomed and has to depend on the others. As decided in Triumph International Finance Ltd 2022 (3) TMI 713 - ITAT MUMBAI case assessee has explained that about ongoing assessment proceedings the assessee came to know only on receipt of order u/s 272A(1)(d) of the Act and demand notice. The explanation furnished by the assessee before the CIT(A) and before the Tribunal is consistent. We are satisfied that nonappearance of the assessee in response to the initial notice under section 142(1) of the Act was not deliberate. The year 2019 being the initial year of shift towards digital and electronic mode, the mistake appears to be bonafide. The assessee has been able to show reasonable cause for the failure to comply with statutory notice u/s. 142(1). Thus considering the following finding of the Co-ordinate Bench in the case as relied upon, we delete the levy of penalty - Appeal of the assessee is allowed.

Summary

Issues Involved:
1. Compliance with statutory notices under section 142(1) of the Income Tax Act.
2. Levy of penalty under section 272A(1)(d) of the Income Tax Act.
3. Reasonable cause for non-compliance with statutory notices.
4. Validity of penalty for delayed compliance versus complete failure to comply.

Summary of the Judgment:

1. Compliance with Statutory Notices:
The assessee filed an e-return declaring an income of Rs. 2,31,510/- for the assessment year 2017-18. The case was selected for limited scrutiny, and notices under sections 143(2) and 142(1) were issued. The assessee failed to comply with the initial notices but later responded to subsequent notices.

2. Levy of Penalty:
The Assessing Officer (AO) levied a penalty of Rs. 20,000/- under section 272A(1)(d) for non-compliance with notices issued under section 142(1). The penalty was upheld by the CIT(A), who noted that the assessee had not provided acceptable reasons for non-compliance and had not demonstrated reasonable cause under section 273B.

3. Reasonable Cause for Non-Compliance:
The assessee argued that the non-compliance was not deliberate or willful, citing lack of computer literacy and the transition to digital notice serving as reasons. The assessee's representative also highlighted that compliance was made once the notices were brought to their attention.

4. Validity of Penalty for Delayed Compliance:
The assessee contended that the penalty should not be levied for delayed compliance, as the required information was eventually submitted before the due date. The Tribunal considered the assessee's arguments and the decision of the Mumbai Co-ordinate Bench in a similar case, Triumph International Finance Ltd. vs. DCIT, which found reasonable cause for non-compliance due to the transition to digital notices.

Tribunal's Decision:
The Tribunal acknowledged the assessee's participation in the assessment proceedings and the eventual compliance with the notices. It found that the non-compliance was not deliberate and was due to the assessee's lack of familiarity with digital notices. Citing the Mumbai Co-ordinate Bench's decision, the Tribunal concluded that the penalty under section 272A(1)(d) was unsustainable and directed the AO to delete the penalty.

Conclusion:
The appeal of the assessee was allowed, and the penalty of Rs. 20,000/- was deleted. The Tribunal emphasized the importance of reasonable cause and the non-deliberate nature of the non-compliance in its decision.