2023 (7) TMI 122 - AT - Income Tax

Levy of penalty u/s 272A(1)(d) - non-compliance to the notice issued to the assessee - eligibility of immunity u/s 273B - assessee had categorically denied the receipt of any statutory notices in electronic mode and that the email ID of advocate was mentioned in the return of income and his email ID was not mentioned thereon, hence the notices including the assessment orders were not received by the assessee - HELD THAT -The various averments made by the assessee regarding the inability of the assessee to respond to the statutory notices were not found to be false by the revenue. In our considered opinion, this is the first year of shifting of issuance of notice and framing of assessments in electronic mode by the department, considering the totality of facts and circumstances of the case, the reasons adduced by the assessee expressing his inability to attend to the notices, constitute reasonable cause within the meaning of section 273B. Assessee has also been consistent with the stand taken before the ld. CIT(A) and this tribunal in adducing the reasons for not responding to the statutory notices. Reasons for non-compliance to the notices was not deliberate on the part of the assessee. Assessee was prevented from sufficient cause and hence would be entitled for immunity provided u/s 273B of the Act in the peculiar facts and circumstances of the instant case. Hence we direct the ld. AO to delete the penalty levied u/s 272A(1)(d) - Decided in favour of assessee.

Summary

Issues involved:
The judgment involves the issue of confirming the levy of penalty under section 272A(1)(d) of the Income-tax Act, 1961.

Summary:
The case pertains to an individual engaged in a confectionary business who had deposited significant amounts of cash in bank accounts during demonetization. The Income-tax Officer (AO) completed the assessment under section 144 of the Act and imposed a penalty under section 272A(1)(d) for non-compliance with notices. The appellant argued that they were not properly informed about the assessment proceedings conducted electronically and that their advocate had failed to communicate the notices issued by the AO. The Commissioner of Income Tax (Appeals) upheld the penalty, noting the appellant's continuous absence in the proceedings. However, the ITAT Delhi found that the appellant's inability to respond to the notices was reasonable due to reliance on the advocate, who had misled them by filing an inaccurate return. Considering the unique circumstances and the appellant's genuine reasons for non-compliance, the ITAT Delhi granted immunity under section 273B of the Act and directed the AO to delete the penalty.

The Tribunal observed that the appellant had not attended any proceedings before the AO but had denied receiving statutory notices in electronic mode. The appellant had entrusted their income tax affairs to an advocate who failed to inform them about the notices and misled them by filing an inaccurate return. The Tribunal considered the appellant's reasons for non-compliance as genuine and reasonable, especially in the first year of electronic proceedings. Citing a precedent from the Mumbai Tribunal, the ITAT Delhi held that the appellant was prevented from sufficient cause and entitled to immunity under section 273B of the Act. Consequently, the penalty under section 272A(1)(d) was directed to be deleted.

In conclusion, the ITAT Delhi allowed the appeal of the assessee, finding that the reasons for non-compliance with notices were valid and that the penalty levied under section 272A(1)(d) should be deleted.