2024 (4) TMI 1053 - AT - Income Tax

Penalty proceedings u/s. 271(1)(b) - non-compliance of 3 notices u/s. 142(1) - Delay in late response as per date mentioned in notice - nowhere assessee had denied that notices were not served upon him nor there was any plausible explanation for non-compliance of notice - HELD THAT - Although it is correct that assessee had not complied the date fixed in the notice u/s. 142(1) however the assessee had filed all the details in response to the said show-cause notice on 24/02/2022 and also on 20/03/2022. Further in response to show-cause notice also assessee had filed the details and also brought to his knowledge that all the transactions which has been alleged had already been offered to tax and part of profit and loss account. The remarks in the chronology of events clearly justify the compliance made by the assessee before the ld. AO. Thus it is not a case of failure to comply with the notice albeit there is failure to respond on the date mentioned in the notice. Delay in late response have been explained that; firstly it was an old matter and assessee took time for retrieving the old date; secondly assessee was having heavy losses due to small scale business operation after Covid and during the Covid period office of the assessee was also not opened. Apart from that assessee has no employee and director was old and was the only person who was handling the affairs of the assessee company and was not aware of any online technicalities of notices sent through online. It was later on when assessee sought for assistance of a Chartered Accountant; the assessee compiled and filed all the details before the ld. AO which has been duly acknowledged. Thus it cannot be held that assessee has purposefully defied the compliance of notices u/s. 142(1) and there was sufficient and reasonable cause in filing the details belatedly. Thus it is not a fit case to levy penalty - Appeals of the assessee are allowed.

Summary

Issues involved:
The judgment involves the issue of penalty proceedings u/s. 271(1)(b) for the A.Ys. 2014-15 & 2015-16 due to non-compliance of notices u/s. 142(1).

Summary of Judgment:

Issue 1: Compliance of Notices u/s. 142(1)
The assessee filed appeals against the penalty imposed for non-compliance of three notices u/s. 142(1). The initial notice u/s. 148 was based on alleged fictitious transactions, leading to the addition of undisclosed income. The assessee responded to the notices by filing returns and details, but failed to comply with specific dates set in the notices. The penalty was confirmed by the ld. CIT (A) citing lack of compliance without plausible explanation.

Issue 2: Explanation for Delayed Response
The assessee's counsel argued that despite delayed responses, the required details were eventually submitted, including participation in video conferencing. Reasons for the delay were attributed to difficulties in data retrieval, operational challenges post-COVID, lack of technical familiarity, and reliance on elderly directors for handling affairs. The counsel contended that the delayed responses did not constitute intentional non-compliance.

Decision and Rationale
After reviewing the events and submissions, the Tribunal found that although the assessee responded late to the notices, all required details were eventually provided, justifying compliance. The Tribunal acknowledged the challenges faced by the assessee, including operational disruptions and technical limitations. Considering the reasons for the delay and the eventual submission of necessary information, the Tribunal concluded that the penalty was unjustified. Consequently, the penalty imposed by the ld. AO was revoked for both A.Y. 2014-15 and 2015-16, and the appeals of the assessee were allowed.

Separate Judgment Delivered:
No separate judgment was delivered in this case.