The Agra Bench of Income Tax Appellate Tribunal(ITAT) deleted a penalty imposed for non-compliance with a notice during the Covid-19 pandemic, citing disruptions caused by lockdowns and the Supreme Court’s extension of limitation periods.
Radha Soni,appellant-assessee,was reassessed for the 2014-15 assessment year on 25.09.2021 by the Assessing Officer (AO) under section 147 read with section 144. The AO issued a notice on 30.09.2020 under section 142(1) requesting information, but the appellant did not comply. The AO initiated penalty proceedings on 25.09.2021 under section 271(1)(b). Despite several opportunities, the appellant failed to respond, leading to a penalty of Rs. 10,000 for non-compliance.
The assessee appealed to the Commissioner of Income Tax( Appeals )[CIT(A)], citing the Covid-19 pandemic as the reason for not complying with the AO’s notice dated 30.09.2020. The assessee also referred to the Supreme Court’s order and the Central Board of Direct Taxes(CBDT)’s Press Release on deadline extensions. However, the CIT(A) ruled that while deadlines were extended, penalties were not exempted. Since no valid reason was shown for non-compliance, the penalty was upheld.
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The assessee then appealed before the tribunal.
Read More:Non-Appearance before Appellate Authority due to COVID-19 Pandemic: ITAT sets aside Ex-Parte Order
A single member bench comprising Ramit Kochar(Accountant Member) noted that the reassessment was done under section 147/148, and the AO issued a notice under section 142(1) on 30.09.2020. The assessee did not comply, leading to a penalty of Rs. 10,000 under section 271(1)(b).
No response was given during penalty proceedings, and the CIT(A) dismissed the appeal despite the assessee citing the Covid-19 pandemic as the reason for non-compliance.
The appellate tribunal observed that the pandemic led to lockdowns and disruptions, prompting the Supreme Court to extend limitation periods from 15.03.2020 to 28.02.2022. Since section 271(1)(b) is subject to section 273B, which allows relief for reasonable cause, the ITAT found the penalty unjustified.
It held that the CIT(A) wrongly distinguished between deadline extensions and non-compliance. Considering the pandemic’s impact, the tribunal deleted the penalty.
In short,the appeal filed by the assessee was allowed.
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