Penalty u/s 272A(1)(d)  Income Tax Act shall not levied if Reasonable Cause for Non-Compliance of Statutory Notices: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) Delhi Bench ruled that penalty under Section 272(1)(d) of Income Tax Act, 1961 should not be levied if the assessee has reasonable cause for non-compliance of statutory notices.

Maqsood Ali, the taxpayer filed its return of income under the head “income from salaries”. Assessee case was selected for scrutiny by CASS and a notice under Section 143(2) of the Income Tax Act  was issued through ITBA Portal but there was no compliance by the assessee.

Accordingly AO initiated penalty proceedings for failure to comply with notices and the penalty of Rs.50,000/- was imposed.

Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax Appeal (CIT(A)) who upheld the order. Thus the assessee filed a second appeal before the tribunal.

Before the bench,Devashish Bhaduria, the counsel for assessee submitted that assessee is an illiterate person and the notices were issued through e-mode on Govt. ITBA Portal. Therefore, he could not attend the proceedings before the assessing authority.

Further argued that  the non-compliance of the notice was not deliberate but there was a bonafide reason for not responding to the notices issued by the assessing authority.

Om Parkash,Counsel for Revenue opposed the submissions and supported the orders of the authorities below. 

The tribunal during the proceedings point out that “As per section 273B of the Income Tax Act, no penalty under sub-section (1) & (2) under the provision of section 272A of the Income Tax Act shall be impossible on the assessee for any failure refer to in the said provision if he proves that there was reasonable cause of the said failure.”

After reviewing the facts and submission, the tribunal observed that  in the present case  the assessee demonstrated that there was a reasonable cause. Firstly, on account of the fact that notices were sent on the email-id of the income tax return preparer but he did not inform the assessee and Secondly, the assessee himself is not technologically literate.

Therefore, the two member bench of the tribunal comprising Dr. B.R.R.Kumar, (Accountant Member) and Kul Bharat, (Judicial Member) determined that there was a reasonable cause for non-compliance of the statutory notices sent by the Department to the assessee. Therefore, the bench allowed the appeal.

To Read the full text of the Order CLICK HERE

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