Penalty u/s 272A(1)(d) of Income Tax Cannot Be Imposed for Non-Compliance with Notices Due to Consultant’s Failure to Inform: ITAT deletes Penalty
It noted that the assessee had a reasonable cause for non-compliance due to the consultant's negligence, which fell under the provisions of Section 273B, allowing relief when reasonable cause can be demonstrated.
The Kolkata bench of Income Tax Appellate Tribunal ( ITAT ) has deleted a penalty imposed under Section 272A(1)(d) of the Income Tax Act, 1961 stating that the penalty cannot be enforced when the non-compliance with notices arises from the consultant's failure to inform the assessee. SNG Microns Private Limited, filed appeal for the Assessment Year (AY) 2017-18 against an order from...
The Kolkata bench of Income Tax Appellate Tribunal ( ITAT ) has deleted a penalty imposed under Section 272A(1)(d) of the Income Tax Act, 1961 stating that the penalty cannot be enforced when the non-compliance with notices arises from the consultant's failure to inform the assessee.
SNG Microns Private Limited, filed appeal for the Assessment Year (AY) 2017-18 against an order from the Commissioner of Income Tax (Appeals) dated March 29, 2023, which upheld a penalty of ₹20,000 for non-compliance with notices issued under Sections 143(2) and 142(1).
The appeal was based on several grounds, including claims that the penalty was imposed without proper service of notice and failed to adhere to principles of equity and natural justice.
The assessee argued that notices were not properly served, as all communications were directed to their consultant's email, which went unchecked. As a result, the assessee did not receive adequate notice or opportunity to respond, leading to the imposition of the penalty.
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During the hearing, the assessee's representative, Adv. Rakesh Kumar contended that the penalties were unjust because there was no intentional failure to comply with the notices. The representative submitted that the lack of communication from the consultant hindered the assessee’s ability to present their case, effectively denying them a fair opportunity to respond to the notices.
On the other hand, the Department's representative supported the imposition of the penalty, arguing that the notices had been duly sent to the registered email and that the non-compliance warranted the penalty.
The bench of Manish Borad ( Accountant member) and Sonjoy Sarma ( Judicial member ) concluded that the penalty was imposed under unfair circumstances. It noted that the assessee had a reasonable cause for non-compliance due to the consultant's negligence, which fell under the provisions of Section 273B, allowing relief when reasonable cause can be demonstrated.
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The tribunal ruled in favour of the assessee, deleting the ₹20,000 penalty and emphasising the importance of proper communication in the compliance process.
To Read the full text of the Order CLICK HERE
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