"NFAC Passed Perverse Order Stating Wrong Penalty Amount & Ignoring S.273B Safeguards": ITAT Deletes Penalty u/s 271(1)(b)
The ITAT noted that the CIT(A) erred by recording incorrect facts about the penalty and failed to consider Section 273B of the Income Tax Act.
The Raipur Bench of the Income Tax Appellate Tribunal (ITAT) has set aside a penalty of Rs. 10,000 imposed under Section 271(1)(b) of the Income Tax Act, 1961, on the assessee for alleged non-compliance with a notice issued under Section 142(1) by noting that the National Faceless Appeal Centre (NFAC) had passed a perverse order by incorrectly stating the penalty amount and failing...
The Raipur Bench of the Income Tax Appellate Tribunal (ITAT) has set aside a penalty of Rs. 10,000 imposed under Section 271(1)(b) of the Income Tax Act, 1961, on the assessee for alleged non-compliance with a notice issued under Section 142(1) by noting that the National Faceless Appeal Centre (NFAC) had passed a perverse order by incorrectly stating the penalty amount and failing to consider the safeguards under Section 273B of the Income Tax Act.
In this case, the assessee, Rishikesh Pandey, had appealed against the order passed by the NFAC for the assessment year 2016-17
Coming to the facts of the case, the Income Tax Officer (ITO) had levied a penalty on the assessee when the latter failed to furnish documents in response to a notice dated 25.06.2018.
The assessee had requested an adjournment on 29.06.2018, which was granted, and the next hearing was scheduled for 09.07.2018. It is to be noted that no response was submitted by that date. A show-cause notice was then issued on 13.07.2018, but the assessee again failed to respond. As a result, the penalty order was passed on 18.07.2018.
Want a deeper insight into the Income Tax Bill, 2025? Click here
The NFAC upheld the penalty, stating the amount as Rs. 20,000 instead of Rs. 10,000. The ITAT considered this error as a lack of application of mind on the part of NFAC.
The Tribunal observed that the NFAC failed to examine whether the assessee’s delay in compliance was due to a reasonable cause, as mandated under Section 273B of the Income Tax Act. The assessee had submitted that the information sought was voluminous and required more time, and he had no intention to avoid proceedings. The ITAT found that neither the Assessing Officer nor the NFAC had properly considered this explanation.
The ITAT observed that the AO passed the penalty order under Section 271(1)(b) on 18.07.2018 without verifying the merits of the assessee's submissions, and that the CIT(A)/NFAC also erred by recording incorrect facts about the penalty and failed to consider Section 273B of the Income Tax Act.
The ITAT, comprising Partha Sarathi Chaudhury (Judicial Member) and Arun Khodpia (Accountant Member), set aside the NFAC’s order, directed the deletion of the penalty, and allowed the appeal of the assessee.
Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates
