ARVINDBHAI PUNABHAI PATEL,AHMEDABAD V. THE ITO, WARD-3(3)(1), AHMEDABAD

ITA 1851/AHD/2024

AI Insights

The case involves Arvindbhai Punabhai Patel, who appealed against the penalty imposed by the Income Tax Officer (ITO) for non-compliance with statutory notices during the assessment proceedings for the Assessment Year 2015-16. The assessee had declared a significantly lower income compared to the high credit transactions flagged by the Directorate of Investigation, leading to a reopened assessment and subsequent non-compliance with notices under Section 142(1). The CIT(A) upheld the penalty, which was challenged in the Tribunal. The Tribunal acknowledged the assessee's failure to comply but reduced the penalty considering the circumstances, including the role of a tax consultant and the assessee's eventual appeal against the assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472263 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRATHVI RAJ MEENA
• Keywords: Reasonable cause
• Section: 148; 144; 142(1); 273B

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ “डी“,अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD \u0016ी िस\u0018ाथ\u001a नौिटयाल, \u0011ाियक सद\u001e एवं \u0016ी मकरंद वसंत महादेवकर, लेखा सद\u001e क े सम%। ] ] BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA No.1851/Ahd/2024 िनधा \u000fरण वष\u000f /Assessment Year : 2015-16 Arvindbhai Punabhai Patel 306, Mangaljoyt Jodhpur Road, Jodhpur 4 Rasta S.O., Ahmedabad – 380 015 बनाम/ v/s. The ITO Ward-3(3)(1) Ahmedabad – 380 015 \u0013थायी लेखा सं./PAN: AGGPP 5322 A (अपीलाथ&/ Appellant) ('( यथ&/ Respondent) Assessee by : -None- Revenue by : Shri Prathvi Raj Meena, CIT-DR सुनवाई की तारीख/Date of Hearing : 13/02/2025 घोषणा की तारीख /Date of Pronouncement: 14/02/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM: This appeal has been filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 23.08.2024, sustaining the penalty of Rs. 30,000/- imposed under Section 271(1)(b) of the Income Tax Act, 1961 [hereinafter referred to as “the Act”], for non- compliance with statutory notices issued under Section 142(1) during the course of assessment proceedings for Assessment Year (AY) 2015-16. ITA No.1851/Ahd/2024 Arvindbhai Punabhai Patel vs. ITO Asst. Year : 2015-16 2 Facts of the Case: 2. The assessee filed his return of income for AY 2015-16, declaring a total income of Rs.15,07,200/-. Based on information flagged in the Insight Portal of the Directorate of Investigation, it was found that the assessee had huge credit transactions of Rs.28,37,80,056/-, significantly disproportionate to the returned income, leading to the reopening of the assessment. A notice under Section 148 was issued on 23.07.2022 along with the order under section 148A(d) of the Act. Subsequent notices under Section 142(1) of the Act were issued on multiple occasions, including 17.01.2023, 11.04.2023, and 25.04.2023, requiring the assessee to furnish necessary details. However, there was no compliance from the assessee’s side. The assessment was completed ex-parte under Section 144 on 26.05.2023, estimating the total income at Rs.2,23,37,400/-. 3. The penalty proceedings under Section 271(1)(b) of the Act were initiated for repeated non-compliance, and a penalty of Rs.30,000/- (Rs.10,000 per default) was imposed by the Assessing Officer (AO) vide order dated 17.11.2023. 4. The CIT(A) upheld the penalty on the ground that sufficient opportunities were given and the assessee failed to demonstrate any reasonable cause under Section 273B for non-compliance. 5 Aggrieved by the order of CIT(A), the assessee is in appeal before us with following grounds of appeal: ITA No.1851/Ahd/2024 Arvindbhai Punabhai Patel vs. ITO Asst. Year : 2015-16 3 “1. On the facts and in the circumstances of the case and in law, that the learned Commissioner (Appeals) has erred in sustaining the penalty of Rs.30,000 imposed by the learned assessing officer under section 272(1)(b) for non- compliance of notices issued under section 142(1). 2. The appellant craves leave, to add, urge, alter, modify or withdraw any grounds before or at the time of hearing.” 6. During the course of hearing before us, the Authorized Representative (AR) of the assessee submitted that the non-compliance was not intentional and occurred due to reliance on a tax consultant, Mr.Ashok Mayani, who was entrusted with handling the assessment proceedings but failed to act in time. The AR further submitted that the assessee was kept in the dark about the notices, and upon realizing the situation, he engaged another Chartered Accountant and filed an appeal against the quantum addition. 7. The Learned Departmental Representative (DR) submitted that the assessee was given multiple opportunities, but there was consistent and repeated default in responding to notices under Section 142(1) of the Act and, therefore, the AO was justified in imposing the penalty to ensure compliance with statutory requirements. 8. We have carefully considered the rival submissions and examined the records. It is an undisputed fact that the assessee failed to comply with statutory notices issued under Section 142(1) of the Act. This non-compliance obstructed the assessment process, leading to an ex-parte order under Section 144 of the Act. 8.1. The assessee cannot absolve himself of responsibility by blaming his tax consultant. Compliance with tax notices is the primary responsibility of ITA No.1851/Ahd/2024 Arvindbhai Punabhai Patel vs. ITO Asst. Year : 2015-16 4 the assessee, and reliance on a third party does not constitute a reasonable cause under Section 273B of the Act. 8.2. At the same time, considering that the assessee eventually filed an appeal against the assessment, there was no direct intention to evade tax, and the quantum appeal is pending, a full penalty of Rs.30,000/- appears excessive. 8.3. In view of the above, we consider it appropriate to restrict the penalty to Rs.10,000/-, which would serve as an adequate deterrent while also taking into account the peculiar circumstances of the case. Accordingly, the penalty under Section 271(1)(b) of the Act is reduced to Rs.10,000/-. 9. The appeal of the assessee is partly allowed. Order pronounced in the Open Court on 14th February, 2025 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 14/02/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS ITA No.1851/Ahd/2024 Arvindbhai Punabhai Patel vs. ITO Asst. Year : 2015-16 5 आदेश की \"ितिलिप अ#ेिषत/Copy of the Order forwarded to : 1. अपीलाथ$ / The Appellant 2. \"%थ$ / The Respondent. 3. संबंिधत आयकर आयु& / Concerned CIT 4. आयकर आयु& ) अपील ( / The CIT(A)-(NFAC), Delhi 5. िवभागीय \"ितिनिध , अिधकरण अपीलीय आयकर , राजोकट/DR,ITAT, Ahmedabad, 6. गाड\u000f फाईल / Guard file. आदेशानुसार/ BY ORDER, स%ािपत \"ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (word processed by Hon’ble AM in his laptop) : 14.2..2025 2. Date on which the typed draft is placed before the Dictating Member. : 14.2.2025 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 14.2.25 7. Date on which the file goes to the Bench Clerk. : 14.2.5 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : "