Subhaan Agencies, Shahjahanpur V. Income Tax Officer NFAC, Delhi

ITA 149/LKW/2023

AI Insights

The case involves Subhaan Agencies, which appealed against the penalty imposed by the Income Tax Officer under Section 272A(1)(d) of the Income Tax Act, 1961, for non-compliance with a notice under Section 142(1). The penalty of Rs.10,000 was confirmed by the NFAC, which dismissed the assessee's appeal due to procedural deficiencies in Form-35. The Tribunal noted the educational background of the partners and the possible lack of legal assistance at the time of the original proceedings, deciding to remand the case back to the NFAC for a decision on merits after rectification of the noted deficiencies.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123079 (ITAT-LUCKNOW)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-09-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 16-05-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Reasonable cause; Non compliance
• Section: 144; 142(1); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “SMC”, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.149/LKW/2023 A.Ys. 2017-18 Income Tax Officer-1(5), Shahjahanpur. Vs. Subhaan Agencies, C/o Sanjay Saxena, 12, Pratap Enclave Colony, Bisrat G.T. Road, Shahjahanpur-242001 PAN ACGFS 4309A (Respondent) (Appellant) Shri Sanjay Saxena, CA Appellant by Shri Sanjeev Krishna Sharma, Addl. CIT( DR) Respondent by 06/09/2023 Date of hearing 27/09/2023 Date of pronouncement O R D E R This appeal has been preferred by the assessee against the order dated 16.03.2023 passed by the National Faceless Appeal Centre (NFAC), Delhi for A.Y. 2017-18 wherein, the assessee’s appeal against imposition of penalty at Rs.10,000/- imposed in terms of Section 272A(1)(d) of the Income Tax Act, 1961 (hereinafter called ‘the Act’) has been confirmed. 2. The brief facts of the case are that based on specific information that the assessee had deposited cash amounting to 2 ITA No. 149/Lkw/2023 Rs.11,34,000/- in its Bank account during the demonetization period and further since the assessee had not filed its return of income u/s.139(1) of the Act within the stipulated time, notice u/s. 142(1) of the Act was issued requiring the assessee to file return of income. However, no compliance was made by the assessee. Therefore, the Assessing Officer proceeded to invoke the provisions of Section 144 of the Act and also issued notice u/s.133(6) of the Act to Indian Bank, Shahjahanpur requiring the Bank to forward bank statements along with KYC documents and account opening form. Thereafter, after obtaining the information from the Bank, the Assessing Officer again issued show cause notice and also notice u/s.142(1) of the Act along with questionnaire requiring the assessee to submit details regarding cash deposits. However, no response was forthcoming from the assessee. Thereafter, the assessment was completed u/s.144 of the Act at an income of Rs.10,42,665/- after making an addition of Rs.2,08,665/- as normal business income and another addition of Rs.8,34,000/- in terms of Section 69A of the Act. Provisions of Section 115BBE of the Act were also invoked. Subsequently, penalty at Rs.10,000/- was also imposed in terms of Section 3 ITA No. 149/Lkw/2023 272A(1)(d) of the Act vide order dated 27.08.2021 for failure to comply with the notice u/s.142(1) of the Act dated 13.03.2018. 3. Aggrieved with the imposition of penalty, the assessee approached the NFAC challenging the imposition of penalty. However, the NFAC dismissed the appeal as being unadmitted for the reason that Form-35 was incomplete/not filled up properly and further the tax on returned income had not been paid/particulars of payment had not been mentioned. While dismissing the appeal, the NFAC noted that deficiency letters were issued to the assessee on 26.09.2022, 02.03.2023 and 09.03.2023 but the assessee had failed to file any response or remove the said deficiency. 4. Now, the assessee has approached this Tribunal challenging the order of the NFAC by raising the following ground of appeal: “1. That the ld. Commissioner of Income Tax (Appeals) erred on fact of the law in confirming the penalty of Rs.10,000/- u/s. 272A(1)(d) of the Income Tax Act, 1961.” 5. The ld. A.R. submitted that partners of the assessee’s firm were not well educated and were unaware of the e-assessment proceedings and after the receipt of notices, the assessee had 4 ITA No. 149/Lkw/2023 engaged a new Authorized Representative for the purpose of compliance to the various notices. It was submitted that the earlier notices were not complied with only due to the fault of the earlier Authorized Representative and that there was no intentional default on the part of the assessee and, therefore, the reason for non compliance was due to a reasonable cause which would not attract the rigors of penalty. The ld. A.R. further argued that the dismissal of assessee’s appeal by the NFAC without going into the merits was also patently illegal and prayed that order of the NFAC should be reversed. 6. Per contra, the ld. Senior Departmental Representative supported the order of the NFAC but suggested that the appeal may be restored to the office of the ld. First Appellate Authority to be considered afresh if the deficiencies were removed. 7. I have heard the rival contentions, perused the material on record and Form-35 filed by the assessee and I am in agreement with the observation of the NFAC that Form-35 (as appearing on the portal) has not been filled up properly. All the same, duly noting the fact that the partners are not very highly educated persons and that at that point of time the assessee might not be 5 ITA No. 149/Lkw/2023 having proper legal assistance, in the interest of substantial justice, I deem it appropriate to restore the issue to the file of the NFAC with the direction to admit the appeal of the assessee and adjudicate the issue on merits, in accordance with law if the assessee is able to remove the deficiencies, as pointed out by the NFAC, in the impugned order. Needless to say, the NFAC will provide proper opportunity to the assessee to remove the deficiency and also the opportunity to file detailed response/arguments against the penalty imposed. 8. In the final result, the appeal of the assessee stands allowed for statistical purposes. (Order pronounced in the open court on 27/09/2023) Sd/- (SUDHANSHU SRIVASTAVA) JUDICIAL MEMBER Aks – Dtd. 27 /09/2023 Copy of order forwarded to: (1) The appellant (2) The respondent (3) Commissioner (4) Departmental Representative (5) Guard File Assistant Registrar