M/S SANGEETA RUSHIKESH DOIPHODE, MUMBAI V. INCOME TAX OFFICER-15(3)(1), MUMBAI

ITA 1976/MUM/2023

AI Insights

The case involves Smt. Sangeeta Rushikesh Doiphode, who appealed against a penalty of Rs. 10,000 levied by the Income Tax Officer for non-compliance with a notice during the assessment proceedings for the year 2016-17. The penalty was initially upheld by the Commissioner of Income-tax (Appeals) but was later contested in the Tribunal. The Tribunal's decision highlighted procedural lapses in the penalty imposition process and acknowledged the assessee's challenges in complying due to her professional commitments during the Covid-19 pandemic.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123620 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 04-09-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 25-05-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAYANJYOTI NATH
• Keywords: Opportunity of being heard; Reasonable cause; Bogus
• Section: 147; 148; 273B; 142(1); 133A; 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI PAVAN KUMAR GADALE (JUDICIAL MEMBER) ITA No. 1976/MUM/2023 Assessment Year: 2016-17 Smt. Sangeeta Rushikesh Doiphode, 8/158, Navrang Society, Chaitanya Nagar, Mumbai, Santacruz (East) S.O. 400055. Vs. ITO-15(3)(1), Room No. 456, 4 th floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. PAN No. ACHPD 5219 R Appellant Respondent Assessee by : Mr. Rakesh Joshi Revenue by : Mr. Nayanjyoti Nath, Sr. DR Date of Hearing : 05/09/2023 Date of pronouncement : 08/09/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 31.03.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2016-17 in relation to penalty of Rs.10,000/- levied u/s 271(1)(b) of the Income-tax Act, 1961 (in short ‘the Act’) for non-compliance of notice issued by the Assessing Officer during assessment procedings. 2. Briefly stated, facts of the case are that the assessee filed regular return of income on 23.08.2016 declaring to Rs.11,91,920/- through tax practitioner Shri Vijay Sawant. During the survey u/s 133A of the Act conducted on 30.01.2018 at the premises of Shri Vijay Sawant admitted that in the case claims of house rent allowance, leave encashment and gratuity incentives from employer etc. were Officer found irregularities/mis assessee, which was filed through Sh Vijay Sawant suppression of the receipt chapter VIA of the Act and therefore recorded reasons to believe that income escaped w Accordingly, the Assessing Officer issued noti on 24.03.2021 which was delivered at the e assessee on 24.03.2021. In response, no return of income It was contended by the assessee that return u/s 148 of the Act could not be filed due to some technica portal (ITBP) and for which the assessee Subsequently, the Assessing Officer issued notice u/s 142(1) of the Act on 08.02.2022. According to the Assessing Officer did not comply with that show cause notice on 31.03.2022 and passed the assessment order on same date. The Assessing Officer also issued notice u/s 271(1)(b) of the Act on 31/03/2022 Smt. Sangeeta Rushikesh Briefly stated, facts of the case are that the assessee filed regular return of income on 23.08.2016 declaring to through tax practitioner Shri Vijay Sawant. During the survey u/s 133A of the Act conducted on 30.01.2018 at the premises of Shri Vijay Sawant, Income-tax practitioner admitted that in the case of returns filed through him certain bogus house rent allowance, leave encashment and gratuity incentives from employer etc. were made by him. The Assessing irregularities/mis-reporting in the return of the assessee, which was filed through Sh Vijay Sawant suppression of the receipt and fraudulent claim of deduction chapter VIA of the Act and therefore recorded reasons to believe that income escaped within the meaning of section 147 Accordingly, the Assessing Officer issued notice u/s 148 of the Act on 24.03.2021 which was delivered at the e-mail address of the assessee on 24.03.2021. In response, no return of income It was contended by the assessee that return u/s 148 of the Act could not be filed due to some technical glitch in the income for which the assessee also filed grievance letter. Subsequently, the Assessing Officer issued notice u/s 142(1) of the Act on 08.02.2022. According to the Assessing Officer that notice. The Assessing Officer issued a final show cause notice on 31.03.2022 and passed the assessment order on same date. The Assessing Officer also issued notice u/s 271(1)(b) on 31/03/2022 for levying penalty of Rs.10,000/ Smt. Sangeeta Rushikesh Doiphode 2 ITA No. 1976/Mum/2023 Briefly stated, facts of the case are that the assessee filed regular return of income on 23.08.2016 declaring total income of through tax practitioner Shri Vijay Sawant. During the survey u/s 133A of the Act conducted on 30.01.2018 at the tax practitioner (ITP), he gh him certain bogus house rent allowance, leave encashment and gratuity, . The Assessing g in the return of the assessee, which was filed through Sh Vijay Sawant. He noted fraudulent claim of deduction under chapter VIA of the Act and therefore recorded reasons to believe ithin the meaning of section 147 of the Act. ce u/s 148 of the Act mail address of the assessee on 24.03.2021. In response, no return of income was filed. It was contended by the assessee that return u/s 148 of the Act l glitch in the income-tax filed grievance letter. Subsequently, the Assessing Officer issued notice u/s 142(1) of the Act on 08.02.2022. According to the Assessing Officer, the assessee notice. The Assessing Officer issued a final show cause notice on 31.03.2022 and passed the assessment order on same date. The Assessing Officer also issued notice u/s 271(1)(b) levying penalty of Rs.10,000/- for non-compliance of notice issue Officer also issued another show cause notice dated 05.08.2022 as why the penalty should not be levied. The assessee were rejected and the Assessing Officer levied the penalty observing as under: “Order under section 271(1)(b) of the Income Tax Act, 1961 During the assessment proceedings for AY 2016 dated 08.02.2022 was issued to the assessee with respect to the queries raised. I response to the notice u/s. 142(1), the assessee neither, filed any response nor filed any request for adjournment. 2. Observing the non Us. 271(1)(b) of the IT Act, were initiated in this case by issuing notice cum show cause notice u/s. 274 r.w.s. the assessee to explain as to why penalty should not be levied for non compliance. 3. Later, after the a fresh issued to the assessee should not be levied. Assessee was given time to respond by 22.08.2022. However, Assessee has submitted his reply vide letter dated 09.08.22 which is considered but not acceptable. Assessee simply stated that he has filed an appeal with CIT(A) and request to keep the proceeding in abeyance, However it is to noted that these proceeding are of non compliance penalty which has no bearing on the output proceedings. Assessee did not furnished any sufficient cause for non compliance. 4 Therefore, I am satisfied that the assessee has without reasonable cause failed to comply to the notice us. 142(1) dated 08.02.2022. I therefore hold that the assessee has failed to comply with a notice us. 142(1) dated 08.02.2022. and committed default u/s. one occasion. I, therefore, levy penalty u/s. 271(1)(b) of the Income Tax Act, 1961 of Rs. 10,000/ 3. On further appeal, the Ld. CIT(A) upheld the penalty levied observing as under: “5.2 It is clear from bare reading of the above provisions that whether or not the penalty as envisaged in Section 271(1)(b) of the Act is to be imposed, is a matter t meaning of Section. He may direct such penalty to be paid and conversely, Smt. Sangeeta Rushikesh e of notice issued. Subsequently, the Assessing Officer also issued another show cause notice dated 05.08.2022 as why the penalty should not be levied. The submissions filed by the rejected and the Assessing Officer levied the penalty Order under section 271(1)(b) of the Income Tax Act, 1961 During the assessment proceedings for AY 2016-17, notice us. 142(1) dated 08.02.2022 was issued to the assessee to submit his submission with respect to the queries raised. I response to the notice u/s. 142(1), the assessee neither, filed any response nor filed any request for adjournment. 2. Observing the non-compliance from the assessee, penalty proceedings 71(1)(b) of the IT Act, were initiated in this case by issuing notice cum show cause notice u/s. 274 r.w.s. 271(1)(b) dated 31.03.2022 requiring the assessee to explain as to why penalty should not be levied for non 3. Later, after the a fresh show cause notice dated, 05.08.2022 was issued to the assessee to respond as to why the non compliance penalty should not be levied. Assessee was given time to respond by 22.08.2022. However, Assessee has submitted his reply vide letter dated 09.08.22 h is considered but not acceptable. Assessee simply stated that he has filed an appeal with CIT(A) and request to keep the proceeding in abeyance, However it is to noted that these proceeding are of non compliance penalty which has no bearing on the output proceedings. Assessee did not furnished any sufficient cause for non Therefore, I am satisfied that the assessee has without reasonable cause failed to comply to the notice us. 142(1) dated 08.02.2022. I therefore hold assessee has failed to comply with a notice us. 142(1) dated 08.02.2022. and committed default u/s. 271(1)b) of the I.T. Act, 1961 on one occasion. I, therefore, levy penalty u/s. 271(1)(b) of the Income Tax Act, 1961 of Rs. 10,000/- (Rupees Ten thousand only).” On further appeal, the Ld. CIT(A) upheld the penalty levied It is clear from bare reading of the above provisions that whether or not the penalty as envisaged in Section 271(1)(b) of the Act is to be imposed, is a matter to be determined by the Assessing Officer within the meaning of Section. He may direct such penalty to be paid and conversely, Smt. Sangeeta Rushikesh Doiphode 3 ITA No. 1976/Mum/2023 . Subsequently, the Assessing Officer also issued another show cause notice dated 05.08.2022 as submissions filed by the rejected and the Assessing Officer levied the penalty Order under section 271(1)(b) of the Income Tax Act, 1961 17, notice us. 142(1) to submit his submission with respect to the queries raised. I response to the notice u/s. 142(1), the assessee neither, filed any response nor filed any request for adjournment. compliance from the assessee, penalty proceedings 71(1)(b) of the IT Act, were initiated in this case by issuing notice cum 271(1)(b) dated 31.03.2022 requiring the assessee to explain as to why penalty should not be levied for non- show cause notice dated, 05.08.2022 was to respond as to why the non compliance penalty should not be levied. Assessee was given time to respond by 22.08.2022. However, Assessee has submitted his reply vide letter dated 09.08.22 h is considered but not acceptable. Assessee simply stated that he has filed an appeal with CIT(A) and request to keep the proceeding in abeyance, However it is to noted that these proceeding are of non- compliance penalty which has no bearing on the output of the CIT(A) proceedings. Assessee did not furnished any sufficient cause for non Therefore, I am satisfied that the assessee has without reasonable cause failed to comply to the notice us. 142(1) dated 08.02.2022. I therefore hold assessee has failed to comply with a notice us. 142(1) dated 271(1)b) of the I.T. Act, 1961 on one occasion. I, therefore, levy penalty u/s. 271(1)(b) of the Income Tax On further appeal, the Ld. CIT(A) upheld the penalty levied, It is clear from bare reading of the above provisions that whether or not the penalty as envisaged in Section 271(1)(b) of the Act is to be o be determined by the Assessing Officer within the meaning of Section. He may direct such penalty to be paid and conversely, it would be correct to say, he may choose not to so direct for such penalty to be paid. To determine whether the default was willf explanation offered, if any, by the appellant shall be imposed, inter u/s 271(1)(b), where the assessee establishes a reasonable cause for failure referred to in the said section. 5.3 In the instant case, it is very clear from th was given sufficient opportunities to explain the non issued u/s 142(1) dated 08/02/2022. The appellant has responded requesting to keep the penalty proceedings us 271(1)(b) in abeyance till the disposal of the appeal filed against the assessment proceedings. The AO has examined the request, however, did not find sufficient cause for the non-compliance and decided to finalize the penalty proceedings initiated u/s 271(1)(b). 5.4 The submissions of the appella is not only the show cause notice that was issued on 31/03/2022 but subsequently one more opportunity was provided vide show cause notice dated 05/08/2022. Therefore, it can be safely concluded that sufficient opportunities and time have been given to the appellant to explain her case of non-compliance. During the course of appellate proceedings also the appellant has miserably failed to substantiate her failure of noncompliance to the statutory notice issued us 142(1) there was sufficient cause for non 5.5 In the light of the above findings, I find there is no merit in the grounds raised by the appellant, therefore, the penalty levied by the A is justified and the grounds 4. We have duly considered the contentions presented by both parties regarding the matter in dispute, and we have examined the pertinent records. Before this Tribunal, the learned counsel representing the assessee has raised two pri imposition of the penalty. order issued under Section 271(1)(b) of the Act, the Assessing Officer referred the non 142(1) dated 08.02.2022. However, in the show 05.08.2022 for levy of pena compliance of the show Consequently, it is argued that no show Smt. Sangeeta Rushikesh it would be correct to say, he may choose not to so direct for such penalty to be paid. To determine whether the default was willful or otherwise, the explanation offered, if any, by the appellant shall be imposed, inter u/s 271(1)(b), where the assessee establishes a reasonable cause for failure referred to in the said section. In the instant case, it is very clear from the order that the appellant was given sufficient opportunities to explain the non-response to the notice issued u/s 142(1) dated 08/02/2022. The appellant has responded requesting to keep the penalty proceedings us 271(1)(b) in abeyance till the the appeal filed against the assessment proceedings. The AO has examined the request, however, did not find sufficient cause for the compliance and decided to finalize the penalty proceedings initiated 5.4 The submissions of the appellant has been examined and found that it is not only the show cause notice that was issued on 31/03/2022 but subsequently one more opportunity was provided vide show cause notice dated 05/08/2022. Therefore, it can be safely concluded that sufficient nities and time have been given to the appellant to explain her case compliance. During the course of appellate proceedings also the appellant has miserably failed to substantiate her failure of noncompliance to the statutory notice issued us 142(1) and also failed to demonstrate that there was sufficient cause for non-compliance. 5.5 In the light of the above findings, I find there is no merit in the grounds raised by the appellant, therefore, the penalty levied by the A is justified and the grounds raised are dismissed.” We have duly considered the contentions presented by both parties regarding the matter in dispute, and we have examined the pertinent records. Before this Tribunal, the learned counsel representing the assessee has raised two primary objections to the imposition of the penalty. Firstly, it is contended that in the final order issued under Section 271(1)(b) of the Act, the Assessing Officer referred the non-compliance of the notice under Section 142(1) dated 08.02.2022. However, in the show-cause notice dated 05.08.2022 for levy of penalty, there was a mention of the non compliance of the show-cause notice dated 31.03.2022. Consequently, it is argued that no show-cause notice has been Smt. Sangeeta Rushikesh Doiphode 4 ITA No. 1976/Mum/2023 it would be correct to say, he may choose not to so direct for such penalty ul or otherwise, the explanation offered, if any, by the appellant shall be imposed, inter-alia, u/s 271(1)(b), where the assessee establishes a reasonable cause for e order that the appellant response to the notice issued u/s 142(1) dated 08/02/2022. The appellant has responded requesting to keep the penalty proceedings us 271(1)(b) in abeyance till the the appeal filed against the assessment proceedings. The AO has examined the request, however, did not find sufficient cause for the compliance and decided to finalize the penalty proceedings initiated nt has been examined and found that it is not only the show cause notice that was issued on 31/03/2022 but subsequently one more opportunity was provided vide show cause notice dated 05/08/2022. Therefore, it can be safely concluded that sufficient nities and time have been given to the appellant to explain her case compliance. During the course of appellate proceedings also the appellant has miserably failed to substantiate her failure of noncompliance and also failed to demonstrate that 5.5 In the light of the above findings, I find there is no merit in the grounds raised by the appellant, therefore, the penalty levied by the A is justified We have duly considered the contentions presented by both parties regarding the matter in dispute, and we have examined the pertinent records. Before this Tribunal, the learned counsel mary objections to the , it is contended that in the final order issued under Section 271(1)(b) of the Act, the Assessing compliance of the notice under Section cause notice dated lty, there was a mention of the non- cause notice dated 31.03.2022. cause notice has been properly issued for the imposition of the penalty in relation to the non-compliance with the notice unde 08.02.2022. Thus, the order under dispute is in contravention of the principles of natural justice and is therefore subject to annulment. 4.1 Secondly, the counsel for the assessee contends that the Assessing Officer, in the order un erroneously stated that the assessee neither submitted any response nor requested an adjournment in response to the notice under Section 142(1) dated 08.02.2022. It is asserted that this statement is factually incorrect, a submitted the necessary documentation on 07.03.2022. Furthermore, it is argued that there was a justifiable reason for the 30-day delay in responding to the said notice. The assessee, a doctor employed by the Municipal Corporat was occupied during the period of January and February 2022, when the third wave of Covid notice under Section 142(1) dated 08.02.2022 was issued during that period. Due to the taxing work sched the adverse conditions caused by the pandemic, it was challenging to submit the response on the prescribed date. Additionally, efforts were made to provide the requested information through a tax consultant. However, the combination Smt. Sangeeta Rushikesh properly issued for the imposition of the penalty in relation to the compliance with the notice under Section 142(1) dated 08.02.2022. Thus, the order under dispute is in contravention of the principles of natural justice and is therefore subject to , the counsel for the assessee contends that the Assessing Officer, in the order under Section 271(1)(b) of the Act, erroneously stated that the assessee neither submitted any response nor requested an adjournment in response to the notice under Section 142(1) dated 08.02.2022. It is asserted that this statement is factually incorrect, as the assessee did, in fact, submitted the necessary documentation on 07.03.2022. Furthermore, it is argued that there was a justifiable reason for the day delay in responding to the said notice. The assessee, a doctor employed by the Municipal Corporation of Greater Mumbai, was occupied during the period of January and February 2022, when the third wave of Covid-19 (Omicron) was at its peak, and the notice under Section 142(1) dated 08.02.2022 was issued during that period. Due to the taxing work schedule of the assessee and the adverse conditions caused by the pandemic, it was challenging to submit the response on the prescribed date. Additionally, efforts were made to provide the requested information through a tax consultant. However, the combination of the Covid Smt. Sangeeta Rushikesh Doiphode 5 ITA No. 1976/Mum/2023 properly issued for the imposition of the penalty in relation to the r Section 142(1) dated 08.02.2022. Thus, the order under dispute is in contravention of the principles of natural justice and is therefore subject to , the counsel for the assessee contends that the der Section 271(1)(b) of the Act, erroneously stated that the assessee neither submitted any response nor requested an adjournment in response to the notice under Section 142(1) dated 08.02.2022. It is asserted that this s the assessee did, in fact, submitted the necessary documentation on 07.03.2022. Furthermore, it is argued that there was a justifiable reason for the day delay in responding to the said notice. The assessee, a ion of Greater Mumbai, was occupied during the period of January and February 2022, 19 (Omicron) was at its peak, and the notice under Section 142(1) dated 08.02.2022 was issued during ule of the assessee and the adverse conditions caused by the pandemic, it was challenging to submit the response on the prescribed date. Additionally, efforts were made to provide the requested information through a tax of the Covid-19-related challenges and the long hours spent attending to patients resulted in a delay in submitting the required information. 4.3 On the contrary, the learned Departmental Representative (DR) supported the orders issued by the lower author 4.4 In our considered opinion, the order issued by the learned Assessing Officer, which was upheld by the learned CIT(A), is untenable for two main reasons. Firstly, the learned Assessing Officer did not issue any show penalty in response to the non Section 142(1) of the Act dated 08.02.2022. Consequently, the imposition of the penalty was carried out without affording the assessee an opportunity to be heard, thus violating the princ natural justice. Secondly, considering the assessee’s role as a doctor with the Municipal Corporation and the extensive clinic hours during the Covid period, a valid and reasonable cause for the 30-day delay in submitting the requested information 142(1) of the Act exists. Thus, invoking provision of section 273B of the Act, where a reasonable and sufficient compliance, no penalty could be levied. 4.5 In light of the foregoing discussion, we hereby set aside the order issued by the learned CIT(A) regarding the matter in dispute and cancel the penalty imposed by the Assessing Officer. The grounds raised by the assessee are allowed. Smt. Sangeeta Rushikesh challenges and the long hours spent attending to patients resulted in a delay in submitting the required information. 4.3 On the contrary, the learned Departmental Representative (DR) supported the orders issued by the lower authorities. 4.4 In our considered opinion, the order issued by the learned Assessing Officer, which was upheld by the learned CIT(A), is untenable for two main reasons. Firstly, the learned Assessing Officer did not issue any show-cause notice for the impositio penalty in response to the non-compliance of the notice under Section 142(1) of the Act dated 08.02.2022. Consequently, the imposition of the penalty was carried out without affording the assessee an opportunity to be heard, thus violating the princ natural justice. Secondly, considering the assessee’s role as a doctor with the Municipal Corporation and the extensive clinic hours during the Covid period, a valid and reasonable cause for the day delay in submitting the requested information 142(1) of the Act exists. Thus, invoking provision of section 273B of reasonable and sufficient cause exits for non compliance, no penalty could be levied. 4.5 In light of the foregoing discussion, we hereby set aside the the learned CIT(A) regarding the matter in dispute and cancel the penalty imposed by the Assessing Officer. The grounds raised by the assessee are allowed. Smt. Sangeeta Rushikesh Doiphode 6 ITA No. 1976/Mum/2023 challenges and the long hours spent attending to patients resulted 4.3 On the contrary, the learned Departmental Representative (DR) ities. 4.4 In our considered opinion, the order issued by the learned Assessing Officer, which was upheld by the learned CIT(A), is untenable for two main reasons. Firstly, the learned Assessing cause notice for the imposition of a compliance of the notice under Section 142(1) of the Act dated 08.02.2022. Consequently, the imposition of the penalty was carried out without affording the assessee an opportunity to be heard, thus violating the principles of natural justice. Secondly, considering the assessee’s role as a doctor with the Municipal Corporation and the extensive clinic hours during the Covid period, a valid and reasonable cause for the day delay in submitting the requested information under Section 142(1) of the Act exists. Thus, invoking provision of section 273B of cause exits for non- 4.5 In light of the foregoing discussion, we hereby set aside the the learned CIT(A) regarding the matter in dispute and cancel the penalty imposed by the Assessing Officer. The 5. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court Sd/ (PAVAN KUMAR GADALE JUDICIAL MEMBER Mumbai; Dated: 08/09/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Smt. Sangeeta Rushikesh In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 08/09/2023. Sd/- PAVAN KUMAR GADALE) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Smt. Sangeeta Rushikesh Doiphode 7 ITA No. 1976/Mum/2023 In the result, the appeal filed by the assessee is allowed. /09/2023. Sd/- (OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai