Kapil Bhateja, Meerut V. ITO, Ward-1(1)(3), Meerut

ITA 2628/DEL/2022

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The case involves Kapil Bhateja, an individual engaged in a confectionary business, who faced penalties under section 272A(1)(d) of the Income-tax Act for non-compliance with notices during the assessment year 2017-18. The Income-tax Officer (ITO) had levied a penalty of Rs 50,000 for non-compliance with statutory notices regarding cash deposits during the demonetization period. The assessee argued that he did not receive the notices as they were sent to his advocate's email, which he was unaware of, and he was not informed about the assessment proceedings until after the penalties were imposed. The Commissioner of Income Tax (Appeals) upheld the penalty, leading to the appeal before the Tribunal. The Tribunal, considering the circumstances and the shift to electronic communication, found in favor of the assessee, citing a lack of willful default and reasonable cause under section 273B of the Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 115825 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-05-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 31-10-2022
• Other Referred Cases: Triumph International Finance India Ltd vs DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 144; 44AD; 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : H : DELHI BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No.2628/Del/2022 Assessment Year: 2017-18 Kapil Bhateja, H.N.184, Jybli Ganj, Rajban Bara Bazar, Meerut, Uttar Pradesh – 250001. PAN: AMJPB2717L Vs ITO, Ward 1(1)(3), Meerut. (Applicant) (Respondent) Assessee by : Ms Sunaina Sharma, Advocate Revenue by : Shri Anuj Garg, Sr. DR Date of Hearing : 04.05.2023 Date of Pronouncement : 09.05.2023 ORDER PER M. BALAGANESH, AM: This appeal in ITA No.2628/Del/2022 for AY 2017-18 arises out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as ‘ld. CIT(A)’, in short] in DIN & Order No.ITBA/NFAC/S/250/2022-23/1045482239(1) dated 14.09.2022 against ITA No.2628/Del/2022 2 the order of assessment passed u/s 272A(1)(d) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 04.02.2022 by the Income-tax Officer, NFAC, Delhi, (hereinafter referred to as ‘ld. AO’). 2. The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the levy of penalty u/s 272A(1)(d) of the Act in the facts and circumstances of the case. 3. We have heard the rival submissions and perused the materials available on record. We find that assessee is an individual engaged in confectionary business under the name and style of ‘Bhateja Confectioners’. The assessee was having a franchise of SIM cards and Mobile Recharging. The assessee filed his return of income for the Asst Year 2017-18 on 05.08.2017 declaring taxable income of Rs 3,18,410/- u/s 44AD of the Act. The said return was declared invalid by CPC Bangalore. The case of the assessee was selected for limited scrutiny to verify the cash deposits made by the assessee during the year in his HDFC and IDBI bank account during demonetization period. The ld. AO observed that as per the information , the assessee had deposited cash of Rs 1,72,94,750/- in IDBI Bank and Rs 81,34,607/- in HDFC Bank. Several notices were issued to the assessee seeking various information by the ld. AO, which stood completely uncomplied. Hence the ld. AO was forced to complete the assessment u/s 144 of the Act on 31.12.2019 by making an addition of Rs 20,34,349/- being 8% of total cash deposits made during the year. For non-compliance to the notice issued to the assessee, the ld. AO levied penalty u/s 272A(1)(d) of the Act at Rs 50,000/- computed at Rs 10000 per each offence committed by the assessee. 4. Before the ld. CIT(A) NFAC, the assessee submitted that the assessee was not in receipt of any notice for assessment proceedings and this was the first year of shift towards proceedings initiated in digital and electronic mode. The email of ITA No.2628/Del/2022 3 the assessee was not given in the return. It was submitted that the email of the advocate representing the assessee was given in the return and that the said advocate had not intimated the assessee regarding the various statutory notices issued by the ld. AO. It was also pointed out that even the assessment order was not received by the assessee. Only after the levy of penalty u/s 272A(1)(d) of the Act in the sum of Rs 50,000/- for which demand notice was issued, the assessee came to know of the assessment proceedings already completed in electronic mode. Thereafter the assessee contacted the authorized representative who had shown his incompetence and also concealed that he had done something wrong in filing the return of assessee which had made the return invalid. Later the assessee had contacted a senior chartered accountant who procured the assessment order for the A.Y. 2020-21 and filed appeals with delay condonation applications in the case of quantum as well as for two penalties imposed upon the assessee. It was pointed out that the assessee was completely unaware of the quantum assessment order framed u/s 144 of the Act ; penalty order passed u/s 270A of the Act for misreporting of income and penalty order passed u/s 272A(1)(d) of the Act. It was submitted that the assessee had totally depended on the advocate who had promised to take care of his income tax affairs and the said person had not advised the assessee properly due to his careless behavior by ignoring the statutory notices. Since the email ID of advocate was mentioned in the return, the statutory notices had been sent only to the advocate and not to the assessee. Hence it was pointed out that it was not a case of willful default by the assessee. 5. In view of continuous non-absence by the assessee even in the penalty proceedings, the ld. CIT(A) confirmed the levy of penalty u/s 272A(1)(d) of the Act in the sum of Rs 50,000/-. Aggrieved, the assessee is in appeal before us. ITA No.2628/Del/2022 4 6. It is not in dispute that the assessee had not attended to any of the proceedings before the ld.AO both during quantum and penalty proceedings. But we find that the assessee had categorically denied the receipt of any statutory notices in electronic mode and that the email ID of advocate was mentioned in the return of income and his email ID was not mentioned thereon. Hence the notices including the assessment orders were not received by the assessee. We find that the assessee had also stated that he was completely dependent on the advocate who has been authorized to look after his income tax affairs and that the said advocate had completely misled him by filing an inaccurate return which had eventually made the return filed by the assessee invalid by CPC Bangalore. Moreover, the advocate had never informed the assessee that notices were issued by the ld.AO in assessment and penalty proceedings. The various averments made by the assessee regarding the inability of the assessee to respond to the statutory notices were not found to be false by the revenue. In our considered opinion, this is the first year of shifting of issuance of notice and framing of assessments in electronic mode by the department, considering the totality of facts and circumstances of the case, the reasons adduced by the assessee expressing his inability to attend to the notices, constitute reasonable cause within the meaning of section 273B of the Act. The assessee has also been consistent with the stand taken before the ld. CIT(A) and this tribunal in adducing the reasons for not responding to the statutory notices. We find that the reasons for non-compliance to the notices was not deliberate on the part of the assessee. This view of ours is also fortified by the decision of co-ordinate bench of Mumbai Tribunal in the case of Triumph International Finance India Ltd vs DCIT in ITA No. 1870/Mum/2020 dated 10.03.2022 for A.Y. 2017-18. In view of the above, we find that the assessee was prevented from sufficient cause and hence would be entitled for immunity ITA No.2628/Del/2022 5 provided u/s 273B of the Act in the peculiar facts and circumstances of the instant case. Hence we direct the ld. AO to delete the penalty levied u/s 272A(1)(d) of the Act in the sum of Rs 50,000/-. Accordingly, the grounds raised by the assessee are allowed. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 09.05.2023 Sd/- Sd/- (C.M. GARG) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 09 th May, 2023. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi