SUDESH KUMAR AGARWAL, LUCKNOW V. INCOME TAX OFFICER, RANGE-1(4), LUCKNOW., LUCKNOW.

ITA 48/LKW/2023

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The case involves an appeal by Shri Sudesh Kumar Agarwal against the penalty imposed by the Income Tax Officer for non-compliance with a notice under section 142(1) of the Income Tax Act, 1961. The notice required the assessee to comply by 18/11/2019, but the assessee failed to do so, leading to a penalty of Rs.10,000. The assessee contested the penalty, arguing that the period for compliance was too short and that he was unwell, as supported by a medical prescription. The CIT(A) upheld the penalty, leading to the current appeal before the ITAT, which found in favor of the assessee, citing insufficient time for compliance as a reasonable cause.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113261 (ITAT-LUCKNOW)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 02-02-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Reasonable cause; Non compliance
• Section: 246; 144; 273B; 143(3); 142(1); 143(1)

Judgement Text

I.T.A. No.48/Lkw/2023 Assessment year:2017-18 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘B’, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A. No.48/Lkw/2023 Assessment Year: 2017-18 Shri Sudesh Kumar Agarwal, 3/503, Vishal Khand, Gomti Nagar, Lucknow. PAN:ACLPA8572C Vs. Income Tax Officer, Range-1(4), Lucknow. (Appellant) (Respondent) O R D E R PER ANADEE NATH MISSHRA:A.M. (A) This appeal vide I.T.A. No.48/Lkw/2023 has been filed by the assessee for assessment year 2017-18 against impugned appellate order dated 25/11/2022 vide DIN & Order No.ITBA/NFAC/S/250/2022- 23/1047653830(1) of learned Commissioner of Income Tax (Appeals) [learned “CIT(A)” for short]. The grounds of appeal are as under: “1. That the Ld. CIT(A) was wrong to confirm the levy of penalty Rs.10,000/- u/s 272A(1)(d) by the Ld. AO. 2. That there was no default within the meaning of Sec 272A(1)(d) and the penalty was wrongly levied. Appellant by Shri S. C. Agrawal, Advocate Respondent by Shri Amit Nigam, Senior Departmental Representative (Sr. DR" for short) Date of hearing 28/06/2023 Date of pronouncement 19/07/2023 I.T.A. No.48/Lkw/2023 Assessment year:2017-18 2 3. That the Ld. CIT(A) was wrong in rejecting the prayer of appellant for keeping penalty proceeding in abeyance during pendency of appeal against assessment order before CIT(A) as per Sec 275 of the Act. 4. That the Ld. CIT(A) was wrong in rejecting the request for keeping the appeal against penalty order in abeyance by simply stating that "assessee's request is not acceptable since the penalty proceeding is initiated for non-compliance of notice u/s 142(1) dated 12.11.2019". 5. That Ld. CIT(A) was wrong in coming to the conclusion that case of the assessee is not covered u/s 273B and holding that there was no reasonable cause in not submitting the reply against notice dated 12/11/2019 u/s 142(1) of the Act. 6. That the penalty order is against facts and law and liable to be cancelled. (A.1) This appeal is regarding penalty amounting to Rs.10,000/- imposed by the Assessing Officer u/s 272A(1)(d) of the Income Tax Act, 1961 (“IT Act” for short). The Assessing Officer had issued notice dated 12/11/2019 u/s 142(1) along with questionnaire. The date of compliance indicated in the notice was 18/11/2019. Assessing Officer took adverse view of the assessee’s non-compliance with aforesaid notice dated 12/11/2019 and initiated penalty proceedings u/s 272A(1)(d) of the IT Act by issuing notice on 16/12/2019. During the penalty proceedings, the assessee requested to keep the proceedings in abeyance, submitting as under: “against assessment order appeal under section 246 was filed and written submissions also submitted. Appellate order is awaited and therefore kindly keep the penalty proceedings in abeyance pending decision in appeal.” (A.2) The Assessing Officer however passed the aforesaid order dated 13/01/2022, holding as under: I.T.A. No.48/Lkw/2023 Assessment year:2017-18 3 “4. As per section 272A(1)(d) of the Act, if any person fails to comply with a notice under sub-section (1) of section 142 or sub- section (2) of section 143 or fails to comply with a direction issued under sub-section (2A) of section 142 of the Act he shall pay, by way of penalty, a sum of ten thousand rupees for each such default or failure. 5. Considering the facts of the case, it is a fit case for levy of penalty under section 272A(1)(d) of the Act. The assessee had failed to comply with notice under section 142(1) of the Act dated 12.11.2019 without reasonable cause. 6. Hence, the assessee is directed to pay a penalty of Rs.10,000/- (Rupees ten thousand only) under section 272A(1)(d) of the for the default/failure. Demand notice under section 156 of the Act forming part of this order is attached herewith. 7. Penalty is imposed with the prior approval of the competent authority as required under section 274(2) of the Act.” (B) The assessee filed appeal against the aforesaid order dated 13/01/2022 of the Assessing Officer in the office of learned CIT(A). Vide impugned appellate order dated 25/11/2022 the learned CIT(A) dismissed the assessee’s appeal and confirmed the penalty of Rs.10,000/- levied by the Assessing Officer u/s 272A(1)(d) of the IT Act. The present appeal has been filed by the assessee against the aforesaid impugned appellate order dated 25/11/2022 of learned CIT(A). In the course of appellate proceeding in ITAT, written submissions were filed from the assessee’s side, the relevant portion of which is reproduced as under: “1. The Ld. CIT(A) did not consider ground No.3 taken before him which is as under :- "That the contention of the Ld. AO to levy penalty rejecting the prayer of the assessee for keeping penalty proceeding in abeyance during pendency of appeal against assessment order was wrong and unjustified." I.T.A. No.48/Lkw/2023 Assessment year:2017-18 4 Against show cause notice dated 30.04.2021 issued by the Ld. AO it was requested by the assessee to keep the penalty proceedings in abeyance pending decision in appeal before CIT(A) against relevant assessment order. It may also be stated that in the show cause notice the Ld. AO had mentioned that in case there is a request for keeping the penalty proceedings in abeyance the copy of that letter be uploaded. The assessee informed that since the appeal against assessment order is pending the penalty proceedings be kept in abeyance and therefore there was no response on the merits of the case. The Ld. AO in the penalty order in para 3 rejected the request of the assessee thereby denying the right of opportunity of being heard before imposition of penalty as provided u/s 272A(4). It is the law that no penalty can be imposed before providing opportunity of being heard and therefore the penalty order is liable to be cancelled. Moreover, the Ld. CIT(A) did not give any finding on ground No.3 taken before him. 2. According to Ld. CIT(A) non-compliance of notice dated 12.11.2019 issued u/s 142(1) it was not a case of reasonable cause for such non-compliance of the notice u/s 142(1) of the Act. According to Ld. CIT(A) the Medical prescription produced by the assessee dated 03.08.2019 does not constitute reasonable cause for the reason that the prescription dated 03.08.2019 and the medicines were prescribed for 10 days only and since the notice u/s 142(1) is dated 12.11.2019 and therefore, according to him the claim of the assessee that he was ill in November, 2019 is not supported by the evidence in the form of prescription. According to him the basis of material available there appears no reasonable cause for non- compliance of notice. It is respectfully submitted that the assessee is a senior citizen and was suffering from various ailments and a copy of medical prescription issued by Asian Institute of Medical Sciences, Faridabad was submitted before CIT(A). If you kindly see the contents of the prescription you will kindly notice the assessee was suffering from lungs related decease called Dyslipidaemia Iron Deficiency. It may kindly be noted that it was not possible for assessee to go Faridabad and the medicines prescribed were continued regularly and the contention of the CIT(A) that since the prescription was only for 10 days and therefore according to him it cannot said it is a valid evidence to prove that there was no reasonable cause in non- complying the notice dated 12.11.2019 is not justified. It is a fact that such ailment continued and the inference drawn by Ld. CIT(A) was erroneous. Moreover, it is also a fact that the assessee is also not well I.T.A. No.48/Lkw/2023 Assessment year:2017-18 5 conversant with the working of e-filing portal and neither e-mail savvy. It is respectfully prayed that penalty order may kindly be cancelled.” (B.1) At the time of hearing before us, learned Counsel for the assessee placed reliance on the aforesaid written submissions. He further contended that the assessment order was passed by the Assessing Officer u/s 143(3) of the Act and not u/s 144 of the Act. He contended that the Assessing Officer should be considered to have, by necessary implication, condoned assessee’s non compliance with aforesaid notice u/s 143(1) of the Act. (B.2) The learned Sr. Departmental Representative for Revenue placed reliance on the order of learned CIT(A) and the Assessing Officer and supported the same. (B.2.1) We have heard both sides. We have perused materials on record. We find that the aforesaid notice was issued on 12/11/2019 by the Assessing Officer u/s 142(1) of the Act and the date of compliance was fixed on 18/11/2019. There were only five days between the date of issue of notice and date fixed for compliance. The assessee was required to comply with questionnaire which was sent along with aforesaid notice u/s 142(1) of the Act. We are of the view, expecially as the assessee was required to respond to the queries contained in the aforesaid questionnaire that the aforesaid period of five days, provided by the Assessing Officer for compliance with the notice u/s 142(1) of the Act and the questionnaire sent alongwith it, did not constitute sufficient opportunity. On this basis, within the meaning of S. 273B of IT Act, we are of the view that there was reasonable cause on the part of the assessee, for failure to comply with aforesaid notice dated 12/11/2019 issued u/s 142(1) of the Act. In view of I.T.A. No.48/Lkw/2023 Assessment year:2017-18 6 the foregoing, and in the specific facts and circumstances of the present case, we cancel the aforesaid penalty of Rs.10,000/- levied by the Assessing Officer u/s 272A(1)(b) of the Act. (C) As we have already cancelled the aforesaid penalty amounting to Rs.10,000/-, the other submissions and contentions made on behalf of the assessee by way of written submissions and oral submissions at the time of hearing are merely academic in nature and need not be decided. Accordingly, we decline to decide the same. (D) In the result, the appeal is allowed for statistical purposes. (Order pronounced in the open court on 19/07/2023) Sd/. Sd/. (SUDHANSHU SRIVASTAVA) (ANADEE NATH MISSHRA) Judicial Member Accountant Member Dated:19/07/2023 *Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. Concerned CIT 4. D.R., I.T.A.T., 5. CIT(A) Assistant Registrar