MANISHKUMAR RAMLAKHAN AGRAWAL,AHMEDABAD V. INCOME TAX OOFICER, WARD 6(1)(1), AHMEDABAD, AHMEDABAD

ITA 920/AHD/2025

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The case involves Manishkumar Ramlakhan Agrawal, an Executive Director at Gopinath Enterprise Private Limited, who appealed against a penalty imposed by the Income Tax Officer (ITO) for non-compliance with notices during reassessment proceedings. The penalty was initially upheld by the Commissioner of Income Tax (Appeals) but was contested in the Tribunal. The background of the case includes a search and seizure operation on the Kushal Group, which revealed the assessee's involvement in suspicious financial transactions. The Tribunal considered the assessee's explanation of non-compliance due to his authorized representative's absence and found it to be a reasonable cause, citing precedents that penalties should not be levied for technical or venial breaches of law unless the conduct was contumacious or dishonest.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 771866 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Other Referred Cases: Hindustan Steel Ltd. vs. State of Orissa, Sardarmal Kothari v. ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENKUMAR M VASAVDA
• Assessee Lawyers: CHETAN AGARWAL
• Keywords: Reasonable cause; Reassessment proceedings; Capital Gains; Search and seizure; Accommodation entries; Bonafide mistake; Bogus
• Section: 147; 143(3); 142(1); 132; 273B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.920/Ahd/2025 (Assessment Year: 2018-19) Manishkumar Ramlakhan Agrawal A/29, Shreenath Park Society, Opp. Jogeshwari Park Society, C.T.M. Road, Amraiwadi, Ahmedabad-380026 Vs. Income Tax Officer, Ward-6(1)(1), Ahmedabad [PAN No.AEQPA1710H] (Appellant) .. (Respondent) Appellant by : Shri Chetan Agarwal, AR Respondent by: Shri Rajenkumar M Vasavda, Sr. DR Date of Hearing 12.08.2025 Date of Pronouncement 25.08.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 17.04.2025 passed for A.Y. 2018-19. 2. The assessee has raised the following grounds of appeal: “1. The ld. CIT(A) erred in law as well as on fact in upholding penalty of Rs. 20,000 imposed by ld.AO u/s. 271A(1)(d).” 3. The brief facts of the case are that the assessee is an individual serving as Executive Director in Gopinath Enterprise Private Limited. The assessee filed his return of income for the Assessment Year 2018–19 declaring a total income of ₹31,34,370/-, which included exemption from Long-Term Capital Printed from counselvise.com ITA No. 920/Ahd/2025 Manishkumar Ramlakhan Agrawal vs. ITO Asst. Year –2018-19 - 2– Gains of ₹7,85,654/- under section 10(38) of the Act and Short-Term Capital Gains of ₹6,01,979/-. Subsequently, a Search and Seizure operation under section 132 of the Act was conducted in the case of the Kushal Group of Ahmedabad on 05.02.2019. During the investigation, it was found that the said Group was involved in price rigging and issuing bogus accommodation entries, including fabricated long-term and short-term capital gains/losses. Based on the appraisal report, the Assessing Officer noted that the assessee was a beneficiary of these transactions, involving suspicious entries amounting to ₹14,85,833/- during the impugned assessment year. On this basis, the Assessing Officer initiated re-assessment proceedings against the assessee. During the reassessment proceedings, various notices under sections 143(2) and 142(1) were issued. However, the assessee failed to respond to two crucial notices dated 27.01.2023 and 10.02.2023. The assessee submitted that his authorized representative (AR) was out of town for 15 days during the relevant period, which caused the lapse in compliance in response to these two notices. However, the Assessing Officer initiated penalty proceedings under section 272A(1)(d) of the Act for non-compliance and rejected the explanation given by the assessee on the ground that it was an afterthought and thereby levied a penalty of ₹20,000/- (₹10,000/- for each default). 4. In appeal before the CIT(A), the assessee submitted that the non- compliance was neither wilful nor deliberate. The assessee submitted that he had relied on his AR, who failed to respond to the notices and also failed to inform the assessee about the default. The assessee submitted he was unaware of the lapse on the part of his AR, until the demand notice was received by Printed from counselvise.com ITA No. 920/Ahd/2025 Manishkumar Ramlakhan Agrawal vs. ITO Asst. Year –2018-19 - 3– the assessee after completion of the reassessment proceedings. It was further submitted that the lapse occurred due to a bonafide mistake and that there was sufficient and reasonable cause, for which the assessee should be protected under section 273B of the Act. The assessee relied on various judicial precedents, including the judgment of the Hon’ble Supreme Court in Hindustan Steel Ltd. vs. State of Orissa (83 ITR 26), to argue that penalty should not be levied for a technical or venial breach of law unless the conduct was contumacious or dishonest. The assessee also placed reliance on ITAT decisions, including Sardarmal Kothari v. ACIT, which held that when the assessment is completed under section 143(3) and not section 144, the defaults committed earlier can be viewed as condoned, and penalty under similar provisions should not be imposed. Despite these submissions, the Ld. CIT(A) was not satisfied with the assessee’s explanation. Ld. CIT(A) observed that there was no dispute regarding the non-compliance of statutory notices under section 142(1) of the Act. The Ld. CIT(A) held that lack of coordination between the assessee and his AR cannot be accepted as a valid or reasonable cause under section 273B of the Act. It was also noted that the assessment had been completed under section 147 read with section 144B of the Act, and not under section 143(3) of the Act. Therefore, in the absence of any compliance to the impugned notices, the Ld. CIT(A) upheld the penalty of ₹20,000/- levied by the Assessing Officer under section 272A(1)(d). Accordingly, the appeal of the assessee was dismissed by Ld. CIT(A). 5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. We have carefully considered the submissions of the assessee and examined the relevant facts Printed from counselvise.com ITA No. 920/Ahd/2025 Manishkumar Ramlakhan Agrawal vs. ITO Asst. Year –2018-19 - 4– on record. It is not in dispute that the assessee failed to comply with two notices issued under section 142(1) of the Act. However, it has been explained by the counsel for the assessee that the non-compliance occurred solely due to the authorized representative of the assessee being out of town for a brief period, which led to an inadvertent lapse in communication between the assessee and his AR and thereby leading to failure to seek adjournment or submit the required details. We are of the considered view that the explanation offered by the assessee appears to be bonafide and does not show any deliberate defiance or contumacious conduct. The assessee has also relied on established judicial precedents which have held that penalty under such provisions should not be levied where there exists reasonable cause and where the breach is neither willful nor intentional. In our considered view, the explanation provided, coupled with the overall conduct of the assessee, does constitute a reasonable cause. Accordingly, we are of the considered view that the levy of penalty under section 272A(1)(d) of the Act, in the present case, is not justified. 6. Accordingly, we direct that the penalty of ₹20,000/- levied under section 272A(1)(d) of the Act be deleted. 7. In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 25/08/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 25/08/2025 TANMAY, Sr. PS TRUE COPY Printed from counselvise.com ITA No. 920/Ahd/2025 Manishkumar Ramlakhan Agrawal vs. ITO Asst. Year –2018-19 - 5– आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 25.08.2025(Dictated on dragon software) 2. Date on which the typed draft is placed before the Dictating Member 25.08.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S .08.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 25.08.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 25.08.2025 7. Date on which the file goes to the Bench Clerk 25.08.2025 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 Dispatch of the Order…………………………………… Printed from counselvise.com "