NIYATI SUTARIA JEMES ,MUMBAI V. INCOME TAX DEPARTMENT , MUMBAI

ITA 1153/MUM/2025

AI Insights

The case revolves around the penalty imposed on the assessee, Niyati Sutaria James, for non-compliance with notices under section 142(1) of the Income Tax Act, 1961, during the assessment year 2016-17. The Assessing Officer (AO) had levied a penalty of INR 10,000 under section 271(1)(b) of the Act, which was upheld by the Commissioner of Income Tax (Appeals). The assessee contended that she did not receive the notices as they were sent to an outdated email address. The Tribunal examined the communication records and the provisions regarding the 'registered email address' for electronic communication, ultimately deciding in favor of the assessee due to the procedural oversight in sending the notices.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470941 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARESH DESHPANDE
• Assessee Lawyers: ANIL DOSHI
• Keywords: Reasonable cause; Reassessment proceedings
• Section: 147; 148; 144; 142(1); 250; 274; 273B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No.1153/MUM/2025 (Assessment Year 2016-17) Niyati Sutaria James, 302 Parimal Premises, 17th Road, Khar West, Mumbai – 400052 PAN : AHIPJ7649B ............... Appellant v/s ITO, Ward – 23(2)(1), Piramal Chambers, Parel Mumbai - 400012 ……………… Respondent Assessee by : Shri Anil Doshi, CA Revenue by : Shri Paresh Deshpande, Sr.DR Date of Hearing – 01/04/2025 Date of Order - 03/04/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal challenging the impugned order dated 24/12/2024, passed under section 250 of the Income Tax Act, 1961 (\"the Act\") by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2016-17, which in turn, arose from the penalty order dated 12/04/2024, passed by the Assessing Officer (“AO”) under section 271(1)(b) of the Act. ITA No.1153/Mum/2025 (A.Y. 2016-17) 2 2. In this appeal, the assessee has raised the following grounds:- “The Appellant appeals against the impugned order dated 24-12-24 passed by the National Faceless Appeal Centre (the CIT(A)), under section 250 of the Income-tax Act. 1961 (the Act), on the following amongst other grounds each of which is in the alternative and without prejudice to any others. 1. The learned CIT(A) erred in holding that the communication were delivered to the assessee on her registered email id. The CIT(A) failed to appreciate that the registered mobile number and email id were updated on e-filing portal in the year 2021, much before the reassessment proceedings were initiated and the notices/letters/communications have not been served on the registered email id of the appellant. The appellant submits that on the facts and circumstances of the case and in law, the CIT(A) ought not to have confirmed the penalty levied u/s 271(1)(b) 2. The learned CIT(A) erred in holding that the appellant failed to file any plausible explanation of non-compliance of notices neither at time of assessment proceedings. penalty proceedings nor during the appellate proceedings. The appellant submits that on the facts and circumstances of the case and in law, the appellant had not received any notice or order or electronic communication on her registered email address or had not received any real time alert and accordingly was unable to provide any reply / explanation to assessment proceedings. The CIT(A) erred in not appreciating the detailed explanation given during the penalty and appellate proceedings. The appellant prays that on the facts and circumstances of the case, the order passed u/s 271(1)(b), should be held to be bad in law. 3. The learned CIT(A) erred in not considering the non-receipt of notice u/s 142(1) as a reasonable cause u/s 273B of the Act, for non-compliance of the notice issued u/s 142(1). The appellant submits that on the facts and circumstances of the case and in law the CIT(A) erred in holding that since the notices/ letters/ communication have been served on the e-mail id registered in the income tax portal by the assessee herself, it should not be construed as 'reasonable cause' as per the provision of section 273B. 4. The learned CIT(A) erred in not giving opportunity to the appellant for personal hearing as requested by the appellant.” 3. The only grievance of the assessee is against the levy of penalty under section 271(1)(b) of the Act. ITA No.1153/Mum/2025 (A.Y. 2016-17) 3 4. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is an individual and, for the year under consideration, did not file her return of income. Subsequently, on the basis of the information that the assessee purchased any immovable property for INR 1,31,34,333 and earned interest income of INR 11,054, a notice under section 148 of the Act was issued to the assessee. However, in response to the notice issued under section 148 of the Act, the assessee did not file her return of income. Further, the assessee also did not respond to various statutory notices issued under section 142(1) of the Act. Therefore, the Assessing Officer (“AO”) proceeded to complete the assessment on a best judgment basis on the basis of the material available on record. Vide order dated 01/01/2024 passed under section 147 read with section 144 read with section 144B of the Act, the AO assessed the total income of the assessee at INR 1,31,45,387. 5. Since the assessee did not comply with the notice issued under section 142(1) of the Act, the AO initiated penalty proceedings under section 271(1)(b) of the Act and issued a notice under section 274 read with section 271(1)(b) of the Act. In response, the assessee submitted that the assessee filed her first return of income for the assessment year 2010-11, declaring a total income of INR 1,03,650, wherein the email address of her then- consultant was given as [e-mail]. The assessee further submitted that thereafter, for subsequent years, since the total income was below the maximum amount not chargeable to income tax, she had not filed her return as she was not liable to file her return of income. The assessee ITA No.1153/Mum/2025 (A.Y. 2016-17) 4 submitted that the registered email address on the electronic filing account was updated to the email address of her husband, i.e., [e-mail]. Thus, the assessee submitted that all the notices under section 148A(b), section 148, section 142(1), communications regarding non-compliance of notice under section 142(1), notice under section 271(1)(b), show cause notice under section 144, show cause notice regarding proposed variation and orders under section 148A(d) and assessment order have all been sent to the old email address of [e-mail]. Thus, the assessee submitted that she has not received any of the above-mentioned notices, communications and orders on her registered email address on the e-filing portal. 6. The AO, vide order dated 12/04/2024 passed under section 271(1)(b) of the Act, disagreed with the submissions of the assessee and held that the assessee should have intimated the Department about the change in her residential address. Accordingly, the AO held that since the notices/letters/communication have been served on the email address registered in the Income Tax Portal by the assessee herself, it should not be construed that the assessee has not received the notices. Accordingly, the AO held that the same cannot be construed as “reasonable cause” as per the provisions of section 273B of the Act for the purpose of imposing a penalty under section 271(1)(b) of the Act. Since the assessee failed to furnish the details as called for vide notice dated 08/09/2023 under section 142(1) of the Act, till the completion of the assessment proceedings under section 147 read with section 144 read with section 144B of the Act on 01/01/2024, the AO ITA No.1153/Mum/2025 (A.Y. 2016-17) 5 held that the assessee is liable for penalty under section 271(1)(b) of the Act. Accordingly, the AO levied a penalty of INR 10,000 under section 271(1)(b) of the Act. 7. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee and upheld the penalty levied under section 271(1)(b) of the Act. The learned CIT(A) held that the assessee ought to have changed her email address and her mobile no. in the Income Tax Portal and should have intimated the Department about the change in her residential address. The learned CIT(A) held that the assessee was given several opportunities by the AO, which were not availed by the assessee, and the assessee has not filed any plausible explanation for non-compliance of the notices neither at the time of assessment proceedings, penalty proceedings, nor during the appellate proceedings. Being aggrieved, the assessee is in appeal before us. 8. During the hearing, the learned Authorised Representative (“learned AR”) placed on record the email sent to the email address [e-mail], which the assessee claims to be the email address of her then-consultant and was provided in her return of income for the assessment year 2010-11. The learned AR submitted that vide the aforesaid email, a notice dated 08/09/2023 issued under section 142(1) of the Act was sent during the assessment proceedings. The learned AR also placed on record the Income Tax Return of the assessee for the assessment year 2023-24, filed on 26/07/2023, wherein the assessee provided her email address, i.e., [e-mail]. The learned AR also placed on record the screenshot from the activity log, last updated on 25/08/2021, whereby the ITA No.1153/Mum/2025 (A.Y. 2016-17) 6 assessee provided the email address of her husband, i.e., [e-mail], and her own email address, i.e., [e-mail], as the primary email address. Accordingly, the learned AR submitted that once the assessee has updated the email address in the Income Tax Portal and said email address was also mentioned in the assessee’s last filed return of income, the statutory notices under section 142(1) of the Act should have been sent to these email addresses instead of the email address of the assessee’s then-consultant, which was provided in her return of income for the assessment year 2010-11. 9. As per the provisions of Explanation (t) to section 144B of the Act, the “registered email address” for the purpose of electronic communication between the National Faceless Assessment Centre and the assessee are as follows: – “(t) \"registered e-mail address\" means the e-mail address at which an electronic communication may be delivered or transmitted to the addressee, including— (i) the e-mail address available in the electronic filing account of the addressee registered in designated portal; or (ii) the e-mail address available in the last income-tax return furnished by the addressee; or (iii) the e-mail address available in the Permanent Account Number database relating to the addressee; or (iv) in the case of addressee being an individual who possesses the Aadhaar number, the e-mail address of addressee available in the database of Unique Identification Authority of India; or (v) in the case of addressee being a company, the e-mail address of the company as available on the official website of Ministry of Corporate Affairs; or (vi) any e-mail address made available by the addressee to the income-tax authority or any person authorised by such authority;” ITA No.1153/Mum/2025 (A.Y. 2016-17) 7 10. From the plain reading of the provisions of Explanation (t) to section 144B of the Act, it is evident that all the sub-clauses of this provision are alternatives to each other, and each of them indicates an independent mechanism for the determination of the “registered email address”. The very first email address, which is treated as the “registered email address”, is the email address available in the electronic filing account of the assessee registered in the designated portal, which we find in the present case was the email address of the assessee and her husband. The next email address, which is treated as a “registered email address”, is the one made available in the last Income Tax Return furnished by the assessee. As noted above, the last Income Tax Return furnished by the assessee was for the assessment year 2023-24 on 26/07/2023, wherein the assessee provided her own email address. Therefore, in the present case, no material has been brought on record by the Revenue to ignore the email addresses considered as “registered email address” as per the provisions of clauses (i) and (ii) of Explanation (t) to section 144B of the Act and to send the notice under section 142(1) of the Act at the email address which can be considered to fall within the last clause, i.e., clause (vi) of Explanation (t) to section 144B of the Act. 11. Since in the present case the statutory notice dated 08/02/2023 issued under section 142(1) of the Act was not sent on the email addresses, which are also recognised as “registered email address” for the purpose of electronic communication between the National Faceless Assessment Centre and the assessee and falls within the first two categories of “registered email address” ITA No.1153/Mum/2025 (A.Y. 2016-17) 8 as per the provisions of Explanation (t) to section 144B of the Act, we find merits in the submission of the assessee in not responding to the notice dated 08/02/2023 issued under section 142(1) of the Act. We are further of the view that the explanation of the assessee falls within the scope of “reasonable cause” within the meaning of the provisions of section 273B of the Act for failure to respond to the notice issued under section 142(1) of the Act. Therefore, we direct the deletion of the penalty levied under section 271(1)(b) of the Act. As a result, the grounds raised by the assessee in its appeal are allowed. 12. In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 03/04/2025 Sd/- VIKRAM SINGH YADAV ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 03/04/2025 Prabhat Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai "