RAJYESHWAR RETAIL TRADE SYSTEMS PVT LTD,INDORE V. ACIT CENTRAL-2, BHOPAL, BHOPAL

ITA 33/IND/2025

AI Insights

The case involves Rajyeshwar Retail Trade Systems Pvt. Ltd., which appealed against a penalty imposed for non-compliance with a notice under Section 142(1) of the Income Tax Act, 1961, during the COVID-19 pandemic. The penalty was initially upheld by the CIT(A), but the Tribunal found that the imposition of the penalty was not justified as the compliance was impossible due to the national lockdown. The Tribunal considered the circumstances of the COVID-19 pandemic as a reasonable cause for the assessee's failure to comply with the notice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713031 (ITAT-INDORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH PORWAL
• Assessee Lawyers: HARSH VIJAYWARGIYA; ARS
• Keywords: Set aside; Opportunity of being heard; Reasonable cause; Principle of natural justice; Assessment record; Non compliance
• Section: 144; 142(1); 273B

Judgement Text

" Page 1 of 9 आयकर अपीलीय अिधकरण, इंदौर Ɋायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE B.M. BIYANI, ACCOUNTANT MEMBER AND SHRI PARESH M JOSHI, JUDICIAL MEMBER ITA No.33/Ind/2025 (AY: 2018-19) Rajyeshwar Retail Trade Systems Pvt. Ltd, 852 Sudama Nagar, Infront of Jain Mandir, Indore (PAN:AAECR4394M) बनाम/ Vs. ACIT Central-2, Bhopal (Appellant) (Revenue) Assessee by Shri Harsh Vijaywargiya, ARs Revenue by Shri Ashish Porwal, DR Date of Hearing 30.07.2025 Date of Pronouncement 31.07.2025 आदेश / O R D E R Per Paresh M Joshi, J.M: This is an appeal filed by the assessee Under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the “Act” for sake of brevity) before this Tribunal. The assessee is aggrieved by the order dated 29.11.2024 in appeal No.CIT(A)-3, Bhopal/17/12499/2017-18 which is hereinafter referred to as the “Impugned order”. The relevant Assessment Year is 2018-19 and the corresponding previous year period is from 01.04.2017 to 31.03.2018. Printed from counselvise.com Rajyeshwar Retail Trade Systems Pvt Ltd ITA No.33/Ind/2025 - A.Y.2018-19 Page 2 of 9 2. FACTUAL MATRIX 2.1 That as by way of an Assessment Order made u/s 272A(1)(d) of the Act, a penalty of Rs. Ten thousand was imposed on the assessee for non-compliance of the provision of Section 142(1) of the Act. That the aforesaid order bears No. ITBA/PNL/F/272A(a)(d)/2020-21/1031057951(1) that the same is dated 26.02.2021 which is hereinafter referred to as the “impugned penalty order”. The core issue was penalty of Rs.10,000/- on account of non-compliance to the provision of Section 142(1) of the Act by the assessee. 2.2 That the assessee being aggrieved by the “impugned penalty order” prefers first appeal u/s 246A of the Act before the Ld. CIT(A) who by the “impugned order” has dismissed the 1st appeal of the assessee on grounds and reasons stated therein. The core ground and reason for dismissal of the first appeal was as under in the “impugned order”:- “4.1 Ground No.1 to 2 I have considered the penalty order, issue involved in assessment and the ground of appeal raised by the appellant against the penalty order. In this case penalty of a sum of Rs.10,000/- was levied on appellant u/s 272A(1)(d) of the “Act”. During the assessment proceedings it has been observed that the assessee did not comply to the notices and did not furnish any reply despite of numerous opportunities provided to the appellant. Accordingly, the Assessing Officer held that the assessee has failed to comply with the notice under section Printed from counselvise.com Rajyeshwar Retail Trade Systems Pvt Ltd ITA No.33/Ind/2025 - A.Y.2018-19 Page 3 of 9 142(1) of the “Act” and levied penalty of amount Rs.10,000/- u/s 272A(1)(d) of the Act for the A.Y 2018-19. 4.1.2 On Perusal of assessment records, I find that during the assessment proceedings, the appellant always failed to comply the notices issued to him. As per record, several opportunities have been given to the appellant during the assessment proceedings. Further, the Ld. A.O has passed the assessment order u/s 144 of the I.T. Act which proves that the appellant was provided ample opportunities to substantiate its claim, however, despite several opportunities being granted from time to time, there has been absolutely no compliance on the part of the appellant to give detailed explanation regarding grounds of appeal taken for the year under consideration. The appellant’s overall attitude towards compliance during assessment as well as penalty proceeding has been absolute non compliance. It is very unreasonable that repeatedly the appellant prefers not to comply the notices issued by the Assessing Officer. Accordingly, the plea of the appellant that penalty levied u/s 272A(1)(d) for the A.Y under consideration without giving reasonable opportunity of being heard is not sustainable and therefore, the claim of the appellant on these grounds are not acceptable. 4.1.3 In view of above discussions, I find no merit on the grounds raised by the appellant. Therefore, the levying of the above penalty is fully justified and proper and in accordance with the provisions made under the Income Tax Act. Accordingly, the appeal on ground No.1 to 2 are dismissed. 4.1.4 Ground No.3:- Being general in nature, this ground does not require any specific adjudication. 5. Accordingly, the appeal is dismissed.” 2.3 That the assessee being aggrieved by the “impugned order” has preferred the instant second appeal before this tribunal and has raised following grounds of appeal in Form No.36 against the “impugned order” which are as under:- “1. That on the facts and in the circumstances of the case Ld. CIT(A)-3, Bhopal has erred in confirming the penalty levied by Printed from counselvise.com Rajyeshwar Retail Trade Systems Pvt Ltd ITA No.33/Ind/2025 - A.Y.2018-19 Page 4 of 9 Ld.AO amounting to Rs.10,000/- u/s 272A(1)(d) of Income Tax Act, 1961. 2. That on the facts and in the circumstances of the case Ld. A.O has erred in passing and Ld. CIT(A)-3, Bhopal has erred in confirming the impugned order without affording any opportunity of being heard against the principles of natural justice. 3. That the assessee craves leave to add, amend, alter or delete any of the grounds of appeal and all the above grounds are without prejudice to each other.” 3. Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 30.07.2025 when the Ld. AR for and on behalf of the assessee appeared and interalia contended that the “impugned order” is illegal, bad in law and not proper. It thus deserves to be set aside by this Tribunal in exercise of its appellate power. It was contended that the notice u/s 142(1) of the Act was issued to the assessee on 16.03.2020 where the assessee was requested to submit the information/documents as per questionnaire along with books of accounts by 15.04.2020. It was mentioned in the said notice that compliance by 15.04.2020 is a must failing which the assessee would be liable to a penalty u/s 271(1)(b) of the Act. A show cause notice for penalty u/s 272A(1)(d) of the Act dated 29.12.2020 was issued to the assessee requiring him to show cause on or before 04.01.2021 as to why penalty of Printed from counselvise.com Rajyeshwar Retail Trade Systems Pvt Ltd ITA No.33/Ind/2025 - A.Y.2018-19 Page 5 of 9 Rs.10,000/- should not be levied upon the assessee for non- compliance of notice u/s 142(1) of the Act. However the assessee did not avail this opportunity and no reply was furnished. Therefore vide “impugned penalty order” a penalty of Rs.10,000/- was imposed u/s 272A(1)(d) of the Act for non- compliance of Section 142(1) notice. The Ld. AR therefore contended that compliance on 15.04.2020 was impossible as Covid-19 had set in and there was national lock down declared. Even when show cause notice dated 29.12.2020 was issued u/s 272A(1)(d) lock down was continuing one. Under these circumstances question of complying with the notice u/s 142(1) of the Act does not arises on or before 15.04.2020. The Ld. AR finally prayed that the “impugned order” imposing penalty of Rs.10,000/- should be set aside. The Ld. DR for and on behalf of the Revenue contended that during Covid-19 there was a national lock down from 15.03.2020 therefore the Ld. AR has rightly contended that it was impossible for anyone to comply with the notice u/s 142(1). Printed from counselvise.com Rajyeshwar Retail Trade Systems Pvt Ltd ITA No.33/Ind/2025 - A.Y.2018-19 Page 6 of 9 4. Observations,findings & conclusions. 4.1 We now have to decide the legality, validity and the proprietary of the “Impugned Order” basis records of the case and rival contentions canvassed before us. 4.2 We have carefully perused the records of the case. 4.3 We basis records of the case and after hearing and upon examining the contentions are of the considered view that as and by way of a notice u/s 142(1) which was issued on 16.03.2020 the Covid-19 was already in place globally and national lock down was declared. The due date for compliance was 15.04.2020. Naturally the assessee could not comply with the requisitions which were made as it was an act of impossibility at that point of time. To expect assessee to comply with the notice u/s 142(1) dated 16.03.2020 by 15.04.2020 was therefore impossible due to Covid-19 which had affected the world across nations. Hence we are of the considered opinion that imposition of penalty of Rs.10,000/- on assessee u/s 272A(1)(d) of the Act was an exercise in nullity. An action wholly untenable in law. Law cannot compel a citizen to do impossible particularly during Covid-19. Printed from counselvise.com Rajyeshwar Retail Trade Systems Pvt Ltd ITA No.33/Ind/2025 - A.Y.2018-19 Page 7 of 9 4.4 We now reproduce Section 272A which deals with subject penalty issue and same is reproduced below:- “[Penalty for failure to answer question, sign statements, furnish information, return or statements, allow inspections etc.] 272A(1) If any person (d) 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 he shall pay by way of penalty a sum of Rs. Ten Thousand for each default or failure”. We hold that use of the word “shall” (supra) u/s 272A(1)(d) is mandatory and there is no discretion with the authorities. Now therefore question before us is whether the word “shall” (supra) should be strictly construed or liberally construed particularly so when entire period from 16.03.2020 to 15.04.2020 during which the assessee was asked to meet requisitions vide notice dated 16.03.2020 was covered by Covid- 19 and national lock down was declared. To expect an assessee to comply was an act of impossibility at the material time and place hence the word “shall” must be liberally interpreted for Covid-19 period. Accordingly we set aside the impugned order which has upheld “impugned penalty order”. We also additionally hold that by virtue of the Section 273B of the Act which deals with “penalty not to be imposed in certain Printed from counselvise.com Rajyeshwar Retail Trade Systems Pvt Ltd ITA No.33/Ind/2025 - A.Y.2018-19 Page 8 of 9 cases” we find that the Section 272A(d) stands covered therein and the said section states that no penalty shall be imposed on the person for any failure referred to in the said provisions if the assessee proves that there was a reasonable cause for the said failure. The AR of the assessee by taking plea of Covid-19 has demonstrated before us reasonable cause of failure to comply with the notice u/s 142(1). Hence “impugned order” by virtue of Section 273B too does not stand which is a non-obstinate clause. 5. Order 5.1 In view of aforesaid we set aside the “impugned order” and allow the appeal of the assessee. 5.2 In the result, the appeal of the assessee is allowed. Order pronounced in open court on 31.07.2025. Sd/- Sd/- (B.M. BIYANI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore िदनांक / Dated : 31/07/2025 Dev/Sr. PS Printed from counselvise.com Rajyeshwar Retail Trade Systems Pvt Ltd ITA No.33/Ind/2025 - A.Y.2018-19 Page 9 of 9 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore Printed from counselvise.com "