SARVESWARAN DEEPA,KANCHIPURAM V. THE INCOME TAX OFFICER, NON CORP WARD 22(6), TAMBARAM, TAMBARAM

ITA 1973/CHNY/2025

AI Insights

The case involves Sarveswaran Deepa, an individual who was employed with M/s. Nokia India Private Limited, and who filed her income tax return for the assessment year 2015-16. The return was initially accepted, but due to a suspected fraudulent PAN, the case was reopened, and notices under sections 142(1) and 148 of the Income-tax Act were issued. The assessee failed to respond to these notices, leading to a penalty under section 271(1)(b) for non-compliance. The assessee appealed against the penalty, which was upheld by the CIT(A). The Tribunal, however, modified the penalty, imposing it for only one instance of non-compliance.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 781295 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 12-07-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GOUTHAMI MANIVASAGAM; J. C.I.T
• Assessee Lawyers: R.S. LAKSHMI NARAYANA
• Keywords: Reasonable cause; Initiation of penalty proceedings
• Section: 144

Judgement Text

" आयकर अपील य अ धकरण, ‘बी’ \u000eयायपीठ, चे\u000eनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI \u0015ी जॉज\u0018 जॉज\u0018 क े, उपा\u001aय\u001b एवं \u0015ी एस.आर.रघुनाथा, लेखा सद%य क े सम\u001b BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:1973/Chny/2025 'नधा\u0018रण वष\u0018 / Assessment Year: 2015-16 Sarveswaran Deepa, No.18, Anna Nagar, Paravathy Nagar, Alamelu Street, Old Perungalathur, Tambaram Taluk, Kanchipuram, Kancheepuram – 600 063. vs. ITO, Non-Corporate Ward -22 (6), Tambaram. [PAN: AXWPD-3112-B] (अपीलाथ)/Appellant) (*+यथ)/Respondent) अपीलाथ) क, ओर से/Appellant by : Shri. R. S. Lakshmi Narayana, Advocate *+यथ) क, ओर से/Respondent by : Ms. Gouthami Manivasagam, J.C.I.T. सुनवाई क, तार ख/Date of Hearing : 16.09.2025 घोषणा क, तार ख/Date of Pronouncement : 23.10.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, AM: This appeal by the assessee is directed against the order dated 30.06.2025 passed by the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter referred to as the “ld.CIT(A)”], arising from the penalty order dated 15.09.2022 passed by the Income Tax Officer, Non-Corporate Ward Printed from counselvise.com :-2-: ITA. No:1973/Chny/2025 22(6), TBM [hereinafter referred to as the “AO”], u/s.271(1)(b) of the Income- tax Act, 1961 [hereinafter referred to as “the Act”], pertaining to the Assessment Year 2015-16. 2. The assessee has raised the following grounds of appeal: - 1. That the Ld.CIT(A) is not justified in upholding the penalty order dated 15.09.2022 passed by the Assessing Officer u/s.271(1)(b) of the Income-tax Act, 1961. 2. That the Ld.CIT(A) erred in law and on facts in dismissing the appeal without duly considering the sufficient cause shown by the appellant for the non-compliance. 3. That the Ld.CIT(A) failed to appreciate that the penalty, if any, could be levied only for the first default and not for each instance of default. 4. That the Ld.CIT(A) is not justified in confirming the penalty of Rs.30,000/- levied by the Assessing Officer u/s.271(1)(b) of the Act. 5. That the appellant craves leave to add, amend or delete any of the ground(s) of appeal on or before the disposal of the present appeal. 3. The brief facts of the case are that the assessee is an individual, who was employed with M/s. Nokia India Private Limited during the assessment year under consideration. For the A.Y.2015-16, the assessee filed her return of income electronically on 01.08.2015, declaring a total income of Rs.4,67,853/- and claimed refund of Rs.1,61,590/-. 4. On the basis of suspected fraudulent PAN flagged in the ITBA system, the case of the assessee was reopened, suspecting fraudulent claim of refund. Accordingly, notice u/s.148 of the Act was issued by the AO on 31.03.2021. In response to the said notice, no return of income was filed by the assessee. Printed from counselvise.com :-3-: ITA. No:1973/Chny/2025 Subsequently, notices u/s.142(1) of the Act were issued to the assessee on 13.11.2021, 27.01.2022, and 04.03.2022. However, the assessee did not comply with any of these notices. Consequently, the assessment was completed u/s.147 r.w.s 144 of the Act on 22.03.2022, wherein the total income of the assessee was assessed at Rs.11,21,440/-. In the said assessment order, the AO also recorded satisfaction for initiation of penalty proceedings u/s. 271(1)(b) of the Act, on account of the assessee’s failure to comply with the notices issued u/s.142(1) of the Act. Accordingly, a show cause notice u/s.274 r.w.s 271(1)(b) of the Act was issued by the AO on 22.03.2022. 5. During the course of the penalty proceedings, the assessee submitted before the AO that the notices issued u/s.142(1) of the Act had been served on an e-mail address belonging to her authorised representative and, therefore, were not received by her personally. It was further contended that the assessee could not furnish a response to the said notices as she had no knowledge of their issuance, owing to non-receipt of the communication. On these grounds, it was urged that there existed a reasonable cause for the alleged non- compliance with the notices issued u/s.142(1) of the Act, and consequently, a request was made to the AO to drop the penalty proceedings initiated u/s.271(1)(b) of the Act. 6. The AO, however, was not satisfied with the explanation so tendered. The AO observed that it was the obligation of the assessee to ensure that her correct and updated e-mail address was duly intimated to the Department. It was further Printed from counselvise.com :-4-: ITA. No:1973/Chny/2025 held that the notices in question had been validly served on the e-mail address available on record, as per the particulars furnished and verified in the return of income. In the opinion of the AO, the assessee had failed to provide any reasonable or satisfactory explanation for the repeated defaults in complying with the notices issued u/s.142(1) of the Act. Accordingly, the AO concluded that the case was fit for the imposition of penalty u/s.271(1)(b) of the Act. In view thereof, the AO proceeded to levy a penalty of Rs.10,000/- for each instance of default, being non-compliance with the notices dated 13.11.2021, 27.01.2022, and 04.03.2022, aggregating to Rs.30,000/-, u/s.271(1)(b) of the Act vide order dated 15.09.2022. 7. Aggrieved by the aforesaid penalty order, the assessee preferred an appeal before the ld.CIT(A), who, vide order dated 30.06.2025, upheld the penalty of Rs.30,000/- levied by the AO u/s.271(1)(b) of the Act. Being further aggrieved, the assessee is in appeal before this Tribunal. 8. The ld.AR, appearing on behalf of the assessee, submitted that the impugned notices issued u/s.142(1) of the Act were sent to the e-mail address of the assessee’s erstwhile Tax Consultant and not to the assessee herself. It was contended that the said Tax Consultant, having ceased to represent the assessee, did not bring the contents of such notices to the knowledge of the assessee, and consequently, there was no compliance on the part of the assessee. The ld.AR further submitted that no physical notices were served at the assessee’s registered address. According to the ld.AR, in the absence of Printed from counselvise.com :-5-: ITA. No:1973/Chny/2025 any response to e-mail communications, it was incumbent upon the Revenue authorities to have effected service of notice through physical mode, which admittedly was not done in the present case. In these circumstances, the ld.AR argued that the assessee cannot be treated as having defaulted in compliance, since there was no valid service of notice. The ld.AR, therefore, prayed for deletion of the penalty levied by the AO u/s.271(1)(b) of the Act. Without prejudice, the ld. AR alternatively submitted that, even otherwise, the penalty, if at all leviable, ought to be restricted to one instance of default alone. 9. Per contra, the ld.DR vehemently supported the order of the AO and contended that the assessee has consistently exhibited a pattern of non- compliance. It was further submitted that the assessee failed to respond to the hearing notices issued by the ld.CIT(A). In view of the foregoing, the ld.DR urged that the penalty levied by the AO u/s.271(1)(b) of the Act be confirmed. 10. We have heard the rival contentions and perused the orders of the lower authorities. It is an admitted fact that the assessee has failed to respond to the notices issued u/s.142(1) of the Act on three different occasions. On examination of the matter, we find that the nature of default committed by the assessee is identical in all three instances. In view of the settled position, the penalty u/s.271(1)(b) of the Act can be imposed only in respect of one default. The provisions of section 271(1)(b) of the Act are intended to serve a deterrent purpose and not to generate revenue. Had the penalty been imposed separately for each notice issued u/s.142(1) of the Act, it would result in an unlimited Printed from counselvise.com :-6-: ITA. No:1973/Chny/2025 multiplicity of penalties for a single underlying default, which cannot be the legislative intent. It is further observed that in the event of non-compliance with a notice u/s.142(1) of the Act, the appropriate remedy available to the AO is to proceed u/s.144 of the Act to frame a best judgment assessment, and not to repeatedly levy penalty u/s.271(1)(b) of the Act for the same default. 11. In view of the foregoing, we are of the considered opinion that the penalty levied u/s.271(1)(b) of the Act should be restricted to one instance of non- compliance with the notice u/s.142(1) of the Act dated 13.11.2021. Accordingly, the penalty levied by the AO is confirmed at Rs.10,000/- instead of Rs.30,000/- as confirmed by the ld.CIT(A). Therefore, the penalty to the extent of Rs.20,000/- is deleted. The grounds of appeal of the assessee are, therefore, partly allowed. 12. In the result, the appeal of the assessee is partly allowed. Order pronounced in the court on 23rd October, 2025 at Chennai. Sd/- Sd/- (जॉज\u0018 जॉज\u0018 क े) (GEORGE GEORGE K) उपा\u001aय\u001b /VICE PRESIDENT (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सद%य/ACCOUNTANT MEMBER चे\u000eनई/Chennai, 0दनांक/Dated, the 23rd October, 2025 SP Printed from counselvise.com :-7-: ITA. No:1973/Chny/2025 आदेश क, *'त2ल3प अ4े3षत/Copy to: 1. अपीलाथ)/Appellant 2. *+यथ)/Respondent 3.आयकर आयु5त/CIT– Chennai/Coimbatore/Madurai/Salem 4. 3वभागीय *'त'न ध/DR 5. गाड\u0018 फाईल/GF Printed from counselvise.com "