Balram Kumar Mahendra Vs ITO (ITAT Delhi)
The case involved appeals by Balram Kumar Mahendra and Prem Mahendra against the penalty levied under Section 271(1)(b) of the Income Tax Act, amounting to ₹10,000 each. The Assessing Officer imposed the penalty for non-compliance with notices under Section 143(2) and subsequent show-cause notices. The appellants argued that they did not receive the notices, as they were sent to an outdated address. Before the Commissioner of Income Tax (Appeals) [CIT(A)], they contended that their address had changed due to medical reasons, and the tax department was aware of their new address. However, the CIT(A) upheld the penalty, stating that the notices were sent to the address provided in the income tax return, and no official intimation regarding the change of address was made to the department.
The Income Tax Appellate Tribunal (ITAT) Delhi ruled in favor of the appellants, emphasizing that penalty under Section 271(1)(b) is not automatic and can be waived under Section 273B if a reasonable cause exists. The tribunal accepted that non-receipt of notices due to an address change constituted a reasonable cause for non-compliance. Citing the Supreme Court ruling in Hindustan Steel Ltd. vs. State of Orissa, ITAT highlighted that penalty should not be imposed when non-compliance is due to a technical or unintentional failure rather than deliberate disregard of statutory obligations. As a result, the penalties were deleted, and the appeals were allowed.
