Jignesh Mahendralal Bharuchi Vs ITO (ITAT Surat)
In the case of Jignesh Mahendralal Bharuchi vs. ITO, the Income Tax Appellate Tribunal (ITAT) Surat considered whether a penalty under Section 272A(1)(d) of the Income Tax Act, 1961, could be levied for each instance of non-compliance with notices issued during assessment proceedings. The assessee, engaged in wholesale and retail trading of edible oil and sugar, had been subjected to a survey under Section 133A in March 2017. The survey led to the detection of a cash balance of ₹23.79 lakhs, including ₹19.37 lakhs received between April and November 2016. The assessee attributed this cash to business receipts. A return of income was filed for AY 2017–18, but during scrutiny proceedings, the assessee failed to respond to multiple notices issued under Sections 143(2) and 142(1), leading to the disallowance of ₹19.37 lakhs as unexplained income under Section 115BBE. Subsequently, a penalty of ₹50,000 was imposed for non-compliance across five notices.
The assessee appealed the penalty and the delay in filing the appeal before the Commissioner of Income Tax (Appeals), attributing the delay to disruptions caused by the COVID-19 pandemic. While the CIT(A) rejected the appeal due to delay, the ITAT found merit in the explanation and held that the delay was reasonable given the pandemic period. Regarding the penalty, the Tribunal referred to judicial precedents, including Rekha Rani vs. DCIT, where it was held that penalties for procedural defaults like non-appearance in response to notices should be limited to the first instance, rather than applied cumulatively to every default. In this case, although the assessee had not fully complied with all notices, the assessment itself was completed under Section 143(3), indicating some level of participation in the proceedings.
