Anila Narendra Sangani Vs ITO (ITAT Rajkot)
The Income Tax Appellate Tribunal (ITAT) in Rajkot has reduced a penalty imposed on a taxpayer for failing to respond to notices during an assessment proceeding. In the case of Anila Narendra Sangani vs. ITO, the Tribunal reduced the penalty from ₹30,000 to ₹10,000, concluding that a single penalty should apply for a series of non-compliances related to the same assessment.
The case involves a taxpayer, a proprietor of a firm named M/s Shreenathji Enterprise, engaged in the manufacturing of brass parts. The taxpayer’s troubles began after the Income Tax Department’s Investigation Wing found that her firm’s account was used for “accommodation entries,” or transactions totaling over ₹4.5 crore meant to facilitate a rotation of funds. The department initiated a reassessment for the Assessment Year 2013-14 by issuing a notice under Section 148 of the Income Tax Act.
During the subsequent assessment proceedings, the taxpayer failed to respond to three separate notices issued under Section 142(1). Citing these three instances of non-compliance, the Assessing Officer (AO) levied a penalty of ₹10,000 for each default, totaling ₹30,000 under Section 271(1)(b) of the Act. This section allows for a penalty of up to ₹10,000 for each failure to comply with a notice. The taxpayer appealed this order to the National Faceless Appeal Centre (NFAC), but the Commissioner of Income-tax (Appeals) upheld the penalty. The NFAC noted that the taxpayer had not provided a valid reason for her failure to respond to the notices, even during the appeal process.
