Summary: The assessee appeals against the penalty of Rs. 10,000 imposed under Section 271(1)(b) of the Income Tax Act for non-compliance with notices under Section 142(1). The appeal argues that non-compliance was due to genuine reasons, including the assessee’s ill health, lack of awareness about the Faceless Scheme, and inability to operate the tax portal. Notices were sent electronically but not physically received, and the time given for compliance was less than the legally required period. The penalty order does not specify the dates of default, making it procedurally defective. Citing Section 273B, the assessee claims reasonable cause for non-compliance and references judicial precedents where penalties were quashed under similar circumstances. Additionally, the assessee highlights dependency on a tax advisor who failed to provide necessary guidance. The appeal requests the Hon’ble CIT (A) to consider the circumstances, uphold natural justice, and delete the penalty. A virtual hearing is also sought.
Draft Submissions
Specific date of defaults not mentioned in the order, no penalty u/s 271 (1)(b) of the Act
BEFORE THE HON’BLE COMMISSIONER OF INCOME TAX (APPEALS), NFAC, NEW DELHI
IN THE CASE OF XXXXX, XXXXXXX (PAN: XXXX)
FOR THE A.YR. 2016-17
GROUND WISE WRITTEN SUBMISSIONS
Ground No. 1
During the F.Yr. 2021-22 the assessee was not well and he was unable to check his mails and was unable to reopen the portal. The innocence of the assessee about the Faceless Scheme of the Govt of India and his ill health were the reasons for non-compliance to the notices issued to the assessee u/s 142(1) of the Act. The reasonable cause for the non-compliance was his ill health and innocence about the e-proceedings and Faceless Scheme of the Govt of India. A lenient approach is expected from the Ld CIT (A) to delete the penalty of Rs. 10000.00/- imposed on the assessee. The assessee met with a fatality due to death of his brother XXX XXXXXX Dt. 21.12.2021. That incident was also painful and it shattered the entire family. At least it was not possible for the assessee to meet his counsel and reply to any notice.
The assessee has not replied to the various notices u/s 142(1) Dt.25.09.2021, 10.12.2021 and 31.01. 2022. The assessee has also failed to reply to the notices due to his ill health. Medical reports of the assessee are enclosed in the paper book. The case was assigned to NFAC and notices were sent to the assessee on his portal but no compliance was made by the assessee as the assessee is innocent and has never desired to open his portal and he has no knowledge of Faceless scheme of the Govt. of India. Show cause notice were issued to the assessee Dt. 19.02.2022 and 24.03.2022 and assessee has replied fully to the show cause notice Dt. 16.03.2022 but the same has not been acknowledged by the department.
He has not received the notices regarding re-opening of the assessment by speed post, in person or on his mobile/mail. He is not well versed with computer operations & he never checked his income tax portal regarding issue of notices. Assessee is an innocent person & not an educated person. The reason for non-compliance of the notices was non- receipt of notices in hand of the assessee during the course of assessment proceeding in the F.Yr. 2020-21 & 2021-22.
He is not well versed with the computer operation and as such he could not open the ITD portal and that resulted for assessment u/s 144 and creation of huge illegal demand o f Rs.1974861.00 which is not possible to deposit by the assessee as assessee is a small stature person.
The notices were sent on the mail of the tax advisor who had not advised the assessee properly for replying to the notices. It was the duty of the tax advisor to guide properly as the assessee is not well educated and not well versed with computer operation. As far as taxation matter is concerned he is fully dependent on his tax advisor. Due to mistake of the tax advisor assessee could not reply and is late in filing appeal otherwise he is fully law abiding citizen.
The reasonable cause is proved beyond doubt about his ill health and innocence of knowing the Faceless Scheme of the Govt of India and e-proceedings as he is not well-educated person. The Hon’ble CIT (A) is requested to delete the penalty u/s 271(1)(b) of the Act imposed by the Assessing Officer. In this regard medical reports of the assesse are enclosed. His ill health and no knowledge of the notices issued by the department resulted into non-compliance and imposition of penalty of Rs. 10000.00. The Hon’ble CIT (A) is requested to delete the penalty considering the innocence of the assessee and a reasonable cause u/s 273B of the Act .
Ground NO. 2
When an assessee is ill and he is unable to check his mails and unable to re-open the portal. The innocence of the assessee about the Faceless scheme of the Govt. of India and his ill health were the reasons for non-compliance. The assesse has reasonable cause u/s 273B of the Act.
The details of the notices is as under :-
| Notices under section | Date of Issue | Reasons for non- compliance |
| 142 (1) | 25-9-2021 | Assessee was ill and he was unknown to the Faceless Scheme of the Govt. of India. This notice was just to file the return in response to the notice u/s 148 of the Act. The assessee has already filed his ITR u/s 139(1) and revised u/s 139(5) of the Act. But this notice was issued by the Jurisdictional Assessing Officer, XXXXXX No. 1, XXXX.The notice itself is illegal as time period given in the notice is less than 7 working days. This notice was not received and seen by the assessee due to his ill health, less education and no knowledge of the mails, portal etc. The time period in the notice is less than 15 days. |
| 142 (1) | 10-12-2021 | Notice was issued by the Ld.FAO but was not received by the assessee. Assessee was ill and he was unknown to the Faceless scheme of the Govt. of India.
This notice was not received and seen by the assessee due to his ill health, less education and no knowledge of the mails, portal etc. The time period in the notice is less than 15 days. A minimum seven days time |
| 142 (1)
|
31-1-2022
|
Notice was issued by the Ld FAO not received and checked by the assesse. The notice itself is illegal as time period given in the notice is less than 7 working days.This notice was not received and seen by the assessee due to his ill health, less education and no knowledge of the mails, portal etc .Assesse was ill and he was unknown to the Faceless scheme of the Govt. of India. The time period in the notice is less than 15 days . A minimum time period of 7 working days is required . |
As the assesse was ill and not knowing e-proceedings tab, his mail ID and income tax portal, not received any notice in hand. The health of the assessee was deteriorating abundantly. Therefore, it was impossible for the assessee to look at the affairs of the business, his family and what we can speak of the income tax notices. The Ld. CIT (A) is requested to take a lenient view and he is prayed to delete the penalty of Rs 10000/- as there is reasonable cause with the assessee. You are requested to delete the penalty u/s 273B of the Act as there is reasonable cause with the assessee. The order being defective in nature.
Out of the three notices issued to the assesse a time period of less than 7 days has been given in two notices which is not legally correct. The principal of natural justice has been denied to the assesse. The notices are illegal. Moreover, no notice was received by the assesse in hand, speed post and he was ill and was having lack of awareness about the Faceless Scheme of the Govt of India, therefore, was unable to respond to notices under Section 142(1) of the Income Tax Act. In these circumstances you are requested to delete the entire penalty imposed on the assessee. Assessee demonstrates that noncompliance was due to genuine reasons beyond their control.
Section 271(1)(b) and Its Discretionary Nature: The imposition of penalties under section 271(1)(b) is not automatic. The income tax authorities have to consider the circumstances before levying the penalty. If the assessee has shown valid reasons for not responding, the penalty may be waived.
The assessee relies on the judgement where the Hon’ble ITAT deleted the penalty knowing reasonable circumstances with the assessee for making non compliance
Income Tax Appellate Tribunal – Mumbai
Shyam Kumar Sadashivan Pillai, Mumbai vs Income Tax Officer, Circle 27(3)(1), … on 20 June, 2024
Copy of judgement is part of the paper book.
Ground No. 3
The imposition of a penalty under section 271(1)(b) of the Income Tax Act, 1961, relates to the failure of an assessee to comply with the notices issued by the Income Tax Officer (ITO), including notices under Section 142(1) of the Act. If the penalty order is passed without specifying the dates of non-compliance, it could be considered legally flawed, as the proper procedure under the law has not been followed. In the case of the assessee no specific date of default for non compliance has been mentioned. The order becomes invalid when no specific default and its date of occurrence has been mentioned.
Section 271(1)(b) imposes a penalty for non-compliance of notices issued under Section 142(1). However, it is essential for the penalty order to clearly specify the dates of non-compliance in order for it to be valid. If the order fails to mention these dates, it does not fulfil the requirement of the law, and therefore, the penalty order is illegal.The assessee relies on the following judgement.
Smt. Rekha Rani Vs DCIT (ITAT Delhi) Appeal Number: ITA No. 6131/Del/2013 Date of Judgement/Order : 06/05/2015 Related Assessment Year : 2009-10 Courts : All ITAT Delhi
In this case the court has mentioned that the penalty u/s 271(1)(b) has to be imposed by the Assessing Officer for the first default. In the case of the assessee, no dates of defaults have been mentioned in the penalty order and moreover it has not been mentioned for which default penalty of Rs. 10000.00/- is being imposed. Hence the penalty order seems to be invalid in the eyes of law and it is prayed to make the order illegal and delete the penalty of Rs. 10000.00/-.
In several cases, courts have quashed penalty orders due to technical defects in the order, such as a failure to specify the necessary facts, including the dates of non-compliance. This helps ensure that penalties are not arbitrarily imposed and that the law is applied in a transparent manner.
Based on these principles and precedents, if the penalty order does not mention the dates of non-compliance, it could be argued that the order is procedurally flawed and, therefore, illegal. The courts have consistently held that penalties cannot be imposed arbitrarily, and the penalty order must adhere to legal formalities, including specifying the dates of non-compliance.
Ground No. 4
Under Section 142(1) of the Income Tax Act, the Assessing Officer (AO) can issue a notice requiring the taxpayer to file a return/reply within a specified time. However, the time period given in such a notice must be reasonable, and it must allow the taxpayer sufficient time to comply.
The courts have generally taken the view that a time period of less than 7 days for filing a response or return under Section 142(1) is too short and could be deemed unreasonable. This is particularly true when considering the principle of natural justice, which requires an adequate opportunity for the taxpayer to respond to the notice.
Hindustan Steel Ltd. v. State of Orissa (1969) 2 SCR 211 (Supreme Court):
This case is not directly related to the Income Tax Act but deals with the principle of natural justice and the right of a party to have a reasonable opportunity to be heard. The Supreme Court observed that any action which does not give a reasonable time to the person concerned is violative of the principles of natural justice.
It can be concluded that a time period of less than 7 days for filing a response or return under Section 142(1) may be considered unreasonable and could be held illegal, violating the principles of natural justice. Already stated in two notices the time period given is less than 7 days. Hence the principal of natural justice has been totally denied to the assessee. The order imposing penalty is illegal and is prayed to make it null and void. The assessee relies on the following judgement in this regard:-
Income Tax Appellate Tribunal – Delhi
Aarti Chadha & Pooja Chadha, Both In … v/s Assessee
INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI(2013)
Copy of judgement is enclosed.
Ground No. 5
Already stated in the above grounds of appeal that the penalty has been imposed in a most illegal manner. The Ld. CIT (A) is requested and prayed to delete the penalty considering a reasonable cause with the assessee u/s 273B of the act.
Ground No. 6
Prayer is made to the Ld. CIT (A) Faceless to delete the penalty of Rs. 10000.00 imposed on the assessee in a most illegal manner and even when reasonable cause is with the assessee.
Ground No. 7
Further prayer is made for a virtual hearing before the Hon’ble CIT (A) faceless.
Ground N. 8
Prayer is made to delete the entire penalty of Rs 10000.00 imposed on the assesse as he himself is in appeal against the order u/s 144 r.w.s 147 of the act passed by AO, faceless in a most illegal & arbitrary manner. The assessee has already filed his detailed written submissions and Paper book and is available on the portal.
Thanking you
(Appellant)
Sd/-
(XXXX)
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