Case Law Details
Devnadi Advisory Pvt. Limited Vs ITO (ITAT Kolkata)
In a recent Income Tax Appellate Tribunal (ITAT) case in Kolkata, Devnadi Advisory Pvt. Limited Vs ITO, the tribunal deleted the penalty charged for non-compliance with the notice under section 271B of the Income Tax Act. This ruling highlighted that not all apparent non-compliance of notice is deliberate.
Case Analysis: The assessee, Devnadi Advisory Pvt. Limited, appealed against the decision by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, which confirmed a penalty of Rs. 20,000 imposed by the Assessing Officer under section 271B of the Income Tax Act.
The Assessing Officer had issued two notices to the assessee, dated 14.03.2022 and 19.02.2022. The penalty was imposed due to the assessee’s failure to comply with these notices.
The assessee contended that the first notice was not served upon them and the second notice was complied with, thus opposing the penalties. The assessee’s appeal to the CIT(Appeals) was dismissed without consideration of these points.
Ruling: The tribunal noted that the assessee did not knowingly violate the notices issued by the Assessing Officer. It observed that there was a reasonable cause for the assessee’s non-appearance to the first notice as it was not served upon them. Moreover, the assessee submitted a reply to the second notice, which demonstrated their willingness to comply.
Considering these facts, the tribunal concluded that the assessee did not deliberately fail to comply with the notices and allowed the appeal, thus deleting the penalty.
Conclusion: The case outcome underlines the importance of due process in serving notices and the duty of authorities to consider all facts before imposing penalties. It also serves as a precedent for assessing intent and circumstances in cases of apparent non-compliance.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 24th February, 2023 passed for assessment year 20 13-14.
2. The grounds of appeal taken by the assessee are argumentative in nature and not in consonance with Rule 8 of ITAT Rules.
3. In brief, its grievance is that the ld. CIT(Appeals) has erred in confirming the penalty of Rs.20,000/- imposed by the ld. Assessing Officer under section 271B of the Income Tax Act.
4. With the assistance of ld. Representatives, we have gone through the record carefully. According to the ld. Assessing Officer, he has issued notices dated 14.03.2022 and 19.02.2022 to the assessee. These notices were not complied with by the assessee. Therefore, a penalty under section 271B has been imposed. In this section, it has been provided that if an assessee failed to comply with the notice issued by the ld. Assessing Officer, the penalty of Rs.10,000/- would be imposed on single failure. In the present case, the assessee has imposed a penalty of Rs.20,000/- on account of failure of the asses see for not comply with two notices.
5. Appeal to the ld. CIT(Appeals) did not bring any relief to the asses see.
6. It has been brought to our notice that the first notice was not served upon the assessee and the second notice was complied with by the assessee. A plea to this effect has specifically been raised by the assessee before the ld. CIT(Appeals), but the ld. 1st Appellate Authority has dismissed the appeal for want of prosecution without taking cognizance of this fact. Considering the above facts and circumstances, we are of the view that the assessee has not knowingly violated the notices issued by the ld. Assessing Officer. There was a reasonable cause for its non-appearance on the first notice, as it was not served upon the Similarly, the assessee has submitted reply to the second notice, therefore, it cannot be construed that the assessee failed to comply with the notices. Accordingly, we allow the appeal of the assessee and delete the penalty.
7. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on May 11th, 2023.
