Mahesh Ratilal Ganatra Vs DCIT (ITAT Delhi)
UK Not OK for Notice! – ITAT Delhi Deletes Penalty as 142(1) Never Reached the NRI in Britain; Penalty Quashed as Notice Not Served – ITAT Delhi Holds Service, Not Mere Issuance, is Mandatory for 142(1) Compliance
Assessee, a Non-Resident Indian residing in the UK, did not file any return of income for AY 2018-19 since he had no income accruing or arising in India. AO levied a penalty of ₹10,000 u/s 272A(1)(d) for alleged non-compliance with a notice u/s 142(1) dated 06.01.2023.
Assessee contended that no such notice was ever served upon him & that he was completely unaware of any proceedings, as even the assessment was framed ex-parte u/s 147 r.w.s 144 & 144C(iii) on 30.05.2023. CIT(A) rejected his explanation & upheld the penalty.
Before the Tribunal
No one appeared for the Assessee; the Departmental Representative supported the CIT(A)’s order, asserting deliberate non-cooperation. However, the Bench examined the record & noted key deficiencies.
Findings & Observations
- The Assessee was a UK resident & assessed in non-resident status; the address in the assessment order itself was a foreign address.
- There was no proof of service of the 142(1) notice on the Assessee.
- The law requires service of notice, not mere issuance.
- Without valid service, the Assessee could not have known about the proceedings.
- The fact that the assessment itself was completed ex-parte reinforced that no effective communication was ever made.
- Hence, the Bench held that the penalty u/s 272A(1)(d) cannot survive when the Assessee had a reasonable cause & lack of notice service.
- Penalty order set aside
Key Takeaway
