Case Law Details
Vishvas Chandrakant Karajkar Vs ITO (ITAT Pune)
ITAT Pune held that appellants’ failure to furnish information/documents during the course of pendency of re-assessment proceedings and failure to comply with notice due to COVID-19 restriction is reasonable cause, hence penalty u/s. 272A(1)(d) of the Income Tax Act not imposable.
Facts- The assessee is an individual whose case for the AY 2017-18 was reopened for assessment/reassessment u/s 147 of the Act. In the course of such proceedings, the Revenue vide notices dt. 12/12/2021 & 27/12/2021 issued u/s 142(1) of the Act called upon the assessee to furnish certain documents vis-à-vis information in connection with the assessment, however same remained unattended by the assessee.
Upon such non-compliance the AO vide notice dt. 14/01/2022 invoked the penalty provisions and finding no force in the contention of the assessee that, due to COVID-19 the requisite information/document could not be submitted by him, culminated the proceedings by imposing a penalty of ₹10,000/- for assessee’s twofold failure viz; (a) failure to supply information & comply with the former notices and (b) failure to establish reasonable cause with documentary evidences behind such non-compliance.
Appeal filed before NFAC was dismissed. Being aggrieved, the present appeal is filed.
Conclusion- Held that the appellants’ failure to furnish information/documents during the course of pendency of re-assessment proceedings prima-facie in our considered view is attributable to subsistence of COVID-19 which utterly prevented the assessee from complying with such notices effectively. The Revenue’s action in mulcting the penalty by asking the assessee to prove the reasonable cause [COVID- 19] with documentary evidence capable of suggesting non-application of mind by the tax authorities. The prevailing COVID-19 restriction/situation in view of Hon’ble Apex Court decision (supra) requires no provement. The COVID-19 restriction r.w. Hon’ble apex court order (supra) de-facto in our considered view is sufficient to form a reasonable cause for the purpose of section 273B of the Act so as to exculpate the assessee’s non-compliance from attracting any penalty u/s 272A(1)(d) of the Act.
FULL TEXT OF THE ORDER OF ITAT PUNE
The DIN & order No. ITBA/NFAC/S/250/2023-24/1061674875(1) dt. 28/02/2024 passed u/s 250 of the Income Tax Act [now onwards ‘the Act’] by the National Faceless Appeal Centre, New Delhi [now onwards ‘Ld. NFAC’] confirming the imposition of penalty levied u/s 272A(1)(d) of the Act by the Income Tax Officer, Ward-2, Sangli [now onwards ‘Ld. AO’] for the assessment years 2017-18 is under challenge by the present appeal instituted u/s 253(1)(a) of the Act by the assessee.
2. The case was called twice, none appeared at the bequest of the assessee. The reasons stated in adjournment request letter dt. 28/08/2024 though found sufficient but on primary briefing from the Revenue, having regards to facts and settled position of law, we deem it fit to proceed ex- parte u/r 24 of ITAT-Rules, 1963 and adjudicate the same on merits in the absence of the assessee. We therefore advanced accordingly.
3. Abridged facts as presented by the Revenue from the case records reveals us that;
3.1 The assessee is an individual whose case for the AY 2017-18 was reopened for assessment/reassessment u/s 147 of the Act. In the course of such proceedings, the Revenue vide notices dt. 12/12/2021 & 27/12/2021 issued u/s 142(1) of the Act called upon the assessee to furnish certain documents vis-à-vis information in connection with the assessment, however same remained unattended by the assessee.
3.2 Upon such non-compliance the AO vide notice dt. 14/01/2022 invoked the penalty provisions and finding no force in the contention of the assessee that, due to COVID-19 the requisite information/document could not be submitted by him, culminated the proceedings by imposing a penalty of ₹10,000/- for assessee’s twofold failure viz; (a) failure to supply information & comply with the former notices and (b) failure to establish reasonable cause with documentary evidences behind such non-compliance.
3.3 The first appeal against the aforestated imposition before the Ld. NFAC could bring no relief to the assessee. For the reasons as a matter of last resort the assessee came in present appeal challenging the imposition as unwarranted on the ground of reasonable cause.
4. In the absence of appellant assessee, invoking rule 24 of ITAT-Rules, 1963 we proceeded ex-parte and heard the Ld. DR Mr Desai and subject to the provisions of rule 18 (supra) perused the material placed on record and considered facts of the case in light of settled position of law.
5. We have given our thoughtful consideration to the case and at the outset noted that, it remained undisputed between the rival parties that Revenue called upon the assessee to furnish information/documents vide notices dt. 12/12/2021 & 27/12/2021 issued u/s 142(1) of the Act, and assessee failed to comply therewith. The former notices u/s 142(1) of the Act by which the information/documents from the appellant were sought were admittedly issued to him during the subsistence of COVID-19
6. The Revenue levied the penalty for such failure & confirmed the same in first appeal for assessee’s further failure to prove beyond doubt the existence of reasonable cause behind such non-compliance with documentary evidences, which the appellant assessee failed. Such failure also continued in the present proceedings too.
7. Without disputing that the COVID-19 Pandemic forms a reasonable cause within the meaning & for the purpose of section 273B of the Act the only support the Revenue draws for imposition of penalty and its sustenance in first appeal is the absence of documents establishing the existence of COVID-19 pandemic during the unexpired period of notices issued to the assessee requiring him to furnish information/documents etc.
8. Without reproducing lock, stock and barrel of section 273B of the Act, in relation imposition of penalty u/s 272A(1)(d) of the Act it shall be purposive to state that, it empowers tax authorities for not to impose penalty u/s 272A of the Act if assessee proves that there was a reasonable cause behind the failure to comply with the notices issued u/s 142(1) or 143(2) or 142(2A) of the Act.
9. The COVID-19 pandemic [also known as the coronavirus pandemic], caused by severe acute respiratory syndrome coronavirus 2 [SARS-CoV-2], began with an outbreak of COVID-19 in Wuhan, China, in December 2019. It spread to other areas of Asia, and then worldwide including India in early 2020. The World Health Organization declared the outbreak a public health emergency of international concern in January 2020, and assessed the outbreak had become a pandemic in early March, 2020 whereby for the first time since independence, India was exposed to major health emergency due to such COVID-19 pandemic. In combating such deadly virus, the Central Government of India imposed a nationwide lockdown using its powers u/s 6(2)(i) of the Disaster Management Act [now onwards ‘DMA’]. A nationwide lockdown of 21 days was declared on March 25, 2020 and which was then extended until May 31, 2020. Thereafter almost for a period of two years i.e. upto March 2022 several restrictions were imposed upon the citizen by the Ministry of Health and Family Welfare by actively directing and advising all the states in the county on COVID-19 to ensure the safety of the citizens and the state/UT governments in turn were issuing regulations and notifications related to measures to be taken for containing the spread of COVID-19. Taking suo-motu cognizance of difficulty faced by tax payers/litigants the Hon’ble Supreme Court vide its order in MA 21 of 2022 [2022 134 taxmann.com 307/2022 (56) GSTL 385/2022 (379) ELT 276 (SC)] excluded the period from 15/03/2020 to 28/02/2022 from the limitation period and further allowed a period of 90 days from 01/03/2022 wherever the actual/balance period of limitation fell below such period of 90 days. In effect the period of any compliance falling within the aforestated period of exclusion is saved without requiring any evidence.
10. Coming back to present case, when the whole world was in the grip of devastating pandemic, it is not only astonishing but hard to believe that the tax authorities holding quasi-judicial position were unaware of then prevailing COVID-19 situation/restriction in the country. In such a global life threating situation it could never be said that the appellant was frivolously sleeping over his duty in the garb of COVID-19 Pandemic.
11. In the extant appeal, the appellants’ failure to furnish information/documents during the course of pendency of re-assessment proceedings prima-facie in our considered view is attributable to subsistence of COVID-19 which utterly prevented the assessee from complying with such notices effectively. The Revenue’s action in mulcting the penalty by asking the assessee to prove the reasonable cause [COVID- 19] with documentary evidence capable of suggesting non-application of mind by the tax authorities. The prevailing COVID-19 restriction/situation in view of Hon’ble Apex Court decision (supra) requires no provement. The COVID-19 restriction r.w. Hon’ble apex court order (supra) de-facto in our considered view is sufficient to form a reasonable cause for the purpose of section 273B of the Act so as to exculpate the assessee’s non-compliance from attracting any penalty u/s 272A(1)(d) of the Act. In view thereof, we set-aside the impugned order and delete the penalty as unwarranted. The solitary ground thus stands allowed.
12. In result, the appeal of the assessee stands ALLOWED.
U/r 34 of ITAT Rules, order pronounced in open court on this Monday, 02th day of September, 2024.
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