Thimanna Nagaraj Vs ITO (ITAT Bangalore)
Notices Reached the Email Inbox, but Did They Reach the Small Trader?
A statutory notice may be delivered to an email address recorded on the income-tax portal. But when an assessee has limited education, does not know how to access email and has no means to engage a tax professional, should failure to respond automatically attract a penalty? In Thimanna Nagaraj v. ITO, the Bangalore Tribunal held that the assessee’s circumstances constituted reasonable cause for non-compliance and deleted a penalty of ₹20,000 under section 271(1)(b).
Cash deposits led to reassessment
Thimanna Nagaraj had not filed a return for AY 2015–16. Information on the Department’s Insight Portal showed cash deposits of ₹68.80 lakh in his State Bank of India savings account. The Department identified him as a non-filer, passed an order under section 148A(d), and issued a notice under section 148.
The assessee did not respond. The assessment was ultimately completed on 21 February 2023 under section 147 read with sections 144 and 144B. The AO treated the entire cash deposit amount of ₹68.80 lakh as unexplained money under section 69A.
During those proceedings, the Department had also issued notices under section 142(1) on 17 October 2022 and 30 December 2022. According to the assessment record, both notices were delivered to the email address recorded for the assessee on the portal, but no reply was received. The AO initiated penalty proceedings for the two defaults and imposed ₹10,000 for each notice, making a total penalty of ₹20,000 under section 271(1)(b).
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