Modern Paper Mart Private Limited Vs ITO (ITAT Delhi)
Summary: The Income Tax Appellate Tribunal, Delhi, in Modern Paper Mart Private Limited Vs ITO, deleted a penalty of Rs. 10,000 imposed under Section 272A(1)(d) of the Income-tax Act, 1961, for alleged non-compliance with a notice issued under Section 142(1). The Tribunal held that the assessee had subsequently furnished the necessary details and documents, the delay was supported by a plausible explanation, and the Assessing Officer had ultimately accepted the returned income without making any addition. Considering the entire factual circumstances, the Tribunal found reasonable cause for the failure and directed deletion of the penalty.
The appeal arose from the order dated 4 November 2023 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for Assessment Year 2017-18. The assessee had filed its return of income on 28 October 2017 declaring income of Rs. 18,74,970. During assessment proceedings, the Assessing Officer issued a notice dated 22 July 2019 under Section 142(1), seeking information and supporting documents. According to the assessee, the queries were lengthy and required substantial documentary preparation, resulting in a delay in furnishing the response.
Before the Tribunal, the assessee argued that delayed compliance should not automatically attract penalty where the requested information was ultimately furnished and the assessment was completed without any addition. Reliance was placed on Globus Infocom Ltd. Vs DCIT, ITA No. 738/Del/2014, decided on 29 June 2016, for the proposition that subsequent compliance accepted by the Assessing Officer could justify deletion of penalty for earlier defaults. The assessee also contended that the Assessing Officer had not recorded satisfaction for levy of penalty in the assessment order.
The Tribunal examined the rival submissions and found that subsequent compliance was undisputed. It considered the explanation for the delay plausible and observed that there appeared to be reasonable cause for the failure. The Assessing Officer had examined the documents eventually furnished and accepted the returned income. On these facts, the Tribunal held that the penalty under Section 272A(1)(d) was liable to be deleted. It set aside the impugned appellate order and allowed the assessee’s appeal. The decision was pronounced on 20 June 2024.
Cases Discussed
- Globus Infocom Ltd. Vs. DCIT, ITA No. 738/Del/2014, Assessment Year 2010-11, decided on 29.06.2016 (ITAT Delhi) — Relied upon by the assessee for the proposition that subsequent compliance accepted during assessment may justify deletion of penalty for an earlier default. The Tribunal’s decision in the present appeal rested on its finding of reasonable cause and subsequent compliance.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)] dated 04.11.2023, for Assessment Year 2017-18, confirming levy of penalty u/s. 272A(1)(d) of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’).
2. Shri Pratap Gupta, appearing on behalf of the assessee submits that the assessee had filed return of income on 28.10.2017, declaring income of Rs.18,74,970/-. During the course of assessment proceedings the assessee had furnished requisite details and documents as sought by the Assessing Officer (AO). The AO after examining the details and documents furnished by the assessee accepted the returned income vide assessment order dated 22.12.2019. The AO has erred in levying penalty u/s. 272A(1)(d) of the Act vide impugned order dated 13.11.2019 without appreciating the fact that the query raised by the AO was quite lengthy and it took some times for the assessee to furnish detailed submissions based on the documentary evidences. It is not a case of non compliance. The assessee had furnished detailed explanation vide letter dated 11.12.2019. Eventually, on the basis of detailed explanation the AO accepted returned income of the assessee. Further, the ld. AR vehemently opposing penalty order submits that AO has not recorded any satisfaction for levy of penalty u/s. 272A(1)(d) in the assessment order. The ld. AR placed reliance on the decision in the case of Globus Infocom Ltd. Vs. DCIT in ITA No. 738/Del/2014 for AY 2010-11 decided on 29.06.2016, to contend that where the assessment has been made without any addition on the basis of documents furnished by the assessee no penalty u/s. 272A(1)(d) of the Act is leviable as subsequent compliance was considered as good compliance and the defaults committed earlier were ignored by the AO.
3. Per contra, Shri S.L. Verma representing the Department supporting the impugned order pointed that a perusal of assessment order would show that the AO had given ten opportunities to the assessee to furnish necessary documents. The AO made submissions after the last date of hearing on 11.12.2019 i.e. just before passing of assessment order. He further pointed that penalty u/s. 272A(1)(d) of the Act was levied vide order dated 13.11.2019 in respect of non compliance of notice dated 22.07.2019 issued u/s. 142(1) of the Act. Therefore, date of penalty order is prior to the date of assessment order. The penalty was levied for non compliance of the notice; hence, there was no requirement for AO to record satisfaction for levy of penalty in assessment order.
4. We have heard the submissions made by rival sides and have examined the orders of authorities below. The assessee is in appeal against the order of First Appellate Authority confirming levy of penalty of Rs. 10,000/- u/s. 272A(1)(d) of the Act, for non compliance of notice dated 22.07.2019 issued u/s. 142(1) of the Act.
5. It is an undisputed fact that subsequently the assessee has complied with the notice issued by the AO and had furnished necessary documents. The reason given by the assessee for delay in responding to the notice dated 22.07.2019 seems plausible. There appears to be reasonable cause for the said failure. The AO after examining the details and documents furnished by the assessee accepted the returned income for the impugned assessment year. Taking into consideration entire facts of the case, we are of considered view that penalty levied u/s. 272A(1)(d) of the Act is liable to be deleted. We, hold and direct accordingly.
6. In the result, impugned order is set aside and appeal of the assessee is allowed.
Order pronounced in the open court on Thursday the 20 day of June, 2024.
