Facts of the Case

The assessee filed two appeals before the Income Tax Appellate Tribunal, Allahabad Bench, against orders of the Commissioner of Income Tax (Appeals)/NFAC dated 17.02.2023 for Assessment Year 2012-13.

  • In ITA No. 21/Alld/2023, the appeal challenged an ex-parte appellate order confirming penalty under Section 271(1)(c).
  • In ITA No. 22/Alld/2023, the assessee challenged a penalty of ₹10,000 imposed under Section 271(1)(b) for alleged non-compliance with notice issued under Section 142(1) dated 06.11.2019.

The assessee contended that notices were not received due to technical glitches and that replies and supporting documents were subsequently furnished before completion of assessment under Section 143(3) read with Section 147.

Issues Involved

  1. Whether an ex-parte order passed by the CIT(A) without proper opportunity and without complying with Section 250(6) is sustainable.
  2. Whether penalty under Section 271(1)(b) is justified where the assessee ultimately complied with notices before completion of assessment.

Petitioner’s (Assessee’s) Arguments

  • The assessee did not receive hearing notices due to technical issues and therefore had a reasonable cause for non-appearance.
  • The CIT(A) failed to pass a reasoned order as required under Section 250(6).
  • Regarding penalty, the assessee submitted replies, financial statements, bank statements, and supporting documents before completion of assessment.
  • Since compliance was made, though belatedly, the case did not constitute wilful non-compliance.

 Respondent’s (Revenue’s) Arguments

  • The Revenue maintained that notices were duly issued and non-compliance justified both the ex-parte order and the penalty imposed by the Assessing Officer.
  • The penalty under Section 271(1)(b) was therefore rightly confirmed by the CIT(A).

 Curt Order / Findings (ITAT)

(A) Ex-Parte Order — ITA No. 21/Alld/2023

  • The Tribunal observed that the CIT(A) had passed the order ex-parte.
  • It held that the order was not in accordance with Section 250(6), which mandates a reasoned order on merits.
  • Considering the assessee’s explanation of technical glitches and assurance to participate, the Tribunal set aside the impugned order.
  • The matter was restored to the CIT(A) for fresh adjudication on merits after granting proper opportunity. 

(B) Penalty u/s 271(1)(b) — ITA No. 22/Alld/2023

  • The Tribunal noted that the assessment order acknowledged receipt of replies and documents from the assessee before completion of assessment.
  • The Assessing Officer had considered these submissions while framing assessment under Section 143(3).
  • Therefore, the case was not one of complete non-compliance but only delayed compliance.
  • Since the assessment was completed after considering the responses, penalty for non-compliance was unwarranted.

 Important Clarification

The Tribunal emphasized that penalty for non-compliance cannot be imposed mechanically where the assessee ultimately furnishes the required information and the assessment is completed after considering such material. Belated compliance, in such circumstances, does not amount to deliberate defiance warranting penalty.

Link to download the order -

https://itat.gov.in/public/files/upload/1698735455-21%20fo%202023%20+1%20Grijesh%20Tiwari(Assessee%20Appeal)%20uder%20section%20272A%20%20and%20273B%20of%20the%20Act%20SMC%20(Section%20273B%20Template%20)%2026.09.2023%20(Corrected).pdf

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