Case Number: ITA 642/DEL/2021
Appellant: Satywan, Panipat
Respondent: ITO WARD – 4, Panipat
Assessment Year: 2011-12
Case Filed On: 2021-06-01
Order Type: Final Tribunal Order
Date of Order: 2023-08-31
Pronounced On: 2023-08-31
This article provides a detailed analysis of the case ITA No. 642/DEL/2021, where Satywan, the proprietor of Raj Khad Bhandar in Panipat, contested the penalty imposed for non-compliance under Section 271(1)(b) of the Income Tax Act for the assessment year 2011-12. The case highlights important issues regarding procedural justice and the concept of reasonable cause.
Satywan, the appellant, is a resident of Panipat, Haryana, and the proprietor of Raj Khad Bhandar. For the assessment year 2011-12, the Income Tax Officer (ITO) of Ward-4, Panipat, issued a notice under Section 142(1) of the Income Tax Act on 22.11.2018. The appellant failed to comply with the notice, leading the Assessing Officer (AO) to levy a penalty under Section 271(1)(b) of the Act. The assessment was completed under Section 147 read with Section 144 of the Income Tax Act.
The primary issue in this case was the appellant’s non-compliance with the notice issued under Section 142(1). The AO imposed a penalty under Section 271(1)(b) for this non-compliance. The appellant contested the penalty, arguing that the non-compliance was due to reasonable cause.
Section 273B of the Income Tax Act provides that no penalty shall be imposed under Section 271(1)(b) if the taxpayer proves that there was reasonable cause for the failure. The appellant argued that the non-compliance was due to the notice being received by his illiterate parents, who did not pass it on to him.
The appellant, represented by Sh. Somil Agarwal, Adv. and Sh. Shrey Jain, Adv., argued that the notice issued by the AO was received by his parents, who were illiterate and did not inform him about it. This, according to the appellant, constituted a reasonable cause under Section 273B for his failure to comply with the notice.
The respondent, represented by Sh. Amit Katoch, Sr. DR, argued that the penalty was rightly imposed as the appellant failed to comply with the notice issued under Section 142(1).
The tribunal, consisting of Dr. B. R. R. Kumar (Accountant Member) and Sh. C. M. Garg (Judicial Member), heard the arguments and reviewed the case records. The tribunal noted that the AO imposed the penalty for non-compliance with the notice issued under Section 142(1). However, the tribunal also considered the appellant’s explanation that the notice was received by his illiterate parents, which constituted a reasonable cause for non-compliance under Section 273B.
The tribunal concluded that the non-receipt of the notice by the appellant due to it being received by his illiterate parents constituted a reasonable cause for his failure to comply with the notice. Therefore, the tribunal held that the penalty imposed under Section 271(1)(b) was not justified.
Final Judgment:
In the Income Tax Appellate Tribunal, Delhi Bench ‘H’ New Delhi
Before: Sh. C. M. Garg, Judicial Member & Dr. B. R. R. Kumar, Accountant Member
Order:
The appeal filed by Satywan is allowed. The penalty imposed under Section 271(1)(b) is hereby deleted. The tribunal emphasized that non-compliance due to reasonable cause, such as non-receipt of notice due to illiteracy of recipients, should be considered valid under Section 273B.
Order Pronounced in the Open Court on 31st August 2023.
Signed:
Dr. B. R. R. Kumar, Accountant Member
C. M. Garg, Judicial Member
Date: 31st August 2023
Satywan vs. ITO: Penalty for Non-Compliance Under Section 271(1)(b)
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