This document provides a detailed analysis of the Income Tax Appellate Tribunal’s final decision on the case between Kapil Bhateja, Meerut and ITO, Ward-1(1)(3), Meerut, concerning the assessment year 2017-18. The case number is ITA 2628/DEL/2022, presided over by Judicial Member Shri C.M. Garg and Accountant Member Shri M. Balaganesh.
The appeal filed by the assessee, Kapil Bhateja, was directed against the order dated 14.09.2022 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18. The primary issue in this case was the levy of penalty under section 272A(1)(d) of the Income Tax Act, 1961, for non-compliance with statutory notices.
During the hearing on 04.05.2023, the assessee was represented by Ms. Sunaina Sharma, Advocate, while the Revenue was represented by Shri Anuj Garg, Sr. DR. The Tribunal proceeded to adjudicate the appeal based on the materials on record and submissions made by both parties.
The primary ground of appeal raised by the assessee was:
The learned CIT(A) erred in confirming the levy of penalty under section 272A(1)(d) of the Income Tax Act in the sum of Rs. 50,000, given the facts and circumstances of the case.
Kapil Bhateja is an individual engaged in the confectionery business under the name ‘Bhateja Confectioners’. He filed his return of income for the assessment year 2017-18 on 05.08.2017, declaring taxable income of Rs. 3,18,410 under section 44AD of the Act. However, the return was declared invalid by CPC Bangalore. The case was selected for limited scrutiny to verify cash deposits made during the demonetization period. The AO observed that the assessee had deposited substantial amounts in IDBI and HDFC banks but failed to comply with several notices issued, leading to the completion of assessment under section 144 and the imposition of a penalty of Rs. 50,000 under section 272A(1)(d).
The assessee contended that he was unaware of the statutory notices as the email ID provided in the return belonged to his advocate, who failed to inform him. He also argued that he was entirely dependent on the advocate for handling his income tax matters, and any non-compliance was due to the advocate’s negligence.
The Tribunal noted that the assessee did not attend any proceedings and did not receive any notices due to the email ID issue. It was established that the advocate handling the case had not communicated with the assessee properly, resulting in non-compliance. The Tribunal found that the reasons provided by the assessee constituted a reasonable cause under section 273B of the Act, which warranted immunity from the penalty.
The Tribunal concluded that the non-compliance was not deliberate and directed the AO to delete the penalty of Rs. 50,000 levied under section 272A(1)(d) of the Act. The appeal of the assessee was allowed.
Order pronounced in the open court on 09th May, 2023.
(C.M. GARG)
JUDICIAL MEMBER
(M. BALAGANESH)
ACCOUNTANT MEMBER
This case highlights the importance of ensuring proper communication and representation in tax matters. The decision underscores the necessity of addressing procedural issues and providing reasonable cause for non-compliance to avoid penalties.
The appellant, Kapil Bhateja, challenged the penalty imposed for non-compliance with statutory notices, arguing that the non-compliance was due to the advocate’s negligence and lack of communication.
The appellant argued that he was unaware of the statutory notices and relied entirely on his advocate, who failed to inform him. He contended that the non-compliance was not intentional and that he should be granted immunity under section 273B of the Act.
The Tribunal observed that the advocate’s negligence and the incorrect email ID provided in the return were valid reasons for the non-compliance. The Tribunal found that these reasons constituted reasonable cause under section 273B, justifying the deletion of the penalty.
The Tribunal’s decision in the case of Kapil Bhateja, Meerut vs ITO, Ward-1(1)(3), Meerut, reaffirms the importance of proper representation and communication in tax matters. The deletion of the penalty under section 272A(1)(d) underscores the need to address procedural issues and provide reasonable cause for non-compliance to avoid penalties.
Final Tribunal Order for Kapil Bhateja, Meerut vs ITO, Ward-1(1)(3), Meerut, Assessment Year 2017-18
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