This case involves an appeal by Manhar Yarns Pvt Ltd against the order dated 25.08.2022 by the National Faceless Appeal Centre (NFAC), New Delhi, pertaining to the assessment year 2017-18.
The grievance was regarding a penalty of Rs. 10,000 imposed under section 272A(1)(d) of the Income-tax Act, 1961, for non-compliance with notices issued under section 142(1) during the assessment proceedings. Despite submitting some financial statements, the company did not comply with a subsequent notice due to the busy schedule of their representative and health issues.
The Tribunal noted that the NFAC had upheld the penalty without providing a sufficient opportunity for the company to be heard, which is against the Principle of Natural Justice. Furthermore, it recognized the reasonable cause provided by the assessee for non-compliance, such as the preoccupation of the company’s representative with statutory filings and the health issues faced.
The Tribunal’s decision emphasizes the need for considering reasonable cause in penalty proceedings and the importance of providing a fair hearing. By deleting the penalty, the Tribunal provided relief to Manhar Yarns Pvt Ltd, reinforcing the principles of justice and fair assessment in tax proceedings.
The appeal by Manhar Yarns Pvt Ltd was allowed, and the penalty imposed under section 272A(1)(d) was deleted, marking a significant outcome for the company.
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