Penalty Appeal Due to Non-Compliance: Vineet Kumar vs ITO – ITA No. 6258/DEL/2019 (Assessment Year 2010-11)

Case Overview: Vineet Kumar vs ITO – ITA No. 6258/DEL/2019

Case Number: ITA 6258/DEL/2019

Appellant: Vineet Kumar, New Delhi

Respondent: ITO, Ward-50(1), New Delhi

Assessment Year: 2010-11

Order Type: Final Tribunal Order

Date of Order: 29th May 2023

Case Filed On: 24th July 2019

Bench: SHRI G. S. PANNU, PRESIDENT and SHRI C. N. PRASAD, JUDICIAL MEMBER

Introduction

The case of Vineet Kumar vs ITO pertains to the assessment year 2010-11, where the appellant, Vineet Kumar, challenged the imposition of a penalty under Section 271(1)(b) of the Income Tax Act, 1961, for alleged non-compliance with statutory notices issued by the Assessing Officer (AO). The appellant contended that the non-compliance was due to the severe illness and subsequent death of his father, which prevented him from receiving the notices and responding to them in a timely manner.

Background of the Case

Vineet Kumar, a resident of New Delhi, faced a penalty imposed by the AO for failing to comply with multiple notices issued under Section 142(1) of the Income Tax Act during the assessment proceedings for the year 2010-11. The AO initially imposed a penalty of Rs. 50,000, which was later reduced to Rs. 40,000 by the Commissioner of Income Tax (Appeals) [CIT(A)] in an order dated 29th May 2019.

The appellant filed an appeal with the Income Tax Appellate Tribunal (ITAT), Delhi, arguing that the penalty was unjustified given the circumstances, particularly his preoccupation with his ailing father, who eventually passed away during the relevant period. The appellant maintained that he was unaware of the statutory notices due to his absence from the premises and that these notices were not properly served.

Proceedings at the ITAT

The case was heard by the ITAT, Delhi Bench “H,” on 21st April 2023, and the order was pronounced on 29th May 2023. The bench comprised SHRI G. S. PANNU, PRESIDENT, and SHRI C. N. PRASAD, JUDICIAL MEMBER.

The appellant was represented by his counsel, Shri V. Rajkumar, while the respondent, the Income Tax Department, was represented by Senior Departmental Representatives (DRs) Shri M. Baranwal and Shri Sanjay Kumar.

Grounds of Appeal

The appellant raised several grounds in his appeal, focusing on the following key issues:

• The statutory notices issued by the AO were never served on the appellant due to his absence from the premises while attending to his ailing father.
• The appellant’s father was severely ill and eventually passed away during the relevant period, which caused the appellant to be preoccupied and unable to comply with the notices.
• The CIT(A) reduced the penalty from Rs. 50,000 to Rs. 40,000 but failed to fully consider the reasonable cause for non-compliance as provided under Section 273B of the Income Tax Act.
• The CIT(A) erroneously concluded that the appellant had failed to explain the reasons for non-compliance, despite acknowledging the reasons provided in the written submissions.

Tribunal’s Findings

The ITAT carefully reviewed the submissions made by both parties, the order of the CIT(A), and the evidence presented, including the death certificate of the appellant’s father and medical documents.

The Tribunal noted that the AO’s penalty order summarized the statutory notices issued and the dates of hearings, all of which the appellant allegedly failed to comply with. However, the ITAT observed that there was no conclusive evidence to show that these notices were properly served on the appellant.

The Tribunal further acknowledged the appellant’s explanation regarding his absence due to his father’s illness and eventual death, supported by medical reports and the death certificate. The ITAT found this explanation to be a reasonable cause for non-compliance under Section 273B of the Income Tax Act.

The Tribunal also highlighted that the CIT(A) had acknowledged the statutory provision under Section 273B, which allows for the non-imposition of a penalty if the assessee can demonstrate a reasonable cause for non-compliance. Despite this, the CIT(A) failed to give due consideration to the appellant’s circumstances and the supporting evidence provided.

ITAT’s Conclusion and Order

Based on the findings, the ITAT concluded that the penalty imposed under Section 271(1)(b) was not justified in this case. The Tribunal held that the appellant had provided a reasonable cause for his non-compliance with the statutory notices, which should have been taken into account by the CIT(A).

The ITAT directed the AO to delete the penalty of Rs. 40,000 imposed under Section 271(1)(b) of the Income Tax Act. The Tribunal allowed the appellant’s appeal in full.

In conclusion, the ITAT’s order emphasized the importance of considering the reasonable cause for non-compliance in penalty cases and reiterated that penalties should not be imposed where the assessee can demonstrate a valid reason for their actions.

Final Judgment

The final judgment in the case of Vineet Kumar vs ITO (ITA No. 6258/DEL/2019) reinforces the principle that penalties under Section 271(1)(b) of the Income Tax Act should not be imposed when the assessee can show a reasonable cause for non-compliance. The Tribunal’s decision to delete the penalty highlights the need for tax authorities to carefully consider the circumstances of each case and the evidence presented before deciding on the imposition of penalties.

The appellant, Vineet Kumar, successfully demonstrated that his non-compliance was due to unavoidable circumstances beyond his control, leading to a favorable outcome in his appeal.

Bench: SHRI G. S. PANNU, PRESIDENT and SHRI C. N. PRASAD, JUDICIAL MEMBER

Order Pronounced On: 29th May 2023

Result: The appeal is allowed, and the penalty under Section 271(1)(b) is deleted.

Penalty Appeal Due to Non-Compliance: Vineet Kumar vs ITO – ITA No. 6258/DEL/2019 (Assessment Year 2010-11)