Penalty u/s 272A(1)(d) deleted. Though law is equal to all, its implementation should not be in a way to take undue advantage of the inability of the assessee – ITAT
In a recent judgment, the ITAT Mumbai has deleted penalty u/s 272A(1)(d) of the Income Tax Act, 1961 (the Act) for non-compliance of statutory notices issued u/s 142(1) observing that though law is equal to all, its implementation with people belonging to different stratum of society who are not equal in terms of education, income or social status, should not be in a way to take undue advantage of the inability of the assessee.
ABCAUS Case Law Citation:
4417 (2025) (02) abcaus.in ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A), NFAC, in confirming penalty u/s 272A(1)(d) of the Income Tax Act, 1961 (the Act) for non-compliance of statutory notices issued u/s 142(1) levied by the Assessing Officer (AO).
The appellant assessee was an individual and has not filed his return of income for the year under consideration. The assessee’s case was selected for scrutiny based on the verification of data pertaining to ‘cash deposits during demonetization period’ from 09.11.2016 to 30.12.2016 available in AIMS module in ITBA, where the assessee was said to have made cash deposits in his bank account.
The AO issued notices u/s. 142(1) on several dates and then passed the assessment order u/s. 144 of the Act being the best judgement assessment, where the ld. AO determined the total income \after making an addition u/s 69A of the Act, towards cash deposits made in the Bank and Department of Posts. The AO also initiated penalty proceedings u/s. 272A(1)(d) of the Act, for non-compliance of statutory notices issued u/s. 142(1) of the Act.
Before the ITAT, the assessee contended that the assessee was engaged in selling fruits on the pavement earning a meagre income per year and had not filed his return of income. He further contended that the assessee does not have a permanent address of his own, due to which the statutory notices could not be served on the assessee.
The assessee reiterated that the assessee had not been negligent or non-compliance of the notice was not wanton and prayed that the penalty be deleted.
The Tribunal observed that assessee in his reply stated that he was neither cognizant of law and its intricacies and had submitted the details of bank statements after which the AO passed the assessment order and the penalty order thereafter.
It was also observed that the CIT(A) in the quantum appeal had upheld the addition made by the AO for which the assessee submitted that the assessee had not preferred an appeal against the said order.
The Tribunal further noted that as stated, the assessee was a small-time fruit vendor selling fruits on the pavements and was unaware of the proceedings but nevertheless made compliance before the lower authorities if not proper compliance. Had the assessee been vigilant about the consequences of such proceedings and had the privilege of engaging counsels to represent his case, he would have as well challenged the addition made by the AO and upheld by the CIT(A) which amounted to in lacs of rupees which, for a small vendor like the assessee was exorbitant.
The Tribunal opined that the instant case was not a case of noncompliance in toto but was merely a case of lack of sufficient compliance. This raises a question that though law is equal to all, whether its implementation is also the same with all people belonging to different stratum of society who are not equal in terms of education, income or social status.
The Tribunal observed that there are various decisions of the Hon’ble High Courts and Hon’ble Apex Court which has reiterated that the revenue cannot take undue advantage of the inability of the assessee and therefore the ITAT directed the AO to delete the impugned penalty.
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