Penalty u/s 272A(1)(d) deleted as notices gave assessee only two hours time to comply and that too on a public holiday i.e. Sunday
In a recent judgment, the Hon’ble ITAT has deleted the Penalty u/s 272A(1)(d) for non compliance of notices, as notices were issued on Sunday and gave assessee only two hours time to comply with.
ABCAUS Case Law Citation:
ABCAUS 3903 (2024) (03) ITAT
Important Case Laws relied upon by parties:
Hindustan Steel Ltd. Vs. The State of Orissa
In the instant case, the assessee had challenged the order passed by the CIT(A), NFAC in confirming levy of penalty under section 272A(1)(d) of the Income Tax Act, 1961 (the Act).
The assessee filed its return of income which was selected for scrutiny and thereafter the assessment was completed under section 143(3) of the Act.
FAC, Delhi thereafter issued notice under section 272A(1)(d) r.w.s 274 as to why the penalty should not be imposed for non compliance to the notice(s) issued during the course of assessment proceedings. Later, the Assessing Officer (AO) imposed the impugned penalty.
Before, the Tribunal the assessee submitted that in the said penalty notice, there was no mention as to which specific notice issued by the AO during the course of assessment proceedings, there was non-compliance on the part of the assessee and how the case of the assessee falls under section 272A(1)(d) of the Act. It was accordingly submitted that there was a clear failure on the part of the NFAC to specify the specific charge against the assessee before levy of the impugned penalty and in absence of a specific charge, the levy of penalty cannot be sustained and same be directed to be set-aside.
Further, it was submitted that only on receiving the impugned penalty order, the assessee came to know about the notices in respect of which NFAC has levied the penalty.
The assessee furnished the details of the notices issued during the assessment proceedings and time given for the compliances. It was submitted that a total of six notices were issued during the assessment proceedings and all were complied with. The attention of the Tribunal was sought on the fact that for two notices time of less than two days were provided and the last three notice were issued in a single day on Sunday giving only two hours time to comply with.
It was submitted that the assessee was granted less than two days to respond to various notices which is clear violation of the principle of natural justice as the Courts have held that the tax authorities should provide reasonable time to the assessee to respond and furnish the necessary responses in response to the notices in consonance with the principle of natural justice.
It was further submitted that the AO issued three notices one after the other and on a day which was a public holiday i.e, Sunday and the assessee was asked to respond on the very same day within two hour. It was submitted that it is a clear case of violation of principle of natural justice where not even two hours have been given to the assessee to respond to the notices.
Lastly, it was contended that given the fact that the assessee substantially complied with the various notices and the assessment was completed under section 143(3) of the Act, the penalty be directed to be deleted.
Attention was drawn to the judgment of the Hon’ble Supreme Court wherein it has been laid down that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi- criminal proceedings and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. It was further held by the Hon’ble Supreme Court that the penalty will not be imposed merely because it is lawful to do so and the same is a matter of discretion which has to be exercised judicially and on consideration of all the relevant circumstances of the case.
The Tribunal observed that assessee had infact responded to the all notices except the one issued on Sunday by furnishing the necessary information/documentation during the course of assessment proceeding and therefore there cannot be any basis for levy of penalty as far as non compliance to the said notices.
The Tribunal further observed that with respect to three notices issued on Sunday whereby the assessee was asked to comply within a period of two hours and that to on a day which was a public holiday.
The Tribunal opined that the Assessing officer has to complete the assessment proceedings within the limitation period involving number of cases, the Assessing officer may be working on a public holiday beyond the call of duty and calling for the necessary information/documentation and thus, there is an expectation from the assesses to co-operate and adhere to the notices asking for the necessary information, documentation in order to enable the Assessing officer to complete the assessment proceedings. At the same time, essential is that the expectation must meet the test of reasonableness and the assessee be provided reasonable time to respond to the various notices.
The Tribunal opined that it was manifestly clear that the AO for reasons best known to him had issued three notices one after the another on the day which was a public holiday and asking the assessee to respond to the said notices within period of two hours which is clearly not reasonable and in any case, cannot be a basis to press charges as far as the deliberate non-compliance on the part of the assessee. Further substantial compliances were made by the assessee and the assessment was completed under section 143(3) of the Act.
In view of the above, the Tribunal held that there was no justifiable basis for levy of penalty u/s 272A(1)(d) of the Act.
Accordingly, the Tribunal directed that the penalty so levied be deleted. In the result, the appeal of the assessee was allowed.
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