Tribunal cancels penalty under Income Tax Act due to non-receipt of notices.

The Tribunal allowed the appeal in favor of the assessee, directing the Assessing Officer to delete the penalty imposed under Section 271(1)(b) of the Income Tax Act, 1961. The Tribunal found that the non-compliance was due to the non-receipt of notices, which was considered a reasonable cause for the non-compliance. The delay in filing the appeal was condoned, and the appeal was admitted for hearing. The Tribunal emphasized a liberal approach towards condonation of delay to ensure substantial justice, following the principles laid down by the Supreme Court.

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Issues Involved
1. Imposition of penalty under Section 271(1)(b) of the Income Tax Act, 1961.
2. Delay in filing the appeal and its condonation.
3. Validity of service of notices under Sections 143(2) and 142(1) of the Income Tax Act, 1961.

Detailed Analysis

1. Imposition of Penalty under Section 271(1)(b) of the Income Tax Act, 1961
The penalty under Section 271(1)(b) was imposed by the Assessing Officer (A.O.) on the grounds that the assessee failed to comply with notices issued under Sections 143(2) and 142(1) of the Income Tax Act, 1961. The assessee's return for the assessment year 2011-12 declared a total income of Rs. 12,80,870, and the case was selected for scrutiny. Despite multiple notices, the assessee did not respond, leading the A.O. to levy a penalty of Rs. 40,000 for non-compliance.

2. Delay in Filing the Appeal and Its Condonation
The assessee appealed against the penalty order but faced a delay of 624 days in filing the appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) dismissed the appeal on the grounds of delay, stating that the assessee failed to justify the condonation of delay with sufficient cause. The assessee argued that the delay was due to not receiving the original order and having to obtain a certified copy, which justified the delay.

3. Validity of Service of Notices under Sections 143(2) and 142(1)
The assessee, an Additional Chief Judicial Magistrate in Rajasthan Judicial Services, was transferred multiple times across various districts in Rajasthan. The notices under Sections 143(2) and 142(1) were issued to her addresses in Pali and Kekri, but she was posted in Jaipur at those times. The assessee argued that the notices were not personally served to her, and hence, she could not comply with them. The A.O. claimed that notices were served to individuals named Shri Rajesh Davera and Shri Raghverder, but their relationship to the assessee was not clarified.

Judgment Analysis

Condonation of Delay
The Tribunal acknowledged the principles laid down by the Hon’ble Supreme Court in the case of Collector, Land Acquisition Vs. Mst. Katiji, emphasizing a liberal approach towards condonation of delay to ensure substantial justice. The Tribunal found the assessee's reasons for delay to be bona fide and not an attempt to save limitation in an underhand way. Consequently, the delay of 62 days in filing the present appeal was condoned, and the appeal was admitted for hearing.

Imposition of Penalty
The Tribunal examined the facts and found that the notices were not served at the correct address where the assessee was posted at the relevant times. The non-receipt of notices was considered a "reasonable cause" for non-compliance. The Tribunal relied on precedents, including the Delhi ITAT's decision in Balram Kumar Mahendra Vs ITO, which held that non-receipt of notice constitutes a reasonable cause for non-compliance, thus invalidating the penalty.

Validity of Service of Notices
The Tribunal noted that the Revenue failed to demonstrate that any notice was personally served on the assessee. The notices were served to individuals whose relationship with the assessee was not established. The Tribunal concluded that the non-receipt of notices by the assessee was a reasonable cause for non-compliance, and therefore, the penalty under Section 271(1)(b) could not be imposed.

Conclusion
The Tribunal directed the A.O. to delete the penalty imposed under Section 271(1)(b) of the Income Tax Act, 1961, as the non-compliance was due to non-receipt of notices, which constituted a reasonable cause. The appeal was allowed in favor of the assessee.

Order Pronouncement
The order was pronounced in the open court on 24th February, 2020.

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