Tribunal deletes penalty for non-compliance with tax notices citing unintentional error

The Tribunal allowed the assessee's appeal, directing the AO to delete the penalty of Rs. 20,000 imposed for non-compliance with statutory notices under section 142(1) of the Income Tax Act. The Tribunal found the non-compliance was unintentional due to the assessee's lack of familiarity with digital notices, citing a similar case precedent. Compliance was eventually achieved, indicating a lack of deliberate intent, leading to the penalty's deletion.

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Issues Involved:
1. Compliance with statutory notices under section 142(1) of the Income Tax Act.
2. Levy of penalty under section 272A(1)(d) of the Income Tax Act.
3. Reasonable cause for non-compliance with statutory notices.
4. Validity of penalty for delayed compliance versus complete failure to comply.

Summary of the Judgment:

1. Compliance with Statutory Notices:
The assessee filed an e-return declaring an income of Rs. 2,31,510/- for the assessment year 2017-18. The case was selected for limited scrutiny, and notices under sections 143(2) and 142(1) were issued. The assessee failed to comply with the initial notices but later responded to subsequent notices.

2. Levy of Penalty:
The Assessing Officer (AO) levied a penalty of Rs. 20,000/- under section 272A(1)(d) for non-compliance with notices issued under section 142(1). The penalty was upheld by the CIT(A), who noted that the assessee had not provided acceptable reasons for non-compliance and had not demonstrated reasonable cause under section 273B.

3. Reasonable Cause for Non-Compliance:
The assessee argued that the non-compliance was not deliberate or willful, citing lack of computer literacy and the transition to digital notice serving as reasons. The assessee's representative also highlighted that compliance was made once the notices were brought to their attention.

4. Validity of Penalty for Delayed Compliance:
The assessee contended that the penalty should not be levied for delayed compliance, as the required information was eventually submitted before the due date. The Tribunal considered the assessee's arguments and the decision of the Mumbai Co-ordinate Bench in a similar case, Triumph International Finance Ltd. vs. DCIT, which found reasonable cause for non-compliance due to the transition to digital notices.

Tribunal's Decision:
The Tribunal acknowledged the assessee's participation in the assessment proceedings and the eventual compliance with the notices. It found that the non-compliance was not deliberate and was due to the assessee's lack of familiarity with digital notices. Citing the Mumbai Co-ordinate Bench's decision, the Tribunal concluded that the penalty under section 272A(1)(d) was unsustainable and directed the AO to delete the penalty.

Conclusion:
The appeal of the assessee was allowed, and the penalty of Rs. 20,000/- was deleted. The Tribunal emphasized the importance of reasonable cause and the non-deliberate nature of the non-compliance in its decision.

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