Appeal allowed by ITAT, penalty under Income Tax Act set aside for non-compliance

The ITAT allowed the appeal, setting aside the penalty imposed under section 272A(1)(d) of the Income Tax Act for non-compliance with the notice during the Assessment Year 2018-19. The ITAT found a reasonable cause for non-compliance considering the circumstances, including the Covid-19 pandemic and the partial compliance by the assessee. The penalty of Rs. 50,000 imposed by the AO was deleted, and the decision was pronounced on 28.08.2023.

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Issues involved:
The judgment involves the challenge to a penalty imposed under section 272A(1)(d) of the Income Tax Act, 1961 for non-compliance with a notice during the Assessment Year 2018-19.

Details of Judgment:

1. Background and Assessment Order:
The individual assessee filed a return of income for the year 2018-19, declaring total income. The Assessing Officer (AO) initiated penalty proceedings under section 272A(1)(d) for non-compliance with a notice under section 142(1) of the Act. The AO levied a penalty of Rs. 50,000, which was upheld by the Commissioner of Income Tax (Appeals) (CIT(A)).

2. Grounds of Appeal and CIT(A) Decision:
The assessee challenged the penalty before the CIT(A), who upheld it on the grounds of the assessee's failure to provide a valid reason for non-compliance with the AO.

3. Arguments and Decision by ITAT:
During the appeal before the ITAT, the Revenue argued that the assessee's claim of non-compliance due to the Covid-19 pandemic was unsubstantiated as no medical evidence was provided. The ITAT observed that the assessee had purchased a property, leading to the addition under section 68 of the Act. However, the ITAT noted that the assessee had provided some compliance by submitting documents and explanations during the assessment process.

4. Legal Analysis and Decision:
The ITAT referred to section 272A(1)(d) of the Act, which imposes a penalty for failure to comply with notices. The ITAT highlighted that the penalty of Rs. 10,000 per default is applicable. Considering the circumstances, including the pandemic period and the partial compliance by the assessee, the ITAT found a reasonable cause for the non-compliance with the notice under section 142(1). Therefore, the ITAT decided to delete the penalty levied by the AO.

5. Conclusion:
The ITAT allowed the appeal filed by the assessee, setting aside the penalty imposed under section 272A(1)(d) of the Income Tax Act for non-compliance with the notice. The decision was pronounced in the open court on 28.08.2023.

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