Appeal Accepted: ITAT Condones Delay and Deletes Penalty Citing Covid-19 for Non-Compliance with Tax Notice Requirements.

The ITAT allowed the appeal, condoning a 70-day delay in filing due to reasonable cause. The penalty of Rs. 20,000 imposed under section 271(1)(b) for non-compliance with section 142(1) notices was reduced to Rs. 10,000 by CIT(A). The ITAT deleted the remaining penalty, acknowledging the minor's incapacity and lack of additions in the assessment order, considering the Covid-19 pandemic as a factor for non-compliance. The order was pronounced on 08/04/2024.

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Issues Involved:
The appeal pertains to the penalty order passed u/s 271(1)(b) of the Income Tax Act, 1961 for Assessment Year 2013-14. The issues include the condonation of delay in filing the appeal and the imposition of penalty on the minor-assessee for non-compliance of notices u/s 142(1) of the Act.

Condonation of Delay:
The appeal filed by the assessee was delayed by 70 days, leading to a petition for condonation of delay. The assessee cited lack of knowledge about income tax proceedings and the order being mixed up with other notices as reasons for the delay. The Tribunal found the reasons convincing and constituting a reasonable cause for the delay, thus condoning it and admitting the appeal for hearing.

Imposition of Penalty on Minor-Assessee:
The assessing officer levied a penalty of Rs. 20,000 u/s 271(1)(b) for non-compliance of notices issued under section 142(1) of the Act. However, the ld CIT(A) reduced the penalty to Rs. 10,000, considering the bona-fide reasons provided by the assessee. The appeal before the Tribunal challenged the remaining penalty amount.

Arguments and Decision:
The counsel for the assessee argued that being a minor, the assessee lacked the capacity to enter into contracts, thus challenging the validity of the penalty proceedings. Additionally, since no additions were made by the assessing officer in the quantum proceedings, the imposition of the penalty was deemed unwarranted. The Tribunal agreed with the assessee, noting that the minor's income is clubbed with a parent and the penalty should not apply to the minor. It was observed that the non-compliance with notices was due to the Covid-19 pandemic, and since no additions were made in the assessment order, the remaining penalty of Rs. 10,000 was deleted.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, pronouncing the order in the open court on 08/04/2024.

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