2025 (2) TMI 610 - AT - Income Tax

Tribunal Removes Rs. 50,000 Penalty Under Section 272A(1)(d) Due to Assessee's Limited Legal Knowledge and Modest Income.

Suresh Chhotelal Jaiswal Versus Income Tax Officer, Ward 22 (3) (6), Mumbai

Suresh Chhotelal Jaiswal Versus Income Tax Officer, Ward 22 (3) (6), Mumbai - TMI The appeal in this case was filed by the assessee challenging a penalty of Rs. 50,000 imposed under section 272A(1)(d) of the Income Tax Act, 1961. The penalty was levied for non-compliance with statutory notices issued under sections 142(1) and 143(2) of the Act. The assessee, an individual selling fruits on pavements with a modest income, had not filed his income tax return for the relevant assessment year. The case was selected for scrutiny based on cash deposits made during the demonetization period.The Assessing Officer (AO) passed a best judgment assessment order determining the total income at Rs. 11,89,370 after adding cash deposits made in specific bank accounts. Subsequently, penalty proceedings were initiated for non-compliance with statutory notices. The first appellate authority upheld the penalty imposed by the AO, leading the assessee to appeal to the Appellate Tribunal.During the appeal, the assessee's representative argued that the non-compliance was not intentional, emphasizing the assessee's limited income, lack of a permanent address, and lack of awareness about legal procedures. The Departmental Representative supported the lower authorities' decisions.The Tribunal noted that the penalty was imposed for failure to comply with multiple notices and directions under the Act. While the assessee had eventually submitted written responses during the proceedings, the compliance was not deemed sufficient. The Tribunal acknowledged the assessee's limited understanding of legal matters and the substantial amount of the addition upheld by the lower authorities. The Tribunal questioned whether the implementation of the law considers the diverse backgrounds and capacities of individuals. Citing judicial decisions emphasizing fairness in tax administration, the Tribunal directed the AO to delete the penalty considering the circumstances of the case.Ultimately, the Tribunal allowed the appeal, directing the deletion of the penalty imposed on the assessee. The decision was pronounced in open court on 14.02.2025.