The Income Tax Appeal Tribunal (ITAT), Mumbai Bench, while quashing a penalty order under Section 272A(1)(d) of the Income Tax Act of 1961, considered that the year 2019 being the first year of transition to the digital and electronic mode, the error seems to be in good faith.
Previously, the first appeal authority rejected the assessee’s explanation for non-compliance with the notice issued under section 142(1) of the Act simply on the grounds that during the sanction proceedings in Under section 272A(1)(d) of the Act, the person being assessed failed to state reasonable cause.
Before the Tribunal, the assessee argued that it was in 2019. This was the first year of an online interface, the employees of the assessee were not aware that the notices were issued electronically . It was only after the order imposing a penalty under Section 272A(1)(d) together with the notice of demand for Rs.10,000/- was served on the assessee, that the assessee has taken note of the current assessment procedure.
A bench consisting of ITAT President, Shri GSPannu, and Judicial Member, Shri Vikas Awasthy, said, “We disagree with the findings of the CIT(A). The assessee explained that about the ongoing assessment process, the assessee was not made aware until receipt of order u/s 272A(1)(d) of the Act and the notice of formal notice. The explanation provided by the person assessed before the CTI(A) and before the Tribunal is coherent. We are satisfied that the assessee’s non-appearance in response to the initial notice under section 142(1) of the Act was not deliberate. »
Quashing the penalty order, the Court concluded that “As 2019 was the initial year of the switch to digital and electronic mode, the error appears to be in good faith. The assessee was able to demonstrate reasonable cause for failure to comply with the u/s legal notice. 142(1) of the Act. So, in our opinion penalty levied u/s. 272A(1)(d) of the Act is untenable. The evaluating officer is invited to remove the sanction. »
Subscribe to Taxscan AdFree to see the judgment
Support our journalism by subscribing to Taxscan ad-free. follow us on Telegram for quick updates.