ITAT Sets Aside Penalty Levied for Non-Compliance with Notices

The Income Tax Appellate Tribunal (ITAT), Mumbai, recently quashed the penalty levied on an assessee for not responding to notices issued under section 142(1) of the Income-Tax Act, 1961.

The assessee, Mr Dhananjay Mahadeo Sonsurkar, was issued two notices under section 142(1), which remained unanswered by the assessee. As a result, the assessing officer passed an assessment order under section 144 due to the non-compliance during the assessment proceedings. The AO also imposed a penalty of Rs 20,000 under Section 272A(1)(d).

The assessee filed an appeal before the Commissioner of Income-tax (Appeals), where he explained that the non-compliance was not intentional and was due to his unawareness of the e-proceedings followed by the Income Tax Department. However, the CIT(A) upheld the penalty, saying that there was no reasonable cause for the non-compliance. Therefore, the assessee approached the ITAT, Mumbai.

The assessee submitted that he was a retired employee with a small income from bank interest and was not required to file the income tax return, as his income was less than Rs 2,50,000. He said that he was not familiar with the e-communication method of the Income Tax Department, which resulted in the non-compliance.

The ITAT ruled in favour of the assessee, holding that CIT(A) did not properly consider the reasons submitted by the assessee. Since the reason was genuine and unintentional, the tribunal quashed the CIT(A)’s order.