Repeated non-compliance by the Assessee led to an ex-parte assessment.
₹30k Penalty Under Section 271(1)(b) Reduced to ₹10k as reliance on a tax consultant does not constitute “reasonable cause” —ITAT Ahmedabad in Arvindbhai Punabhai Patel vs The ITO, Ward-3(3)(1), Ahmedabad (14-Feb-2025)
Facts of the Case 🤔
• The Assessee filed the return of income for AY 2015–16, declaring ₹15,07,200/-.
• The Department reopened the assessment on 23.07.2022 under #Section148 after noticing significant credit entries totaling ₹28,37,80,056/-.
• Multiple notices under #Section142(1) dated 17.01.2023, 11.04.2023, and 25.04.2023 were issued, but the Assessee did not comply.
• An ex-parte assessment under #Section144 was passed on 26.05.2023, estimating the income at ₹2,23,37,400/-.
• A penalty of ₹30,000/- under #Section271(1)(b) was imposed on 17.11.2023 for repeated non-compliance; the Commissioner (Appeals) confirmed it on 23.08.2024.
Issue:
Whether the penalty under Section 271(1)(b) for non-compliance with statutory notices is justified given the Assessee’s claim of reliance on a tax consultant?
Tribunal held:
The Tribunal holds that reliance on a tax consultant does not constitute “reasonable cause” under #Section273B, justifying some form of penalty. Yet, it reduces the penalty from ₹30,000/- to ₹10,000/-, considering the Assessee eventually appealed against the quantum addition and did not seem to have a direct intent to evade.
Key Takeaways
• Timely compliance with statutory notices is crucial.
• Merely blaming a tax consultant does not absolve the Assessee.
• The Tribunal may grant partial relief if there is no clear intent to evade tax.
• #PenaltyProvisions remain enforceable for repeated non-compliance.