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Judgment
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
These are a batch of two appeals pertaining to the same assessee for AY 2015-16. For the sake of convenience these two appeals are being disposed of through a single order.
Appeal No.6574 arises from order dated 19.08.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by Ld. CIT(A)-NFAC, Delhi. ITA No.6575 arises from order dated 19.08.2025, passed u/s 250 of the Act by Ld. CIT(A)-NFAC.ITA 6574 pertains to a penalty of Rs.5,000/- levied u/s 271F of the Act on the allegation that there is a default of not filing of return of income either u/s 139(1) of the Act or in response to notice u/s 148 of the Act. In ITA 6575 a penalty u/s 271(1)(b) has been levied of Rs.20,000/- for two defaults in terms of not attending to notices issued by the Ld. AO.
Aggrieved with these penalties the assessee approached the Ld. CIT(A) where he could not succeed on the basis of finding that the main plea of the assessee about ignorance of law leading to the said defaults, was not found tenable at first appellate stage.
Further aggrieved, the assessee has approached the ITAT with grounds challenging the penalties levied.
Before us the Ld. AR stated that the assessee was running the business of trading in old and discarded cloth. The assessee being a marginal trader was not conversant with tax provisions and hence, did not file the return of income and thereafter also did not properly attend to the proceedings. It has been stated by the Ld. AR, through written submissions and oral arguments, that the assessee was not residing at his usual address and thus, was not aware of the notices issued to him. Furthermore, as soon as it was brought to the notice of the assessee that there were proceedings going on against him he then promptly followed up and deposited the tax due against him. It was averred by the Ld. AR that it is for such situations that the provisions of section 273B have been put in place and both the penalties are duly covered for the purposes of determining “Reasonable Cause”. It was the prayer that the facts & circumstances of the case would reveal that the assessee deserves to succeed with respect to section 273B of the Act.
Per contra, the Ld. DR relied on the orders of the authorities below and also submitted written comments filed on 16.03.2026. The Ld. DR read out from the comments and pointed out that ignorance of law is no excuse to justify non-compliance by the assessee. It was further pointed out in the written submissions that the assessee was provided with sufficient opportunity to comply with the notices but he was not forthcoming in that regard.
We have carefully considered the documents before us and have heard the Ld. AR/DR. We are acutely aware of the fact that the provisions of section 273B cover a large number of penalties, including the impugned penalties in these two cases. A review of judicial literature reveals that there is no hard and fast rule for defining “Reasonable Cause” but considering the totality of facts and circumstances of this case and the fact that the assessee has been prompt in attending before the Ld. CIT(A), leads us to believe that some reasons prevented him from complying with the notices earlier but later on he was diligent enough in the same. It is felt that these two cases would certainly fall in the category of “Reasonable Cause” as envisaged u/s 273B and thus, the assessee would merit relief from the two penalties levied.
In the result, both the appeals are allowed.