HIMANSHU DIPAKKUMAR GANDHI,SURAT V. ASSESSING OFFICER, NFAC, SURAT

ITA 326/SRT/2024

AI Insights

The case involves Himanshu Dipakkumar Gandhi, the appellant, who contested a penalty imposed by the Income Tax Officer, Ward-2(3)(7), Surat, for non-compliance with statutory notices during the assessment year 2017-18. The penalties were related to the scrutiny of cash deposits during the demonetization period. The Assessing Officer initially accepted the assessee's submissions as illegible but later contradicted this in the penalty order by stating there was no compliance. The Tribunal found these contradictions significant enough to set aside the penalty, highlighting issues of procedural fairness and consistency in the application of tax laws.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 33934 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ISSUING NOTICE DATED
• Keywords: Set aside; Initiation of penalty proceedings
• Section: 143(3); 142(1); 274

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No. 326/Srt/2024 (Assessment Year 2017-18) (Physical hearing) Himanshu Dipakkumar Gandhi, 5/468, Haripura, Kaljug Street, Haripura, Surat-395003 (Gujarat) PAN No. ADOPG 3188 J Vs. Income Tax Officer, Ward-2(3)(7), Surat Appellant/ assessee Respondent/ revenue Assessee represented by Shri Yogesh B Shah, AR. Department represented by Shri Mukesh Jain, Sr.DR Date of Institution of Appeal 26/03/2024 Date of hearing 11/12/2024 Date of pronouncement 30/12/2024 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals), (in short, the ld. CIT(A)) dated 21/02/2024 18, in confirming penalty levied under section 272(2)(1)(d) dated 05.01.2022 for the Assessment year (AY) 2017-18. 2. Rival submissions of both the parties have been heard and record perused. At the outset of hearing, the learned Authorised Representative (ld. AR) of the assessee submits that the case of assessee for A.Y. 2017-18 was selected for scrutiny for verification of source of cash deposit during demonetization period. The Assessing Officer issued show cause notice under Section 142(1) of the Income Tax Act, 1961 (in short, the Act) on 23/05/2019, 08/08/2019 and 20/11/2019 for making compliance by 07/06/2019, 20/08/2019 and ITA No. 326/Srt/2024 Himanshu dipakkumar Gandhi Vs AO 2 26/11/2019 respectively. The assessee in response to such notices, furnished requisite reply. Reply was not accepted by Assessing Officer by taking view that the submissions were illegible. Ultimately, the assessment was completed under Section 143(3) of the Act. The Assessing Officer after completing the assessment proceedings on 21/12/2019 allegedly issued show cause notice under Section 274 r.w.s. 272A(1)(d) of the Act on 21/19/2019 for non- compliance of above three statutory notices. The said notice was not received by the assessee. The Assessing Officer in the penalty order, recorded that further opportunity was given to the assessee by issuing notice dated 23/02/2021 for making compliance on or before 01/03/2021 wherein the assessee explained that the assessee has filed appeal before the ld. CIT(A) against initiation of penalty proceedings in the assessment order. The Assessing Officer ultimately levied penalty for non-compliance of notices dated 23/05/2019, 13/11/2019 and 22/11/2019 and levied penalty @ 10,000/- for each of alleged default thereby levied the penalty of Rs. 30,000/-. On appeal before the ld. CIT(A), the action of Assessing Officer was upheld. The ld. AR of the assessee submits that once the Assessing Officer accepted in the assessment order that the assessee made compliance, no cause of action for levying penalty under Section 272A(1)(d) of the Act is arisen. The ld. AR of the assessee submits that the observation of Assessing Officer in assessment order as well as in penalty order are contradictory. In penalty order, the Assessing Officer recorded that no compliance was made. On the contrary, in the assessment order, the Assessing Officer in para 3.1 has recorded that the ITA No. 326/Srt/2024 Himanshu dipakkumar Gandhi Vs AO 3 assessee filed written submission, however, the same was illegible copies and the assessee was asked to furnish legible copy. 3. On the other hand, the learned Senior Departmental Representative (ld. Sr.DR) for the revenue supported the orders of the lower authorities. 4. We have considered the submissions of both the parties and have gone through the orders of the lower authorities carefully. We find that the Assessing Officer in para 3 of assessment order has recorded that three notices were issued and that notices were plied. Relevant part of assessment order is scanned herein below: 5. We find that the Assessing Officer completed the assessment order under Section 143(3) of the Act on 21/12/2019. At the time of completing assessment order, the Assessing Officer issued show cause notice under Section 274 r.w.s. Section 272A(1)(d) of the Act. The Assessing Officer in para 2 of penalty order, recorded “no compliance was made by assessee within stipulated dates and time”. The Assessing Officer ultimately levied penalty @ Rs. 10,000/- for three alleged defaults thereby levied penalty of Rs. 30,000/-. We find that the ITA No. 326/Srt/2024 Himanshu dipakkumar Gandhi Vs AO 4 observation of Assessing Officer is in contradictory, in assessment order, the Assessing Officer duly recorded that in response to said notices, the assessee filed written submission, however, the same was illegible, but in penalty proceedings, the Assessing Officer recorded that no compliance was made, thus, in our view, the penalty order due to contradictory observation has no legs to stand and we direct the Assessing Officer to delete the penalty. In the result, penalty levied vide order dated 21/12/2019 is set aside. 6. In the result, this appeal of assessee is allowed. Order pronounced in the open court on 30th December, 2024. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 30/12/2024 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT 4. DR 5. Guard File By order // True Copy // Sr. Private Secretary, ITAT, Surat "