Smt. Anita Awasthi, Jaipur V. ITO, Ward - 3(5), Sonebhadra

ITA 243/VNS/2019

• Counselvise Citation: [NaN] 107 COUNSELVISE.COM (IT) 1737 (ITAT-VARANASI)
• Duration Of Justice: 2 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 02-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T.P. SHUKLA
• Keywords: Source of fund; Reasonable cause; Non compliance; Tax effect; Reassessment proceedings; Set aside
• Section: 147; 148; 144; 273B; 142(1); 69A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH, VARANASI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No. 243/VNS/2019 Assessment Year: 2010-11 Smt. Anita Awasthi, 1142, Block-36, Rangoli Gardens, Kanakpura, Jaipur, Rajasthan, 302021 v. ITO, Ward-3(5), Income Tax office, Sonebhadra, Uttar Pradesh PAN:ACBPA9520E (Appellant) (Respondent) Assesseeby: Shri T.P. Shukla, Advocate Revenue by: Shri A.K. Singh, Sr. DR Date of hearing: 26.05.2022 Date of pronouncement: 03.06.2022 O R D E R PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by assessee, being ITA No. 243/VNS/2019, is directed against the appellate order dated 05.09.2019 passed by ld. Commissioner of Income Tax (A), Allahabad (hereinafter called "the CIT(A)") in Appeal No. CIT(A), Allahabad/10111/2018-19 for assessment year (ay) 2010-11, the appellate proceedings had arisen before Learned CIT(A) from penalty order dated 05.06.2018 passed by learned Assessing Officer (hereinafter called “the AO”) under Section 271(1)(b) of the Income-tax Act, 1961 (hereinafter called “the Act”). We have heard both the parties in Open Court through physical hearing mode. 2. The grounds of appeal raised by assessee in memo of appeal filed with Income Tax Appellate Tribunal, Varanasi (hereinafter called “the tribunal”), reads as under : ITA No.243/VNS/2019 Assessment Year: 2010-11 Smt. Anita Awasthi v. ITO, Ward 3(5), Sonebhadra, U.P. 2 “1. The learned CIT(A) has erred in law and on facts in not considering the non- service of notice as reasonable cause for non-compliance of the notice issued u/s 142(1) on the last known address. 2. The learned CIT(A) has erred in law and on facts in not appreciating the fact that the appellant has left her job and shifted to Jaipur address and no notice could be served. 3. The learned CIT(A) has erred in law and on fact in not considering the judgments cited by the appellant in her written submission wherein it is held that change of address can be a reasonable cause u/s 273B and reasonable opportunity of hearing means reasonable opportunity of oral hearing in penalty proceedings.” 3. The brief facts of the case are that the re-assessment in the case of the assessee was framed by AO on 27 th December, 2017 under Section 144 read with Section 147 of the 1961 Act, assessing total income of Rs. 12,67,770/- in the hands of the assessee, as against returned income of Rs. 2,45,470/- . The penalty notice under Section 271(1)(b) was issued by AO for non-compliance of notice issued by AO under Section 142(1) during the course of reassessment proceedings . The AO observed that penalty notice u/s 271(1)(b) was served on the assessee along with assessment order passed by AO u/s 144 read with Section 147, but no reply was received by the AO. Further , Show Cause Notice(SCN) under Section 271(1)(b) dated 17.05.2018 was issued by the AO show-causing assessee as to why penalty u/s 271(1)(b) be not levied against the assessee for non compliance of notice u/s 142(1) during re-assessment proceedings . The date fixed for hearing before AO was 28 th May, 2018 , but again there was no compliance by the assessee. The AO ITA No.243/VNS/2019 Assessment Year: 2010-11 Smt. Anita Awasthi v. ITO, Ward 3(5), Sonebhadra, U.P. 3 levied penalty of Rs. 10,000/- against the assessee under Section 271(1)(b) of the 1961 Act , vide penalty order dated 5 th June, 2018 passed by the AO. 4. Aggrieved by penalty levied by the AO u/s 271(1)(b) vide penalty order dated 05.06.2018 , the assessee filed first appeal before CIT(A) , and submitted as under: "The appellant, Anita Awasthi was regularly filing her returns of income from the Renusagar address and for the year under consideration she has filed his return of income on 28.07.2010 disclosing Income of Rs. 2,45,740/- which fact has been admitted by the learned Assessing Officer In Para-3 of his order. The sources of income were salary from Aditya Birla Public School, Renusagar and bank interest. 2- The appellant resided at Renusagar address till May, 2014 and had a saving bank account number 00000010722349264 with the State Bank of India, Anpara, Sonebhadra and another saving bank account number 07320100003915 In UCO Bank, Renusagar, Sonebhadra jointly with his son Shri Nishit alias Ravi Awasthi Salary and other receipts were deposited by her In the said bank accounts and withdrawals as per need were made from the said accounts from time to time. The appellant's son Nishit alias Ravi is working in Marine Management SCMT of Qatar and NRI and he was also authorized to operate the UCO bank account when he visited India if the need arose. 3. As mentioned by the AO In his order the Ld. Assessing Officer has got Information from AIR that the appellant allegedly deposited sums aggregating to Rs.10,23,026/- In cash in her saving accounts during the F,Y. 2009-10 relevant for A.Y. 2010-11 and the appellant had not filed her return of Income for A.Y. 2010-11. In this background the Id. Assessing Officer has formed his belief that income amounting to Rs. 10,23,026/- has escaped assessment. After obtaining statutory approval from the CTT, ITA No.243/VNS/2019 Assessment Year: 2010-11 Smt. Anita Awasthi v. ITO, Ward 3(5), Sonebhadra, U.P. 4 Allahabad, he has issued notice u/s 148 to reopen the assessment on 31- 03-2017. 4. As mentioned by the AO in his order, he had issued notices u/s 142(1) on different dates right from 26-04-2017 to 31-10-2017 but no compliance of the same has been made and so he has completed the assessment u/s 144 of the Income Tax Act, 1961. The said assessment has resulted in addition of Rs. 10,23,026/- u/s 69A in the returned income of the appellant. 5. The appellant came to know only in August 2018 that certain income tax proceedings are going on against her as a postman had come with certain closed envelops to be served upon her, when she came in contact with her colleague of Aditya Birla Public School. Immediately, she requested her counsel to apply for the certified copy of assessment under and penalty orders and reasons for Initiating proceedings u/s 148 and copy of order sheet entries. After obtaining the same on 13.08.2018 the appellant approached for filing appeal against the assessment order dated 27-12-2017 and against penalty orders u/s 271(1)(b) and that of u/s 271(1)(c). Delay caused in this regard is beyond control of the appellant and so she requests your good-self ta condone the delay in filing appeal. 6. In the aforesaid circumstances, the assesses appellant has suffered Injustice and has come before your goodself by way of appeal and requests for relief after considering the case of the appellant sympathetically, The appellant begs to submit as under: i. No notice u/s 142(1) could be served upon the appellant as she was not present in the given address at the relevant time and so there did not arise any question of noncompliance. What to say of notice u/s 142(1), none of the notice/letter issued by the ld. AO could be served upon the appellant since June, 2014 as the appellant was present at Jaipur and not at Renusagar. Under the circumstance, default required tor initiating proceedings u/s 271(1)(b) is not present and the proceedings itself are vitiated. ITA No.243/VNS/2019 Assessment Year: 2010-11 Smt. Anita Awasthi v. ITO, Ward 3(5), Sonebhadra, U.P. 5 ii. In his order dated 05.06.2018, the Id AO has alleged that penalty notice was sent and served on the assessee along with assessment order but no reply was received in his office. The appellant vehemently denies this assertion of ld. AO and very humbly submits that the assessment order and penalty orders have been received by her authorized representative only on 13.08.2018 and not before. The appellant may file a sworn affidavit in this regard if desired. iii. The alleged show cause notice dated 17.05.2018 was never received by the appellant and so none from his side could attend the hearing before the Ld. AO. Since penalty proceedings were carried on one-sided only without considering the facts from the assessee and without allowing opportunity of being heard, the whole proceedings are vitiated and are in violation of Section 274(1) of the Act which is an overriding provisions. Accordingly the order u/s 271(1)(b) dated 05.06.2018 imposing penalty of Rs. 10,000/- on appellant is liable to be set aside. iv. In addition to above, non-service of notice is a reasonable cause for non-compliance of the appellant assessee. As per legal definitions –as given in Advanced Law Lexicon by P. Ramanatha Aiyar, 2005 edition “a reasonable cause” means a cause that would constrain a person of average intelligence and ordinary prudence.” Since the appellant was not residing at the Renusagar address since 2014 and no notice could be served on her, there existed ‘reasonable cause’ which prevented her to not comply with the notices issued by the learned AO. Accordingly as per overriding provisions of Section 273B no penalty could be imposed on her. v. The appellant places her reliance in this regard on following judicial pronouncements. 1. Balram Kumar Mahendra v. Income Tax Officer [2012)121 taxmann.com222 [Delhi Tribunal] ITA No.243/VNS/2019 Assessment Year: 2010-11 Smt. Anita Awasthi v. ITO, Ward 3(5), Sonebhadra, U.P. 6 2.CWT v. Sri Jagdish Prasad Choudhary (1995) 211 ITR 472 (Pat.) Copies of judgments cited above are annexed with this submission as annexure-A and annexure-B for your honour’s kind perusal. Prayer In view of above submission the appellant begs to submit that your honour may kindly be pleased to cancel the order of penalty passed by the AO u/s. 271(1)(b).” 5. The ld. CIT(A) dismissed the appeal filed by the assessee , vide appellate order dated 05 th September, 2019, by holding as under: “Decision : I have gone through the facts and the order of AO and submissions made by appellant. I am not able to agree with the submissions made by appellant. On perusal of the penalty order and also the corresponding assessment order, it is seen that the assessee has failed to make compliance to the notices issued by the A.O.. The assessment order has been framed u/s 144 of the I.T. Act. Further, the appellant has failed to lead any evidence that no notice was served upon him or another reasonable cause for such non-compliance. No evidence has been submitted to show that appellant informed the department about the change in address or about the fact that she was not residing at the Renusagar address since 2014. It is therefore clear that the AO had correctly sent the notices on the last available address on record. Appellant has not given any evidence to prove that there existed any reasonable cause for noncompliance. Hence, the penalty so levied is perfectly justified.” 6. Still aggrieved by appellate order dated 05.09.2019 passed by ld. CIT(A), the assessee filed second appeal before tribunal. The ld. Counsel for the assessee opened arguments and submitted that the assessee was a teacher at ITA No.243/VNS/2019 Assessment Year: 2010-11 Smt. Anita Awasthi v. ITO, Ward 3(5), Sonebhadra, U.P. 7 Renusagar . She was divorced , left her job at Renusagar and shifted to Jaipur. It was submitted that based on information available in AIR with the department that cash aggregating to Rs. 10,23,026/- were deposited by the assessee in her saving bank account during the year under consideration and the assessee did not file her return of income for impugned assessment , the assessment in the case of the assessee was reopened by invoking provisions of Section 147/148 of the 1961 Act. The AO issued notice u/s 148 dated 31.03.2017during reassessment proceedings , which was not served on the assessee, as the assessee was not residing at Renusagar, because the assessee left Renusagar in 2014 and shifted to Jaipur. It was submitted that none of the notices issued by AO during re-assessment proceedings as well during penalty proceedings were served on the assessee. The AO finally passed re- assessment order ex-parte on 27.12.2017 , u/s 144/147 of the 1961 Act. It was submitted that even penalty order dated 05.06.2018 u/s 271(1)(b) was passed by AO, ex-parte. It was further submitted that re-assessment as framed by the AO itself was quashed by Ld. CIT(A) , NFAC, New Delhi vide appellate order dated 17.12.2021 vide DIN and Order No. ITBA/NFAC/S/250/2021-22/1037893041(1) (National Faceless Appeal Centre, New Delhi) . The ld. Counsel for the assessee also submitted that the AO did not mention in penalty order/penalty notice , as to against which notice issued by AO u/s 142(1) during re-assessment proceedings, there was no compliance by the assessee. It was submitted that during re-assessment proceedings, the AO allegedly issued three notices u/s 142(1) , dated 26.04.2017, 08.06.2017 and 31.10.2017 as found mentioned in reassessment order passed by AO u/s 144/147 . It was submitted that the assessee shifted from Renusagar to Jaipur, in the year 2014. It was also submitted that ld. ITA No.243/VNS/2019 Assessment Year: 2010-11 Smt. Anita Awasthi v. ITO, Ward 3(5), Sonebhadra, U.P. 8 CIT(A) dismissed penalty appeal , prior to the quantum appeal decided by ld. CIT(A), N.F.A.C. , New Delhi , and there is no appeal filed by Revenue against the appellate order passed by ld. CIT(A) against quantum re-assessment, as tax effect was lower than the threshold limit. The Ld. Sr. DR confirmed that the appeal against the penalty order was disposed off by ld. CIT(A) on 05.09.2019, while appeal against quantum re-assessment was disposed of by ld. CIT(A), NFAC, New Delhi later on 17.12.2021 , i.e. appeal against penalty order u/s 271(1)(b) was disposed off by ld. CIT(A), prior to the disposal of appeal by ld. CIT(A) against the quantum re-assessment. 7.We have heard rival contentions and perused the material on record. We have observed that the assessment of the assessee was reopened by Revenue by invoking provisions of Section 147/148 of the 1961 Act. The AO issued notice u/s 148, dated 31.03.2017 . The other statutory notices were also issued by the AO u/s 142(1), which remained un-complied with by the assessee , during the course of reassessment proceedings. The AO framed reassessment order ex-parte u/s 144/147 , vide reassessment order dated 27.12.2017. The AO issued notices u/s 271(1)(b) to the assessee, as to why penalty be not levied for non complying with notices issued u/s 142(1) of the 1961 Act, during the course of reassessment proceedings. Three notices were issued by AO u/s 142(1) , dated 26.04.2017, 08.06.2017 and 31.10.2017 , during reassessment proceedings, but it is not specified by AO as to against which notice u/s 142(1) of the 1961 Act non compliance by the assessee, the penalty proceedings u/s 271(1)(b) were initiated. The assessee has claimed that she was not served with any of the notices issued during reassessment proceedings as well during penalty proceedings . The assessee has also ITA No.243/VNS/2019 Assessment Year: 2010-11 Smt. Anita Awasthi v. ITO, Ward 3(5), Sonebhadra, U.P. 9 contended that she was also not served with reassessment order and the penalty order passed by the AO , as she shifted to Jaipur from Renusagar, in 2014. The assessee has claimed that she was teacher in Renusagar, and got divorced, and hence shifted to Jaipur , in 2014, and hence no notice as well reassessment order/penalty order , which were all post 2014, could have been served to her at her disclosed address at Renusagar.It is not brought on record by the assessee as to whether she supplied the information about the new address at Jaipur to the AO or even applied for correction in PAN database. The assessee is equally responsible for its woes. However, while adjudicating appeal against quantum re-assessment , the ld. CIT(A), NFAC, New Delhi , vide appellate order dated 17.12.2021 , has quashed the quantum re-assessment , by holding as under: “ 1. In the light of the observations made in para-5 above, in all its sub- paragraphs, and respectfully following the ratio of the judicial pronouncements referred to therein , it is concluded that in the present case, firstly the AO recorded wrong an incorrect reasons for reopening the assessment and secondly, the ex-parte assessment order u/s 144/147 dated 27.12.2017 passed by the AO was without jurisdiction and void ab- initio. The reopening of assessment in the present case is therefore, quashed and consequenty the addition of Rs. 10,23,026/- under section 69A stands deleted. Ground No. 1 & 2 are, therefore, Allowed. 2. Since , the assessment order is treated as void ab-initio and the same has been quashed , therefore, there is no further need to consider and adjudicate the remaining grounds of appeal. Ground No. 3 & 4 are thus not adjudicated upon. 3. In the result , the appeal is Allowed.” Thus, as could be seen that the ld. CIT(A), NFAC, New Delhi , while adjudicating appeal filed by the assessee, against quantum re-assessment, has quashed the re-assessment order dated 27.12.2017 passed by AO u/s ITA No.243/VNS/2019 Assessment Year: 2010-11 Smt. Anita Awasthi v. ITO, Ward 3(5), Sonebhadra, U.P. 10 144/147 of the 1961 Act., by holding that reopening of the assessment u/s 147/148 was based on wrong and incorrect reasons recorded, and secondly that the reassessment order dated 27.12.2017 passed by the AO was without jurisdiction and void ab-initio. Thus, ld. CIT(A), NFAC, New Delhi quashed reopening of the assessment and deleted the additions as were made by the AO. This appellate order of the ld. CIT(A), NFAC, New Delhi against quantum re-assessment has attained finality , as ld. Sr. DR. could not show that an appeal was filed with tribunal by Revenue against the appellate order dated 17.12.2021 passed by ld. CIT(A), NFAC, New Delhi. Thus, once the quantum re-assessment itself is held to be void ab-inito and without jurisdiction , nothing survives so far as non compliances of notices u/s 142(1) of the 1961 Act, as the proceedings itself was vitiated , held to be bad in law and quashed , as it is also held by ld. CIT(A), NFAC, New Delhi , that reopening of the assessment was done based on wrong and incorrect reasons recorded. Thus, if the quantum proceedings itself are declared to be bad in law and quashed , then any non compliance on the part of the assessee to respond to notice issued u/s 142(1) during such proceedings which are held to be void ab inito and proceedings without jurisdiction , will not give rise to any cause of action for validly initiating penalty proceedings u/s 271(1)(b) for non compliance of notice issued u/s 142(1) during such proceedings , and hence consequently penalty proceedings itself are to be held to be bad in law, liable to be quashed. Thus, we order deletion of penalty levied by the AO u/s 271(1)(b) amounting to Rs. 10000/- , vide penalty order dated 05.06.2018, which was later confirmed by ld. CIT(A), Allahabad, vide appellate order dated 05.09.2019. While deleting penalty as above , we also note that when ld. CIT(A), Allahabad confirmed the penalty levied by the AO u/s 271(1)(b) , vide appellate order ITA No.243/VNS/2019 Assessment Year: 2010-11 Smt. Anita Awasthi v. ITO, Ward 3(5), Sonebhadra, U.P. 11 dated 05.09.2019 , the ld. CIT(A), Allahabad was not having the benefit of the appellate order dated 17.12.2021 passed by ld. CIT(A) , NFAC, New Delhi, as the appellate order against penalty order was passed by ld. CIT(A), Allahabad, much earlier/prior to the appellate order passed by ld. CIT(A), NFAC, New Delhi against quantum re-assessment. The assessee succeeds in this appeal. We order accordingly. 8. In the result, appeal filed by the assessee in ITA No. 243/VNS/2019, for ay: 2010-11 is allowed. Order pronounced on 03/06/2022 at Allahabad, U.P, in accordance with Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963 Sd/- /- Sd/- Sd [VIJAY PAL RAO] [RAMIT KOCHAR] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 03/06/2022 KD Azmi Copy forwarded to: 1. Appellant –Smt. Anita Aswathy, 1142, Block-36, Rangoli Gardens, Jaipur- 302021, Rajasthan 2. Respondent – The ITO, Ward-3(5), Sonebhadra, U.P. 3. Sr. DR , ITAT, Varanasi, U.P. 4. CIT, Varanasi,U.P./Sonebhadra, U.P. 5. The CIT(A),Allahabad, U.P.. 5. Guard File ITA No.243/VNS/2019 Assessment Year: 2010-11 Smt. Anita Awasthi v. ITO, Ward 3(5), Sonebhadra, U.P. 12 Sr. P.S.