SURESH MUTHA, CHENNAI V. ACIT, CORPORATE CIRCLE - 4 (1), CHENNAI

ITA 3505/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3217 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 31-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Non compliance
• Section: 144; 143(3); 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI , # , ' BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR , ACCOUNTANT MEMBER ./ ITA NO.3505/CHNY/2019 /ASSESSMENT YEAR: 2016-17 SHRI SURESH MUTHA, 961, SIYAT HOUSE, POONAMALLEE HIGH ROAD, PURASAWALKAM, CHENNAI-600 084. V . THE ASST. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-4(1), CHENNAI. [PAN: AAEPM 8042 J ] ( ) /APPELLANT) ( *+) /RESPONDENT) ) , / APPELLANT BY : MR.P.UTTAMCHAND JAIN, CA *+) , /RESPONDENT BY : MR. AR.V.SREENIVASAN, JCIT , /DATE OF HEARING : 11.03.2020 , /DATE OF PRONOUNCEMENT : 11.03.2020 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER: THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST APPELLATE ORDER DATED 26.09.2019 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-8, CHENNAI (HEREINAFTER CALLED THE CIT(A )), IN ITA NO.63/18-19 FOR ASSESSMENT YEAR (AY) 2016-17, THE APPELLATE PRO CEEDINGS BEFORE LEARNED CIT(A) HAD ARISEN FROM PENALTY ORDER DATED 07.12.2018 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED T HE AO) U/S.271(1)(B) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED TH E ACT) LEVYING PENALTY ITA NO.3505/CHNY/2019 :- 2 -: OF RS. 10,000/- FOR NON COMPLIANCE TO NOTICES ISSUE D BY THE AO DATED 24.08.2018 AND 16.10.2018, BOTH U/S 142(1) OF THE 1 961 ACT. 2. THE GROUNDS OF APPEAL RAISED BY ASSESSEE IN MEM O OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, CHENNAI (HE REINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. FOR THAT THE ORDER OF THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) AND ASSESSING OFFICER IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE AND IN ANY CASE IS OPPOSED TO THE PRINCIPLES OF EQUITY, NATURAL JUSTICE AND FAIR PLAY. 2. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY U/S.271(1)(B) BY THE ASSESSING OFFICER UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONCLUDING THE LEVY OF PENALTY IS FOR DELAY IN SUBMISSION OF DETAI LS UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONSIDERING THE FACT THE ASSESSMENT WAS COMPLETED U/S. 143(3) AND NOT UNDER SECTION 144. 5. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS.10,000/- AGAINST SHOW CAUSE N OTICE FOR MORE THAN ONE NOTICE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE OUT OF THE SALES PROMOTION EXPENSES U NDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE OUT OF THE SALES PROMOTION EXPENSES U NDER THE FACTS AND CIRCUMSTANCES OF THE CASE PRAYER FOR THESE GROUNDS AND SUCH OTHER GROUNDS THAT MAY B E URGED BEFORE OR DURING THE HEARING OF THE APPEAL IT IS MOST HUMBLY PRAYED THAT THE HON OURABLE INCOME TAX APPELLATE TRIBUNAL MAY BE PLEASED TO A. DIRECT THE ASSESSING OFFICER TO DELETE THE LEVY O F PENALTY U/S.271(1)(B). B. PASS SUCH OTHER ORDERS AS THE HONOURABLE APPELLA TE TRIBUNAL MAY DEEM FIT. 3. THE SOLITARY ISSUE THAT ARISE IN THIS APPEAL IS WITH RESPECT TO CHALLENGE MADE BY ASSESSEE AGAINST LEVY OF PENALTY OF RS. 10,000/- U/S.271(1)(B) OF THE ACT FOR NON COMPLIANCES OF TWO NOTICES DATED 24.08.2018 AND 16.10.2018 BOTH ISSUED U/S 142(1) OF THE 1961 ACT. THE ITA NO.3505/CHNY/2019 :- 3 -: ASSESSEE IS AN INDIVIDUAL AND THE CASE OF THE ASSES SEE WAS SELECTED FOR FRAMING SCRUTINY ASSESSMENT THROUGH CASS AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED BY THE AO TO THE ASSESSEE WHICH WAS ADMITTEDLY DULY SERVED ON THE ASSESSEE. SUBSEQUENTLY, THE NOTICE U /S.142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE AND THE ASSESSEE HAD E-F ILED THE DETAILS CALLED FOR IN THE E-PROCEEDINGS PORTAL. HOWEVER IT SO HAPP ENED THAT ON TWO OCCASIONS WHEN NOTICE(S) DATED 24.08.2018 & 16.10.2 018 BOTH ISSUED U/S.142(1) OF THE ACT BY THE AO TO THE ASSESSEE ASK ING TO APPEAR AND FILE DETAILS ON APPOINTED DATE, THE ASSESSEE DID NOT COM E FORWARD AND THERE WAS NON COMPLIANCES TO BOTH THESE NOTICES BY THE AS SESSEE, WHICH LED TO ISSUANCE OF SHOW CAUSE NOTICE U/S.274 R.W.S.271(1)( B) OF THE ACT ON 09.11.2018 BY THE AO , AS TO WHY, PENALTY SHOULD NO T BE IMPOSED U/S271(1)(B) OF THE ACT AGAINST THE ASSESSEE. IN R ESPONSE TO THE AFORESAID SCN, THE ASSESSEES REPRESENTATIVE DULY APPEARED BEFORE THE AO ON 16.11.2018 AND FILED DETAILS IN PERSON BEFORE THE AO AND ALSO FURNISHED REPLIES WHICH WERE UPLOADED IN THE E-PROC EEDINGS PORTAL. THIS NON-APPEARANCE BY ASSESSEE ON THESE TWO OCCASIONS T O THE NOTICES ISSUED BY AO U/S.142(1) OF THE ACT , DATED 24.08.2018 & 16 .10.2018 LED TO LEVY OF PENALTY OF RS. 10,000/- AGAINST THE ASSESSEE , VIDE PENALTY ORDER DATED 07.12.2018 PASSED BY THE AO U/S.271(1)(B) OF THE AC T. 4. AGGRIEVED BY LEVY OF PENALTY BY THE AO U/S 271(1 )(B) OF THE 1961 ACT, THE ASSESSEE FILED FIRST APPEAL WITH LD.CIT(A) WHICH WAS DISMISSED BY LD.CIT(A) , VIDE APPELLATE ORDER DATED 26.09.2019. THE ASSESSEE IS NOW ITA NO.3505/CHNY/2019 :- 4 -: IN APPEAL BEFORE TRIBUNAL AND AT THE OUTSET, LD.COU NSEL FOR THE ASSESSEE SUBMITTED THAT NON-COMPLIANCE OF THESE NOTICES U/S. 142(1) OF THE ACT DATED 24.08.2018 & 16.10.2018 WAS NOT DELIBERATE AN D ASSESSEE DULY ENTERED APPEARANCE BEFORE AO LATER ON 16.11.2018 D URING THE COURSE OF ASSESSMENT PROCEEDINGS AND FILED ALL DETAILS WHICH LED TO THE CULMINATION IN THE ASSESSMENT ORDER DATED 14.12.2018 PASSED U/S .143(3) OF THE ACT AND IT WAS PRAYED THAT THE LIBERAL VIEW MAY BE TAKE N AND PENALTY OF RS. 10,000/- U/S.271(1)(B) OF THE ACT LEVIED BY THE AO , BE HEREBY DELETED. THE ASSESSEE HAS RELIED ON THE FOLLOWING DECISIONS: 1. HONBLE ITAT, DELHI BENCH DECISION IN THE CASE OF A KHIL BHARTIYA PRATHMIK SHMSHAK SANGH BHAWAN TRUST V. ADIT REPORTED IN [200 8] 115 TTJ 419 (DELHI). 2. HONBLE ITAT , AHMEDABAD DECISION IN THE CASE OF SW ARNABEN M. KHANNA & ORS. V. DCIT REPORTED IN (2010) 132 TTJ (AHD) (UO) 1 : (201 0) 37 SOT 25. 3. HONBLE ITAT, JODHPUR DECISION IN THE CASE PARMESHW ARI TEXTILES V. ITO REPORTED IN (2005) 92 TTJ (JD) 764 THE LD.DR, ON THE OTHER HAND, VEHEMENTLY RELIED UPO N THE APPELLATE ORDER PASSED BY LD.CIT(A). 5.WE HAVE HEARD BOTH THE RIVAL PARTIES AND PERUSED THE MATERIAL ON RECORDS INCLUDING CITED CASE LAWS. WE HAVE OBSERVE D THAT ASSESSEE IS AN INDIVIDUAL. THE CASE OF THE ASSESSEE WAS SELECTED FOR FRAMING SCRUTINY ASSESSMENT THROUGH CASS BY REVENUE U/S.143(3) R.W.S .143(2) OF THE ACT. THE NOTICE U/S.143(2) WAS ISSUED BY AO TO THE ASSES SEE AND ADMITTEDLY SERVED ON THE ASSESSEE. THEREAFTER TWO NOTICES WERE ISSUED TO THE ASSESSEE U/S 142(1) OF THE 1961 ACT ON 24.08.2018 A ND 16.10.2018 FIXING THE DATE OF HEARING BUT THE ASSESSEE DID NOT APPEAR BEFORE THE AO ON THE ITA NO.3505/CHNY/2019 :- 5 -: DATE FIXED FOR HEARING AND HENCE BOTH THESE NOTICES REMAINED NON- COMPLAINT WITH. LATER, THE AO ISSUED SHOW CAUSE NO TICE DATED 09.11.2018 U/S 271(1)(B) SHOW-CAUSING ASSESSEE AS TO PENALTY B E NOT LEVIED ON ASSESSEE WITHIN PROVISIONS OF SECTION 271(1)(B) OF THE 1961 ACT. THE ASSESSEE THEN ENTERED APPEARANCE BEFORE THE AO THRO UGH AR ON 16.11.2018 AND FILED DETAILS AS CALLED FOR BY THE A O . THE SAID DETAILS WERE ALSO UPLOADED BY ASSESSEE ON E-PROCEEDING PORTAL OF THE DEPARTMENT . THE AO PASSED AN ASSESSMENT ORDER DATED 14.12.2018, U/S 143(3) OF THE 1961 ACT. THUS, THE ASSESSMENT ORDER PASSED BY THE AO WA S UNDER PROVISIONS OF SECTION 143(3) OF THE 1961 ACT AND NOT AN EX-PARTE BEST JUDGMENT ASSESSMENT U/S 144 OF THE 1961 ACT. THE AO LEVIED P ENALTY OF RS. 10000 FOR NON COMPLIANCES OF AFORESAID TWO NOTICES DATED 24.08.2018 AND 16.10.2018 , BOTH ISSUED U/S 142(1) OF THE 1961 AC T BY INVOKING PROVISIONS OF SECTION 271(1)(B) OF THE 1961 ACT. IN OUR CONSIDERED VIEW , THE ASSESSEE HAS SUBSEQUENT TO ISSUE OF BOTH THE AF ORESAID NOTICES U/S 142(1) OF THE 1961 ACT, ENTERED APPEARANCE BEFORE T HE AO ON 16.11.2018 DURING ASSESSMENT PROCEEDINGS AND FILED THE REQUISI TE DETAILS. THE AO FINALLY PASSED AN ASSESSMENT ORDER U/S 143(3) AND N OT AN EX-PARTE BEST JUDGMENT ASSESSMENT ORDER U/S 144 OF THE 1961 ACT. THUS, IT IS NOT A CASE THAT THE ASSESSEE DID NOT ENTERED APPEARANCE AT ALL POST THESE NOTICES DURING ASSESSMENT PROCEEDINGS OR THAT IT DID NOT FU RNISH THE DESIRED DETAILS .WE HAVE ALSO GONE THROUGH THE CITED CASE L AWS AS RELIED UPON BY ASSESSEE AND IN OUR CONSIDERED VIEW, THE ASSESSEE H AS ENTERED APPEARANCE POST ISSUE OF THESE NOTICES AND FURNISH THE DETAILS BEFORE THE ITA NO.3505/CHNY/2019 :- 6 -: AO AS WELL IN UPLOADED DETAILS IN THE E-PROCEEDINGS PORTAL DURING ASSESSMENT PROCEEDINGS AND THUS KEEPING IN VIEW ENT IRE FACTUAL MATRIX OF THE CASE AND ALSO TAKING A LIBERAL VIEW, WE HEREBY DELETE PENALTY OF RS. 10,000/- LEVIED AGAINST THE ASSESSEE BY THE AO U/S. 271(1)(B) OF THE ACT. WE ORDER ACCORDINGLY. 6. IN THE RESULT, THE APPEAL FILED BY ASSESSEE IN I TA NO.3505/CHNY/2019 FOR AY: 2016-17 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 11 TH DAY OF MARCH, 2020 IN CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( # ) ( RAMIT KOCHAR ) /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 11 TH MARCH, 2020. TLN , *#2 32 /COPY TO: 1. ) /APPELLANT 4. 4 /CIT 2. *+) /RESPONDENT 5. 2 * /DR 3. 4 ( ) /CIT(A) 6. /GF