Sh. Ajit Singh, New Delhi V. ITO, New Delhi

ITA 4455/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5709 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-03-2010
• Assessment Year: 1996-1997
• Appeal Filed On: 23-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FARHAT QURESHI
• Assessee Lawyers: LOKENDRAJIT PAONAM
• Section: 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH A DELHI ] BEFORE SHRI R. P. TOLANI, JM AND SHRI K. D . RANJAN, AM I. T. APPEAL NO. 4455 (DEL) OF 2009. ASSESSMENT YEAR : 1996-97. SHRI AJIT SINGH, THE INCOME-TAX OFFIC ER, 1BHARAT NAGAR, NEW FRIENDS COLONY, VS. W A R D : 22 (2), N E W D E L H I 110 025. N E W D E L H I. P A N / G I R NO. ACB PS 7758 L. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI LOKENDRAJIT PAONAM, ADV.; DEPARTMENT BY : SHRI FARHAT QURESHI, SR. D.R. ; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 199 6-97 ARISES OUT OF THE ORDER OF THE LD. CIT (APPEALS)-XXIII, NEW DELHI. 2. THE GROUNDS OF APPEAL, RAISED BY THE ASSESSEE, A RE REPRODUCED AS UNDER :- 1. THAT THE LD. CIT (APPEALS) HAS ERRED IN L AW AND ON FACTS IN SUSTAINING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE INCO ME-TAX ACT ON WHOLLY ERRONEOUS AND UNSUSTAINABLE GROUNDS; 2. THAT THE LD. CIT (APPEALS) HAS FAILED TO APPRECIATE THAT IN THE ABSENCE OF SERVICE OF NOTICES ISSUED UNDER SECTION 142(1) OF T HE I. T. ACT, THE SAME COULD NOT 2 I. T. APPEAL NO. 4455 (DEL) OF 2009. HAVE BEEN COMPLIED WITH AND DEFAULT COMMITTED BEING NOT DELIBERATE AND THE APPELLANT BEING PREVENTED BY SUFFICIENT AND REASONA BLE CAUSE, NO PENALTY UNDER SECTION 271(1)(B) OF THE I. T. ACT WAS EXIGIBLE IN THE PRESENT CASE; 3. THAT THE FINDINGS RECORDED BY THE LD. CIT (APPEALS) AS REGARDS THE FURNISHING OF RETURN BY THE APPELLANT ON 11-11-1998 SHOWING AN INCOME OF RS.56,800/- FOR THE YEAR IN APPEAL AND NON-SUBMISSI ON OF AFFIDAVIT ARE AGAINST THE MATERIALS ON RECORD INASMUCH AS NO RETURN FOR T HE YEAR IN APPEAL WAS FILED AND A DULY SWORN AFFIDAVIT IN SUPPORT OF ABSENCE OF SERVICE OF NOTICES ISSUED ON 16-01-2002 AND 28-02-2002 WAS FILED DURING THE C OURSE OF APPELLATE PROCEEDINGS. THUS THE IMPUGNED ORDER SUFFERS FROM NON-APPLICATION OF MIND AND IS LIABLE TO BE QUASHED. ' 3. THE ONLY ISSUE FOR CONSIDERATION RELATES TO IMPO SITION OF PENALTY UNDER SECTION 271(1)(B) OF THE I. T. ACT. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSING OFFICER INITIATED PENA LTY PROCEEDINGS UNDER SECTION 271(1)(B) OF THE ACT FOR NON-COMPLIANCE OF NOTICE UNDER SECTION 142(1) ISSUED ON 16/01/2002 AND 28/02/2002. SINCE THE ASSESSEE DID NOT COMPLY WITH THE NOTICE ISSUED U/S 142(1), THE AO IMPOSED PENALTY OF RS.20, 000/- FOR ABOVE TWO DEFAULTS I.E. RS.10,000/- FOR EACH DEFAULT. 4. BEFORE THE LD. CIT (APPEALS) IT WAS PLEADED THAT THE ASSESSEE DID NOT RECEIVE NOTICES UNDER SECTIONS 148 AND 142(1) AND, THEREFORE, PENAL TY UNDER SECTION 271(1)(B) WAS NOT IMPOSABLE. IT WAS ALSO SUBMITTED THAT THE ASSESSEE APPLIED FOR COPY OF ASSESSMENT ORDER AFTER HE RECEIVED DEMAND NOTICE FROM THE DEPARTMENT ON 19/08/2004. C ERTIFIED COPY OF ASSESSMENT ORDER WAS OBTAINED ON 4/10/2004 ON PAYMENT OF PRESCRIBED FEE OF RS.150/-. THEREAFTER THE APPEAL WAS FILED ONLY ON 4/11/2004. SINCE THE NOTICE WAS NOT SERVED ON THE ASSESSEE, IT WAS PLEADED BY THE ASSESSEE THAT PENALTY UNDER SECTION 271(1)(B) WAS N OT LEVIABLE. HOWEVER, THIS CONTENTION OF THE ASSESSEE WAS REJECTED BY THE LD. CIT (A) RELYING ON THE DECISION OF PATNA HIGH COURT IN THE CASE OF CIT VS. STANDARD MERCANTILE COMPANY 160 ITR 630 (PAT.) WHEREIN IT HAS BEEN HELD THAT THE EXPRESSION 'MAY' IN THE CONTEXT IN WHICH IT HAS BEE N USED MUST BE HELD TO BE MANDATORY. THEREFORE, THE PENALTY UNDER SECTION 271(1)(B) OF T HE ACT WAS CORRECTLY IMPOSED. 3 I. T. APPEAL NO. 4455 (DEL) OF 2009. 5. BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE NOTICE UNDER SECTION 142(1) AND 148 OF THE ACT WAS NOT RECEIVED. THEREFORE, THE AS SESSEE WAS PREVENTED FROM FURNISHING THE REPLY. SINCE NOTICE HAS NOT BEEN SERVED, PENALTY U NDER SECTION 271(1)(B) OF THE ACT COULD NOT BE IMPOSED. THE LD. AR OF THE ASSESSEE PLACED RELIANC E ON THE AFFIDAVIT FILED BY THE ASSESSEE BEFORE THE LD. CIT (A). ON THE OTHER HAND, THE LD. DR SUP PORTED THE ORDER OF THE LD. CIT (A). 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE ASSESSMENT ORDER AS WELL AS PENALTY ORDER, WE F IND THAT THE AO HAD NOT GIVEN ANY FINDING THAT THE NOTICE UNDER SECTION 148 AS WELL AS 142(1) WAS SERVED UPON THE ASSESSEE. THE ASSESSEE HAS FILED AFFIDAVIT IN SUPPORT OF HIS CONTENTION THAT T HE NOTICE WAS NOT SERVED. DURING THE COURSE OF HEARING THE LD. SR. DR COULD NOT PRODUCE ANY EVIDEN CE TO CONTROVERT THE CONTENTION OF THE ASSESSEE IN AFFIDAVIT THAT NOTICES UNDER SECTION 14 8 AND 142(1) WERE SERVED ON THE ASSESSEE. SINCE THERE IS NOTHING ON RECORD TO PROVE THAT NOTI CE UNDER SECTION 148/143(2) WAS SERVED ON THE ASSESSEE, IN THE ABSENCE OF WHICH INITIATION OF PEN ALTY PROCEEDINGS UNDER SECTION 271(1)(B) OF THE ACT WILL BE BAD IN LAW. ACCORDINGLY, IMPOSITION OF PENALTY UNDER SECTION 271(1)(B) FOR NONCOMPLIANCE OF NOTICE ON 16/1/2002 AND 28/2/2002 WOULD NOT ARISE. WE, ACCORDINGLY, DELETE THE PENALTY OF RS.20,000/- IMPOSED BY THE AO AND CO NFIRMED BY THE LD. CIT (APPEALS). 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 12 TH MARCH, 2010. SD/- SD/- [ R. P. TOLANI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12 TH MARCH, 2010. *MEHTA * 4 I. T. APPEAL NO. 4455 (DEL) OF 2009. COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT. 5 I. T. APPEAL NO. 4455 (DEL) OF 2009.