Viraj Shirishkumar Modi, Surat V. Dy. Commissioner of Income Tax, CC-1, Surat, Surat

ITA 632/SRT/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 5216 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-11-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 14-09-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause
• Section: 144; 273B; 143(3); 142(1); 153A; 274; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA Nos.631 to 637/SRT/2023 Assessment Years: (2012-13 to 2018-19) (Physical Hearing) Viraj Shirishkumar Modi, 5, Dwarkadhish Society, Palanpur Patia, Rander Road, Surat – 395009. Vs. The DCIT, Central Circle – 1, Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No.: BDBPM7942L (Appellant) (Respondent) Appellant by Shri Bipin Jariwala, Advocate Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 21/11/2023 Date of Pronouncement 21/11/2023 आदेश / O R D E R PER BENCH: These are the seven appeals, filed by the assessee, pertaining to assessment years (AYs) 2012-13 to 2018-19, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals), Surat [in short “the ld. CIT(A)”], which in turn arise out of separate penalty orders passed by the Assessing Officer under section 271(1)(b)/272A(1)(d) of the Income Tax Act, 1961 [hereinafter referred to as the “Act”]. 2. Since, the issues involved in all the appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No.631/SRT/2023 for AY. 2012-13, have been taken into consideration for deciding the above appeals en masse. Page | 2 ITA Nos.631 to 637/SRT/2023 Viraj Shirishkumar Modi 3. Grounds of appeal raised by the assessee in lead case, (in ITA No. 631/SRT/2023 for AY.2012-13), are as follows: “1. On the facts and in the circumstances of the case as well as on the subject, the learned commissioner of the Income Tax (Appeals) has erred in confirming the action of the assessing officer in levying Penalty of Rs.10,000/- u/s. 271(1)(b) of the I.T. Act, 1961. 2. It is therefore prayed that the above penalty may please be deleted as learned members of the tribunal may deem it proper. 3. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” 4. Succinct facts qua the issue are that during the assessment proceedings, the Assessing Officer observed that assessee has failed to comply with the terms of statutory notice issued under section 142(1) on 02.12.2020 and 22.12.2020 of the Income Tax Act, 1961. The Assessing Officer noted that there is an onus on the assessee to produce the requisite details, accounts or books called for under section 142(1) of the Income Tax Act, 1961 in order to enable revenue authorities to determine the true and correct income for the assessment year under consideration. In the absence of these documents, it becomes difficult to assess the true and proper income of the assessee. Accordingly, a show cause notice under section 271(1)(b) of the Act was issued on 08.01.2020 asking the assessee as to why penalty under section 271(1)(b) of the Act should not be levied for non-compliance to notices under section 142(1) of the Act issued on various dates. There has been failure to comply with the content and terms of notice under sub-section (1) of Section 142 of the Act. Hence, there is clear default under clause (b) of sub section 271(1) of the Act, and penalty is leviable. Therefore, Assessing Officer concluded that the assessee has without any reasonable cause failed to comply with the notice and is therefore liable to be penalized under section 271(1)(b) of the Act, Page | 3 ITA Nos.631 to 637/SRT/2023 Viraj Shirishkumar Modi accordingly, a penalty of Rs.10,000/- was levied by the Assessing Officer. 5. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has partly allowed the appeal of the assessee, observing as follows: “6.1 I have gone through the penalty orders and submissions made by the appellant. The AO has levied penalty u/s 271(1)(b) for non-compliance to the notices issued u/s 142(1) of the Act on 02.12.2020 & 22.12.2020. The AR of the appellant submitted that the appellant, during the assessment proceedings, submitted all the necessary details and complied with the notices issued by the Assessing officer from time to time. Further, the AR of the appellant submitted that the delay in submission of part details was due to heavy workload of audit work and due to Covid-19 pandemic everyone was doing work with proper safety measures. Hence, it should not be considered as default for non-compliance of legal notice and penalized the same u/s 271(1)(b) of the Act. Further, the AR of the appellant submitted that the assessment order was finally passed u/s 143(3) r.w.s. 153A of the Act and not u/s 144 of the Act. Hence delay in filing submission should not be instructed strictly, more so when the assessee has co-operated and replied and attended the hearings in the case. 6.2 After considering the order passed by the AO and submission made by the appellant, I am of the opinion that the appellant has not brought on record the reasonable cause for the failure to comply within the meaning of section 273B of the Income Tax Act, 1961. The appellant has failed to comply with the statutory notices during the course of assessment proceeding, which is evident from the penalty order and the statement of facts filed by the appellant. Therefore, the action of the AO levying penalty for non-compliance is justified. The Hon'ble ITAT Delhi in the case of Rekha Rani 154 ITD 617 has held that where default was same, penalty of Rs.10,000/- could be imposed for first default made by Assessee in this regard only. Penalty could not be imposed for each and every notice issued u/s. 143(2), that remained not complied with, on part of the Assessee. In view of the above discussion, the action of the AO in imposing penalty under Section 271(1)(b) of the Act is confirmed, but the quantum of penalty is restricted to Rs.10000/- levied for the first default of the appellant in not complying with the notice under Section 142(1) of the Act. Accordingly, the penalty imposed is restricted to Rs.10,000/- as against Rs.20,000/- levied by the AO. Ground No.1 is partly allowed.” 6. Aggrieved by the order of Ld. CIT(A), the assessee is in further appeal before us. Page | 4 ITA Nos.631 to 637/SRT/2023 Viraj Shirishkumar Modi 7. Shri Bipin Jariwala, Learned Counsel for the assessee, reiterated the submissions made during the appellate proceedings and stated that assessee during the assessment proceedings submitted all the necessary details and complied with the notices issued by the Assessing officer from time to time. Regarding the non-compliance of notice of hearing issued by the Assessing Officer, the ld Counsel for the assessee submitted that the assessee had duly filed submission against the said notice. The delay in submission of part details was due to Covid-19 pandemic and everyone was doing work with proper safety measures. Hence, it should not be considered as default for non-compliance of legal notice and penalized the same u/s 271(l)(b) of the Act. The ld Counsel also submitted that the assessment order was finally passed u/s 143(3) r.w.s. 153A of the Act and not u/s 144 of the Act. Hence delay in filing the submission should not be constructed strictly, more so when the assessee has co-operated and replied and attended all the hearings, before the Assessing Officer. Therefore, Ld. Counsel prayed the Bench that entire penalty may be deleted. 8. On the other hand, Ld. DR for the Revenue submitted that assessee did not make the compliance of various notices during the assessment proceedings, so penalty should be levied under section 271(1)(b) of the Act, therefore Ld. DR prayed the Bench that order passed by the Assessing Officer may be upheld. 9. We heard both sides in detail and also perused the records of the case including the paper book filed by the assessee. We note that issue under consideration is no longer res-integra, on the identical and same facts, the Co-ordinate Bench of this Tribunal in case of Sanskruti Mega Structure Pvt. Ltd. vs DCIT, ITA No.28/SRT/2018, dated 19.05.2021, Page | 5 ITA Nos.631 to 637/SRT/2023 Viraj Shirishkumar Modi has deleted the penalty under section 271(1)(b)/272A(1)(d) of the Income Tax Act, observing as follows: “10. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities. We have also deliberated upon the various case laws relied by the ld. AR of the assessee including the decision of Hon’ble Supreme Court in Suo Moto Writ Petition No. 3/2020. We find that the Assessing Officer finalised the assessment order on 07/06/2021. While finalizing the assessment order, no variation in the returned income was made, thus accepted the return income. Moreover, the assessment was completed under Section 143(3) r.w.s. 153C of the Act. The Assessing Officer before levying penalty issued notice under Section 274 r.w.s. 271(1)(b) dated 23/01/2021. In response to said show cause notice, the assessee specifically submitted that there is Covid-19 pandemic and everybody is doing work with safety measures and that his Accountant were busy in audit work. The reply of assessee was not accepted. The Assessing Officer levied penalty for non-compliance of notice dated 03/12/2020. In our view, the assesse has shown sufficient cause within the meaning of Section 273B in response to reply of show cause notice, therefore, no penalty under Section 271(1)(b) of the Act was leviable and the assessee is liable to succeed on this ground alone. 11. We have further noted that the notice dated 03/12/2020 was issued to the assessee. In response to said notice, the assessee sought adjournment on 28/12/2020. The adjournment was allowed to assessee and on the request of assessee, the hearing of the case was fixed on 04/01/2021. In our view, once the Assessing Officer himself allowed adjournment, the cause of action for non-compliance was waived on that moment itself. 12. We find that the ld. CIT(A) while confirming the action of Assessing Officer proceeded one step further and held that the assessee committed two defaults. In our view, the observation of ld. CIT(A) is contrary to the record and with the contents of order of penalty under Section 271(1)(b) of the Act. As recorded above, the assessee has shown sufficient cause for non-compliance, moreover, such non-compliance was done by granting adjournment by the Assessing officer himself. Further considering the decision in various case laws relied by the ld. AR of the assessee wherein it was held that when the assessment was framed under Section 143(3), merely because the assessee could not make compliance for single hearing due to bonafide reason on the penalty under Section 271(1)(b) of the Act cannot be imposed on the assessee for such bonafide default due to reasons beyond his control. In view of aforesaid factual and legal position, we direct the Assessing Officer to delete the impugned penalty. In the result, ground of appeal raised by assessee is allowed. 13. In ITA No. 135 to 138/Srt/2022 for the A.Y. 2013-14 to 2016-17, the facts are identical. The Assessing Officer levied penalty with similar Page | 6 ITA Nos.631 to 637/SRT/2023 Viraj Shirishkumar Modi reasons. Considering our decision in ITA No. 134/Srt/2022 for the A.Y. 2012-13, the penalties in all the appeals are deleted. 14. In ITA No. 139 & 140/Srt/2022 for the A.Y. 2017-18 and 2018-19, the Assessing officer levied penalty under Section 272A(1)(d) of the Act. We noted that the provisions of Section 272A(1)(d) of the Act are pari materia with the provisions of Section 271(1)(b) of the Act. The Assessing officer levied the penalty for alleged non-compliance of notice dated 21/12/2020 as levied in earlier years which we have already deleted. Therefore, considering the principle of consistency, the penalty under Section 272A(1)(d) of the Act for both the years are also deleted. 15. In the result, all these appeals of the assessee are allowed.” 10. We note that due to Covid-19 pandemic, the assessee could not make sufficient compliance before the Assessing Officer. However, ultimately, the assessment was completed under section 143(3) of the Act by the Assessing Officer which goes to prove that the earlier absence of the assessee has been duly condoned by him. Reliance in this regard is placed in the following decisions: (i) Ganesh B Pokhriyal vs ACIT in ITA No.5291/Mum/2018 dated 29/11/2019 (ii) Globus Infocom Ltd., vs. DCIT in ITA No.738/Del/2014 dated 29/06/2016 (iii) Akhil Bharatiya Prathmik Shamshak Sangh Bhawan Trust vs. ADIT reported in 115 TTJ 419(Del) 11. We note that 'Reasonable cause' as applied to human action is that which would constrain a person of average intelligence and ordinary prudence. It can be described as probable cause. It means an honest belief founded upon reasonable grounds, of the existence of a state or circumstances, which assuming them to be true, would reasonably lead any ordinary prudent and cautious man, placed in the position of the person concerned, to come to the conclusion that the same was the right thing to do. The cause shown has to be considered. The word 'reasonable' has in law the prima facie meaning of Page | 7 ITA Nos.631 to 637/SRT/2023 Viraj Shirishkumar Modi reasonable with regard to those circumstances of which the actor, called on to act reasonably, knows or ought to know. The reasonable cause can be reasonably said to be a cause which prevents a man of average intelligence and ordinary prudence, acting under normal circumstances, without negligence or inaction or want of bona fides [Azadi Bachao Andolan v. UOI [2001] 116 Taxman 249 (Delhi)]. The words 'reasonable cause' in section 273B must necessarily have a relation to the failure on the part of the assessee to comply with the requirement of the law which he had failed to comply with. We note that during the assessment stage, the assessee has made sufficient compliance of notices issued by the assessing officer. Moreover, no penalty u/s 271(1)(b) of the Act could be levied when an assessment has been completed u/s143(3) of the Act, wherein the ld. AO is deemed to have condoned the absence of the assessee or his authorised representative on earlier occasions when subsequently, the details were furnished by him and the assessments were ultimately completed u/s143(3) of the Act. Hence, we deem it fit that this is not a fit case for levy of penalty u/s 271(1)(b) of the Act. Therefore, we direct the AO to delete the said penalty. Accordingly, the grounds raised by the assessee are allowed. 12. Since, we have adjudicated the issue by taking the lead case in ITA No.631/SRT/2023 for AY.2012-13, and the facts and grounds of appeal raised by the assessee in other appeals are identical and common, therefore our instant adjudication in ITA No.631/SRT/2023 shall apply mutatis mutandis to other appeals of the assessee also. 13. In the result, appeals filed by assessee (in ITA Nos. 631 to 637/SRT/2023) are allowed. Page | 8 ITA Nos.631 to 637/SRT/2023 Viraj Shirishkumar Modi Registry is directed to place one copy of this order in all appeals folder / case files. Order is pronounced on 21/11/2023 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 21/11/2023 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat