MAHESHBHAI PRABHUDAS GANDHI, AHMEDABAD V. The Income Tax Officer, Ward-5(3)(1), Ahmedabad

ITA 766/AHD/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8626 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-02-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 30-09-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL KUMAR KATIAR
• Assessee Lawyers: SAIYAM
• Section: 144; 2; 15; 139; 142(1); 201; 139(1); 9(1); 9(1); 9(1); 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./I. T. A. No s. 75 9 to 762 & 764 to 767/Ahd/2023 ( नधा रण वष / As se ss ment Year s : 2 013-14 to 2016-17) Ma he s h bh ai P ra b h ud as Ga nd hi D -4 0 4, Dh ar ni d h ar To we r , Pa l di , G uj a r a t 3 80 0 07 बनाम/ Vs . L d . AO , C I T ( A ) N F A C , D e lh i N O W I n c o m e Ta x O f f ic e r W ar d-5(3) (1) , A h m ed a b a d थायी लेखा सं./जीआइआर सं./P A N/ G I R N o . : A B D PG 8 8 9 9 D (Appellant) . . (Respondent) Assessee by : Shri Prakash D. Shah & Shri Saiyam V Shah, A.Rs. Revenue by : Shri Sushil Kumar Katiar, Sr. DR D a t e o f H e a r i ng 01/02/2024 & 08/02/2024 D a t e o f P r o n o u nc e me n t 21/02/2024 O R D E R PER BENCH: This bunch of eight appeals filed at the instance of the appellant is directed against the orders dated 31.07.2023 & 02.08.2023 passed by National Faceless Appeal Centre (NFAC), Delhi, arising out of the orders dated 26.09.2022 & 29.09.2022 passed by the ITO, Ward-5(3)(1), Ahmedabad, whereby and whereunder the penalty imposed under Section 271(1)(b) & 271F of the Act levied by the ITO has been confirmed for A.Y. 2013-14 to 2016-17; respectively. Since all the appeals filed by the single appellant and ITA Nos. 759 to 762 & 764 to 767/Ahd/2023 (Maheshbhai Prabhudas Gandhi) - 2 - the facts are identical, these are heard analogously and are being disposed of by a common order for the sake of convenience. ITA No. 7 59/Ahd/202 3 for A. Y. 2013-14 2. ITA No.759/Ahd/2023 for A.Y. 2013-14 relates to levied penalty under Section 271(1)(b) of the Act and is taken as a lead case. 3. The brief facts leading to the case is this that during course of assessment proceeding, it was found that the appellant did not comply with the notice issued under Section 142(1) of the Act dated 12.03.2022 fixing the date of hearing on 17.03.2022. Thereafter, the case was transferred from Faceless unit to the Ward-5(3)(1) on 01.08.2022 as per provision of Section 144B(8) of the Act, whereupon, notice was given on 14.09.2022 through ITBA for compliance before 29.09.2022. In response to the show cause notice for initiation of penalty under Section 271(1)(b) of the Act dated 31.03.2022 followed by notice dated 14.09.2022, the appellant duly furnished reply on 13.04.2022 and 22.09.2022. It is the case of the Revenue that as the appellant has not furnished any supporting document in order to establish his claim, the reply was not found to be acceptable. Penalty was, therefore, levied as per provision of Section 271(1)(b) of the Act for default. 4. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. 5. Before the First Appellate Authority, the appellant further placed this particular fact on record that the appellant duly made compliance in response to the notice mentioned hereinabove under Section 142(1) of the Act. Moreso, ITA Nos. 759 to 762 & 764 to 767/Ahd/2023 (Maheshbhai Prabhudas Gandhi) - 3 - the signed copy of the reason for the re-assessment and approval under Section 151 of the Act was asked for from the Ld. AO by the assessee by filing the reply dated 17.03.2022, a copy whereof has duly been submitted before us in each of the matter and the contents whereof is as follows: 6. We furth er fin d that while confirming the pen alty imp osed by th e Ld . AO under Sectio n 2 71(1)(b) of the Act, th e Ld . CIT(A) ITA Nos. 759 to 762 & 764 to 767/Ahd/2023 (Maheshbhai Prabhudas Gandhi) - 4 - to ok into consideration that as no supp ortin g documents w ere fu rnished by the assessee to establish th e clai m o f the appellant by filing the reply to th e show cause notice for levy of penalty on 13. 04.2 022 and 05 . 08. 20 22, the Ld. AO pa ssed o rders levying penalty of Rs. 10,0 00/- under Section 271(1)(b) of th e Act on 26. 09.2 022. 7. Furth er that, though the asse ss ee made a requ est fo r sup plying th e signed copy for the reason o f re-a ss es sment and approv al u nder Section 151 of th e Act alon gwith the respon se to th e notice u nder Sectio n 1 42(1) o f the Act, p enalty was i mposed under Section 271(1 )(b) of the Act by the Ld. AO and was confir med by the Ld. CIT(A). A b are ap preciation of the records, one cann ot overloo k sigh t o f th e above fact. It is also evident that as the qu antum ap peal was pending before th e First Appellate Autho rity, the asse ssee prayed for th e p enalty proceed in g to be kept in ab eyance till the finalization of su ch ap peal. The Ld. DR also failed to controvert the sa me. 8. Hav ing regard to the do cu ments, particu larly , the e- Pro ceedings Resp onse Ack nowledge men t establishing the above fact o f reply mad e b y the asses see, the condu ct of the assess ee can not be treated as assessee-in -d efault and penalty o f the impugn ed amo unt o f Rs. 10, 0 00/- lev ied fo r A. Y. 20 13-14 u nder Section 271(1)(b ) of the Act is, therefore, not fo und to be sustainable in th e ey e of law and hence qu ashed. ITA Nos. 759 to 762 & 764 to 767/Ahd/2023 (Maheshbhai Prabhudas Gandhi) - 5 - 9. In th e result, app eal filed by the ass es see is allowed. 10. Th e decision in ITA No . 759/Ahd/20 23 for A. Y. 20 13-14 shall also ap ply mutatis muta ndis in ITA No s. 760 to 762/Ahd/202 3 for A. Ys. 20 14-15 to 2 016-17. ITA No. 7 64/Ahd/202 3 for A. Y. 2013-14 11. Th e in stan t ap peal is directed again st th e o rd er dated 02. 08.2 023 passe d b y NFAC, Delh i arisin g ou t of p enalty order dated 29. 09.2 022 un der Section 271F o f the Act passed b y the Ld. AO, Ward-5(3)(1), Ahmedabad. The appeal was migrated to the NFAC in terms of the CBDT Notification No. 76/2020 dated 25.09.2020. 12. We have heard the rival submi ssions mad e by the respective parties and we h ave also peru sed t he relevant materi als available on reco rd. 13. Th e fact remain s that the impugn ed penalty un der Section 271F of the Act was levied fo r no n-filing of the return of inco me under Section 139(1) o f the Act by the asses see; the in come fo r th e y ear under Section was d eter mi n ed under Section 1 44 r. w. s. 147 o f th e Act vid e order dated 31. 0 3. 2022. The case o f the asses see is this th at as the income o f the ass es se fo r the year under consideratio n was below the taxable limit, there was no requirement to file return under Section 139(1) of th e Act. Relevant to note that the estimated inco me o f th e assessee is ITA Nos. 759 to 762 & 764 to 767/Ahd/2023 (Maheshbhai Prabhudas Gandhi) - 6 - Rs. 2, 00, 0 00/- for A. Ys. 20 13-14 & 2014 -15. On the con trary , as per the asses sment of the Ld. AO, the as se ssee as deposited considerable amo unt of cash in differ ent banks, the as sessee mu st have income above the tax able limi t and therefo re bo und to file his return of inco me for the y ear und er consideratio n under Section 13 9(1) of the Act and also to p ay due taxes within time. On this premi se, the penalty under Section 271F of th e Act wa s levied , which was furth er con firmed by the First Appellate Autho rity. 14. It is a trite law that th e basis o f det ermination o f inco me in th e asse ss men t or der cannot be said to be th e b asis fo r filin g o f return o f inco me und er Section 139(1 ) of th e Act. As e sti mated in come fo r the y ear under consideration was Rs. 2, 00, 0 00/- as per th e asse ssee for A. Ys. 2 013-14 & 2014 -15 and Rs. 2, 50, 000/- for A. Ys. 201 5-16 & 20 16-17, the asses see was o f th e firm b elief that return o f income is no t required to be filed under Section 139 (1) of th e Act. 15. In th is regard, the appellant had filed the following reply: “ 1 . T h a t f o r t h e l e v y o f t h e p e n a l t y u n d e r s e c t i o n 2 7 1 F o f A c t f o r n o n - f i l i n g o f t h e r e t u r n o f i n c o m e , i t i s m o s t r e s p e c t fu l l y s u b m i t t e d t h a t t h e a s s e s s e e e s t i m a t e d i n c o m e w a s b e l o w t a x a b l e l i m i t an d t h e r e f o r e , r e t u r n u n d e r s e c t i o n 1 3 9 ( 1 ) w a s n o t a p p l i c a b l e . T h e e s t i m at e d i n c o m e f o r t h e A Y 2 0 1 3 - 1 4 & 2 0 1 4 - 1 5 w a s R s . 2, 0 0 , 0 0 0 / - a n d f o r t h e A Y 2 0 1 5 - 1 6 & 2 0 1 6 - 1 7 i t w a s R s . 2 , 5 0 , 0 0 0 / - T h a t t h e b a s i s d e t e r m i n a t i o n o f i n c o m e i n t h e a s s e s s m e n t o r d e r c a n n o t b e b a s i s f o r t h e f i l i n g o f t h e r e t u r n o f i n c o m e u n d e r s e c t i o n 1 3 9 ( 1 ) o f t h e A c t . A c c o r d i n g l y , t h e ap p e l l a n t h a s r e a s o n a b l e c a u s e f o r n o n f i l i n g o f t h e r e t u r n o f i n c o m e . 2 . T h a t f r o m t h e p e r u s a l o f t h e i m p u g n e d o r d e r , t h e l e a r n e d A O h a s n o t i s s u e d a n y o t h e r n o t i c e a f t e r f i r s t n o t i c e d a t ed 1 / 4 / 2 0 2 2 ( t h e n o t i c e ITA Nos. 759 to 762 & 764 to 767/Ahd/2023 (Maheshbhai Prabhudas Gandhi) - 7 - d a t e d 1 / 4 / 2 0 2 2 w a s d u l y r e p l i e d o n 2 6 / 4 / 2 0 2 2 f o r k ee p i n g t h e p r o c e e d i n g i n a b e y a n c e ) a n d l e v i e d p e n a l t y o n 2 9 / 9 / 2 0 2 2 a n d t he s a m e i s a g a i n s t t h e n a t u r a l j u s t i c e a l s o . 3 . T h a t t h e l e a r n e d J u r i s d i c t i o n a l A s s e s s i n g o f f i c er h a s p a s s e d t h e i m p u g n e d p e n a l t y o r d e r t h o u g h F a c e l e s s P e n a l t y S c h em e 2 0 2 1 h a s b e e n i n t r o d u c e d v i d e C B D T N o t i f i c a t i o n 0 3 / 2 0 2 1 d a t e d 1 2 /1 / 2 0 2 1 a n d a c c o r d i n g t o i t , t h e p e n a l t y c a n b e l e v i e d b y F A O a nd n o t J A O, e x c e p t i t h a s b e e n t r a n s f e r r e d t o J A O b y t h e a u t h o r i t y a n d t h e r e f o r e th e o r d e r p a s s e d b y t h e l e a r n e d J A O i s b a d i n l a w a n d r e q u i r e d t o b e q u a s h ed . 4 . T h a t t h e p e n a l t y h a s b e e n l e v i e d a f t e r t h e v e r y l o n g p e r i o d o f 6 - 9 y e a r s , a f t e r t h e f a i l u r e o f f i l i n g o f t h e r e t u r n i nc o m e u n d e r s e c t i o n 1 3 9 ( 1 ) o f t h e A c t a n d w h i c h i s b a d i n l a w . 5 . T h a t V i d e o C o n f e r e n c e r e q u e s t e d b y t h e a p p e l l a n t t o t h e L d. A p p e l l a t e A u t h o r i t y ( N F A C ) . t h e l e a r n e d N F A C h a s n ot a l l o w e d t h e s a m e a n d t h e w h i c h i s a g a i n s t t h e n a t u r a l j u s t i c e a n d t he r e f o r e t h e o r d e r p a s s e d b y t h e l e a r n e d A O i s r e q u i r e d t o b e q u a s h e d . ” 16. Th e provisio n o f Section 271F of th e Act clearly speaks o f requirement of fu rn ishing return of in co me as required under Section 139(1) of the Act or by the p ro viso s of th at sub-Section. Precisely, the retu rn o f inco me is to filed on the b asis of the total in come o f any perso n in respect o f wh ich he is assess ab le u nder th e Act du ring the previous year, ex ceeded the maximu m amount which is n ot chargeable to tax, an d in this p articular case as the esti mated inco me o f the a ss es see is only Rs. 2 ,00,000/- i. e. below th e taxable limit, the asses see was, th erefore, o f the fir m belie f o f not being req uired to file retu rn under Sectio n 1 39(1) of the Act. Th us u nder this fact an d circu mstance of th e mat ter, levy o f penalty seems not on ly harsh but also not sustainable in the eye o f law u nder Section 27 1F of the Act and hence quashed. 17. In th e result, app eal filed by the ass es see is allowed. ITA Nos. 759 to 762 & 764 to 767/Ahd/2023 (Maheshbhai Prabhudas Gandhi) - 8 - 18. Th e decision in ITA No . 764/Ahd/20 23 for A. Y. 20 13-14 shall also ap ply mutatis muta ndis in ITA No s. 765 to 767/Ahd/202 3 for A. Ys. 20 14-15 to 2 016-17. 19. In the combined result, all app eals prefer red by the ass es see are allowed . This Order pronounced on 21/02/2024 Sd/- Sd/- (WASEEM AHMED) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 21/02/2024 S. K. SINHA True Copy आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय $त$न ध, आयकर अपील'य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड- फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील$य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad