M/s. Raj Enterprise, Ahmedabad V. The Income tax Officer,Ward-9(1), Ahmedabad

ITA 958/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85761 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 31-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: B T THAKKAR
• Section: 143(3); 142(1)

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , .. ' , #$ # % BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 958/AHD/2011 [ASSTT. YEAR: 2007-08 M/S.RAJ ENTERPRISE C/O. DHAVAL R. JANI 9, SHREENATH SOCIETY NR. BANK OF BARODA USMANPURA, AHMEDABAD. PAN : AAIFR 4714 N VS ITO, WARD - 9(1) AHMEDABAD. &' / (APPELLANT) )* &' / (RESPONDENT) ASSESSEE(S) BY : SHRI B.T. THAKKAR, AR REVENUE BY : SHRI B.L. YADAV, SR.DR / DATE OF HEARING : 25/02/2015 / DATE OF PRONOUNCEMENT: 04/03/2015 #+/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-XV, AHMEDABAD DATED 15.3.2011 FOR THE ASSTT. YEAR 2007-08. 2. THE SOLE GROUND OF APPEAL TAKEN IN THIS APPEAL I S THAT THE CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS.50,000/- LEVI ED BY THE AO UNDER SECTION 271(1)(B) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO HAS OBSE RVED IN HIS PENALTY ORDER THAT THE ASSESSEE HAS NOT COMPLIED WITH THE N OTICES UNDER SECTIONS 143(2)/142(1) OF THE ACT, DETAILS OF SUCH INSTANCES ARE S UNDER: ITA NO.958/AHD/2011 2 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED THAT THE ASSESSEE HAS NOT COMPLIED WITH NUMBER OF NOTICE S ISSUED U/S.143(2)7142(1) OF THE ACT. THE DETAILS OF SUCH I NSTANCES ARE AS UNDER: NOTICE U/S. DATE OF ISSUE DATE OF HEARING REMARKS 143(2) 22.09.2008 23.10.2008 NO COMPLIANCE 142(1) 07.01.2009 29.01.2009 THE ASSESSEE DID NOT FURNISH THE DETAILS AS PER THE TERMS OF NOTICE, BUT SOUGHT ADJOURNMENT, WHICH WAS GRANTED. BUT THE ASSESSEE DID NOT TURN UP ON THE ADJOURNED DATE. 142(1) 11 .06.2009 18.09.2009 NO COMPLIANCE. 142(1) 30.10.2009 10.11.2009 NO COMPLIANCE 142(1) 19.11.2009 23.11.2009 NO COMPLIANCE I 4. THE AO, THEREFORE, OBSERVED THAT THE ASSESSEE H AS SCANT REGARD FOR THE STATUTORY NOTICES ISSUED UNDER SECTION 143( 2) AND 142(1) OF THE ACT. IN SUCH CIRCUMSTANCES, THE IMPOSITION OF PENA LTY UNDER SECTION 271(1)(B) OF THE ACT IS MANDATORY IN LAW. HE PLACE D RELIANCE O THE DECISION IN THE CASE OF CIT VS. STANDARD MERCANTILE CO. (1986) 160 ITR 613 (PATNA) WHEREIN IT WAS HELD THAT WHERE A PERSON FAILS TO COMPLY WITH THE NOTICES U/S.142(1)/143(2) OF THE ACT, THE ONUS LIES ON HIM TO SHOW CAUSE SUFFICIENTLY FOR NOT LEVYING THE PENALTY UNDER SECTION 271(1)(B) OF THE ACT. SINCE THE ASSESSEE FAILED TO SHOW CAUSE AS TO WHY PENALTY U/S.271(1)(B) OF THE ACT SHOULD NOT BE LEVI ED, HE LEVIED PENALTY AT THE RATE OF RS.10,000/- PER FAILURE, AND THEREBY LEVIED PENALTY OF RS.50,000/- UNDER SECTION 271(1)(B) OF THE ACT.. 5. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF TH E AO. ITA NO.958/AHD/2011 3 6. THE ASSESSEE IN THE WRITTEN SUBMISSION FILED BEF ORE US HAS SUBMITTED AS UNDER: I) NOTICE U/S. 143(2) DATED 22-09-2008 ISSUED FOR THE INTIMATION TO THE APPELLANT FOR SELECTION OF THE SC RUTINY. II) NOTICE U/S. 142(1) DATED 07-01-2009 ALONG WITH QUESTIONNAIRE CALLING CERTAIN INFORMATION. AR ATTEN DED AND FILED COPY OF STATEMENT OF INCOME, BALANCE SHEET, P ROFIT AND LOSS ACCOUNT AND AUDIT REPORT. III) NOTICE U/S. 142(1) DATED 11-06-2009 WAS NEVER SERVE D UPON THE APPELLANT. IV) NOTICE U/S. 142(1) DATED 30-10-2009 WAS ISSUED DUE TO CHANGE OF INCUMBENT U/S. 120 OF I.T. ACT. V) NOTICE U/S. 142(1) DATED 19-11-2009 WAS ISSUED AND AR APPEARED BEFORE THE ASSESSEE OFFICER AND SOUGHT TIM E FOR FURNISHING DETAILS. VI) THE AR OF THE APPELLANT APPEARED ON 26TH NOVEMBER, 2009 AND FILED THE REQUISITE INFORMATION BEFORE THE ASSE SSING OFFICER. VII) THE APPELLANT FURTHER SUBMIT THAT EXCEPT THE ABOVE REFERRED NOTICES THE APPELLANT ATTENDED REGULARLY AND FILED REQUISITE DETAILS BEFORE THE ASSESSING OFFICER AND THE ASSESS MENT ORDER IS PASSED U/S. 143(3) OF THE I.T. ACT, 1961. 04. THE APPELLANT PLACED RELIANCE ON THE DECIS ION OF THE HON'BLE DELHI TRIBUNAL IN THE CASE OF AKHIL BHAHTIY A PRATHMIK SHIKSHAK SANGH BHAVAN TRUST V/S ASST. DIRECTOR OF I . T.(2008) 115 TTJ 419(DELHI) HELD: WHERE ASSESSMENT WAS MADE U/S 143(3) AND NOT U/S 144, IT MEANS THAT SUBSEQUENT COMPLIANCE IN THE ASSESSMENT PROCEEDINGS WAS CONSIDERED AS GOOD COMPL IANCE AND THE DEFAULTS COMMITTED EARLIER WERE IGNORED BY THE AO. THEREFORE, IN SUCH CIRCUMSTANCES, THERE COULD HAVE BEEN NO REASON TO COME TO THE CONCLUSION THAT THE DEFAULT W AS WILLFUL. CIT APPEAL WAS, THEREFORE, NOT RIGHT IN UP HOLDING THE LEVY OF PENALTY. 05. UNDER THIS BACKGROUND THE ASSESSING OFFICE R HAS IMPOSED PENALTY OF RS.50000/- U/S. 271(1) (B) OF THE ACT, C ONSIDERING FIVE DEFAULTS COMMITTED BY THE ASSESSEE. ITA NO.958/AHD/2011 4 7. ON THE OTHER HAND, DR SUPPORTED THE ORDERS OF TH E LOWER AUTHORITIES. 8. WE FIND THAT IN THE SIMILAR CIRCUMSTANCES, THE C HENNAI BENCH OF THE TRIBUNAL, WHEREIN ONE OF US (N.S. SAINI, ACCOUN TANT MEMBER) WAS A MEMBER CONSTITUTING THE BENCH, DELETED PENALTY BY O RDER PASSED IN THE CASE OF SARDARMAL KOTHARI VS. ACIT, IN ITA NO.210/M DS/2012 DATED 8.3.2013, AND HAS HELD AS UNDER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-IX, CHENNAI, D ATED 30.8.2012 FOR THE ASST. YEAR 2009-10. THE ONLY GRIE VANCE OF THE ASSESSEE IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE PENALTY OF RS.10, 000/- LEVIED BY THE ASSESSING OFFICER UNDER SEC.271(1)(B) OF THE I. T. ACT. 2. THE ASSESSING OFFICER LEVIED PENALTY OF RS.10,00 0/- UNDER SEC.271(1)(B) OF THE ACT AS THE ASSESSEE DID NOT RE SPOND TO NOTICES ISSUED BY HIM UNDER SEC.143(2) & 142(1) OF THE I.T. ACT ON THREE OCCASIONS, IE., ON 2.9.2010, 8.9.2011 AND 15.10.2011, FIXING THE DATES OF HEARING ON 20.9.2010, 12.9.2011 AND 20.10.2011 RESPECTIVELY. SUBSEQUENTLY, THE ASSESSME NT WAS MADE UNDER SEC.143(3) OF THE ACT WHEREIN THE ASSESS EE APPEARED AND FURNISHED INFORMATION CALLED FOR BY THE ASSESSI NG OFFICER. THE ASSESSEE PREFERRED APPEAL BEFORE THE COMMISSIONER O F INCOME TAX (APPEALS) AGAINST LEVY OF PENALTY CONTENDING TH AT NO SHOW CAUSE NOTICE HAS BEEN ISSUED BY THE ASSESSING OFFIC ER BEFORE LEVY OF PENALTY UNDER SEC.271(1)(B) OF THE ACT. 3. THE ASSESSEE CONTENDED THAT HE HAS COOPERATED WI TH THE ASSESSING OFFICER BY RESPONDING TO THE NOTICES ISSU ED THERE AFTER AND THE ASSESSMENT WAS COMPLETED UNDER SEC.143(3) O F THE ACT AND, THEREFORE, SINCE HE HAS COOPERATED WITH THE AS SESSMENT PROCEEDINGS COMPLYING WITH THE NOTICES SUBSEQUENTLY ISSUED AND SINCE THE ASSESSMENT WAS MADE UNDER SEC.143(3) OF T HE ACT AND IT WAS NOT AN EX-PARTE ASSESSMENT UNDER SEC.144 OF THE ACT, THE ASSESSING OFFICER SHOULD NOT HAVE LEVIED PENALTY UN DER SEC.271(1)(B) OF THE ACT. HE PLACED RELIANCE ON THE DECISION OF DELHI BENCH OF THE ITAT IN THE CASE OF AKHIL BHARTI YA PRATHMIK SHIKSHAK SANGH BHAWAN TRUST V. ASST. DIRECTOR OF IN COME TAX (115 TTJ 419) AND THE DECISION OF AHMEDABAD BENCH O F THE TRIBUNAL IN THE CASE OF SWARNABEN M. KHANNA & OTHER S V. DCIT (132 TTJ 1). HOWEVER, THE COMMISSIONER OF INCOME TA X (APPEALS) ITA NO.958/AHD/2011 5 CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFIC ER ON THE GROUND THAT THE ASSESSEE DID NOT RESPOND TO THE NOT ICES ISSUED BY THE ASSESSING OFFICER. 4. THE COUNSEL FOR THE ASSESSEE REITERATES THE SUBM ISSIONS MADE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND SUBMITS THAT THERE IS NO JUSTIFICATION IN LEVYING PENALTY, ESPECIALLY WHEN THE ASSESSMENT WAS MADE UNDER SEC.143(3) OF THE ACT AND NOT UNDER SEC.144 OF THE I.T. ACT. 5. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH SIDES. PERUSED THE MATERIALS ON RECORD AND THE ORDERS OF AUTHORITIES BELOW. WE HAVE GONE THROU GH THE DECISIONS RELIED ON BY THE COUNSEL FOR THE ASSESSEE . IN BOTH THESE DECISIONS, THE TRIBUNAL HELD THAT WHEN AN ASSESSMEN T HAS BEEN MADE UNDER SEC.143(3) AND NOT UNDER SEC.144 OF THE I.T. ACT, IT MEANS THAT SUBSEQUENT COMPLIANCE IN THE ASSESSMENT PROCEEDINGS WAS CONSIDERED AS GOOD COMPLIANCE AND T HE DEFAULTS COMMITTED EARLIER WERE IGNORED BY THE ASSESSING OFF ICER AND, THEREFORE, THERE IS NO CASE FOR LEVY OF PENALTY UND ER SEC.271(1)(B) OF THE ACT. IN THE PRESENT CASE, THE ASSESSEE SEEMS TO HAVE CO- OPERATED WITH THE ASSESSMENT PROCEEDINGS BY RESPOND ING TO THE NOTICES AND FILING INFORMATION CALLED FOR AND THE A SSESSMENT WAS COMPLETED UNDER SEC.143(3) AND NOT SEC.144 OF THE A CT. THEREFORE, WE HOLD THAT THERE IS NO CASE FOR LEVY O F PENALTY UNDER SEC.271(1)(B) OF THE I.T. ACT THE ASSESSEES CASE. 9. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TR IBUNAL, WE DELETE THE PENALTY OF RS.50,000/- LEVIED UNDER SECTION 271 (1)(B) OF THE ACT, AND ALLOW THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 4 TH MARCH, 2015 AT AHMEDABAD. SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 04 /03/2015