MALINI DIVYESH NAGAR,SURAT V. ACIT, CENTRAL CIRCLE-1, SURAT

ITA 716/SRT/2024

AI Insights

The case involves a series of appeals by the assessee, Malini Divyesh Nagar, against the penalties levied by the Assistant Commissioner of Income-tax, Central Circle-1, Surat, for non-compliance with notices under sections 142(1) and 272A(1)(d) of the Income Tax Act, across multiple assessment years from 2012-13 to 2018-19. The penalties were initially set at Rs. 20,000 for each year following a search operation that uncovered incriminating documents related to the assessee. The Tribunal's decision to reduce the penalties was based on the reasoning that the non-compliance constituted a single default rather than multiple defaults warranting separate penalties for each year.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 39082 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-11-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 27-06-2024
• Other Referred Cases: Aaryan Motels vs. DCIT, Smt. Rekha Rani vs. DCIT, Smt. Anita Awasthi vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: UDAY P NANAVATI
• Section: 144; 142(1); 153C

Judgement Text

" आयकर अपीलीय अिधकरण, सूरत Ɋायपीठ, सूरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos. 712 to 718/SRT/2024 (AYs 2012-13 to 2018-19) (Physical court hearing) Malini Divyesh Nagar, 39, Ganesh Krupa Society, Opp: GAIL Tower, Rander Road, Surat-395 009 [PAN : ABBPD 6151 D] बनाम Vs Assistant Commissioner of Income-tax, Central Circle-1, Surat, Aayakar Bhavan, Majura Gate, Surat-395 001 अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri Uday P Nanavati, AR राजˢ की ओर से /Revenue by Shri Mukesh Jain– Sr-DR अपील पंजीकरण/Appeal instituted on 27.06.2024 सुनवाई की तारीख/Date of hearing 20.11.2024 उद ्घोषणा की तारीख/Date of pronouncement 22.11.2024 Order under section 254(1) of Income Tax Act PER BENCH: 1. This group of seven appeals by individual assessee are directed against the common order of Commissioner of Income Tax (Appeals)-4, Surat [for short to as “Ld.CIT(A)”] all dated 24.04.2024 for assessment years (AYs) 2011-12 to 2018-2019. The ld CIT(A) confirmed penalty levied by Assessing Officer (AO) under section 271(1)(b) in AY 2012-13 to 2016-17 and under section 272A(1)(d) for AY 2016-17 & 2017-18. In all appeals, the assessee has raised identical grounds of appeals, facts in all appeals are common, therefore, with the consent of both the parties, all the appeals were clubbed, heard together and are decided by common order to avoid conflicting decision. For appreciation of ITA Nos.712 to 718/SRT/2024 (A.Ys.12-13 to 18-19) Malini Divyesh Nagar 2 facet, appeal for A.Y. 12-13, in ITA No.712/SRT/2024 is treated as “lead” case. The assessee has raised the following grounds of appeal: - “1. The Learned CIT(A) has erred in upholding the action of the AO in levying penalty of Rs. 10,000 for non-compliance of notice issued u/s 142(1) dated 18/11/2022 u/s 271(1)(b) of the Act on misleading, baseless, arbitrary and perverse observations, is contrary to law and facts of the case and hence, liable to be deleted. 2. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 2. Rival submission of both the parties have been heard and record perused. The Ld. Authorized Representative (Ld.AR) for the assessee submits that a search action was carried out on 23.11.2018 at residential premises of Shri Divyesh Dhansukhlal Nagar. In the search action certain incriminating materials/details or documents were found and seized. Some of the documents were considered to be related to assessee. Notice under section 153C was issued to the assessee for filing return of income for six assessment years prior to date of search. The assessee has not filed her return of income in response to notice under section 153C. Assessment was completed under section 144 r.w.s. 153C of the Act on 28.12.2022. The AO levied penalty either under section 271(1)(b) or 272A(1)(d) for all seven years and thereby levied penalties @ Rs. 20,000/- for all seven years by separate orders. Resultantly, penalty for Rs.1,40,000/- was levied. The Ld. AR of the assessee submits that it was only a single default. The AO completed assessment under section 144 of the Act. On appeal before Ld. CIT(A), all the additions made by the Assessing Officer were deleted by following the decision of Apex Court in Abhisar Buildwell (149 taxmann.com 399-SC). The Department has not filed further appeal before Tribunal. Once, all the additions in the quantum assessment is deleted, consequently penalty ITA Nos.712 to 718/SRT/2024 (A.Ys.12-13 to 18-19) Malini Divyesh Nagar 3 under section 271(1) (b) or 272A(1)(d) is also liable to be sustained. Though, the Ld. CIT(A) deleted the quantum assessments, yet penalty levied by AO for assessment years 2012-13 to 2016-17 under section 271(1)(b) and for assessment years 2017-18 to 2018-19 under section 272A(1)(d) were confirmed. In alternative and without prejudice his submission, the ld. AR of the assessee submits that there was only two default, the non-compliance was not intentional, rather a very short time of three days was allowed to the assessee. The AO was very harsh in levying penalties for all seven assessment years. To support his various submission, Ld. AR of the assessee relied upon following decisions:  Aaryan Motels vs. DCIT [2017] 88 taxmann.com 7 (Agra-Trib.)  Smt. Rekha Rani vs. DCIT [2015] 60 taxmann.com 131 (Delhi-Trib.)  Smt. Anita Awasthi vs. ITO [2022] 143 taxmann.com 238 (Varanasi-Trib.) 3. On the other hand, ld. Sr-DR for the Revenue submits that besides the notice dated 07.12.2022 under section 142(1), the assessee has not made compliance of two other notices as recorded in para-5 of the assessment order. Thus, Assessing Officer has rightly imposed penalties qua violation for every assessment year. The penalties proceedings under section 271(1)(b) or 272A(1)(d) are separate and independent. The Ld. CIT(A) considered all such submission of the assessee before upholding the order of Assessing Officer. The ld SR DR for the revenue prayed for dismissal of all the appeals. 4. We have considered the rival submissions of both the parties and have gone through order of lower authorities carefully. We have also deliberated on various case laws relied by Ld. AR of the assessee. We find that there is no dispute that pursuant the search action, the AO was making assessment orders of current ITA Nos.712 to 718/SRT/2024 (A.Ys.12-13 to 18-19) Malini Divyesh Nagar 4 assessment year as well as for six years immediately prior to year in which action search was carried out. It is also matter of fact that AO issued a consolidated notice under section 142(1) of the Act dated 08.11.2022 and 13.12.2022 for all assessment years. The Assessing Officer has given very short time to make compliance. It is also undisputed fact that neither the assessee nor his representative attended or complied both the notices dated 08.11.2022 and 13.12.2022 nor sought any adjournment. The AO considered a both default for initiation and levying penalty for default on a single occasion, but levied penalties in all years. Thereby treating it seven defaults on a single day. In our view, penalty for defaults on two occasions and imposing seven-time penalties i.e. in each and every year is unreasonable. We find that the ld CIT(A) has already reduced the penalty for single default for all assessment years, thereby restricted to Rs. 70,000/-. In our view the levy of penalty for each and every year @ Rs. 10,000/- is still harsh and unreasonable. Thus, penalty levied by AO is restricted for single default in first assessment year and for all remaining years is deleted. 5. The Ld. AR of the assessee strongly relied on the decision of Varanasi Tribunal in case of Smt. Anita Awasthi vs. ITO [2022] 143 taxmann.com 238 (Varanasi- Trib.) wherein similar penalties under section 271(1)(b) was deleted as re- assessment proceedings were quashed. However, facts in the present cases are at little variance. In the case of hand only addition was deleted and entire assessment proceedings are not quashed. 6. To make this order clear, the penalty for initial assessment year i.e., assessment year 2012-13 is sustained and for remaining assessment years i.e., 2013-14 to ITA Nos.712 to 718/SRT/2024 (A.Ys.12-13 to 18-19) Malini Divyesh Nagar 5 2018-19 penalties levied either under section 271(1)(b) or 272A(1)(d) of the Act are deleted. 7. In the result, assessee’s appeal ITA No.712/SRT/2024 is partly allowed and remaining appeals ITA Nos.713 to 718/SRT/2024 are allowed. Registry is directed to place one copy of this order in all appeals folder / case file(s). Order pronounced in the open court on 22/11/2024. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) लेखा सद˟/Accountant Member Ɋाियक सद˟/Judicial Member सूरत / Surat Dated: 22/11/2024 Dkp Outsourcing Sr.P.S* आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to :  अपीलाथŎ/ The Appellant  ŮȑथŎ/ The Respondent  आयकर आयुƅ/ CIT  िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, SURAT  गाडŊ फाईल/ Guard File By order/आदेश से, सहायक पंजीकार आयकर अपीलीय अिधकरण, सूरत "