MOHD ZUBAIR ASHARAFI,NAGPUR V. THE INCOME TAX OFFICER, WARD - 4(1), NAGPUR

ITA 438/NAG/2024

AI Insights

The case involves an appeal by Mohd. Zubair Asharafi against a penalty imposed by the Income Tax Officer for non-compliance with statutory notices under section 142(1) of the Income Tax Act, 1961. The penalty was initially set at Rs. 30,000 but was later reduced to Rs. 20,000 by the Commissioner of Income Tax (Appeals) due to the assessee's compliance with one of the notices. The Tribunal examined the circumstances under which the notices were served and the compliance by the assessee, ultimately finding the imposition of the remaining penalty to be unjustified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24320 (ITAT-NAGPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY Y. MARATHE
• Assessee Lawyers: BHAVESH MORYANI
• Keywords: Set aside; Reason to believe; Non compliance
• Section: 147; 148; 143(3); 142(1); 131

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI K.M. ROY, ACCOUNTANT, MEMBER ITA no.438/Nag./2024 (Assessment Year : 2014–15) Mohd. Zubair Asharafi 201, Chandralok Building Central Avenue, Nagpur 440 001 PAN – ABPPA7557G ……………. Appellant v/s Income Tax Officer Ward–4(1), Nagpur ……………. Respondent Assessee by : Shri Bhavesh Moryani Revenue by : Shri Abhay Y. Marathe Date of Hearing – 23/01/2024 Date of Order – 28/01/2025 O R D E R PER K.M. ROY, A.M. This appeal by the assessee is emanating from the impugned order dated 28/06/2024, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2014–15. 2. In its appeal, the assessee has raised following grounds:– “1. The learned CIT(A) NFAC passed penalty order u/s. 271(1)(b) is illegal, invalid and bad in law; 2. On the facts and circumstances of the case the learned CIT(A) NFAC erred in confirming penalty imposed U/s. 271(1)(b) amounting to Rs. 20,000/- is unjustified, unwarranted and excessive; 2 Mohd. Zubair Asharafi ITA no.438/Nag./2024 3. On the facts and circumstances of the case the learned CIT(A) NFAC ought to have cancel the penalty as the assessee have not received the notice, therefore penalty imposed is unjustified, unwarranted and excessive; 4. On the facts and circumstances of the case learned CIT(A) NFAC failed to consider that notice U/s. 142(1) was PPRE served on email ID not belong to assessee and having no knowledge of the same, therefore the penalty imposed U/s. 271(1)(b) is illegal, invalid and bad in law; 5. On the facts and circumstances of the case the learned CIT(A) NFAC ought to have considered that the learned assessee has not considered the reply filed by the assessee, therefore without considering the reply imposition penalty U/s. 271(1)(b) is unjustified, unwarranted and excessive.” 3. The facts of the case are culled out in Para–5.3 of the impugned order passed by the learned CIT(A), are reproduced below:– “5.3 During appellate proceedings, the appellant filed reply vide letter dated 03.06.2024 stating that during the course of assessment proceedings the learned assessing officer has issued notices u/s 142(1) dated 30.06.2021, 24.11.2021 and 14.02.2022. The said notices were not received by the appellant as the same were sent on e-filing portal hence the appellant has not compliance the same Further, notice U/s. 142(1) alongwith the notice u/s 148 of the Act was also sent by speed post on 01/03/2022 which was received by the appellant. b) In view of the above, it is very clear that the appellant has received the statutory notices through mail and through speed post. The appellant has also submitted that due to the health issues and undergone treatment of heart problem, the appellant was unable to filed reply to the statutory notices. c) Further, the appellant has filed copy of e-proceedings response acknowledgement No. 306676301080322 dated 08.03.2022 through which the appellant has filed reply of notice u/s 142(1) of the Act dated 14.02.2022. d) The AO has levied the penalty u/s 271(1)(b) of the Act of Rs. 30,000/- for non compliance of three notices u/s 142(1) of the Act dated 30.06.2021, 24.11.2021 and 14.02.2022, however, on perusal of the reply of the appellant, it is found that the appellant has filed response to the notice u/s 142(1) of the Act dated 14.02.20220 08.03.2022. e) In view of the facts and circumstances mentioned above and taking into consideration the reply of the appellant, since the appellant has responded to one of the statutory notice u/s 142(1) of the Act dated 14.02.2022 on 08.03.2022, hence penalty levied by the Assessing Officer is restricted to Rs. 20,000/- for non compliance of two statutory notices u/s 142(1) of the Act dated 30.06.2021 and 24.11.2021.” 3 Mohd. Zubair Asharafi ITA no.438/Nag./2024 5.4 In view of the above, the appellant is hereby granted relief of Rs. 10,000/-against penalty order u/s 271(1)(b) of the Act dated 09.09.2022 and confirmed the penalty amount of Rs. 20,000/- for non compliance of notice u/s 142(1) of the Act dated 30.06.2021 and 24.11.2021 6. In the result, the appeal is Partly Allowed. 4. The learned Authorised Representative prayed that deletion of penalty of ` 20,000, is unwarranted in his case. The learned Departmental Representative on the other hand submitted that the impugned order passed by the learned CIT(A) is a reasoned one and need not be overturned. He stressed that out of penalty imposed by the Assessing Officer for ` 30,000, relief of ` 10,000, was already granted by the learned CIT(A). 5. We have meticulously examined the documents on record. It is deemed expedient to reproduce the facts on the issue of purchase of property from the assessment order for a clear understanding. “The information is received from the ITO, Ward–2(4), Indore that the assessee Sh. Mohd Zubair Asharafi has purchased the land admeasuring of 11220 Sq. at Zingabai takli Nagpur in the name brother-in-law Sh Asad Mond, Idris, Indore. The of his case or Sh. Asad Mohd. Idris was under scrutiny U/s 1433 Ward (4) Indore and the assessment in the case of Sh. Asad Mohd. Idris for A.Y.2014-15 was completed U/s 143(3) by making addition of Rs.46,90,385/- on protective basis. During scrutiny Sh. Asad Mohd. Idris has submitted that the said land was purchased by Sh. Mohd. Zubair Asharafi for Rs.44,71,440/- and he was benamidar of this land. He has further submitted that the agricultural income of Rs.2,18,945/- shown by him on the agricultural land is also of Sh. Mohd. Zubair Asharafi. During verification conducted by ITO Ward 2(4), Indore, the statement of Sh. Asad Mohd. Idris was recorded on oath U/s 131 on 10.08.2016 wherein he has stated that whatever properties purchased by him are infact belonging to his brother-in-law Sh. Mohd. Zubair Asharafi, the assessee. On investigation of ITR filed by the assessee in the format ITR-4 for A.Y.2014-15, it is found that the assessee Sh. Mohd. Zubair Asharafi has not shown Nil Investments, Stock in trade, any sale of goods, raw material, finished goods, purchases, etc in the relevant columns of ITR. In view of the above, there was reason to believe that the income of Rs.46,90,385/- has escaped assessment in the hands of Sh. Mohd. Zubair Asharafi for A.Y.2014-15.” 4 Mohd. Zubair Asharafi ITA no.438/Nag./2024 6. The addition has already been made on a protective basis. Statement under section 131 of the Act on oath was recorded. Assessment proceedings under section 147 of the Act for the year under consideration were initiated by issuing notice under section 148 of the Act on 26/03/2021. It is not clear that as to what more information the Assessing Officer wanted to have since ` 46,90,385, has been already added on a protective basis in the hands of Asad Mohd. Idris. Thus, it is a classic example of mechanical application of penalty provisions under section 271(1)(b) of the Act without analysing its true intent. Consequently, we set aside the impugned order passed under section 271(1)(b) of the Act levying penalty of ` 30,000. The assessee gets relief of ` 20,000. 7. In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on 28/01/2025 Sd/- V. DURGA RAO JUDICIAL MEMBER Sd/- K.M. ROY ACCOUNTANT MEMBER NAGPUR, DATED: 28/01/2025 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Sr. Private Secretary ITAT, Nagpur "