PARAMJIT SINGH,MOHALI, PUNJAB V. INCOME TAX OFFICER, DELHI

ITA 548/CHANDI/2023

AI Insights

The case involves Paramjit Singh, a Canadian citizen, who appealed against a penalty of Rs. 40,000 imposed by the Income Tax Officer (ITO) for non-compliance with four notices under Section 142(1) of the Income Tax Act, 1961, during the Assessment Year 2012-13. The assessee argued that he was not in India and unaware of the proceedings, as he resided in Canada and the notices were not properly served. The Commissioner of Income Tax (Appeals) upheld the penalty, leading to the appeal before the Tribunal. The Tribunal noted the returned notices with remarks like 'insufficient address' and 'house remains closed', and found merit in the assessee's arguments, leading to the remand of the case for a fresh hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107727 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Other Referred Cases: Hindustan Steel Ltd. v. State of Orissa, Saini Medical Store, Smt. Rekha Rani (ITA No. 6131/Del/2013)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR SHARMA
• Assessee Lawyers: PARIKSHIT AGGARWAL; C.A
• Keywords: Set aside; Principle of natural justice
• Section: 144; 142(1)

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमार अŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 548/Chd/ 2023 िनधाŊरण वषŊ / Assessment Year : 2018-19 Paramjit Singh Village Hanali Khera, Dist. Fatehgarh, Punjab, India-140406 बनाम The ITO Ward-6(1), Chandigarh ˕ायी लेखा सं./PAN NO: DMHPS4546F अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Parikshit Aggarwal, C.A राजˢ की ओर से/ Revenue by : Shri Anil Kumar Sharma, Sr. DR सुनवाई की तारीख/Date of Hearing : 16/04/2025 उदघोषणा की तारीख/Date of Pronouncement : 17/04/2025 आदेश/Order PER LALIET KUMAR, J.M: This appeal has been filed by the assessee against the order dated 26.07.2024 passed by the Commissioner of Income Tax (Appeals), NFAC, Delhi [‘CIT(A)’], confirming the penalty of Rs.40,000/- levied under Section 271(1)(b) of the Income Tax Act, 1961 for the Assessment Year 2012–13. 2. At the outset the Registry has pointed out that the appeal of the assessee is barred by limitation by 116 days. 3. After considering the condonation application filed by the assessee, we find that sufficient cause has been shown for the delay, which is hereby condoned. 4. Ld. DR had no objection if the delay is condoned. 2 5. Accordingly, the appeal is admitted for adjudication 6. Brief facts of the case are that the AO had issued four notices under Section 142(1) of the Act, which the assessee allegedly failed to comply with. Accordingly, penalty proceedings under Section 271(1)(b) were initiated and a penalty of Rs.10,000/- for each default, aggregating to Rs.40,000/-, was levied. 7. Before the CIT(A), the assessee contended that he is a Canadian citizen residing abroad since 1995, and during the period relevant to the assessment proceedings, he was not present in India and had no knowledge of the ongoing proceedings. It was further submitted that the notices were not properly served and returned with postal remarks such as “insufficient address” and “house remains closed.” Copies of the returned envelopes and other documents were placed on record. 8. The CIT(A), while acknowledging that the assessee had not complied with the four statutory notices under Section 142(1), nonetheless dismissed the appeal. The CIT(A noted that the assessment was completed ex parte under Section 144 r.w.s. 147 of the Act and even during the penalty proceedings, the assessee had failed to file any response. The CIT(A further observed that the assessee, being a well-informed individual, was expected to exercise reasonable diligence and compliance with the law. The simplistic explanation that he was unaware of the proceedings was held to be unconvincing. It was further noted that the judicial precedents relied upon by the assessee, such as Hindustan Steel Ltd. v. State of Orissa and Saini Medical Store, were distinguishable on facts. 9. The Ld. AR for the assessee has submitted that the assessee, being a permanent resident of Canada, was not in a position to respond to the notices issued by the Ld. Assessing Officer during the relevant period. It was contended that the non-appearance was bonafide and not intentional. 3 Further, it was submitted that the assessee could not effectively present his case before the Ld. CIT(A) either. However, if given an opportunity, the assessee is now prepared to appear and explain the facts of the case and substantiate his stand before the Ld. CIT(A) . 10. Per contra the Ld. DR relied upon the order passed by the lower authorities. 11. We have heard the rival contentions and perused the material available on record. Admittedly, the penalty was levied due to non- compliance with notices issued u/s 142(1). However, the assessee has filed before the CIT(A) sufficient material evidencing that the notices were returned unserved with remarks such as “house locked” and “gone to Canada.” The assessee also produced a copy of his Canadian passport to substantiate his claim of being abroad during the relevant time. 12. In our considered view, the explanation offered by the assessee, along with postal remarks and proof of foreign residency, merited deeper appreciation. The penalty under Section 271(1)(b) is quasi-criminal in nature and cannot be sustained merely on technical non-compliance, particularly where service of notice itself is in dispute and the conduct of the assessee does not reflect contumacious defiance. 13. We further find that the CIT(A), while affirming the penalty, did not properly deal with the evidence of returned notices or the relevance of judicial precedents cited by the assessee, including the decision of ITAT Delhi in the case of Smt. Rekha Rani (ITA No. 6131/Del/2013), which held that failure to respond to unserved notices should not automatically result in penalty under Section 271(1)(b). 13.1 Under the circumstances, and in the interest of natural justice, we consider it appropriate to set aside the impugned order of the CIT(A) and remand the matter back to the file of the CIT(A) for fresh adjudication. The 4 CIT(A) shall duly consider the assessee's explanation, evidences regarding non-service, and applicable legal precedents after providing due opportunity of hearing to the assessee. 13.2 The assessee is directed to cooperate in the proceedings and furnish all supporting documents as may be required. 14. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 17/04/2025. Sd/- Sd/- मनोज क ुमार अŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "