PATEL BRASS WORKS,RAJKOT V. DCIT, CIR 1(1), RAJKOT

ITA 415/RJT/2024

AI Insights

The case involves four appeals by Patel Brass Works against penalty orders for the Assessment Years 2015-16 and 2016-17, issued by the Assessing Officer under Sections 271(1)(b) and 271F of the Income Tax Act, 1961. The penalties were imposed for non-compliance with notices and non-submission of income returns. The primary contention was that the entity, Patel Brass Works, did not exist during the relevant assessment years, and thus, could not comply with the legal requirements or appear before the tax authorities. The Tribunal found that the penalties did not survive due to the non-existence of the entity, leading to the setting aside of the penalties and a directive for re-assessment of the entity's existence at the relevant times.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 40489 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: G. R. SANGHAVI
• Section: 142(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH (SMC), RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.414, 415, 417 & 418/RJT/2024 Assessment Year: (2015-16 & 2016-17) (Hybrid Hearing) Patel Brass Works, 2, Bhaktinagar Station Plot, Rajkot-360002 (Gujarat) Vs. The D.C.I.T., Circle 1(1), Rajkot. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AACFP 7695 L (Appellant) (Respondent) Appellant by Shri G.R. Sanghavi, A.R. Respondent by Shri Abhimanyu Singh Yadav, Sr. DR Date of Hearing 14/10/2024 Date of Pronouncement 30/12/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned four appeals are filed by the assessee, pertaining to Assessment Year (AY) 2015-16 and 2016-17, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short “the Ld. CIT(A)/NFAC”], all dated 03/05/2024, which in turn arise out of penalty orders passed by Assessing Officer (in short ‘the AO”) u/s 271(1)(b) and 271F of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 15/09/2022 and 21/09/2022, respectively. 2.In all these appeals, the assessee is common, and raised identical grounds of appeal, therefore with the consent of parties, all these appeals are clubbed and heard together and are decided by the consolidated order to avoid the conflicting decision. ITA 414, 415, 417 & 418/Rjt/2024 Patel Brass Works Vs DCIT Page | 2 3. At the outset, Learned Counsel for the assessee, has submitted that during the assessment proceedings, notices were served on non-existed entity. The assessee, under consideration, was not in existence, hence, there is no question to appear before the Assessing Officer or before the ld. CIT(A). The order passed by the Assessing Officer, as well as ld. by CIT(A) is on non-existed entity and therefore, the assessee could not file return of income, hence, penalty imposed by the assessing officer under Section 271F of the Act of Rs. 5,000/-, on account of non-submission of return of income may be deleted and penalty under section 271 (1) (b) of the Act, for non-compliance of notices, during the assessment proceedings, may also be deleted. 4. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue, has supported the orders of the lower authorities. 5. I have heard the submissions of both the parties and have also gone through the orders of the lower authorities carefully. I find that since the assessee does not exist, therefore, there is no question to attend the proceedings, before the Assessing Officer, therefore, the penalty imposed by the Assessing Officer, on account of non-compliance of notice, and on account of no response provided by the assessee, in response of several notices issued by the Assessing Officer, under Section 142(1) of the Act, does not survive. Since the entity does not exist in the eyes of law, hence penalty under Section 271(1)(b) of the Act, does not survive and should be deleted. I Find that once the foundation fails, the superstructure also fails i.e the addition on account of penalty is to be deleted. In this regard, I place reliance on the legal maxim “Sublato fundamento cadit opus” (meaning thereby that foundation being removed, structure /work falls). Hence the initial action of the revenue itself is not in consonance with law, then all the ITA 414, 415, 417 & 418/Rjt/2024 Patel Brass Works Vs DCIT Page | 3 subsequent and consequential proceedings would fall through for the reason that illegality strikes at the root of the order. I find that since the entity does not exist in the eyes of law, hence penalty under Sections 271(1)(b) and 271F of the Act do not survive. Considering the overall facts and circumstances of the case, all the grounds of appeal raised by the assessee, in all these four appeals are restored back to the file of Assessing Officer for deciding the issue afresh, after verifying the fact that the assessee is existed or non-existed at that point of time. If the assessee does not exist at the relevant time, then appropriate relief may be granted to the assessee. In the results, grounds of appeals in all these four appeals raised by the assessee are allowed for statistical purposes. 6.In the combined result, all these four appeals of the assessee are allowed for statistical purposes. Order is pronounced on 30/12/2024 in the open court. Sd/- (Dr. A.L. SAINI) ACCOUNTANT MEMBER Rajkot *Ranjan Ǒदनांक/ Date: 30/12/2024 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By Order Assistant Registrar/Sr. PS/PS ITAT, Rajkot ITA 414, 415, 417 & 418/Rjt/2024 Patel Brass Works Vs DCIT Page | 4 "