PRATIK KIRITKUMAR VAIDYA,SURAT V. .ITO, WARD-(1)(3)(1), SURAT

ITA 983/SRT/2024

AI Insights

The case involves an appeal by Pratrik Kiritkumar Vaidya against the penalty imposed by the Assessing Officer under section 271(1)(b) of the Income-tax Act, 1961, for non-compliance with statutory notices during reassessment proceedings for the Assessment Year 2012-13. The assessee contended that he did not receive the notices due to them being sent to an incorrect address, which constituted a reasonable cause for non-compliance. The Commissioner of Income-tax (Appeals) upheld the penalty, leading to the present appeal before the Income-Tax Appellate Tribunal. The Tribunal, after considering the submissions and evidence, including the incorrect address issue, ruled in favor of the assessee, highlighting the importance of proper notice delivery in compliance with legal procedures.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26737 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Other Referred Cases: Hindustan Steel Ltd. vs. State of Orissa, CIT vs. Nayan Builders and Developers, Kantilal Chndulal vs. ITGO
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: ESMAYEEL SAHERWALA
• Keywords: Set aside; Reasonable cause; Reassessment proceedings
• Section: 148; 142(1); 250; 273B

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.983/SRT/2024 Assessment Year: (2012-13) (Physical court hearing) Pratrik Kiritkumar Vaidya 2/4224, Kala Mehta Street, Sagrampura, Surat-395 003 बनाम/ Vs. Income Tax Officer, Ward-1(3)(1), Surat, Room No. 206, 2nd Floor, Income Tax Office, Anavil Business Center, Adajan Hazira Road, Adajan, Surat-395 007 èथायीलेखासं./जीआइआरसं./PAN/GIR No: AHIPV 7773 N (अपीलाथŎ/Appellant) (ŮȑथŎ /Respondent) िनधाŊįरती की ओर से /Appellant by Shri Esmayeel Saherwala, CA राजˢ की ओर से /Respondent by Shri Mukesh Jain, Sr-DR अपील पंजीकरण/Appeal instituted on 23.09.2024 सुनवाई की तारीख/Date of Hearing 26.12.2024 उद ्घोषणा की तारीख/Date of Pronouncement 27.12.2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 25.07.2024 by the National Faceless Appeal Centre, Delhi /Commissioner of Income-tax (Appeals) [in short ‘Ld. CIT(A)’] for the Assessment Year (AY) 2012-13, which in turn arises out of the penalty order passed by Assessing Officer (in short, ‘AO’) u/s 271(1)(b) the Act dated 15.08.2021. Grounds of appeal raised by the assessee are as under: “(1) On the facts and circumstances of the case and in law, the Learned Assessing Officer is not justified in concluding the penalty assessment u/s 271(1)(b) of the Act without awaiting disposal of appeal against assessment 2 ITA No.983/SRT/2024/AY.2012-13 Pratik K Vaidya order. Ld.AO has erred in presuming that faith of said appeal against quantum addition will have no bearing on merits of the penalty proceedings. (2) On the facts and circumstances of the case and in law Ld. CIT, NFAC has erred in misinterpreting the provisions of Section 271(1)(b) of the Act. (3) On the facts and circumstances of the case and in law Ld.CIT, NFAC has erred in appreciating the fact that there was a reasonable cause for failure due to non-service of notices. (4) On the facts and circumstances of the case and in law, Ld. CIT, NFAC has erred in interpreting the remand report and has overlooked the submissions of objections in respect to remand report in course of penalty assessment. (5) The appellant reserves the right to add, amend, replace or delete any grounds of appeal before conclusion of the appeal. (6) The appellant prays to quash the penalty order passed by Ld. ITO, National Faceless Assessment Centre, Delhi.” 2. Facts of the case in brief are that the assessee did not file his return of income for AY 2012-13. The case was reopened and notice u/148 was issued on 29.03.2019. During the reassessment proceedings for AY 2012-13, the assessee did not respond to the notice u/s 142(1) of the Act dated 11.09.2019. The AO issued a show cause notice as to why penalty should not be levied for non-compliance of the statutory notice. In response, the assessee submitted that no notice/letter as mentioned in the assessment order was received by the assessee and hence compliance could not be made. Therefore, there was reasonable cause for non-compliance of the notice u/s 142(1) of the Act. The reply of the assessee was not found satisfactory and hence, penalty of Rs.10,000/- was imposed by AO u/s 271(1)(b) of the Act. 3. Aggrieved by the order of AO, the assessee has filed appeal before CIT(A). Before CIT(A), assessee made detailed submission, which is at para-4.4 3 ITA No.983/SRT/2024/AY.2012-13 Pratik K Vaidya in pages 5 to 8 of the order of CIT(A). The CIT(A) called for a remand report from AO. The AO, in the remand report, has given the details of notices issued and the manner in which they were served upon the assessee. The CIT(A) observed that there is no dispute on failure of assessee to comply with the notice issued u/s 142(1) during the assessment proceedings on various dates. He observed that all statutory notices u/s 148 and 142(1) on various dates were duly served on assessee. The assessee had also made a request before the AO to keep the penalty proceedings in abeyance till the disposal of assessment order. The AO did not accede the request for the reasons that appeal against the quantum addition would have no bearing on merits of penalty proceedings for non-compliance of statutory notices. He held that appellant has not been able to show a reasonable cause even during the appellate proceedings. The appellant was having a registered account on the e- filing portal which was active because assessee is using it for filing returns of income. Therefore, there was no merit on the plea that the assessee could not attend the proceeding for non-receipt of notices. The CIT(A) has reproduced provisions of Section 282 of the Act and Rule 127 of IT Rules, 1962 and held that e-mail address mentioned by the appellant in his account registered with the e-filing portal would be a valid address for delivery of electronic communication under Rule 127(2)(b) of the IT Rules. Hence, the CIT(A) dismissed the appeal and confirmed the levy of penalty of Rs.10,000/-. 4 ITA No.983/SRT/2024/AY.2012-13 Pratik K Vaidya 4. Further, aggrieved by the order of CIT(A) assessee has filed present appeal before the Tribunal. The Ld. Authorized Representative (Ld.AR) of the assessee filed paper book. He submitted that assessee has not received any notice and hence there was reasonable cause for failure to comply with notice u/s 142(1) of the Act. He submitted that assessee has been residing at 2/4224, Kala Mehta Sheri, Sagrampura, Surat and not at A/3 302, Gopal Park, Bhatar Road, Surat, where the notices were sent. He submitted that the order dated 31.10.2019 along with penalty proceedings notices were served with hand- written correct address besides typed incorrect address and was sent via speed post A/D No. EG5454295611N on 19.12.2019. Had the AO been careful while communicating the hearing notices, assessee would have received the same and complied with the requirement in the notice. The Ld. AR of the assessee relied various case law: (i) in case of Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC), (ii) CIT vs. Nayan Builders and Developers (2014) 368 ITR 722 (Bom) and (iii) Kantilal Chndulal vs. ITGO (1991) 190 ITR 44 (Guj) 5. On the other hand, Ld.Sr-DR for the Revenue supported the order of lower authorities. He stated that the address in the assessment order and the penalty order are same, being A/3 302, Gopal Park, Bhatar Road, Surat. Hence, the plea that assessee did not receive notice is not tenable. 6. We have heard both the parties and perused the materials on record. We have also deliberated various case law relied upon by Ld.AR of the assessee. Penalty u/s 271(1)(b) is leviable if any person has failed to comply 5 ITA No.983/SRT/2024/AY.2012-13 Pratik K Vaidya with the notices under various sections including sub-section (1) of Section 142 of the Act. The amount of penalty is Rs.10,000/- for each such failure. However, penalty may not be imposed in certain cases, as specified u/s 273B of the Act, or any failure referred to in the said provisions, if the person or the assessee proves that there was reasonable cause for the said failure. In this case, we find that the address of the assessee in the assessment order as well as penalty order was A/3 302, Gopal Park, Bhatar Road, Surat whereas in the appellate order u/s 250 of the Act, the address was 2/4224, Kala Mehta Sheri Sagrampura, Surat. Hence, the plea of the assessee that notice was issued on a wrong address cannot be disbelieved. In our view, there was reasonable cause for failure to comply with the notices u/s 142(1) of the Act. Hence, order of CIT(A) is set aside and AO is directed to delete levy of penalty of Rs.10,000/-. This ground of assessee is allowed. 7. Since we have deleted the penalty, the other grounds are academic in nature and do not require any adjudication. 8. In the result, appeal of the assessee is allowed. Order is pronounced on 27/12/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) Æयाियक सदÖय/JUDICIAL MEMBER लेखा सदÖय/ACCOUNTANT MEMBER सूरत /Surat Ǒदनांक/ Date: 27/12/2024 Dkp Outsourcing Sr.P.S* 6 ITA No.983/SRT/2024/AY.2012-13 Pratik K Vaidya आदेश कì ÿितिलिप अúेिषत/ Copy of the order forwarded to :  अपीलाथê/ The Appellant  ÿÂयथê/ The Respondent  आयकर आयुĉ/ CIT  आयकर आयुĉ (अपील)/ The CIT(A)  िवभागीय ÿितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, SURAT  गाडª फाईल/ Guard File // True Copy // By order/आदेश से, सहायक पंजीकार आयकर अपीलȣय अͬधकरण, सूरत "