RAVINDRA SINGH ,AGRA V. ITO WARD-2(1)(3), AGRA

ITA 61/AGR/2023

AI Insights

The case revolves around a penalty imposed on the assessee, Ravindra Singh, for non-compliance with notices under section 142(1) during reassessment proceedings. The Assessing Officer (AO) had issued notices under sections 142(1) and 271(1)(b), which the assessee failed to comply with, leading to a penalty of Rs. 10,000. The assessee contested the penalty, arguing that the non-compliance was due to a strike by the Taxation Bar Association and the unavailability of his counsel, who was engaged in a professional commitment in Bangalore. The Commissioner of Income-tax (Appeals) upheld the penalty, leading to the current appeal before the Tribunal. The Tribunal, after considering the circumstances and the principles of natural justice, decided in favor of the assessee, highlighting the need for specific notices for each instance of non-compliance and the importance of allowing the assessee an opportunity to explain his case.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23178 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-11-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 21-04-2023
• Other Referred Cases: Collector Land Acquisition, Anantnag & Ors. vs Mst. Katiji & Ors. (1987) 167 ITR 471 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA; INVOKING
• Assessee Lawyers: S.C. JAIN
• Keywords: Condonation of delay; Reasonable cause; Reassessment proceedings; Principle of natural justice; Assessment record; Non compliance
• Section: 147; 144; 142(1); 273B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH, AGRA BEFORE: SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No. 61/Agr/2023 Assessment Year: 2010-11 Ravindra Singh, 86, Karamyogi, Amita Vihar Colony, Kamla Nagar Agra. PAN: BHXPS4964G v. Income-tax Officer, Ward 2(1)(3), Agra. (Appellant) (Respondent) Assessee by: Sh. S.C. Jain, C.A. Revenue by : Sh. Shailendra Srivastava, Sr. DR Date of hearing : 21.11.2024 Date of Pronouncement : 03.12.2024 ORDER This appeal in ITA No. 61/Agr/2023 for the assessment year 2010-11 has arisen from the appellate order dated 27.01.2023 (DIN& Order No. ITBA/NFAC/S/250/2022-23/1049191763(1)) passed by learned Commissioner of Income-tax(Appeals), NFAC,Delhi, which appeal in turn has arisen from the penalty order 07.05.2018 passed by Assessing Officer u/s. 271(1)(b) of the Income-tax Act, 1961. 2. At the outset, it is observed that this appeal is filed belatedly by the assessee by 24 days before the Income-tax Appellate Tribunal, ITA No. 61/Agr/2023 2 Agra , beyond the time prescribed u/s 253(3) of the 1961 Act. The ld. Counsel for the assessee Shri S C Jain, CA opened arguments before the Bench , and drew my attention to the application for condonation of delay filed by the assessee, and vehemently argued and prayed for condonation of delay. The assessee has filed application for condonation of delay, which is placed on record, in which the assessee has submitted that the order passed by ld. CIT(Appeals) was not physically received by the assessee and in fact it was sent by email by department, which email communication went into the spam/junk folder and the assessee did not see the spam/junk folder. It was only when the assessee opened the portal to download the returns/assessment orders for the last three years in order to submit to the Bank for availing bank finance that the assessee came to know that there is an order passed by ld. CIT(A) dated 27.01.2023 upholding the penalty levied by the Assessing Officer u/s. 271(1)(b) of the Act. The assessee also submitted that the assessee hardly uses this email Id, which is specifically created for Income-tax purposes and which is hardly used for any other purposes. The ld. Counsel for the assessee prayed for condonation of delay in filing this appeal belatedly with ITAT beyond ITA No. 61/Agr/2023 3 the time prescribed u/s 253(3). The ld. Sr. DR did not have any serious objections to the condonation of delay of 24 days in filing this appeal belatedly by the assessee beyond the time prescribed u/s 253(3) with ITAT. . I have gone through the contents of said condonation application along with evidences filed by the assessee claiming that the said mail was received in the junk/spam folder. There is a switch- over phase, wherein proceedings before the IT department be it assessment or adjudication of appeals by ld. CIT(A) are not conducted in a faceless mode using electronic mode ,wherein notices, summons, assessment proceedings , first appellate proceedings, service of assessment orders , first appellate orders etc. are undertaken in electronic mode , and in the initial stages , there will be hiccups at both assessee as well at the level of Revenue, and hence liberal view is required to be taken so far as condonation of delay in filing appeal . I am of the considered view that this delay of 24 days in filing this appeal belatedly with ITAT needs to be condoned. The assessee has shown sufficient and reasonable cause in filing this appeal belatedly with ITAT. If substantial justice and technical considerations are pitted against each other, courts will lean towards advancement of ITA No. 61/Agr/2023 4 substantial justice unless malafide is at writ large on the part of the litigant. I do not find any mala fide on the part of the assessee in filing this appeal belatedly with the Income-tax Appellate Tribunal. I further observe that the assessee is not likely to gain anything by filing the appeal belatedly by 24 days. I have also observed that the assessee has filed its appeal before ld. CIT(Appeals) in time ,and has also prosecuted the matter before ld. CIT(Appeals) in the first appellate proceedings. The assessee is also persuingthis appeal filed with ITAT, as ld. Counsel for the assessee Shri S C Jain, CA attended the hearing before ITAT (Physical/Virtual Mode)on 25.04.2024, 29.04.2024 and 21.11.2024. The assessee has also persued its quantum appeal before ITAT, wherein significant relief was granted by ITAT, Agra Bench, Agra, vide orders dated 18.02.2021 in ITA No. 10/Agr/2019. Thus, the assessee is vigilant as to its rights and duties, but however there was a delay of 24 days in filing this appeal belatedly with ITAT, which needs to be condoned as sufficient and reasonable cause is shown by the assesse. Thus, keeping in view the interest of substantial justice, I condone the delay of 24 days in filing this appeal belatedly with ITAT beyond the time prescribed u/s 253(3), and proceed to ITA No. 61/Agr/2023 5 decide the appeal on merits. Reliance is placed on the decision of Hon’ble Supreme Court in the case of Collector Land Acquisition, Anantnag &Ors. vs Mst. Katiji&Ors. (1987) 167 ITR 471 (SC). 3. Brief facts of the case are that the case of the assessee was reopened under the provisions of section 147 of the Act ,and notice u/s. 148 dated 31.03.2017 was issued by the AO to the assessee. Assessee participated in the reassessment proceedings and filed adjournment application by physically being present before the Assessing Officer on 10.08.2017. Case was adjourned by AO to 16.08.2017, and the assessee himself was again present before the Assessing Officer and filed computation of income, financial statements, Income & Expenditure account, capital account, purchase deed etc. .Assessee again appeared on 21.08.2017 himself before the Assessing Officer, and made various explanations. On 13.09.2017, the assessee’s counsel Shri S.C. Jain, CA appeared before the Assessing Officer and submitted explanations and evidences to support the case of the assessee. Thereafter, notice u/s. 142(1) was issued by the AO on 04.10.2017 calling for certain explanations and fixing the case for hearing on 25.10.2017. On 25.10.2017, there was a strike by Taxation ITA No. 61/Agr/2023 6 Bar Association,Agra and the assessee and/or his counsel did not appear before the Assessing Officer. Thereafter, the Assessing Officer issued fresh notice u/s. 142(1) dated 03.11.2017 fixing the case for hearing on 13.11.2017 asking for certain details from the assessee. Assessee did not appear on 13.11.2017 and the Assessing Officer passed reassessment quantum order dated 14.11.2017 u/s 144/147 of the 1961 Act. Thus, the re-assessment was framed on the very next date, i.e., on 14.11.2017. The AO initiated penalty proceedings u/s 271(1)(b) for non compliance of notice u/s 142(1) dated 04.10.2017, as is discernible from re-assessment order. Thereafter, notice u/s. 271(1)(b) dated 14.11.2017 was stated to be issued by the AO for non- compliance of notice dated 04.10.2017 , and the and the assessee was asked by the AO as to why penalty u/s. 271(1)(b) may not be imposed. The date of hearing was fixed for 12.12.2017.Theassessee neither appeared before the Assessing Officer on 12.12.2017 ie. The date fixed for compliance of notice u/s 271(1)(b) dated 14.11.2017 issued by the AO nor filed any adjournment application before the AO ( theassessee is disputing that the assessee never received notice u/s 271(1)(b) dated 14.11.2017). Thus, the AO keeping in view that there ITA No. 61/Agr/2023 7 is non-compliance of notices u/s. 142(1) dated 04.10.2017 and 03.11.2017 by the assessee in quantum re-assessment proceedings, imposed penalty of Rs.10,000/- on the assesseeu/s. 271(1)(b) of the Act( as is discernible from re-assessment order, the penalty u/s 271(1)(b) was initiated for non compliance of notice u/s 142(1) dated 04.10.2017, but the AO levied penalty for non compliance of notices u/s 142(1) dated 04.10.2017 and 03.11.2017). 4. Assessee filed first appeal before ld. CIT(Appeals) and submitted in Form No. 35 in statement of facts as under : Assessee is individual, engaged in the retail business of sale of spare parts, computer repairing and services at Sanjay Place, Agra in name and style of Raj Computers Services, falling in the jurisdiction of ITO 1(1)(3) Agra. However, ITO, Ward-2(1)(3), Agra has issued a notice u/s 148 on 31.03.2017, without jurisdiction. Since Income of the assessee for the year under consideration was below the taxable limit, hence, no return of Income was filed by the assessee. However, in support of his income and on requisition of learned Assessing Officer, assessee filed the computation of Income, Trading and Profit and loss account, capital account, Balance Sheet of his above proprietary firm with his business address. Income tax assessment in the case was framed on 14.11.2017 u/s 144 for which assessee has preferred appeal separately. On 13-11-2017 as was fixed for hearing in the case as referred by the Assessing Officer in the order, assessee attended office of learned Assessing Officer for seeking adjournment and submitted that his authorized representative is out of station. However, learned Assessing Officer did not grant any adjournment and even refused to receive application depriving opportunity to the assessee to explain his case, in violation of principle of natural justice. Moreover, cause register was not available in the office to mark attendance. 12-12-2017, as alleged fixed by the learned Assessing Officer, for compliance of penalty notice u/s 271(1)(b), no such notice was received by the ITA No. 61/Agr/2023 8 assessee. No other notice or reminder was issued by the learned Assessing Officer subsequently but suddenly he imposed penalty on 07-05-2018, almost after 5 months of alleged penalty notice issued, which is bad under the facts and circumstances of the case. Being aggrieved by the said order, the appellant-assessee has filed the present appeal petition and further detailed facts of the case will be explained at the time of hearing.” 4.2 The assessee submitted before ld. CIT(A) in appellate proceedings wrt penalty imposed by the AO u/s 271(1)(b), that the appeal is already decided by the ld. CIT(Appeals) vide order dated 30.11.2018 and the order is itself available on e-filing portal( this was an erroneous statement made by the assessee as is now averred by ld. Counsel for the assessee in appellate proceedings before the Bench). 4.3 The learned CIT(Appeals) observed that the assesseehas stated that he is engaged in the retail business of sale of spare parts, computer repairing and services at Sanjay Place, Agra in the name and style of Raj Computers Services. The assessee was non- compliant during the course of assessment proceedings ,and has failed to submit any reply in response to the notices issued u/s. 142(1) and the reassessment order u/s. 147/144 of the Act was passed on 14.11.2017 , and hence, the assessee has wilfully defaulted in complying with the statutory noticesissued by the AO during re- ITA No. 61/Agr/2023 9 assessment proceedings, and the order of the AO levying penalty u/s 271(1)(b) of Rs. 10,000/- for the failure to comply with the notice u/s 142(1) was confirmed by ld. CIT(Appeals) as the assessee failed to comply without any reasonable cause( the ld. CIT(A) has not stated in its order as to which of the non-compliances of notices u/s 142(1) i.e. dated 04.10.2017 or 03.11.2017, the penalty u/s 271(1)(b) is confirmed). 5. The assessee being aggrieved has now filed second appeal before the Tribunal . The assessee has filed paper book containing 10 pages, which is placed on record in file. Ld. Counsel for the assessee, Shri S C Jain, CA appeared and made submissions before the Bench. The main bone of contentions of the assessee is that the assesseeand/or his counsel could not appear before the Assessing Officer during the course of re-assessment proceedings on 25.10.2017 in compliance to notice dated 04.10.2017, owing to strike by Taxation Bar Association, Agra. Fresh notice u/s 142(1) dated 03.11.2017 was issued by the AO wherein date of hearing was granted for 13.11.2017. It is stated by the ld. Counsel for the assesseeShri S C Jain, CA that he was not available in Agra on 13.11.2017, as he was in Bangalore ITA No. 61/Agr/2023 10 due to quality review functions assigned to him by ICAI u/s.288 of the Chartered Accountants Act , as a technical reviewer to conduct quality review of M/s. B.K.Ramdhani& Co LLP, Bangalore , from 12.11.2017 to 17.11.2017, which was main reason that there was no appearance before the Assessing Officer. Further, it is stated by ld. Counsel for the assesseeShri S C Jain, CA before the Bench that the assessee himself attended the office of the Assessing Officer on 13.11.2017 for seeking adjournment and to submit that the AR of the assessee was out of station, but the Assessing Officer refused to receive theajournment application and explanations of the assessee. Reassessment order was passed on the very next day i.e., 14.11.2017. It was submitted that on 13.11.2017, even the cause register was not available in the office of the AO to mark attendance on 13.11.2017. It was prayed that the penalty as imposed by the AO be deleted. 5.2 Ld. Sr. DR relied upon the order of ld. CIT(Appeals) and prayed that penalty levied by the AO and as confirmed by ld. CIT(A) be confirmed . 6. I have considered the submissions of both the parties and perused the material on record. I have observed that the case of the ITA No. 61/Agr/2023 11 assesseein quantum was reopened by Revenue by invoking provisions of section 147 of the Act , and notice dated 31.03.2017was issued by the AO u/s. 148 of the Act. The assesseeeven participated in person in the reassessment proceedings as well as through his Counsel , Shri S C Jain, CA. Assessee made appearance on 10.08.2017, 16.08.2017 and 21.08.2017 and the Counsel Shri S C Jain, CA appeared before the AO during reassessment quantum proceedings , on 13.09.2017. Thus, it cannot be said that the assessee has not participated in the reassessment proceedings. It is with respect to the notice dated 04.10.2017 u/s 142(1) issued by the AO fixing the date of hearing on 25.10.2017 , that there was no compliance by the assessee and/or his counsel on 25.10.2017 due to strike by Taxation Bar Association, Agra. In my considered view , the assessee cannot be penalised for the strike called by Taxation Bar Association, Agra. The AO issued fresh notice u/s. 142(1) on 03.11.2017 fixing the date of hearing for 13.11.2017. Statement has been made by the assessee and his counsel before the ld. CIT(Appeals) (Statement of fact in Form No. 35) as well as before me that on 13.11.2017, counsel of the assessee Shri S C Jain, CA was out of town due to quality review work ITA No. 61/Agr/2023 12 as Technical Reviewer of a firm of CA in Bangalore , and in fact it is claimed that the assessee himself appeared before the Assessing Officer on 13.11.2017 requesting for adjournment, but the Assessing Officer did not granted adjournment nor received the adjournment application carried by the assessee to the office of ITO on 13.11.2017. Further, it is stated that even cause register was not available to mark attendance in the office of ITO on 13.11.2017.It is claimed that the AO acted in haste and passed re-assessment order u/s 147/144 on the very next date i.e. on 14.11.2017, although the case was getting time barred on 31.12.2017(Refer Section 153(2)). It is also observed that in ITA No. 10/Agr/2019, in quantum proceedings against reassessment order passed by the AO u/s 144/147, the Tribunal vide order dated 18.02.2021 granted substantial relief to the assessee and an addition of Rs.2,84,500/- has been deleted and the addition of Rs.1,00,000/- was confirmed. The assessee has participated in the appellate proceedings before the Tribunal against reassessment order in quantum. The assessee also participated in the appellate proceedings conducted by ld. CIT(A) against the penalty levied u/s 271(1)(b). The assessee is also appearing through his counsel before the ITAT ITA No. 61/Agr/2023 13 against penalty levied u/s 271(1)(b).Thus, the conduct of the assessee is through out of participating in the proceedings conducted by authorities . The ld. CIT(A) also did not verified the contentions and explanations submitted by the assessee for non-compliance of notices issued by the AO u/s 142(1) dated 04.10.2017 and 03.11.2017, and the penalty levied u/s 271(1)(b) of Rs. 10,000 was confirmed. There is another aspect to the matter. The AO initiated the penalty proceedings u/s 271(1)(b) for non compliance of notice u/s 142(1) dated 04.10.2017, as is discernible from reassessment order. The notice u/s 271(1)(b) was stated to be issued by the AO on 14.11.2017 .No further notice u/s 271(1)(b) was issued by the AO before levying penalty of Rs. 10,000/- u/s 271(1)(b) vide orders dated 07.05.2018.The AO levied penalty u/s 271(1)(b) for non compliance to notice u/s 142(1) dated 04.10.2017 and 03.11.2017, while as per reassessment order placed on record , the penalty proceedings u/s 271(1)(b) were initiated for non compliance to notice u/s 142(1) dated 04.10.2017. Every non- compliance to notice u/s 142(1) give a separate cause of action for levying penalty u/s 271(1)(b) and there has to be a specific initiation and issuance of notice u/s 271(1)(b) for each non compliance , and the ITA No. 61/Agr/2023 14 assessee is to be put to notice for the same.Thus, initiating penalty proceedings u/s 271(1)(b) for non compliance to notice dated 04.10.2017 u/s 142(1) and levying penalty u/s 271(1)(b) for non compliance to notice u/s 142(1) dated 04.10.2017 and 03.11.2017 is itself not correct. Further, the AO issued only one notice u/s 271(1)(b) dated 14.11.2017 , which the assessee has claimed that it was never received by him, and the AO imposed penalty ex-parte u/s 271(1)(b) of Rs. 10,000/- vide penalty order dated 07.05.2018, and hence principles of natural justice are clearly breached and the assessee is condemned un-heard by the AO. Further, it is observed that the ld. CIT(A) did not verify the contentions and explanations submitted by the assesseewrt to non compliances to the notices issued u/s 271(1)(b), and the appeal of the assessee was dismissed by ld. CIT(A). The ld. CIT(A) did not even called for assessment records nor called for records from the AO wrt penalty levied u/s 271(1)(b), and dismissed the appeal of the assessee, without verifying the contentions and explanations of the assessee. The ld. CIT(A) did not specify as to non-compliance of which of the notices u/s 142(1), the ld. CIT(A) is upholding the penalty. It is well settled that power of ld. CIT(A) are co-terminus with the ITA No. 61/Agr/2023 15 powers of the AO. Thus, keeping in view of the entire facts and circumstances, I am of the considered view that the assessee has given reasonable explanation for not attending the hearing before the AO on 25.10.2017 and 13.11.2017 and keeping in view the provisions of section 273B read with section 271(1)(b) of the Act, I accept the contentions of the assessee and delete penalty of Rs.10,000/- imposed by the AO u/s. 271(1)(b) of the Act. I order accordingly. 7. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 03/12/2024. Sd/- (RAMIT KOCHAR) ACCOUNTANT MEMBER Dated:03/12/2024 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT Assistant Registrar ITAT Agra "