Krishankumar Maheshwari, Ahmedabad vs Assessee

1 ITA.No. 2542 /Ahd/2011 Assessment year 2008-2009

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD " D " BENCH, AHMEDABAD

(BEFORE SHRI N.S.SAINI ACCOUNTANTMEMBER AND SHRI KUL BHARAT JUDICIAL MEMBER.)

ITA No.2542/Ahd/2011 (Assessment Year: 2008-2009)

Shri Krishnakumar Maheshwari 78 New Cloth Market, Outside Raipur Gate, Raipur, AHMEDABAD. ..............Appellant

[PAN:AAEPM 6825B ]

Vs.

Income Tax Officer, Ward 11(4), Ahmedabad.

................Respondent

Appellant by : Shri K.M. Mehta

Respondent by: Smt. Sonia Kumar,Sr.D.R.

Date of hearing : 05-05-2015

Date of pronouncement : 13-05-2015

O R D E R

Per Shri KUL BHARAT JUDICIAL MEMBER

This appeal is filed by the assessee against the order dated 12-08-

2011 passed by Commissioner of Income Tax (Appeals)-XVI,Ahmedaad. 2 ITA.No. 2542 /Ahd/2011

Assessment year 2008-2009

2. The assessee has raised the following grounds of appeal:

(1) That the CIT (A) has erred in holding that assessee did not have

reasonable cause.

(2) That on facts and in law Ld. CIT (A) ought to have deleted the

penalty u/s. 271(1)(b) of the I.T. Act.

3. Briefly stated the facts of the case are that during the course of

assessment proceedings the Assessing Officer issued notices u/s.142(1)

dated 3-2-2010 and 24-5-2010.The said notices were not complied with.

Therefore, the A.O. levied penalty of Rs.20,000/- u/s. 271(1)(b) of the Income

Tax Act,1961 (hereinafter referred to as 'the Act'). Against the said

assessment order, assessee filed appeal before the CIT (A) who after

considering the submissions of the assessee dismissed the appeal.

4. Against this order, the assessee is in appeal before this Tribunal. The

only ground is against the confirmation of the penalty by the CIT (A).

5. Ld. Counsel for the assessee submitted that the order u/s.143(3) was

passed on 10-12-2010. The assessee has thus participated in the

assessment proceedings except the defaults in question. He submitted that

the A.R. of the assessee was busy in the audit and limitation matters 3 ITA.No. 2542 /Ahd/2011 Assessment year 2008-2009

and therefore, he could not attend the hearing. He submitted that the co-

ordinate Bench have taken view that where the assessee after default of first

notice attends the proceedings subsequently no penalty u/s. 271(1)(b) is

leviable.

6. On the contrary Sr.D.R. vehemently opposed the submission of the

assessee and supported the orders of the authorities below.

7. We have heard the rival submissions, perused the material and

relevant reports. We find that the Assessing Officer imposed the penalty u/s.

271(1)(b). However, it is not disputed that the assessment proceedings were

initiated subsequently and the requisite details were filed as and when called

for. The Coordinate Bench-D Ahmedabad in the case of Swarnaben M.

Khanna vs. D.C.I.T. (2010) 37 SOT (25) decided the issue in favour of the

assessee has decided the issue in favour of the assessee and against the

Revenue by holding as under:-

" We have considered the rival submissions and perused the material on record. The undisputed facts as emerge from the above discussion are that the statutory notice under sec.142(1) was issued to the four assessees for Assessment Year 2006-07 only and not for any other assessment years. No notice under sec. 1412(1) was issued to these assessees in respect of other assessment years. So far as letters requiring compliance issued by the Assessing Officer on 14-8-2007 / 17-8-2007 are concerned, it is noticed that except in the case of Shri Kaushal M. Khanna, the letters did not mention that compliance is required to be made u/s.142(1). Before levying penalty under sec. 271(1)(b), there must be specific notice to the assessee for specific assessment year with specific requirements to be complied with . The compliance must have relevance to the assessment year in question and it must have apparent nexus with the assessment for that assessment year to be framed. General information sought may not be 4 ITA.No. 2542 /Ahd/2011 Assessment year 2008-2009

relevant for any particular assessment year in addition, adequate time should be given to the assessee for making compliance The notices were issued on 14-8-2007 in some cases and compliance were required to be made by 24-8-2007. Thereafter the A.O. proceeded to initiate the penalty proceedings. In our considered view, it is against the principles of natural justice as no reasonable opportunity is given to them for making compliance of the information sought. For the sake of convenience, we refer to the compliance sought by the AO. Vide letter dated 14-8-2007 containing five pages from Shri Kaushal M. Khanna as similar compliance was sought by him from others as well. If there is apparent impossibility of compliance or compliance could take naturally long time, then the A.O. is expected to give adequate time to the assessee before he infers that they are tending to non-compliance and avoiding to furnish information. The statutory provision for levy of penalty is not for mere technical non-compliance but for actual or habitual defaulters. On the face of present facts where the Assessing Officer has hastily proceeded to initiate penalty proceedings in all the cases, it is difficult to infer that these assessees were intending to make non-compliance, information sought by the A.O. is very detailed and requires assistance from professionals like Advocate or Chartered Accountant. An affidavit has been filed from Shri Kaushal M. Khanna before the Ld. CIT (A), i.e. erstwhile Chartered Accountant who was handling his tax matters, has left all these assessees and the family is in search of new counsel for making compliance made by the Income Tax Department. It shows that these assessees had really intended to comply with the notices and, therefore, it should not be inferred that there was a default which could invite penalty under section 271(1)(b). The ITAT Delhi Bench-G in the case of Akhil Bharatiya Shikshak Sangh Bhawan Trust (supra) has held that if assessment order is passed under sec. 143(3),and not under section 144then non-compliance is deemed to have been waived."

Considering all these facts and circumstances and the authority

referred to above, we hold that neither the A.O. nor the Ld. C.I.T.(A)

has made out a case for sustaining the penalties. Accordingly, the

penalties in all these assessment years for all the assessees are

cancelled."

5 ITA.No. 2542 /Ahd/2011

Assessment year 2008-2009

Following the above order of the Coordinate Bench, we have no reason to

take a contrary view. Therefore, the ground of the assessee's appeal is

allowed.

8. In the result, appeal of the assessee is allowed. Assessing Officer is

directed to delete the penalty.

ORDER PRONOUNCED IN THE COURT ON 13th day of May,2015.

Sd/- Sd/-

(N.S. SAINI) (KUL BHARAT) Accountant Member Judicial Member

Ahmedabad, the 13th day of May, 2015

Copies to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order etc

Assistant/Deputy Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad Patki

1. Date of dictation . 7-5-15. (dictation-pad pages attached at the end of this File)

2. Date on which the typed draft is placed before the Dictating Member . 12-5-15

3. Other Member 12-5-2015

4. Date on which the approved draft comes to the Sr.P.S./P.S 12-5-2015

5. Date on which the fair order is placed before the Dictating Member for Pronouncement 13-5-2015

6. Date on which the fair order comes back to the Sr.P.S./P.S 13-5-2015

7. Date on which the file goes to the Bench Clerk 14-5-2015

8. Date on which the file goes to the Head Clerk..........................................

9. The date on which the file goes to the Assistant Registrar for signature on the order..........................

10 Date of Despatch of the Order..................