Neville Tuli, Mumbai vs Assessee

This appeal has been filed by the Assessee, against order dated 12.08.2013, passed by Ld. CIT(A)-37, Mumbai in relation to the penalty proceedings u/s 271(1)(b)

2. The assessee is mainly aggrieved by levy of penalty of Rs.10,000/- u/s 271(1)(b) on account of non compliance of notice u/s 142(1), issued on 28.11.2011 for compliance on 05.12.2011.

3. Before the assessing officer in response to the show cause notice for levy of penalty u/s 271(1)(b), the assessee had submitted that it has duly attended the office of the AO and responded to the said notice by his representative on 05.12.2011, however, the same has not come in ITA No. 5953/Mum/2013 2 Assessment Year: 2009-10

the office record. However, the assessing officer rejected the assessee's explanation and levied the penalty of Rs.10,000/-.

4. Before the Ld.CIT(A), the assessee reiterated the same and submitted that the assessing officer has levied the penalty u/s 271(1)(b) for non compliance of three notices, for which three separate orders of penalty had been passed for levying penalty of Rs.10,000/- for each default. In case of two penalty orders, the Ld. CIT(A) has deleted the penalty and therefore, this penalty should also be deleted. However, the Ld. CIT(A) confirm the penalty after observing and holding as under:-

"5.1 I have given my careful consideration to the rival submissions, perused the material on record and duly considered the factual matrix of the case as also the applicable legal position. 5.2 It is seen that no other information or submission is filed other than reliance on the appellate order of the Ld. CIT(A). This is the third default, as is seen from records, for which penalty was levied. Despite penalty levied for earlier defaults, there was non compliance the third time. Penalty proceedings u/s 271(1)(b) is distinct from assessment proceedings. The assessing officer has to complete the assessment proceedings within limitation period and it cannot be the cas that every assessment will be completed only on the last date. Further, delay in submissions repeatedly hampers the effective investigation and completion of assessments. This is the case of third default and not the first default. No extenuating circumstances has been informed for the third default, which is the subject matter of this appeal. In these circumstances, the appeal is dismissed.

5. Before us, learned counsel submitted that in response to notice for levy penalty u/s 271(1)(b), the assessee vide reply dated 09.12.2011, had specifically submitted that compliance was duly made by the assessee in response to notice u/s 142(1) dated 28.11.2011 on 05.12.2011.This is evident from the letter filed before the AO dated 09.12.2011. The said copy has also been placed before us. He also filed copy of assessment u/s 143(3), wherein neither such default has been ITA No. 5953/Mum/2013 3 Assessment Year: 2009-10

pointed out by the AO, nor any initiation of penalty u/s 271(1)(c) has been mentioned.

6. On the other hand, Ld. DR strongly relied upon the order of the Ld. CIT(A).

7. We have heard the rival submissions and perused the material placed on record. The impugned penalty has been levied for non- compliance of notice u/s 142(1) dated 28.11.2011 for compliance on 05.12.2011. From the perusal of the assessment order passed u/s 143(3) dated 12.12.2011, it is seen that, nowhere the assessing officer has mentioned that assessee has not complied with any notices issued u/s 142(1). In fact in para 2 of the assessment order, he has noted that in response to the notices Authorized Representative of the assessee, Shri Shekhar Gupta C.A. had attended and filed the details and the case was discussed with him on material available on record. The assessee's returned income has also been accepted. There is no mention about any non-compliance of notice or initiation of penalty proceeding u/s 271(1)(b). On the perusal of the assessee's reply dated 09.12.2011 filed in response to show cause notice 07.12.2011, the assessee has stated as under:-

"At the outset, we have to submit that your goodself has already levied penalty twice u/s 271(1)(b) and the said show cause notice is for the third time for levy of penalty which is not proper on the facts and circumstances of the case.

We have to submit that our Mr. S. Gupta along with Mr. Lakshmi Narayan, Company Secretary of the group, attended before your goodself on 01-12-2011, 05-12-2011 and 07-12-2011. Further, on 1-12-2011 and 05-12-2011, we were again made to wait outside for almost one hour as in the past. Thereafter, you directed your Inspector to attend to us. Your Inspector raised queries only regarding Osian's-Connoisseurs of Art Pvt. Ltd. and no queries ITA No. 5953/Mum/2013 4 Assessment Year: 2009-10

are raised in respect of other cases and even our attendance was not recorded in other cases.

In respect of all the case, the group has filed details as required by you except in those case where notices u/s 133(6) was issued and the parties have not responded in which cases the assessee is helpless. In fact, in the case of Osian's Connoisseurs of Art Pvt. Ltd., you have furnished copy of accounts of 36 parties for reconciliation only on 05.12.2011, although requests were made much earlier.

We have to further submit that, on the intervention of the Additional Commissioner we again attended on 08.12.2011, when for the first time you recorded our attendance and have completed assessment in the case of Oseta Investments Trustee Company Pvt. Ltd, Tuli Foundation of Holistic Education & Art (HEART), Swaraj Tuli and Neville Tuli.

In respect of other three assessee namely, Osian's Art Fund, Osian's- Connoisseurs of Art Pvt. Ltd. and Cabochon of Art Pvt. Ltd., all the details have been filed and there is no default for non attendance.

Hence, in view of the above, we shall request you not to levy any further penalty."

This letter has been acknowledged by a seal from the office of "Deputy Commissioner of Income-tax Central Circle-11, Mumbai". The aforesaid reply has not been rebutted by the assessing officer at all, wherein, the assessee has categorically stated that he has attended the proceedings and has also filed copies of accounts and reconciliation on the date mentioned i.e. 05.12.2011. On these facts, levy of penalty by the AO for non-compliance of notice and confirmation by the Ld. CIT(A0 is wholly unjustified and uncalled for. Accordingly, penalty levied and confirmed is deleted.

8. In the result, the appeal filed by the Assessee is allowed.

Order pronounced in the open court on this 25th day of February, 2015.

Sd/- Sd/- (SANJAY ARORA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA No. 5953/Mum/2013 5 Assessment Year: 2009-10

Mumbai, Dated: 25.02.2015 *Srivastava Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT(A) Concerned, Mumbai The DR "B" Bench

//True Copy// By Order

Dy/Asstt. Registrar, ITAT, Mumbai.