Raj Enterprise, Ahmedabad vs Assessee

ी मक ु ु ल कुमार ावत, या यक सद य एवं ी एन.एस. सैनी, लेखा सद य के सम% BEFORE SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA No. 958/Ahd/2011 [Asstt. Year: 2007-08

M/s.Raj Enterprise ITO, Ward-9(1) C/o. Dhaval R. Jani Vs Ahmedabad. 9, Shreenath Society Nr. Bank of Baroda Usmanpura, Ahmedabad.

PAN : AAIFR 4714 N

अपीलाथ'/ (Appellant) )*यथ'/ (Respondent)

Assessee(s) by : Shri B.T. Thakkar, AR Revenue by : Shri B.L. Yadav, Sr.DR

सन ु वाई क तार ख/ Dateof Hearing : 25/02/2015 घोषणा क तार ख / Date of Pronouncement: 04/03/2015

आदे श/O R D E R

PER N.S. SAINI, ACCOUNTANT MEMBER:

1. This is an appeal filed by the assessee against the order of the CIT(A)-XV, Ahmedabad dated 15.3.2011 for the Asstt.Year 2007-08.

2. The sole ground of appeal taken in this appeal is that the CIT(A) erred in confirming the penalty of Rs.50,000/- levied by the AO under section 271(1)(b) of the Act.

3. Brief facts of the case are that the AO has observed in his penalty order that the assessee has not complied with the notices under sections 143(2)/142(1) of the Act, details of such instances are s under:

ITA No.958/Ahd/2011 2 3. During the course of assessment proceedings, it was observed that the assessee has not complied with number of notices issued u/s.143(2)7142(1) of the Act. The details of such instances are as under:

Notice Date of issue Date of Remarks u/s. hearing

143(2) 22.09.2008 23.10.2008 No compliance

142(1) 07.01.2009 29.01.2009 The assessee did not furnish the details as per the terms of notice, but sought adjournment, which was granted. But the assessee did not turn up on the adjourned date.

142(1) 11 .06.2009 18.09.2009 No compliance.

142(1) 30.10.2009 10.11.2009 No compliance

142(1) 19.11.2009 23.11.2009 No compliance i

4. The AO, therefore, observed that the assessee has scant regard for the statutory notices issued under section 143(2) and 142(1) of the Act. In such circumstances, the imposition of penalty under section 271(1)(b) of the Act is mandatory in law. He placed reliance o the decision in the case of CIT Vs. Standard Mercantile Co. (1986) 160 ITR 613 (Patna) wherein it was held that where a person fails to comply with the notices u/s.142(1)/143(2) of the Act, the onus lies on him to show cause sufficiently for not levying the penalty under section 271(1)(b) of the Act. Since the assessee failed to show cause as to why penalty u/s.271(1)(b) of the Act should not be levied, he levied penalty at the rate of Rs.10,000/- per failure, and thereby levied penalty of Rs.50,000/- under section 271(1)(b) of the Act..

5. On appeal, the CIT(A) confirmed the action of the AO.

ITA No.958/Ahd/2011 3 6. The assessee in the written submission filed before us has submitted as under:

i) Notice u/s. 143(2) dated 22-09-2008 issued for the intimation to the appellant for selection of the scrutiny.

ii) Notice u/s. 142(1) dated 07-01-2009 along with questionnaire calling certain information. AR attended and filed copy of Statement of Income, Balance Sheet, Profit and loss Account and Audit Report.

iii) Notice u/s. 142(1) dated 11-06-2009 was never served upon the appellant.

iv) Notice u/s. 142(1) dated 30-10-2009 was issued due to change of incumbent u/s. 120 of I.T. Act.

v) Notice u/s. 142(1) dated 19-11-2009 was issued and AR appeared before the assessee officer and sought time for furnishing details.

vi) The AR of the Appellant appeared on 26th November, 2009 and filed the requisite information before the Assessing Officer.

vii) The appellant further submit that except the above referred notices the appellant attended regularly and filed requisite details before the Assessing Officer and the assessment order is passed u/s. 143(3) of the I.T. Act, 1961.

04. The appellant placed reliance on the decision of the Hon'ble Delhi Tribunal in the case of Akhil Bhahtiya Prathmik Shikshak Sangh Bhavan Trust v/s Asst. Director of I. T.(2008) 115 TTJ 419(Delhi)

Held: Where Assessment was made u/s 143(3) and not u/s 144, it means that subsequent compliance in the assessment proceedings was considered as good compliance and the defaults committed earlier were ignored by the AO. Therefore, in such circumstances, there could have been no reason to come to the conclusion that the default was willful. CIT Appeal was, therefore, not right in upholding the levy of penalty.

05. Under this background the assessing officer has imposed penalty of Rs.50000/- u/s. 271(1) (b) of the Act, considering five defaults committed by the assessee.

ITA No.958/Ahd/2011 4 7. On the other hand, DR supported the orders of the lower authorities.

8. We find that in the similar circumstances, the Chennai Bench of the Tribunal, wherein one of us (N.S. Saini, Accountant Member) was a Member constituting the Bench, deleted penalty by order passed in the case of Sardarmal Kothari Vs. ACIT, in ITA No.210/Mds/2012 dated 8.3.2013, and has held as under:

"This is an appeal filed by the assessee against the order of Commissioner of Income Tax (Appeals)-IX, Chennai, dated 30.8.2012 for the Asst. Year 2009-10. The only grievance of the assessee in this appeal is that the Commissioner of Income Tax (Appeals) erred in confirming the penalty of Rs.10,000/- levied by the Assessing Officer under sec.271(1)(b) of the I.T. Act.

2. The Assessing Officer levied penalty of Rs.10,000/- under sec.271(1)(b) of the Act as the assessee did not respond to notices issued by him under sec.143(2) & 142(1) of the I.T. Act on three occasions, ie., on 2.9.2010, 8.9.2011 and 15.10.2011, fixing the dates of hearing on 20.9.2010, 12.9.2011 and 20.10.2011 respectively. Subsequently, the assessment was made under sec.143(3) of the Act wherein the assessee appeared and furnished information called for by the Assessing Officer. The assessee preferred appeal before the Commissioner of Income Tax (Appeals) against levy of penalty contending that no Show Cause Notice has been issued by the Assessing Officer before levy of penalty under sec.271(1)(b) of the Act.

3. The assessee contended that he has cooperated with the Assessing Officer by responding to the notices issued there after and the assessment was completed under sec.143(3) of the Act and, therefore, since he has cooperated with the assessment proceedings complying with the notices subsequently issued and since the assessment was made under sec.143(3) of the Act and it was not an ex-parte assessment under sec.144 of the Act, the Assessing Officer should not have levied penalty under sec.271(1)(b) of the Act. He placed reliance on the decision of Delhi Bench of the ITAT in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust v. Asst. Director of Income Tax (115 TTJ 419) and the decision of Ahmedabad Bench of the Tribunal in the case of Swarnaben M. Khanna & Others v. DCIT (132 TTJ 1). However, the Commissioner of Income Tax (Appeals) ITA No.958/Ahd/2011 5

confirmed the penalty levied by the Assessing Officer on the ground that the assessee did not respond to the notices issued by the Assessing Officer.

4. The Counsel for the Assessee reiterates the submissions made before the Commissioner of Income Tax (Appeals) and submits that there is no justification in levying penalty, especially when the assessment was made under sec.143(3) of the Act and not under sec.144 of the I.T. Act.

5. Departmental Representative supported the orders of lower authorities.

6. We have heard both sides. Perused the materials on record and the orders of authorities below. We have gone through the decisions relied on by the Counsel for the Assessee. In both these decisions, the Tribunal held that when an assessment has been made under sec.143(3) and not under sec.144 of the I.T. Act, it means that subsequent compliance in the assessment proceedings was considered as good compliance and the defaults committed earlier were ignored by the Assessing Officer and, therefore, there is no case for levy of penalty under sec.271(1)(b) of the Act. In the present case, the assessee seems to have co- operated with the assessment proceedings by responding to the notices and filing information called for and the assessment was completed under sec.143(3) and not sec.144 of the Act. Therefore, we hold that there is no case for levy of penalty under sec.271(1)(b) of the I.T. Act the assessee's case."

9. Respectfully following the above order of the Tribunal, we delete the penalty of Rs.50,000/- levied under section 271(1)(b) of the Act, and allow the appeal of the assessee.

10. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on Wednesday, the 4th March, 2015 at Ahmedabad.

Sd/- Sd/- (MUKUL KR. SHRAWAT) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 04/03/2015