Suresh M. Bajaj, New Delhi vs Assessee

Suresh M. Bajaj ITO R-289C, Greater Kailash-1 Ward-33(4) New Delhi vs New Delhi AADPB7622G (APPELLANT) (RESPONDENT)

Appellant by Sh. S.C. Malhotra, CA Respondent by Sh. Robin Rawal, JCIT

Date of Hearing 23.06.2015 Date of Pronouncement 29.06.2015 ORDER PER S. V. MEHROTRA, AM

This is an appeal filed by the assessee against the order of CIT(A) XIX, New Delhi dated 31/10/2013 in Appeal No. 249/2013-14 for Assessment Year 2005-06.

2. Brief facts of the case are that assessment was completed u/s 144 at an income of Rs. 5,47,470/- as against return income of Rs. NIL. The Assessing Officer levied penalty u/s 271 (1) (b) of Rs. 40,000/- observing as under:-

" During the course of assessment proceeding notice u/s 143(2) was issued and served upon the assesses. In response to which the assess/the A.,R of the assesses has not attended the office. A fresh notice u/s 143(2) and notice u/s 142(1) along with questionnaire was issued on 22/4/2009 fixing for 4/5/2009 served upon the assessee. None attended on 4/5/2009. Again a fresh notice u/s 142(1) was issued on 24/6/2009. Nor any reply filed by the assesseee. Again notice u/s 142(1) was issued on 6/10/2009 fixing the case of 14/10/2009 again non attended on 14/10/2009 or any reply filed by the assessee. Final notice u/s 143(2) was again issued on 20/11/2009 for 2 ITA No. 782/Del/14

26/11/2009 again none attended on 26/11/2009 or any replied filed by the assessee. Since the assesse has not complied with the statutory notice issued on different dates and failed to attend the office on the dates as per notice issued from time to time. It was held that the assessee has committed the default as per provision of Section 271 (1) (b) of the I.T. Act and penalty proceeding were initiated vide notice dated 18/12/2009 for fixing the case of 16/1/2010."

3. Ld. CIT(A) after considering the assessee's explanation deleted the penalty with reference to non-compliance of notice dated 6th October 200. However, confirmed the penalty apropos three other notices which were not complied by the assessee. Ld. Counsel for the assessee filed before me written submissions in regard to proceedings on the issue which are reproduced here under:-

Shri Suresh M. Bajaj CHART OF PROCEEDINGS Date of Notice Date of Assessment Penalty Order Sheet Remarks hearing Order Order 22/4/2009 4/5/2009 Non attended Notice issued on On 22/4/2009entrry has The hearing was attended 22/4/2009 fixing the been made in the order and it was informed that hearing 4/5/2009 non sheet that non attended the case will be taken up attended. which is the date of issue later on. No entry in the of notice. However, no order sheet was made for entry has been made on date of hearing i.e. date of hearing i.e 4/5/2009.

4/5/2009 that non CIT(A) has not accepted attended. the above as Order sheet does not contain entry8. AS the appellant has not attended hearings on different dates, hence penalty imposed is in order. The fact is that usually hearings are not taken in April & May. 24/6/2009 7/7/2009 Non attended Notice issued on On 24/6/2009 entry has Letter dated 7/7/2009 was 24/6/2009. No reply filed been made in the order filed with a request for by assessee sheet that non attended adjournment of hearing. which is date of issue of Letter is in the Paper notice. However, no Book No. mention of the entry on date of hearing same has ben made in the i.e. 7/7/2009 has been order Sheet. made non-attended. CIT(A) has held that as AO has mentioned that no 3 ITA No. 782/Del/14

reply was filed therefore, the penalty imposed is confirmed. 6/10/2009 14/10/2009 Shri S. C. Malhotra, CA Notice issued on Present Shri S AC In the assessment order attended 6/10/2009 fixing the case Malhotra, CA sheet it is mentioned that on 14/10/2009 non Shri S C Malhotra , CA attended. attended whereas in penalty order it is written non attended. 20/11/2009 26/11/2009 Show cause notice Notice dated 20/11/2009 On 20/11/2009 entry has On inspection no service remained un-complied for 26/11/2009 issued non been made in the order of notice was found in attended. sheet that non attended assessment records. Vide which is the date of issue letter dated 17/11/2010 of notice. However, no request was made to entry has been made on supply the service of the date of hearing i.e notice. Certified copy of ;26/11/2009 that non the letter has been attended. supplied, ihowever, service of the same has not been supplied. Further 21-22/11/2009 were Saturday & Sunday and only 3 days were left for service as well as for attendance. Further there is no mention of non attendance in the Order Sheet. CIT(A) has confirmed penalty on the ground that sufficient opportunities were given hence penalty for non attendance is confirmed.

4. He further referred to the order-sheet contained at Page 5 to 6 of paper book and pointed out as under:-

"(i) On the date on which notice has been issued it is mentioned non attended.

(ii) There is no entry in the Order Sheet as to the proceedings on the dates fixed for hearing.

(iii) There is no mention of issue of show cause notice for imposing penalty u/s 271 (1) (b) of the Income-tax Act, 1961.

(iv) There is no entry as to the imposition of penalty u/s 271 (1) (b) of the Income-tax Act, 1961."

4 ITA No. 782/Del/14 5. He relied on the decision of Delhi ITAT in the case of DCIT VS. Mayawati (2010) 42 SOT 15 Delhi wherein it has been held that Assessing Officer will record proper entries about minutes of proceedings including invoking of any jurisdiction, exercise of any statutory power, issuing notice, fixing date of hearing, outcome of date of hearing and attendance. He further submitted that it is not a fit case for levy of penalty u/s 271 (1) (b) because AO has not recorded the proceedings in respect of the date fixed for hearing.

6. Ld. DR relied on the order of Ld. CIT(A) and submitted that Assessing Officer has recorded the order-sheet on the date of issuance of notice.

7. I have considered the submissions of both the parties and have perused the record of the case. I find considerable force in the submission of Ld. Counsel for the assessee that in the order-sheet noting there is no entry in respect of the date for which the notice had been issued. The relevant notings in the order sheet are as under:-

" 22/4/2009 None attended issue another notice. 24/6/2009 None attended issue another notice. 6/10/2009 None attended issue final notice. 19/10/2009 Present Shri S. C. Malhotra CA and sought adj.

Case adj to 28/10/2009 20/11/2009 None attended issue show cause notice."

8. As regards, the default in regard to notice dated 22nd April 2009 fixing 4th May 2009 as the date of hearing, Ld. Counsel has stated that the hearing was attended but no entry in the order sheet was made on 4th May 2009. Ld. Counsel submits that he personally attended and was informed that the cases will be taken later on, I find that the Assessing Officer has not made the relevant entries on 4/5/2009 fixed for hearing. Therefore, no adverse inference can be drawn against the assessee's submissions.

5 ITA No. 782/Del/14 9. On 24th June 2009, the AO had issued notice fixing the 7th July 2009 as the date of hearing. However, there is no order sheet noting on 7/7/2009. It is not clear as to how Assessing Officer recorded on 24th June 2009 itself regarding non- attendance of A/AR on 7th July. Further, the assessee has pointed out that letter dated 7th July 2009 was filed with the request for adjournment of hearing. Since, in the order-sheet, there is no entry on 7th July 2009, no adverse inference can be drawn against the assessee's plea of filing the adjournment application.

10. As regards, the notice issued on 20th November 2009 fixing 26th November 2009 as the date of hearing, the position is same as regard to order sheet noting as on earlier dates. Further, assessee's representative has pointed out that on inspection no service of notice was found in the assessment record; only certified copy of the letter has been supplied to the assessee. From the submissions, noted above it is evident that non-compliance on 24th November 2009 wason account of non-service of notice and not deliberate.

11. It is pertinent to note that before levying penalty u/s 271 (1) (b), the assessing officer should be satisfied that failure to comply with the notice was without reasonable cause. Unless the assessing officer has recorded basic entries on the date fix for hearing, it cannot be inferred that the assessing officer had acquired the requisite satisfaction as contemplated u/s 271 (1) (b). The penalty is not automatic which is evident from the term "may " used in the section. I, therefore, cancel the penalty of Rs. 30,000/- sustained by Ld. CIT(A).

9. In the result, the assessee's appeal is allowed.

The order is pronounced in the open court on 29th of June 2015.

Sd/-

(S. V. MEHROTRA) ACCOUNTANT MEMBER Dated:- 29 /06/2013 6 ITA No. 782/Del/14

*R. Naheed*

Copy forwarded to:

1. Appellant

2. Respondent

3. CIT

4. CIT(Appeals)

5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

Date

1. Draft dictated on 23.06.2015 PS

2. Draft placed before author PS 24.06.2015

3. Draft proposed & placed before the JM/AM second member

4. Draft discussed/approved by Second JM/AM Member.

5. Approved Draft comes to the .06.2015 PS/PS Sr.PS/PS

6. Kept for pronouncement on PS

7. File sent to the Bench Clerk .06.2015 PS

8. Date on which file goes to the AR

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

10. Date of dispatch of Order.

7 ITA No. 782/Del/14