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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI & SHRI SANDEEP SINGH KARHAIL
The present appeal has been filed by the assessee challenging the impugned order dated 21/02/2023, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2010-11, which in turn, arose from the penalty order dated 24/05/2018, passed by the Assessing Officer (“AO”) under section 271(1)(b) of the Act.
In this appeal, the assessee has raised the following grounds:-
Milan Shantilal Mehta ITA no.1199/Mum./2023 “1. Penalty order passed by the learned lower authorities are bad in law and bad in facts.
2. The learned lower authorities have grossly erred in levying / confirmity penalty u/s 271 (1) (b) of the I.T.Act 1961 at Rs. 10,000/- Reasons assigned for imposition of impugned penalty are wrong and contrary to the evidence on record.
3. The learned lower authorities have grossly erred in charging/ confirming imposition of penalty at Rs. 10,000/- without considering the 3 explanation of the appellant and without appreciating the fact that appellant in fact had appeared before the Assessing officer in response to show cause notice.
4. Having regard to facts of the case, provisions of law and judicial propositions, the levy of impugned penalty at Rs. 10,000/- is wholly unjusticiable and unlenable in law.
5. The appellant may please be permitted to raise any additional or alternative ground on or before hearing of appeal.”
The only grievance of the assessee is against the levy of penalty under section 271(1)(b) of the Act.
We have considered the submissions of both sides and perused the material available on record. The brief facts of the case, as emanating from the record, are that the assessee filed his original return of income on 15/10/2010, declaring a total income of Rs. 1 lakh. The return filed by the assessee was processed under section 143(1) of the Act. On the basis of the information received from DGIT (Investigation), Mumbai that the assessee is part of a complex transfer transaction between a group of accounts wherein funds were transferred/rotated through RTGS/clearing/DMAT/pay order on the same day, and an amount of Rs. 1,61,19,082, in assessee’s bank account has remained unexplained and unaccounted, the proceedings under section 147 of the Act were initiated and notice under section 148 of the Act was issued. Subsequently, statutory notices under section 143(2) and section 142(1) of Milan Shantilal Mehta ITA no.1199/Mum./2023 the Act were issued to the assessee with a request to attend the reassessment proceedings. However, the assessee could not comply with the same. The assessee also did not comply with the notices issued thereafter. Accordingly, the Assessing Officer (“AO”) vide order dated 27/11/2017, passed under section 144 read with section 147 of the Act concluded the assessment and added the amount of Rs. 1,61,19,082, to the total income of the assessee as undisclosed income.
Since the assessee did not comply with the notice issued under section 142(1) of the Act, the AO initiated penalty proceedings under section 271(1)(b) of the Act and issued notice under section 274 read with section 271(1)(b) of the Act. Neither the assessee attended the said notice nor filed any reply thereto. Accordingly, vide order dated 24/05/2018, passed under section 271(1)(b), the AO levied a penalty of Rs. 10,000 on the assessee due to failure on the part of the assessee to comply with the notices issued under section 142(1) of the Act.
Before the learned CIT(A), the assessee submitted that the assessee appeared before the AO on 15/12/2017, and also filed a written reply to the notices issued during the assessment proceedings. However, the same was completely ignored by the AO and the assessment order was passed under section 144 read with section 147 of the Act. The learned CIT(A), vide impugned order, without controverting the aforesaid fact dismissed the appeal filed by the assessee against the penalty order passed under section 271(1)(b) of the Act, since the assessee could not respond to notices of hearing. The learned Authorised Representative (“learned AR”) submitted that since the Page | 3
Milan Shantilal Mehta ITA no.1199/Mum./2023 notices of hearing issued by the learned CIT(A) were not received, therefore, the assessee could not attend to the same. In the present appeal, the assessee is duly represented by the learned AR and wishes to pursue the litigation against the penalty levied by the AO. Therefore, in light of the uncontroverted fact as noted above, we are of the view that the penalty under section 271(1)(b) is unsustainable in the peculiar facts of the present case. Thus, the AO is directed to delete the penalty of Rs.10,000, levied under section 271(1)(b) of the Act. As a result, the grounds raised by the assessee are allowed.
In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 17/07/2023