SANSKRUTI MEGA STRUCTURE PVT. LIMITED,SURAT vs. DCIT, CENTRAL CIRCLE-2(1)(2), SURAT

Assessee by Shri Pragnesh Jagasheth – CA Revenue by Ms. Anupma Singla – Sr. DR Date of hearing 18.05.2021 Date of pronouncement 19.05.2021 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the orders of ld. Commissioner of Income tax (Appeals)-2, Surat, dated 26.11.2017, for assessment year (AY) 2014-15. The assessee raised the following grounds of appeal: “1. On the facts and in the circumstances of the case as well as law on the subject, the learned commissioner of the Income Tax (Appeals) has erred in confirming the action of the assessing officer in levying penalty of Rs.10,000/- u/s.271(1)(b) of the Income Tax Act, 1961.

2. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper.

3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.”

2. Brief facts of the case are that during the assessment proceedings for assessment year (AY) 2014-15, the Assessing Officer (AO) issued notice under section 142(1) of the Act on 11.08.2016 along with certain questionnaires. The AO noted that the assessee has debited an amount of Sanskruti Mega Structure Pvt. Ltd., (AY 2014-15) Rs. 73,388/- on account of interest on TDS, the amount debited was not related to the business expenses and were penal in nature and thus not allowable as business expenses. The assessee appeared through his representative and suo moto offered Rs.73,388/-, on account of interest on TDS. Therefore, the assessee suo moto offered the amount for taxation. No other addition except the suo moto income offered by assessee was made in the assessment order passed under section 143(3) of the Act on 15.12.2016. The AO vide his separate order dated 25.07.2016, levied penalty under section 271(1)(b) of the Act of Rs.10,000/- for non- compliance of notice under section 142(1) of the Act dated 13.06.2016. The AO recorded that assessee has not furnished any reply to the show cause notice. The AO levied penalty of Rs.10,000/- vide order dated 25.07.2016. Aggrieved by the penalty under section 271(1)(b) of the Act, the assessee filed appeal before the ld.CIT(A) on 11.09.2016. The ld.CIT(A) dismissed the appeal of assessee by taking view that despite fixing appeal for hearing on three (03) occasions that is on 21.09.2017, 30.11.2017 and 21.12.2017, the assessee neither made compliance nor availed any further opportunity. The ld.CIT(A) by referring several decisions dismissed the appeal for non-prosecution by taking view that assessee is not interested in the appeal. Further aggrieved, the assessee has filed present appeal before this Tribunal.

3. We have heard the submission of ld. Authorised Representative (AR) of the assessee and ld. Departmental Representative (Sr. DR) for the Revenue and perused the order of Lower Authorities. The AR of the assessee Sanskruti Mega Structure Pvt. Ltd., (AY 2014-15) submits that the ld.CIT(A) dismissed the appeal for non-prosecution and no order was passed on merit. The AR submits that instead of going into any controversy that if any notice for hearing was received or no by the assessee, the assessee may be given one more opportunity to represent his case before ld CIT(A).

4. On merit, the learned AR of the assessee submits that in the assessment order, the AO has mentioned that notice under section 142(1) of the Act was issued on 11.08.2016. The assessee complied with the questionnaires issued by the AO. The AO suo moto offered the income of Rs.73,388/-, and it was added by the AO in the total income of assessee. No other addition was made. The AO in the assessment order nowhere recorded that there was any non-compliance by the assessee of any notice issued by the AO. In the penalty order, the AO levied penalty for non-compliance of notice dated 13.06.2016. There is no reference in the assessment about the notice dated 13.06.2016. The learned AR for the assessee submits that the order passed by the ld.CIT(A) is invalid due to conflicting dates mentioned in the assessment order and in penalty order under section 271(1)(b). Even otherwise, the assessee has not defaulted in making compliance of notice of AO, the assessee has made honest compliance of the notices issued by the assessing officer.

5. On the other hand, the Sr. DR for the Revenue submits that though the ld. CIT(A) has not adjudicated the appeal on merit and the matter may be restored to the file of ld.CIT(A) to adjudicate the issue on merit. On the objection of the learned AR of the assessee that penalty order is invalid Sanskruti Mega Structure Pvt. Ltd., (AY 2014-15) due to conflicting date mentioned in the assessment order and the penalty order under section 271(1)(b) of the Act. The ld.Sr.DR would submit that while adjudicating the appeal on merit, the ld.CIT(A) will examine the record about the conflicting dates. It may be that the assessee may not have complied with the notice dated 13.06.2016, which may not have referred by AO in the assessment order.