LAXMI DEVI AGARWAL,JAIPUR vs. INCOME TAX OFFICER, WARD-3-1, JAIPUR

During the course of hearing, the ld. AR submitted that the assessee has disputed the service of the notice u/s 142(1) of the Act in respect of which the penalty u/s 271(1)(b) has been levied by the Assessing Officer. It was further submitted that the assessee has also challenged the service of the notice u/s 148 in the quantum proceedings and the appeal is pending adjudication before the ld. CIT(A). It was accordingly submitted that the matter may be set aside to the file of ld. CIT(A) to decide the same after adjudication of the appeal in the quantum proceedings. 2 Laxmi Devi Agarwal, Jaipur Vs. ITO, Ward 3(1), Jaipur 3. Per contra, the ld. DR submitted that the present appeal has been filed by the assessee against the levy of penalty u/s 271(1)(b) of the Act and is not consequential and dependent on outcome of the quantum proceedings which the ld. AR claims to the pending adjudication before the ld. CIT(A). On merits, She has relied on the findings of the lower authorities and submitted that once the notice issued u/s 133(6) has been received by the assessee which was served at the same address at which the notice u/s 142(1) has been issued by the Assessing Officer, the contention of the assessee cannot be accepted where she claims that that the notice u/s 142(1) has not been received by the her due to incorrect address.

We have heard the rival submissions and pursued the material available on record. We find that the assessee is in appeal against the order passed by the Assessing Officer u/s 147 read with section 144 dated 08.12.2016 and appeal has been filed before the ld. CIT(A) on 21.07.2017. On the same date, two more appeals have been filed namely, appeal against the levy of penalty u/s 271(1)(c) vide order dated 15.06.2017 and another appeal against the levy of impugned penalty u/s 271(1)(b) of the Act vide order dated 15.06.2017. Therefore, it appears that though all the appeals have been filed before the ld. CIT(A) on 21.07.2017, the appeal of the assessee in context of penalty proceedings u/s 271(1)(b) has been decided by the impugned order and the other two matters are pending adjudication before the ld. CIT(A).

The ld. AR has stated at the Bar that in the quantum appeal, the assessee has also challenged the service of the notice u/s 148 of the Act. A question which may arise for consideration is where the matter relating to non- service of notice u/s 148 is finally decided in favour of the assessee resulting in quashing the whole of the reassessment proceedings, whether the impugned penalty proceedings arising out of the said reassessment proceedings can still survive. Therefore, we find that the outcome of the appeal in the quantum proceedings, which apparently is pending adjudication before the ld CIT(A), 3 Laxmi Devi Agarwal, Jaipur Vs. ITO, Ward 3(1), Jaipur may have a bearing on the impugned matter and ideally speaking, appeal in quantum proceedings should have been decided first or along with the present penalty appeal. We therefore agree with the contention of the ld AR and deem it appropriate that the matter is set aside to the file of the ld. CIT(A) who shall decide the same afresh as per law taking into consideration the final outcome of the appeal in the quantum proceedings after providing reasonable opportunity to the assessee.