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Income Tax Appellate Tribunal, PUNE ‘A’ BENCH, PUNE
Before: SHRI SATBEER SINGH GODARA & SHRI G. D. PADMAHSHALI
बिधम / V/s Income Tax Officer (Exemption), Ward 1(1) Pune . . . . . . प्रत्यर्थी / Respondent द्वधरध / Appearances Assessee by : Mr. Kishor Phadke [‘Ld. AR’] Revenue by : Mr Ramnath Murkunde [‘Ld. DR’] सुनवाई की तारीख / Date of conclusive Hearing : 26/09/2023 घोषणा की तारीख / Date of Pronouncement : 26/09/2023 आदेश / ORDER PER G. D. PADMAHSHALI, AM; This bunch of four appeals of appellant assessee is directed against separate orders of National Faceless Appellate Centre, Delhi [hereafter ‘NFAC] dt. 12/07/2023, passed u/s 250 of the Income-tax Act, 1961 [hereafter ‘the Act’], which stemmed out of respective penalty orders dt. 30/08/2022 passed u/s 271(1)(b) of the Act by Income Tax Officer (Exemptions), Ward-1(1), Pune [hereafter ‘ITO’] for assessment year 2013-14 to 2016-17 [hereafter ‘AY’].
A common & sole issue of multiple levies of penalty u/s 271(1)(b) for non-compliance of notices issued u/s 142(1) arose in this bunch of appeals, at the request of rival parties hereof, these are taken up together for the sake of brevity and for a common & consolidated order.
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Gaurishankar Education Society, AY: 2013-14 to 2016-17 3. We shall first adjudicate ITA No 982/PUN/2023 as lead case, resultantly our adjudication laid hereafter in succeeding paragraphs shall mutatis- mutandis apply to ITA No 983 to 985/PUN/2023.
The long and short of the case is that; 4.1 The assessee is trust engaged in educational activities by running colleges etc., had failed its return of income [hereafter ‘ITR’] which was treated as defective/incomplete by the respondent Revenue.
4.2 On 02/05/2019 a survey action u/s 133A of the Act was carried on a third party namely ‘Gourishankar Education Charitable Trust’ [hereafter ‘GECT’], wherein it was discovered that, the appellant assessee was operating from premises of GECT with common trustees on board, had advanced an interest-free loan of ₹3.30Crores to GECT out of its interest bearing loans availed from various bankers etc.
4.3 In view of the Ld. National Faceless e-Assessment Centre [hereafter ‘NeAC’], the aforestated interest free loan advanced to GECT by the assessee was in the nature of direct/indirect benefit to the person referred in s/s (3) of section 13 of the Act, therefore assessment of the appellant was subjected to the provisions of section 13(1)(c)(ii) of the Act. On the forgoing reasoning, following due procedure of law, the case of the appellant was reopened, and assessee was called upon to file return of income within the period allowed under notice dt. 25/03/2021 u/s 148 of the Act.
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Gaurishankar Education Society, AY: 2013-14 to 2016-17 4.4 When the assessee failed to file its return of income in response to notice issued u/s 148 of the Act, the Ld. NeAC was put the assessee to further notices dt. 23/06/2021, 12/11/2021, 09/12/2021 and 27/12/2021 issued u/s 142(1) of the Act and directed to comply therewith. When aforestated notices remained unattended by the assessee, the Ld. NeAC after putting the assessee to ‘show cause’ has culminated the proceedings ex-parte to the best of his judgement and determined the total income at ₹3.30Crores by an assessment order dt. 16/03/2022 framed u/s 147 r.w.s. 144 r.w.s. 144B of the Act.
4.5 In view of the aforestated non-compliance, the assessee was put to final show cause notice dt. 10/08/2022 u/s 274 r.w.s. 271(1)(b) of the Act, and thereby granted an opportunity to explain the reasoning beyond its non- compliance. Upon effective failure of the appellant to show cause good, sufficient & reasonable cause beyond such non-compliance, the Ld. AO imposed a consolidate penalty of ₹50,000/- for the year under consideration computed @₹10,000/- per default for five such occasions.
4.6 Aforestated levy of penalty was unsuccessfully assailed before first appellate authority in an appeal; consequently the assessee came before the Tribunal in present appeals on the following grounds ; ‚1. The learned CIT(A) erred in confirming the penalty of Rs.50,000/- levied by A.O. u/s 271(1)(b) of the Act, without appreciating that the said levy of penalty was not justified on facts and in law.
2. The learned CIT(A) failed to appreciate the fact that there was a sufficient cause due to which the counsel of the appellant was unable attend the ITAT-Pune Page 3 of 6
Gaurishankar Education Society, AY: 2013-14 to 2016-17 proceedings on the date fixed and therefore, penalty cannot be sustained in the present case. 3. The appellant craves to leave, add, alter, amend and delete any of the above grounds of appeal
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5. During the course of physical hearing, the Ld. AR candidly solidified the facts of non-compliance and could hardly establish any reasonable cause there behind. However it is vehemently pleaded that, since appellant’s non- compliance is attributable to a single instance, therefore imposition of penalty against each of such multiple notices is illegal. Per contra the Ld. DR Mr Murkunde submitted that, the tax authorities below have rightly imposed and sustained the penalty for not complying with five notices issued, hence warranting no interference therewith. Thus relief prayed herein deserves to be dismissed.
6. After hearing to rival contention of both the parties; perused material placed on record and duly considered the facts of the case in the light of legal position. Here we note that, for the reasons of non-compliance to the notices issued u/s 142(1) of the Act neither party is in dispute over the legality of initiation and imposition of penalty u/s 271(1)(b) of the Act. The sole legal dispute is over the validity of multiple levy of penalty based on multiple notices issued u/s 142(1) of the Act which remained unattended.
The plain reading of applicable provision of clause (b) of s/s (1) of section 271of the Act revealed us that, ‘the assessee’s failure to comply with a notice under sub-section (2) of section 115WD or under sub-section (2) of ITAT-Pune Page 4 of 6
Gaurishankar Education Society, AY: 2013-14 to 2016-17 section 115WE or under sub-section (1) of section 142 or sub-section (2) of section 143 or fails to comply with a direction issued under sub-section (2A) of section 142, empowers the assessing officers to levy a sum of ten thousand rupees for each such failure by virtue of clause (ii) to section 271(1) of the Act. Now the words ‘for each such failure’ appearing in this applicable provision in our considered view is referred in context of five exclusive requirements viz; (i) notice u/s 115WD(2) calling upon to file return of FBT (ii) notice issued u/s 115WE(2) require production of evidence in support of FBT return filed (iii) notice u/s 142(1) requiring assessee either to furnish return or to produce accounts/documents or such information in connection therewith (iv) notice u/s 143(2) to produce evidence in support of return filed and (v) direction to get books audited u/s 142(2A) of the Act, etc. Since compliance of requirement could only be defaulted once, therefore consequential penalty u/s 271(1)(ii) could only be levied once, where such requirement is defaulted. It must be noted here that, during the course of assessment proceedings, for each of aforestated requirement, it may necessitate the assessing officer to issue either single or multiple notices whereby compliance is called for, this however by no means empowers the assessing officer to impose a penalty u/s 271(1)(b) for each and every notice issued which remained un-responded. Further since this provision is of deterrent nature and not for revenue earning, therefore it could only be imposed once for each of the default enumerated u/c (b) of section 271(1) of the Act, irrespective of number of notices issued remained unattended.
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Gaurishankar Education Society, AY: 2013-14 to 2016-17 8. We find our this view fortified by the Co-ordinate bench in ‘Smt. Rekha Rani Vs DCIT [2015] 60 taxmann.com 131 wherein the was held that, the penalty u/s 271(1)(b) of the Act can only be imposed once and cannot be imposed for each and every notice issued which remained not complied with on the part of the assessee.
In the light of foregoing discussion and following the principle of parity (supra), in this view of the matter, the imposition of single penalty ₹10,000/- u/s 271(1)(b) of the Act for failure to comply with the requirement sought by notice u/s 142(1) of the Act for the AY 2013-14 is sustained balance penalty of ₹40,000/- stands deleted. The ground of appeals is thus stands partly allowed.
In result, all four appeals of the assessee are PARTLY ALLOWED. U/r 34 of ITAT Rules, order pronounced in open court on this Tuesday 26th day of September, 2023.
-S/d- -S/d- SATBEER SINGH GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; ददनाांक / Dated : 26th day of September, 2023. आदेश की प्रनिनलनप अग्रेनषि / Copy of the Order forwarded to : 3. The CIT(A)-NFAC, Delhi (India) 1.अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 4. The CIT, Concerned 5. DR, ITAT, Bench ‘A’, Pune 6. गार्डफ़ाइल / Guard File. Ashwini आदेशानुसार / By Order वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्यायादधकरण, पुणे / ITAT, Pune.
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