SAMIKSHA GOUR,UDAIPUR vs. INCOME TAX OFFICERS WARD2(2), UDAIPR, UDAIPUR

Appellant) : Respondent) Appellant /Assessee by : Shri Ashok Kumar Gupta, AR Revenue / Respondent by : Shri Leyaqat Ali Aafaqui- Sr. DR Date of Hearing : 22.04.2025 : 28.04.2025 Date of Pronouncement O R D E R Per Padmavathy S, AM:

This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi [In short 'CIT(A)'] dated 15.01.2025 for AY 2016-17. The assessee raised the following grounds of appeal:

1. The impugned penalty order u/s 271(1)(b) dated 25-10-2023 as well as notices are bad in law and on facts of the case, being barred by limitation, for want of jurisdiction and various other reasons and hence the same may kindly be quashed.

2. Rs.20.000/- The Id. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the penalty of Rs. 20,000/- imposed by the id. AO u/s 271(1)(b) of the Act, Samiksha Gour also erred in not considering the request and material available on record. Hence the penalty so Imposed by the AO and confirmed by the Id. CIT(A) is totally contrary to the provisions of law and facts on the record and hence the same may kindly be deleted in full.”

2. The assessee is an individual and did not file the return of income for the year under consideration. Based on the information received from DDIT(Inv.), the Assessing Officer (AO) noticed that the assessee has received a sale consideration of Rs. 31,65,137/- from the sale of alleged penny stock M/s Appu Marketing & Manufacturing Ltd. The AO issued various notices to the assessee and based on the details furnished by the assessee, the AO completed the assessment under section 147 of the Income Tax Act, 1961 (the Act) by making an addition of Rs. 17,17,370/- as unexplained income in the hands of the assessee. The AO subsequently initiated penalty proceedings under section 271(1)(b) of the Act for the reason that the assessee did not respond to the notices under section 143(2) and 142(1) both dated 31.03.2023. The AO imposed a penalty of Rs. 20,000/- by passing order under section 271(1)(b) of the Act. On further appeal, the CIT(A) confirmed the penalty. Aggrieved by the order of the CIT(A), the assessee is in appeal before the Tribunal.

3. We heard the parties and perused the material on record. We notice from the perusal of the assessment order that the AO in the order has tabulated the various notices issued and the response filed by the assessee as extracted below: Type of Date of Date of Response Date of Response Remarks notice/comm notice/comm compliance of the response (if type (if any) unication unication given assessee received) (full/part/ received / adjourn not ment) received Notice U/s 24/01/2023 08/02/2023 Received 23/02/2023 Part NA 142(1) Notice U/s 31/03/2023 05/04/2023 Not NA NA NA 143(2) Received Notice U/s 31/03/2023 05/04/2023 Not NA NA NA 142(1) Received Show cause 02/05/2023 08/05/2023 Received 08/05/2023 full NA notice send Samiksha Gour 4. From the perusal of the above, it is clear that the assessee though has not filed any response to two notices issued on 31.03.2023, has made full compliance of the show-cause notice dated 02.05.2023. During the course of hearing the ld. AR submitted that in assessee's case the AO has not passed order under section 144 thereby ignoring the non-compliance of the earlier notices dated 31.03.2023 and has considered the compliance made to the notice issued on 02.05.2023 for the purpose of passing order under section 147. We notice from the perusal of the AO's order that the said contention is well substantiated. The ld AR also made an alternate plea that the impugned notice under section 143(2) dated 31.03.2023 was not served on the assessee and in this regard drew our attention to the copy of order-sheet noting from the e-proceedings. It is a settled legal position that where the assessment is not completed under section 144 of the Act, then it would mean that the subsequent compliance by the assessee has been considered by the AO and that the same would amount to good compliance where no penalty can be levied under section 271(1)(b) of the Act. The facts in assessee's case is that the assessee has submitted the relevant details by way of response to the notice which has been duly considered by the AO while passing the order under section 147 of the Act. Therefore in our considered view, considering the facts, the alleged non-compliance warranting levy of penalty under section 271(1)(b) of the Act is not sustainable. Accordingly we direct the AO to delete the penalty levied under section 271(1)(b).