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Income Tax Appellate Tribunal, [ DELHI BENCH “C”: NEW DELHI ]
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M.
This appeal is filed by Shri Gurmohan Singh, Prop. Of M/s. G. H. Associates, against the order passed by the ld. Commissioner of Income Tax (Appeals)–17, New Delhi, dated 28.08.2018, for assessment year 2006-07, wherein the penalty levied by the ld. Income Tax Officer, Ward : 33 (4), New Delhi, as per order dated 25.08.2014, under Section 271(1)(b) of the Income Tax Act, 1961 (the Act) of Rs.80,000/- was confirmed.
The assessee is aggrieved with that order and has preferred this appeal, raising following grounds of appeal:-
“1. That the Ld. Commissioner of Income Tax (A) has grossly erred in law as well as on facts in confirming penalty order u/s 271(1)(b) of the income Tax Act imposing the penalty of Rs.80,000/-. 2. The Ld. Commissioner of Income Tax (A) has passed the order without going through the facts and circumstances of the case and without giving reasonable and sufficient opportunity of being heard before passing the penalty order to the appellant. Page | 1
The Ld. CIT(A) while upholding the penalty levied u/s 271 (l)(b) of the Act has grossly erred in failing to appreciate that alleged notices were not served on the appellant and hence levying of penalty was unsustainable in law.
The appellant craves leave for addition, modification, alteration, amendment of any of the grounds of appeal. ”
3. Briefly stated the facts shows that the assessee furnished return of income on 30th July, 2006 declaring income of Rs. 1,01,557/-. Subsequently, notice under Section 148 of the Act was issued on 28th of March, 2013. In response to that notice on 16.12.2013 assessee submitted to take original return filed into cognizance. Assessee asked for the reasons recorded, which were supplied. In the reasons it was found that assessee has deposited cash of rs.13,18,455/- on 28.01.2006 in his bank account No. 1170 with Ramgarhia Co-Operative Bank Ltd. The assessee was asked to submit the documentary evidence about the source of cash. Assessee submitted that the bank account does not belong to the assessee as it has not done any transaction with that particular bank after 2002. It was stated that there was a fraud committed by somebody and assessee has filed Police complaint on 19.02.2014. Consequently, several opportunities were granted to the assessee. Assessee failed to reply the same on 8 different occasions. Ultimately, the Assessing Officer came to the conclusion that in the above bank account Rs. 16.94 crores are deposited, which includes cash deposit of Rs. 13,18,455/-. Assessing Officer noted that in the account opening form with the bank assessee has shown his business of trading and job work and fabrication of aluminum and steel. Assessee did not produce the books of accounts as well as other supporting materials. Therefore, assessee was questioned on several occasions, but no reply came forward and, therefore, the ld. Assessing Officer estimated 5% of the credit in the bank account other than cash amounting to Rs. 16,80,00,000/- and determined the income of Rs. 84,04,645/-out of the above unexplained deposit other than in cash. He further estimated the profit from regular business of Rs.2,50,000/-. A further addition of cash deposit of Rs. 13,18,455/- was made. Accordingly, total income of the assessee was assessed at Rs. 99,73,119/- by passing an order under Section 147 read with Section 144 of the Act on 2.03.2014.
4. As assessee did not appear on 8 different occasions in response to the notices issued, the learned AO initiated penalty proceedings under Section 271(1)(b) of the Act. In response to the penalty notices the assessee did not give any reason for non-compliance and, therefore, the Assessing Officer passed an order under Section 271(1)(b) of the Act on 25th August, 2014 levying penalty of Rs.80,000/- for 8 different occasions Rs.10,000/- for each default.
5. Against the above order of the levy of penalty, assessee preferred an appeal before the ld. CIT (Appeals). It was stated that the assessment order was passed under Section 144 of the Act and assessee has submitted the information. It was also prayed that the bank account of the assessee with the connivance of the bank has been mis-used by someone and, therefore, penalty should not have been levied. It was further stated that on 24.01.2014 it was stated that a Police complaint has also been filed on 189.02.2014 for these reasons. It was further stated that the assessee came to know about the misuse of his bank account only through the reasons recorded by the learned assessing officer therefore, assessee was unaware about those transaction and hence could not appear before the learned assessing officer. It was therefore stated that there was sufficient and reasonable cause for not attending/not complying the notices of the learned assessing officer. It was stated that there was no malafide intention of the assessee. No sooner did the assessee came to know about the deposit of cash in his bank account, he immediately approached the local police and lodged FIR. The ld. CIT (Appeals) rejected the contentions of the assessee and confirmed the penalty. Therefore, assessee is in appeal before us.
The ld. AR submitted that assessee is carrying on his business under the Proprietorship & style of M/s. G. H. Associates. He submitted that he has not operated the bank account for the last more than three years and, therefore; same was declared in-operative. He further stated that assessee is a senior citizen and, therefore, did not pay attention to the same. He suddenly came to know about the operation in his bank account by the notice of the Assessing Officer. On enquiry with the bank, he came to know that one Mr. Gurdev Singh, who has been alleged to authorize the bank account is operating the account. Therefore, assessee made Police complaint and lodged criminal complaint. As the assessee was busy in filing criminal complaint and FIR, the assessee could not appear before the Assessing Officer on 8 occasions. However, he submitted that when the assessee came to know about the above fraud, he immediately appeared before the Assessing Officer on 24.01.2014 and submitted the same facts. He submitted that on each of the occasion the assessee has sought an adjournment. He, therefore, submitted that there is no default on the side of the assessee. He submitted that assessee took reasons on 24.12.2013 before the Assessing Officer by filing the return of income in response to notice under Section 148 of the Act. He, therefore, submitted that Page | 3 even on 16.12.2013, he appeared before the ld. Assessing Officer. He further stated that the assessment order which is placed at page No. 16 of the paper book in the first paragraph itself does not mention that all these notices were in fact served on the assessee. It was stated that mere issuance of the notice could not be the basis for levy of the penalty under Section 271(1)(b) of the Act. He relied upon the several judicial precedents supporting the argument that the penalty should not have been levied as there is a sufficient cause/reasonable cause for nonappearance before the learned assessing officer.
The learned departmental representative vehemently supported the order of the lower authorities and stated that assessee has failed to appear before the learned assessing officer on eight different occasions and therefore the penalty has been levied of ₹ 80,000 u/s 271 (1) (b) of the act. It was further stated that the assessee has failed to show any sufficient or reasonable cause for such nonappearance before the lower authorities.
We have carefully considered the rival contention and perused the orders of the lower authorities as well as the paper book submitted by the learned authorised representative. The fact shows that starting from 2 May 2013 to 14 February 2014 the learned assessing officer fix the date of hearing on 18 different occasions and the assessee failed to comply with those notices and therefore the penalty u/s 271 (1) (b) of the act was levied of ₹ 80,000 for eight different defaults. In this case the fact shows that in response to notice dated 17/10/2013 assessee responded by seeking reasons recorded. Further with respect to notice dated 24 December 2013 wherein the date of hearing was fixed on 31st of December 2013 assessee complied with the requirement of the above notice by letter dated 7 January 2014. Further assessee filed an objection to the reopening of the assessment by letter dated 10 February 2014. It is also true that assessee has made representation before the assessing officer in the month of February 2014 that the bank account for which the reopening of the assessment has been made in case of the assessee has not operated by the assessee but was lying dormant for almost 3 years. It was further stated that somebody is misusing the bank account of the assessee. It was further informed to the assessing officer that assessee has filed a complaint in police about the fraud conducted on the assessee. These facts were stated before the assessing officer. The fact also shows that assessee is an individual is about 63 years and having a very meagre sources of the income. Further the learned assessing officer has mentioned in the penalty order that notices were issued to the assessee on 2 May 2013, 2 August 2013, 10 September 2013, 1 October 2013 and 17 October 2013 however it is disputed by the assessee that no such Page | 4 notices have been received by the assessee. Even otherwise the assessment order has been passed by the learned assessing officer u/s 144 of the income tax act. Further as the assessee itself has denied that he has entered into any such transaction of depositing some in cash or through clearing in his bank account for last two years naturally, assessee looking at his age as well as the smallness of the business, first approached the police authorities by making a complaint. In view of this we find that there is a sufficient and reasonable cause with the assessee, irrespective of the addition made in the assessment order, for failure to comply with the notices to appear before the learned assessing officer. In view of the above facts we allow the appeal of the assessee and direct the learned assessing officer to delete the penalty u/s 271 (1) (b) of the act of ₹ 80,000 levied by the learned assessing officer and confirmed by the learned CIT – A.
Accordingly appeal of the assessee is allowed. z Order pronounced in the open court on : 17/11/2021.