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Income Tax Appellate Tribunal, “F” BENCH MUMBAI
PER KAVITHA RAJAGOPAL: This appeal has been filed by the assessee as against the order of the learned Commissioner of Income Tax (Appeals)-53, Mumbai [hereinafter referred to as “CIT(A)”] confirming the penalty of Rs.10,000/- u/s 271(1)(b) of the Income Tax Act,1961 (hereinafter referred to as “the Act”) vide order dated 15.11.2018 pertaining to assessment year 2013-14.
P a g e | (A.Y.2013-14) Mr. Uttamchand Sawlachand Jain 2. Briefly stated the assessee has filed his return of income dated 13.09.2013 declaring total income of Rs.3,16,354/- and the assessee’s case was selected for scrutiny and notice u/s 142 (1) dated 01.07.2015 was issued and served on the assessee on 08.07.2015. The assessee vide submission dated 22.09.2015 to the Assessing Officer (AO) has confirmed the said service of notice and had sought an adjournment vide letter dated 17.07.2015. It is observed that the assessee has not responded to the AO subsequent to the adjournment letter 17.07.2015 even after the expiry of 2 months. Consequentially, the AO initiated penalty proceedings u/s 271(1)(b) of the Act and show-cause notices dated 08.09.2015 and 11.12.2015 were sent and the same was returned back unserved by the postal authorities. Subsequent to this the AO issued another notice dated 04.01.2016 and the same was served by affixture at the last known address of the assessee. The AO levied penalty of Rs.10,000/- u/s 271(1)(b) of the Act vide order dated 11.03.2016 for non compliance to notice u/s 142 (1). The assessee was in appeal before the learned CIT(A) on the ground that due to change of business address of the assessee from ‘81/83, 3rd Kumbharwada Lane, Dr. P a g e | (A.Y.2013-14) Mr. Uttamchand Sawlachand Jain M.G. Mahimtura Marg, Mumbai-400 007’ to the address ’49, M.S. Ali Road, Ground Floor 12th Khetwadi Lane Corner, Mumbai-400 007’, the notice was not served upon the assessee and further, the assessee contended that vide letter dated 10.07.2015 the change of address was informed to the AO. The learned CIT(A) confirmed the penalty order of the AO on the ground that the assessee in spite of notice sent to both old as well as new address during the appellate proceedings did not participate in the appeal proceedings. Further, the learned CIT(A) stated that the address associated with the PAN of the assessee continues to be old address and assess has failed to update its new address in the income tax records. The assessee aggrieved by the order of the learned CIT(A) is in appeal before us.
The learned Authorised Representative (AR) for the assessee contended that the change of address was communicated to the AO as well as to the learned CIT(A) and that the reason for non compliance before the AO was neither wanton nor intentional. The learned AR relied on the decision of the Tribunal in the case of Balram Kumar Mahendra Vs. ITO (2012) 21 taxmann.com 222 (Delhi), and M/s. Sun P a g e | (A.Y.2013-14) Mr. Uttamchand Sawlachand Jain Infrastructure Pvt. Ltd. Vs. ACIT to 3017/PUNE/2017. The learned AR also relied on the decision of the Hon’ble Apex Court in the case of Hindustan Steel Ltd. Vs. State of Orissa (1972) 83 ITR 26 (SC). The learned DR on the other hand relied on the decision of the lower authorities.
Having heard the rival submission and perused the materials on record, it is observed that the assessee has recalled an ex parte order passed by the Tribunal vide order dated 26.02.2020. It is evident that the assessee has communicated the change of address of the assessee’s business premises before the lower authorities which fact has not been controverted by the Revenue. It is also observed that the quantum proceeding is also pending before the learned CIT(A). The assessee has submitted the letter communicated to the AO pertaining to the change of address of business premises. From this it is evident that the assessee’s non compliance to the section 142(1) notice issued by the AO is due to reasonable cause and has not intentionally avoided the assessment proceedings. We would like to place our reliance on the decisions cited by the assessee in the case of Balram Kumar Mahendra Vs. ITO (supra) which P a g e | (A.Y.2013-14) Mr. Uttamchand Sawlachand Jain held that penalty cannot be levied u/s 271(1)(b) unless the assessee has deliberately failed to carry out the statutory obligation which is casted upon under provisions of law. The relevant extract of the said decision is cited here under for ease of reference: “Under such circumstances, rigours of penalty u/s 271(1)(b) are not attracted in the case of the assessee. In this regard, we place reliance from the apex court decision rendered by a larger Bench comprising of three of their Lordships in the case of Hindustan Steel Ltd. Vs. State of Orissa (1972) 83 ITR 26 (SC) wherein it was held that (headnote) “an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the P a g e | (A.Y.2013-14) Mr. Uttamchand Sawlachand Jain provisions of the Act, or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statue.”
From the above observations and by respectfully following the decisions cited above we find that there was reasonable cause for the assessee in not complying with notice issued by the AO and the same is covered under the provisions of section 273B of the Act which provides that penalty u/s 271(1)(b) need not be imposed if there is reasonable cause for the failure of the assessee to comply with the provisions of section 271(1)(b). We therefore delete the penalty imposed by the AO and confirmed by the CIT(A).