TATER REALTY,MUMBAI vs. DCIT, CENTRAL CIRCLE 8(2) , MUMBAI

These appeals in to 1380/Mum/2022 for A.Yrs.2013-14 to 2018-19 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-50, Mumbai in appeal Nos.CIT(A)50, Mumbai /10103/2012-13, CIT(A)50, Mumbai/10455/2013-14, CIT(A)50, Mumbai/10998/2014-15, CIT(A)50, Mumbai/10719/2015-16, CIT(A)50, Mumbai/10553/2016-17 & CIT(A)50, Mumbai/10305/2017-18 dated 29/03/2022 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271 (1)(b) of the Income Tax Act, 1961 (hereinafter referred to as Act).

The only identical issue to be decided in these appeals is as to whether the ld. CIT(A) was justified in upholding the levy of penalty u/s.271(1)(b) of the Act for default in compliance with one notice issued by the ld. AO by the assessee in the facts and circumstances of the instant case.

We have heard rival submissions and perused the materials available on record. A search and seizure action u/.132 of the Act was carried out on 04/10/2018 at the office premises of M/s. Shine Shilpi Jewellers Pvt. Ltd., In the said search action, the assessee firm was also covered. Accordingly, notice u/s.153A of the Act was issued to the assessee on 23/11/2019. In response to the same, assessee filed return of income u/s.153A of the Act on 10/12/2019 declaring loss of Rs.7,76,788/-. Notice u/s.142(1) of the Act dated 20/02/2020 was issued and served on the assessee. There was no compliance made by the assessee to the said notice. However, later on, the assessee furnished all the requisite details before the ld. AO and ultimately the search assessment for A.Y.2013-14 was completed by the ld. AO u/s.153A of the Act on 27/05/2021. Penalty proceedings u/s.271(1)(b) of the Act was initiated on the assessee for default in compliance to statutory notice u/s.142(1) of the Act dated 20/02/2020. We find that all the details called for by the ld. AO in the notice u/s.142(1) of the Act dated 20/02/2020 were duly furnished by the assessee vide letter dated 18/03/2020 filed on 19/03/2020. Since there was a change of incumbent in the office, a separate notice u/s.129 and notice u/s.142(1) of the Act was issued to the assessee duly intimating the change of incumbent to the assessee. The assessee also filed further reply dated 07/01/2021 in response to various queries raised by the ld. AO from time to time. Further reply was also filed by the assessee vide letter dated 19/03/2021 before the ld. AO making both factual and legal submissions. Yet another reply was also filed by the assessee vide letter dated 20/04/2021 before the ld. AO in response to various queries raised during the course of assessment proceedings from time to time. All the aforesaid narration of facts conclusively prove that though there was initial non-compliance of statutory notice by the assessee, the same had been subsequently rectified by the assessee by furnishing various requisite details from time to time before the ld. AO which enabled the ld. AO to complete the assessment u/s.153A . Admittedly, the search assessment is not completed by the ld. AO u/s 144 of the Act. We find that assessee had explained before the ld. AO that in the notice u/s.142(1) dated 20/02/2020, the ld. AO had called for details with regard to 13 major points alongwith Annexures for seven years i.e. from A.Y.2013-14 to 2019-20. For submission of those details, the assessee was given only seven days time. Since, assessee could not gather the requisite details within the allotted seven days time, the assessee did not comply with the said notice on the appointed date. However, it is a fact on record that all the details called for by the ld. AO were subsequently filed by the assessee to enable smooth completion of assessment proceedings by the ld. AO. One more important fact which needs to be looked into is the assessee had duly complied with all the subsequent notices even during the Covid-19 pandemic. Considering the totality of facts and circumstances and the conduct of the assessee and also considering the fact that assessment has ultimately been completed u/s.143(3) r.w.s. 153A of the Act and not u/s.144 of the Act, we hold that this is not a fit case for levy of penalty u/s. 271(1)(b) of the Act as in our considered opinion, the assessee had adduced reasonable cause within the meaning of Section 273B of the Act. The subsequent compliance by the assessee in the assessment proceedings was considered as a good compliance and defaults committed earlier were ignored by the ld. AO. This is inferred from the fact that the ld. AO had in para 3 mentioned that assessee had filed submissions from time to time during the course of assessment proceedings. This goes to prove that the ld. AO was satisfied with the overall compliance made by the assessee during the assessment proceedings. Hence, we hold that assessee had adduced reasonable cause u/s.273B of the Act for non-levy of penalty u/s.271(1)(b) of the Act. Reliance in this regard is placed on the decision of the Co-ordinate Bench decision of Delhi Tribunal in the case of DLF Commercial Enterprises vs. ACIT in dated 16/02/2021. Similar ratio was also laid down by the Co-ordinate Benches of Delhi Tribunal in the case of Akhil Bhartiya Prathamik Shikshak Sangh Bhawan Trust Vs ADIT reported in 5 DTR 429; Globus Infocom Ltd., vs. DCIT in ITA No.738/Del/2014 dated 29/06/2016; Carreen Builders & Developers vs. DCIT in ITA No.5737/Del/2015 dated 20/09/2017.

The decision rendered hereinabove for A.Y.2013-14 shall apply mutatis mutandis for A.Yrs. 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19.

In the result, all the appeals of the assessee are allowed.