SHRI CHOUTH MAL SHARMA,GRAM NINDAR, TEHSIL AMER, JAIPUR vs. INCOME TAX OFFICER, WARD-7(4), JAIPUR

PER VIJAY PAL RAO, JM :

This appeal by the assessee is directed against the order dated 24th January,

2018 of ld. CIT (A)-3, Jaipur arising from penalty order passed under section

271(1)(b) of the I.T. Act for the assessment year 2009-10. The assessee has raised

the following grounds :-

“ 1. The ld. CIT (A) has erred on facts and in law in confirming the levy of penalty of Rs. 20,000/- u/s 271(1)(b) of the IT Act, 1961.

2 ITA No. 311/JP/2018 Shri Chouth Mal Sharma, Jaipur.

of information received from Sub Registrar about the sale of agricultural land. The

notice issued under section 148 was served through affixture. Thereafter, notice under section 142(1) was issued on 30th April, 2014. Since there was no response

and compliance on behalf of the assessee to the notices issued by the AO,

accordingly the AO framed the assessment under section 147 read with section 144 of the IT Act on 23rd January, 2015 and initiated penalty proceedings under section

271(1)(b) by issuing a notice on 15.07.2015. The AO levied penalty of Rs. 10,000/-

each for failure on notices issued under section 148 and 142(1) of the Act total amounting to Rs. 20,000/- vide order dated 31st July, 2015. The assessee

challenged the action of the AO before the ld. CIT (A) but could not succeed.

section 271(1)(b) can be imposed by the AO if he is satisfied that any person failed

to comply with the notice under section 142(1) or under section 143(2) or directions

issued under section 142(2A) of the Act. Therefore, no penalty can be levied under

section 271(1)(b) for non compliance of notice issued under section 148. Hence, the

ld. A/R has submitted that the penalty levied by the AO of Rs. 10,000/- for non

compliance of notice under section 148 is not valid as the provisions of section

271(1)(b) cannot be invoked. He has referred to the provisions of section 271(1)(b)

and submitted that it stipulates the levy of penalty on account of failure or non

compliance of assessee to the notice under section 142(1) or section 143(2) or

section 142(2A) of the Act. As regards the non compliance of notice issued under

3 ITA No. 311/JP/2018 Shri Chouth Mal Sharma, Jaipur.

section 142(1), the ld. A/R of the assessee has submitted that since the assessee

shifted his residence from the place as given in the Sale Deed, therefore, the notices

issued by the AO could not be served on the assessee. The assessee in the

appellate proceedings furnished the relevant documents to show that the assessee

shifted his residence at Jhotwara and, therefore, in the absence of service of notice

issued by the AO, the assessee could not comply with the notice under section

142(1). He has also referred to the decision of this Tribunal in assessee’s own case

dated 20.11.2017 in quantum proceedings against the ex parte assessment passed

by the AO and submitted that the Tribunal has set aside the matter to the record of

the AO for deciding the same denovo as per law. Hence, the ld. A/R has pleaded

that the penalty levied by the AO under section 271(1)(b) may be deleted/cancelled.

3.1. On the other hand, the ld. D/R has submitted that despite repeated notices

the assessee did not respond and appear in the assessment proceedings. Even in

the penalty proceedings, nobody has appeared on behalf of the assessee and there

is a report of the Inspector that the assesssee refused to receive the notice. She

has further pointed out that the AO has levied the penalty for non compliance of

statutory notice under section 142(1) as well as other show cause notice issued by

the AO, therefore, it is not the case for levy of penalty for non compliance of notice

under section 148 only but since the assessee has not complied with the notice

issued under section 142(1) and other show cause notices, therefore, the AO has

imposed the penalty of Rs. 20,000/-. She has relied upon the orders of the

authorities below.

4 ITA No. 311/JP/2018 Shri Chouth Mal Sharma, Jaipur.

record. The assessee is not regularly assessed to tax. Since the assessee has sold

the ancestral agricultural land during the year relevant to the year under

consideration, therefore, as per the information received from the Sub Registrar, the

AO issued notice under section 148 of the Act. The AO has recorded in the order

that the notice issued under section 148 was served through affixture as the

assessee was not available at the place of address. Further, the notice issued under

section 142(1) was also not served on the assessee and, therefore, there was no

compliance by the assessee to the notice issued under section 142(1). The

assessment was framed under section 147 read with section 144. Even during the

penalty proceedings, none has appeared on behalf of the assessee and the AO has

stated in the order that the notice was refused to be received. Even the Inspector

also reported that assessee has refused to take notice though none of the reports of

the Postal Authorities or the Inspector has stated that the assessee was available at

the place and assessee refused to receive the notice. Therefore, the assessee has

explained the fact that he has shifted his place of residence and, therefore, he could

not receive the notice issued by the AO. The assessee has given the current address

at 88, Ram Nagar – B, Jhotwara, Jaipur. We find that the current address of the

assessee is mentioned in the order of the Tribunal in quantum appeal No.

530/JP/2017. As regards the penalty levied by the AO of Rs. 10,000/- for non

compliance of notice under section 148, we find that the provisions of section

271(1)(b) cannot be invoked for non compliance of notice under section 148. The

AO while passing the order under section 271(1)(b) has observed as under :-

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“ In such facts and circumstances I am satisfied that the assessee is liable to be penalized u/s 271(1)(b) of the I.T. Act, 1961 for non compliance of statutory notice issued u/s 148/142(1) and show cause notice issued of the I.T. Act, 1961 issued by this office on 31.05.2013, 30.04.2014.”

Thus it is clear that the AO has levied the penalty @ Rs. 10,000/- each for non

compliance of notices under section 148/142(1) of the Act. As it is clear from the

provisions of section 271(1)(b) that this provision can be invoked only for non

compliance of notice under section 115WD(2) or section 115WE(2) or section 142(1)

or 143(2) or directions issued under section 142(2A) of the Act, therefore, other

than the default committed by the assessee specified in the clause (b) of section

271(1) the non compliance to the other notices or directions would not attract the

penalty under section 271(1)(b) of the Act. Accordingly, the penalty levied under

section 271(1)(b) for non compliance of notice under section 148 is not valid and the

same is deleted.

142(1), we find that the assessee was not served with any of the notices issued by

the AO due to the change of address and since the assessee has not filed any return

of income, therefore, the AO was not having the present address of the assessee.

Hence when the notice issued under section 142(1) was not served upon the

assessee, and the AO has not conducted further enquiry regarding the current

address of the assessee then in the facts and circumstances of the case that the

assessee had already furnished the current address in the quantum proceedings, we

find that the reasons explained by the assessee are bonafide and reasonable.

6 ITA No. 311/JP/2018 Shri Chouth Mal Sharma, Jaipur.

Accordingly, in the facts and circumstances of the case, we delete the penalty

imposed under section 271(1)(b) of the Act for non compliance of section 142(1).

Order is pronounced in the open court on 05/07/2018.

Sd/- Sd/- (foØe flag ;kno) (fot; iky jkWo ½ (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Jaipur Dated:- 05/07/2018. Das/

आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

7 ITA No. 311/JP/2018 Shri Chouth Mal Sharma, Jaipur.