SHRI BALDEVBHAI BHIKHABHAI PATEL,SURAT vs. THE ADDL. CIT, RANGE-3, SURAT

H.I.T.A No.539/AHD/2015 fefkur aYIA.Y.:2006-07 Shri Baldevbhai Bhikhabhai Patel A-2, 503, Stuti Residency, Pal, Adajan, Surat PAN: ABTPP 7672 H 3dlalreff Appellant Vs. Addl: CIT , Range-3 Surat 4areff/Respondent Assessee_bY Revenue by Date_of hearing Date of pronouncement None, but written submissions filed Shri 0_ P_ Meena. Sr. D.R. 24.01.201 8 25.01.201 8 ORDER Per OPMeena_AM 1. This appeal by the assessee is directed against the order of the learned Commissioner of Income-tax (Appeal)-Il, Surat (in short the CIT (A)) dated 16.12.2014 whereby penalty of Rs.10,000 / - levied under section 271(1Jb) of the Act by the Assessing Officer (in short the AO) was confirmed: The assessee is an individual and derives income from supply of labour to textile dustries: The assessee filed return of income on 10.01.2007 declaring total income of Rs: 2,02,184. The assessment was reopened under section 147 of the Act and the assessment was finalised on 30.03.2014 under section 143 (3) read with section 147 of the Act. During the course of assessment proceedings, notice under section 142(1) was issued on 27.12.2013 fixing the date of hearing on 02.01.2014. However, it was not complied-with, nor any compliance was made in respect of show-cause notice issued u/s. 274 read with section 271(1) (b) dated 03.02.2014 issued for fixing date of hearing on 10.02.2014. Since the assessee has failed to comply with notice under section 1 42(1) dated 27.12.2013 without any reasonable cause and also not complied with show cause notice under section 274 read with section 271(1 )bJof the Baldev Bhikhabhai Patel/lT.A: No.539/AHD/20 15/A.Y.06-07 Act: The AO treated the assessee in default as contemplated under section 271(1 J(b) of the Act and accordingly, levied a penalty of Rs. 10,000 under section 271(1J(b) of the Act: 3. The assessee agitated the issue in first appeal before CIT (A) However, the Id. CIT (A) has confirmed the penalty levied by the AO by observing that the assessee was legally bound to make compliance of statutory notices, which was not done: The Id. CIT (A) also supported his view by placing reliance on the decision of Hon ble Patna High Court in the case of CIT V. Standard Mercantile Co [1986] 160 ITR 613 (Pat): 4. Being, aggrieved the assessee filed this appeal before the Tribunal. Before US, also, neither the assessee nor his representative has appeared: However, written submissions dated 04.12.2017 as filed are being considered: It has been submitted through written submissions that notice under section 1 42(1) dated 27.12.2013 was not served in person on the assessee, as during the relevant time he was not present in India. Hence, the assessee was prevented by sufficient reasonable cause for non-compliance of notice under section 1 42(1), within the meaning of section 273B of the Act: For this proposition the assessee placed reliance on decision of Co-ordinate Bench of Tribunal in the case of Balram Kumar Mahendra v. ITO [2012] 52 SOT 92 (Delhi): It was further claimed that when the assessment is made u/s 143(3), then non- kompliance deemed to have been waived as held in the case of Swarnaben M Khanna V. DCIT [2010] 132 TTJ (Ahd) (UO)I 5. Au contraire, the Id. Sr. DR strongly supported the order of Id: CIT (A)

We have heard the Id: Sr. D.R: and perused the written submissions of the assessee_ We have also gone through the relevant material on record: We find that notice under section 142(1) dated 27.12.2013 has been claimed as not been served in person upon the assessee Nevertheless, it has not been denied by the assessee that the notice was not received on his behalf: Thus, non-service of notice in person does not give any immunity for non-compliance of statutory notices, when it is served properly and it was within knowledge of the assessee: Be that as it may be, we also find that the show-cause notice under section 274 read with section 271(1J(b) of the Act, was issued on 03.02.2014 fixing the hearing for 10.02.2014 was duly Baldev Bhikhabhai Patel/lT.A. No.539/AHD/2O 15/A.Y.06-07 served upon the assessee. However, the assessee has not filed any explanation or reply in response to the said show cause notice , even though the assessee has filed objection the reopening proceedings on 10.02.2014, meaning thereby that the assessee had nothing to say with regard to penalty proceedings under section 271(1J(b) of the Act. Therefore, the AO had not left with any option but to levy the penalty for non-compliance: We find that the CIT (A) has elaborately dealt with the issue of which relevant extract is reproduced as under: "6.1.1 have considered the penalty order as well as the submissions of the appellant. The grounds of appeal-Ground No. 1 pertains to levying penalty of Rs. 10,000/-u/s. 271(1) (b) of the Act: On the perusal of details, it is observed that the appellant was provided opportunities during the assessment proceedings and the notice u/s. 142(1) of the Act were issued on 27.12.2013 but no compliance was made: Thereafter , further show-cause notice u/s. 271(1) (b) of the Act was issued on 03.02.2014 but again no compliance was made The issue of service of notice personally on the appellant is not required as per the provisions of the Act. The appellant is legally bound to make compliance of the statutory notices, which was not done. No compliance was made to the show cause notice u/s. 271(1) (b) of the Act: Mere filing letter for obtaining reasons of reopening etc. does not prove compliance: The compliance is to provide details as per the notice u/s 1 42(1) of the Act 6.1.2 The aforesaid facts prove that the appellant willfully and deliberately did not comply with statutory notices and assessment proceedings. The Assessing Officer has rightly levied 3 the penalty u/s. 271(1) (b) of Rs. 10,000 /- for willful and deliberate non-compliance as the appellant failed to comply without any reasonable cause. The Patna High Court in its judgement has pronounced as following which is very relevant in the facts of the case:- "The onus was on the assessee to answer the charge of having failed to comply with the notice u/s. 142(1). The words of section 271(1) (b) that if the revenue is satisfied that any person has without reasonable cause, failed to comply with the notice under section 1 42(1) , he shall be liable to penalty are rather crucial. It was obvious therefore, that the assessee waS required to show reasonable cause. That was & matter within the special knowledge of Baldev Bhikhabhai Patel/l T.A. No.539/AHD/2O 15/A.Y.06-07 the assessee. It must be added that in the instant penalty proceedings as well as the assessee took no steps to establish that there was any reasonable cause for not complying with notice under section 1 42(1) . Despite the findings in the assessment and reassessment proceedings, one would have been inclined to consider whether there was any reasonable cause or not but entire record showed that no effort worth the name was made by the assessee to show that there was any reasonable cause. CIT v/s Standard Mercantile Co (1986) 160 ITR 613(PAT): Hence , the levy of penalty of Rs: 10,000 /- is hereby confirmed and the ground of appeal is dismissed. 7 Considering the above findings of Id. CIT (A) and facts of the case, we are of the considered opinion that the assessee willfully and deliberately not complied with statutory notices hence; there was no reasonable cause for non-compliance of statutory notices issued by the AO. We also agree with the finding recorded by the Id. CIT (A) that non-service of notice in person is not required as per provisions of Income Tax Act, 1961. Nor the assessee has complied with either of notice under section 1 42(1) or show-cause notice under section 274 read with section 271(1)b) of the Act. The evidences in the form of copy of passport were not filed before he AO nor were these filed before CIT (A) with a request to admit the same as additional evidence. As could be seen from written submissions reproduced by the CIT (A) in his order: We also find that the assessee has not appeared in person or through representative before the CIT (A) also before Us to represent his case and only filed written submissions, which also shows the lackluster and non-serious attitude of the assessee in making statutory compliance of notices, issued by the authorities: Thus, we find that the assessee has not made out @ case of reasonable cause for non-compliance of notice under section 142(1) as well as show cause notice issued under section 274 read with section 271(1) (b) of the Act. This view is also supported by decision of Hon ble Patna High Court in the case of CIT V. Standard Mercantile Co (1986) 160 ITR 613(PAT) which laid down that the onus was on the assessee to answer the charge of having failed to comply with the notice u/s. 142(1). The words of section 271(1) (b) that if the revenue Baldev Bhikhabhai Patel/l.T.A: No.539/AHD/20 15/A.Y.06-07 is satisfied that any person has without reasonable cause, failed to comply with the notice under section 7 42(1), he shall be liable to penalty which are rather crucial: It was obvious therefore, that the assessee was required to show reasonable cause: We are also of the view that assessment finalised u/s. 143(3)read with section 147 does not absolve the assessee from the default committed under section 271(1) (b) of the Act without any reasonable cause: Therefore, the assessee cannot take shelter of decision of Co-ordinate Bench in the case of Swarnaben M Khanna v. DCIT [2010] 132 TTJ (Ahd) (UO)I. It is trite law that the penalty proceedings are distinct and different than the assessment proceeding, where there is non-compliance of statutory notices issued under section 142(1) is made without reasonable cause within the meaning of section 273B of the Act: Therefore, the case laws of Swarnaben M: Khanna v. DCIT (supra) and Balram Kumar Mahendra (supra) relied by the assessee are distinguishable on facts as there was no reasonable cause for non-compliance of notice undler section 142(1) as well as shown under section 271(1)(b) of the Act has been established: In view of these facts and circumstances, we find no infirmity in the order of Id: CIT (A), hence, same is upheld. Accordingly, the grounds of appeal of the assessee are dismissed: 8. In the result, the appeal of the assessee is dismissed. Qrder pronounced in the open court on 25.01.2018 S (O.P. MEENA) (CM: GARG) JUDICIAL MEMBER ACCOUNTANT MEMBER ga Surat. fani Dated: Copy of order forwarded to- Assessee/AO /Pr. CIT / CIT (A)/ITAT (DR)/Guard file of ITAT: By order cakii)u Assistant Registrar-ITAT-Surat Huree ter Eenr &afry en (7vta, Tu