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Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
Before: SHRI R.K. PANDA & SHRI K.NARASIMHA CHARY
ORDER PER BENCH
Challenging three common orders dated 19.09.2017in three batches of appeals Nos.362 to 368/16-17;410, 412, 414, 419, 421 & 422/16-17; and 411,413, 415, 417, 418, 420 & 423/16-17 passed by the learned Commissioner of Income Tax (Appeals)-27, New Delhi (“Ld. CIT(A)”), for assessment years 2008-09 to 2014-15, Moin Akhtar Qureshi(“the assessee”)in the capacity of Representative Assessee/Agent of M/s. Jean Louis Deniot, M/s. Design 39 Inc. and M/s. Cabinet Jean Louis Deniot, preferred these appeals.
Since common question of law and fact pertaining to imposition of penalty u/s. 271(1)(b) of the Income-tax Act, 1961 (for short “the Act”) is involved in all these appeals and assessee has raised common grounds therein, all these appeals are being disposed of by this consolidated order for the sake of convenience and brevity. The common grounds raised read as under :
“1. That on the facts and circumstances of the case and in law, theorder passed by CIT (A)-27, NewDelhi (hereinafter referred to as CTT (A)), is bad in law.
2. That on the facts and circumstances of the case and in law, the CIT (A) was not justified and has erred in upholding the action of the AO in sustaining Penalty of Rs. 10,000/- u/s 271(1)(b) of theIT Act on account of alleged failure in compliance to notice u/s142(1)of the Actby holdingMoinAkhtar Qureshi as representative assessee of M/s Jean Louis Deniot u/s 163 of the Income Tax Act.
3. That the facts and circumstances of the case and in law the CIT (A) was not justified in upholding the penalty of Rs. 10,000/- U/s 271(1)(b) of the Income Tax Act, 1961 by omitting to consider that, failure of assessee to attend proceedings on 03.11.2016 in response to notice u/s 142(1) dated 27.10.2016 has not been made ground for framing ex-parte assessment u/s 144 of the Act. The penalty cannot be sustained as per the proposition laid down by ITAT in to 115/MUM/2014 in the case of Mr. Lakhamshi J. Gala vide order dated 09.06.2015.”
Brief facts of the case are that the Assessing Officer initiated penalty proceedings u/s. 271(1)(b) of the Act against the assessee for non-compliance of statutory notices dated 25.10.2016 and 27.10.2016 issued u/s. 142(1) of the Act. Show causeletter dated 10.11.2016 issued to the assessee also stood un-complied, resulting into ex parte assessment u/s. 144 of the Act. During the penalty proceedings too, no reply to show cause notice dated 28.11.2016 was filed. This led the Assessing Officer to impose penalty of Rs.10,000/- u/s. 271(1)(b) of the Act each for above seven assessment years against the assessee in the capacity of representative assessee/agent of three different non- resident/foreign entities.
The assessee assailed the orders of penalty in appeals before the ld. CIT(A), stating that there was strong prima facie case in favour of the assessee, as the order passed u/s. 163 of the Act holding the assessee as “representative assessee”, stood challenged for adjudication; that in the present cases the assessee did not file any return of income in response to notice u/s. 153A, as it was contesting its vicarious liability of being assessed to tax in respect of the three non-resident foreign entities/individuals as representative assessee; that the assessee could not be expected to produce and submit the details relating to alleged affairs of the three non-resident foreign entities; and that all these facts would constitute a reasonable cause for non-compliance of statutory notices issued by the Assessing Officer. The learned CIT(A), however, confirmed the penalty imposed against the assessee holding that the assessee, even though, a representative assessee, was obliged to comply with the notices; that assessee’s challenge to order u/s. 163 has nothing to do with the compliance of statutory notices issued in the assessment proceedings; and that no other reasonable cause was given by the assessee. He, therefore, relying upon the decision of Hon’ble Patna High Court in the case of CIT vs. Standard Mercantile Company, 160 ITR 613, sustained the penalty saddled against the assessee.
Before us, the ld. AR of the assessee submitted that sincein some of the disputed years, the assessments have resulted into no additions, as such assessment orders have been passed at Nil income, no penalty can be initiated against the assessee; that in remaining years, reply dated 19.09.2016 filed during the assessment proceedings objecting to inclusion of assessee as representative assessee of non-resident u/s. 163; that reply dated 08.12.2016 was filed on merits in response to show cause notice dated 06.12.2016; that the impugned assessment orders were passed after considering the reply of assessee and cannot be said to be the best judgment assessment; and that therefore, no penalty can be imposed
Per contra, the Ld. DR while placing reliance on the impugned orders vehemently contended that the assessee failed to offer reasonable cause which prevented it to comply with the statutory notices issued by Assessing Officer. The ld. CIT(A) has given plausible reasons to reject the explanation offered by assessee for non-compliance and has rightly affirmed the penalty imposed against the assessee.
We have gone through the record in the light of the submissions made on either side. Though it is contended by the Ld. AR that in respect of certain cases no addition was made and therefore levy of penalty under section 271(1)( b ) of the Act is unsustainable, the fact remains that there is an allegation of non-compliance with the notices issued by the learned Assessing Officer. In this matter the penalty has to be decided from the point of non-cooperation of the assessee.
Be that as it may, even it is the case of the Revenue that the non- compliance with the notices was committed by the assessee in their capacity of Representative Assessee/Agent of M/s. Jean Louis Deniot, M/s. Design 39 Inc.and M/s. Cabinet Jean Louis Deniot, which are non- resident entities. It is a fact that the act of non-compliance with the statutory notices is one in respect of all these entities but for various assessment years. Considering that fact, We are of the considered opinion that the levy of penalty could be confined to one such capacity of the assessee for all the 7 years and therefore, we consider the lapse of the assessee, though in different capacities for 7 years, as 7 instances of non-cooperation and in consonance with such conclusion we limit the levy of penalty for 7 years in one capacity.
We therefore, confirm the levy of penalty for the assessment years 2008-09 to 2014-15 at the rate of Rs. 10,000/-per year in appeals in ITA numbers 6815 to 6821/del/2017 and, in view of our discussion in the preceding paragraph, delete the same in all other appeals.
In the result to 6821/del/2017 are dismissed and ITA Nos 6822 to 6835/del/2017 are allowed. Order pronounced in the Open Court on 23rd January, 2020.