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Income Tax Appellate Tribunal, DELHI BENCHES “SMC”: DELHI
Before: SHRI BHAVNESH SAINI
This appeal by assessee has been directed against the order of Ld. CIT(Appeals)-13, New Delhi dated 01.06.2018 for AY 2005-06, challenging the levy of penalty u/s 271(1)(b) of the Act.
The AO noted in the penalty order that assessee company was required to furnish details/information/explanation by 2 ITA.No.7453/Del./2018 issue and service of notices/letters mentioned in the penalty order pertaining to notice dated 18.08.2006, 26.04.2007, 04.05.2007, 28.05.2007, 17.08.2007, 05.09.2007, 20.09.2007, 28.09.2007 and 05.10.2007. The AO noted that there was no compliance to the notices which was considered as default u/s 271(1)(b) of the Act. The AO issued show-cause notice for levy of penalty and in absence of any explanation, the AO levied the penalty of Rs. 10,000/- for failure to comply with notices u/s 142(1)/143(2) of the Act. The assessee contended before Ld. CIT(A) that there was a change in address as reported in ITR for subsequent AY 2006-07.
Therefore, no notice has been served upon the assessee at the new address. The Ld. CIT(A) did not accept the contention of the assessee and noted that the record shows assessee has four addresses and on 05.09.2007, Counsel for assessee appeared, therefore, change of address should have been intimated to the AO. The appeal was accordingly dismissed.
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Ld. Counsel for assessee submitted that the AO has mentioned old address even in the penalty order despite in the Income tax return for AY 2006-07 filed on 31.12.2006 assessee has reported new address at “E-6/9, Vasant Vihar, New Delhi”. No notice has been served upon the assessee at new address, therefore, penalty cannot be levied against the assessee. He has further submitted that even in the penalty order AO was not specific as to for which notice penalty has been levied against the assessee. He has submitted that order of the CIT(A) on quantum has been set aside by ITAT vide order dated 20.12.2017 and appeal is pending before Ld. CIT(A) and, as such, matter is still pending on quantum. He has relied upon the judgment of Hon’ble Delhi High Court in the case of Pr. CIT-1 vs. Atlanta Capital Pvt. Ltd., dated 21.09.2015 in which it was noted that AO was aware of change of address of the assessee and yet the notice u/s 148 of the Act was issued at old address.
Therefore, issue was decided against the Revenue.
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On the other hand, Ld. DR relied upon the orders of the authorities below and submitted that as per PAN, AO issued notice which has not been complied by the assessee.
Therefore, penalty was rightly levied against the assessee.
I have considered the rival submissions. In the present case the AO passed the assessment order u/s 144 of the Act dated 11.12.2007 (PB-6) in which AO has mentioned address of the assessee at 1378/21, 3rd Floor, Naiwala, Karol Bagh, New Delhi. Same address is mentioned in the penalty order.
The assessee, however, filed return of income for subsequent AY 2006-07 on 31.12.2006 in which assessee has mentioned new address at E-6/9, Vasant Vihar, New Delhi. It is, therefore, clear that prior to completion of the assessment for assessment year under appeal, assessee had already reported new address to the Revenue Department. However, the AO for the reasons best known to him have sent the notices to the assessee at the old address. No attempt has been made to serve assessee at the new address. Therefore, there could not 5 ITA.No.7453/Del./2018 be any reason to believe that assessee had defaulted in making compliance to the notices. Ld. CIT(A) noted that on 05.09.2007 Counsel for assessee appeared before AO but no new address has been intimated. However, in the Income tax return filed for subsequent AY 2006-07, assessee had already reported new address to the Department. There is thus, no default on the part of the assessee to comply with the notices u/s 142(1)/143(2) of the Act. Further, AO has recorded several dates on which notices have been issued to the assessee, but it is not mentioned in the penalty order as to for which default of notice penalty has been levied. In the absence of any specific charge against the assessee, it is difficult to accept that assessee would default to make any reply before the authorities below. The quantum matter is pending before the CIT(A) as per directions of the Tribunal.
Considering all these facts and circumstances, I am of the view that assessee had a reasonable cause for failure to comply with the notices. Therefore, penalty is not leviable in 6 ITA.No.7453/Del./2018 the matter. I, accordingly, set aside the orders of the authorities below and cancel the penalty.
In the result, appeal of assessee is allowed.
Order pronounced in the open Court.