DILIP KUMAR A. JAIN,MUMBAI vs. ITO, W-18(1)(4), MUMBAI

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ITA 1044/MUM/2019Status: DisposedITAT Mumbai14 December 2020AY 2014-153 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that levying a penalty based solely on presumption without verifying actual service of the notice is not justified. The order of the lower authorities was set aside, directing the deletion of the penalty.

What were the facts?

The assessee did not comply with a notice issued under Section 142(1) of the Income Tax Act, leading to a penalty. The assessee claimed non-receipt of this notice, but the lower authorities confirmed the penalty based on the presumption that other notices were received.

What were the issues?

Whether the penalty for non-compliance with a notice under Section 142(1) is sustainable when the assessee claims non-receipt of the notice, and whether the lower authorities properly verified the service of the notice.

Which sections of the Income-tax Act were involved?

Section 142(1),Section 271(1)(b),Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI

Before: SHRI VIKAS AWASTHY & SHRI RAJESH KUMAR

For Respondent: Shri Vijay Jaiswal, D.R
Hearing: 21.10.2020Pronounced: 14.12.2020

Per Rajesh Kumar, Accountant Member:

1.

The present appeal has been preferred by the assessee against the order dated 13.12.2018 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2014-15.

2.

At the time of hearing we notice that none appeared on behalf of the assessee nor any application for adjournment was filed. Therefore, we are deciding this appeal ex-parte after hearing the Ld. D.R.

2 Mr. Dilip Kumar A. Jain 3. The only issue raised by the assessee is against the confirmation of penalty of Rs.10,000/- by Ld. CIT(A) as levied by the AO under section 271(1)(b) of the Act.

4.

The facts in brief are that the assessment was framed in this case under section 143(3) of the Act vide order dated 30.12.2016 assessing the total income at Rs. Nil as against the declared loss of Rs.11,71,758/-. According to the AO, the assessee has not made any compliance of the notice issued under section 142(1) dated 21.12.2016 whereby the is fixed 31.10.2016. The AO observed that since the assessee has not made any compliance to the notice issued under section 142(1) of the Act and accordingly a notice under section 274 read with section 271(1)(b) of the Act dated 18.11.2016 was issued to the assessee to show cause as to why the penalty should not be levied under section 271(1)(b) of the Act fixing the date on 28.11.2016 which according to the AO was also not responded. Finally, the AO levied the penalty of Rs.10,000/- for non compliance of the statutory notice issued under section 142(1) of the Act vide order dated 07.12.2016 passed under section 271(1)(b) of the Act.

5.

The Ld. Ld. CIT(A) also dismissed the appeal of the assessee by noting that assessee has received all the notices except the notice issued under section 142(1) dated 21.10.2016 which is highly improbable and thus upheld the order of the AO.

6.

After hearing the Ld. D.R. and perusing the material on record, we observe that in this case the assessee has been denying the fact that the notice issued under section 142(1)

3 Mr. Dilip Kumar A. Jain dated 21.10.2016 and show cause notice issued u/s 274 r.w.s. 271(1)(b) of the Act dated 18.11.2016 were not received by the assessee for which the AO has levied penalty on the assessee. The Ld. CIT(A) has just on the basis of presumption confirmed the penalty by holding that it is highly improbable that the assessee has not received the notice for which the penalty was levied whereas all other notices were duly served upon the assessee. In our opinion, the levying of penalty on just the presumption basis is not justified and fair and can not be sustained. In our opinion, the Ld. CIT(A) should have gone into the issue whether actual service of notice was done or not . In view of these facts and circumstances, we are not in a position to sustain the order of Ld. CIT(A) and accordingly, set aside the order by directing the AO to delete the penalty.

7.

In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 14.12.2020.

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