GANESH B POKHRIYAL,MUMBAI vs. ACIT CIRCLE-3, KALYAN

O R D E R

PER RAVISH SOOD, JM

2. On the facts and in circumstances of the case and in law the Commissioner Income-tax (Appeals) erred in confirming the penalty order by keeping silent on the issue of violation o principles of natural justice.

A.Y 2014-15 – 2 Ganesh B. Pokhriyal Vs. ACIT

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2. Briefly stated, the assessee had filed his return of income for A.Y 2014-15 on 30.06.2015, declaring a total income of Rs. 19,46,220/-. Return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act.

3. As is discernible from the orders of the lower authorities, the A.O in the course of the assessment proceedings had issued a notice under Sec. 142(1), dated 08.08.2016, which is stated to have not been complied with by the assessee. Also, it is stated by the A.O, that the notices under Sec. 142(1) alongwith questionnaire which were subsequently issued to the assessee on various dates had also remained unattended. Accordingly, the A.O issued a „Show cause‟ notice (for short „SCN‟) under Sec. 274 r.w.s 271(1)(b), dated 05.10.2016 to the assessee, as per which he was called upon to explain on or before 18.10.2016, as to why penalty under Sec. 271(1)(b) may not be imposed upon him for his failure to comply with the notice under Sec. 142(1), dated 08.08.2016. As per the order passed by the A.O, the assessee had failed to comply with the „SCN‟ that was issued to him under Sec. 274 r.w.s 271(1)(b), and had neither appeared before him nor furnished any written submissions. Observing, that the assessee had scant regard for law and had no explanation for his non-compliance of the notice that was issued to him under Sec. 142(1), the A.O imposed a penalty of Rs. 10,000/- on him , vide his order under Sec. 271(1)(b), dated 24.10.2016.

4. Aggrieved, the assessee assailed the order passed by the A.O imposing penalty under Sec. 271(1)(b) before the CIT(A). It was observed by the CIT(A), that as the notice issued to the assessee under Sec. 142(1), dated 08.08.2016 was not complied by the assessee upto 05.10.2016, therefore, a notice on the said date was issued to him under Sec. 271(1)(b). As noticed by the CIT(A), in response to the aforesaid „SCN‟, dated 05.10.2016, an adjournment was sought by a Chartered Accountant, which in the absence of any authorization was declined by the A.O. Also, it was observed by the CIT(A), that despite the fact that the A.O due to the non-compliance on the part of the assessee had initiated the aforesaid penalty proceedings, however, the assessee had even thereafter failed to furnish proper information as was called A.Y 2014-15 – 3 Ganesh B. Pokhriyal Vs. ACIT for in the course of the assessment proceedings. It was noticed by the CIT(A), that as the assessee had failed to furnish sufficient details, therefore, the A.O vide his order passed under Sec. 143(3), dated 02.12.2016 had made an addition of Rs.26,64,699/-. Observing, that as the assessee by adopting a non-cooperative attitude had failed to comply with the notice u/s 142(1), dated 08.08.2016, and also not furnished the complete details before the A.O despite repeated notices, including notice u/s 144, the CIT(A) upheld the penalty of Rs. 10,000/- imposed by the A.O under Sec. 271(1)(b).

5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. It was averred by the ld. A.R, that though the assessee in compliance to the notice issued by the A.O under Sec. 274 r.w.s 271(1)(b) and notice u/s 142(1), had vide his letter dated 17.10.2016 sought an adjournment, for the reason, that his chartered accountant at the relevant point of time was busy with the filing of the returns of income, and had requested that the matter be taken up after 07.11.2016, however, the said request of the assessee was never considered by the A.O. It was submitted by the ld. A.R, that even in the order passed by the A.O under Sec. 271(1)(b) there was no reference of the said request for adjournment that was filed by the assessee. On a perusal of a letter dated 24.10.2016 of the A.O, we find, that the A.O had stated that the request for adjournment made by the assessee vide his letter dated 17.10.2016 (received on 19.10.2016) in response to notice issued under Sec. 142(1), dated 05.10.2016 was rejected. As is discernible from a perusal of the aforesaid letter dated 17.10.2016, we find, that the assessee had specifically sought an adjournment both in respect of the penalty proceedings u/s 274 r.w.s 271(1)(b) and also the notice issued u/s 142(1). As regards the request of the assessee for adjourning of the proceedings u/s 274 r.w.s 271(1)(b), vide his letter dated 17.10.2016 (received by the A.O on 19.10.2016), we find, that there is no whisper about the same at all in the aforesaid letter dated 24.10.2016 of the A.O. Apart therefrom, we also do not find any reference about seeking of adjournment by the assessee vide his letter dated 17.10.2016 (received by the A.O on 19.10.2016), in his order passed under Sec. 271(1)(b). In totality of the facts of the case, we are of the considered view that the assessee was never intimated about the fate of his letter dated 17.10.2016 (received by the A.O on 19.10.2016), insofar his request for adjourning the penalty proceedings under Sec. 274 r.w.s 271(1)(b) was concerned. In fact, it can safely be held that the assessee had remained divested of a sufficient opportunity of being heard before being saddled with the penalty under A.Y 2014-15 – 4 Ganesh B. Pokhriyal Vs. ACIT Sec. 271(1)(b). Apart therefrom, we find that subsequently the A.O had passed the assessment order u/s 143(3) and not under Sec.

144. Accordingly, it can safely be concluded that the subsequent compliances/furnishing of information by the assessee were held by the A.O to be good compliances and the defaults committed earlier were ignored by him. As observed by the ITAT, Delhi in the case of (i). Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust Vs. ACIT [5 DTR 429 ](Delhi) and (ii). Globus Infoco Limited vs. ACIT [ITA No. 738/Del/2014; dated 29.06.2016], the framing of assessment under Sec. 143(3), though not conclusively, but to some extent would rule out the circumstances justifying imposition of any penalty under Sec. 271(1)(b). Accordingly, in the backdrop of our aforesaid observations, we are unable to subscribe to the imposition of penalty of Rs. 10,000/- under Sec. 271(1)(b) by the A.O, and finding the same to be unjustified, quash the same.

6. Resultantly, the order of the CIT(A) is set aside and the appeal of the assessee is allowed.

Sd/- Sd/- (S.Rifaur Rahman) (Ravish Sood) ACCOUNTANT MEMBER JUDICIAL MEMBER भ ुंफई Mumbai; ददन ुंक 29.11.2019 PS. Rohit आदेश की प्रतिलऱपि अग्रेपिि/Copy of the Order forwarded to : अऩीर थी / The Appellant 1. 2. प्रत्मथी / The Respondent. आमकय आम क्त(अऩीर) / The CIT(A)- 3. 4. आमकय आम क्त / CIT विब गीम प्रतततनधध, आमकय अऩीरीम अधधकयण, भ ुंफई / DR, ITAT, 5. Mumbai ग र्ड प ईर / Guard file. 6. सत्म वऩत प्रतत //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीऱीय अधिकरण, भ ुंफई / ITAT, Mumbai.

A.Y 2014-15 – 5 Ganesh B. Pokhriyal Vs. ACIT