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Income Tax Appellate Tribunal, MUMBAI BENCHES “H”, MUMBAI
Before: Shri C. N. PRASAD, & Shri G. MANJUNATHA
आदेश / O R D E R Per G. Manjunatha (Accountant Member) These four appeals filed by the assessee are directed against separate but identical orders of the Ld. CIT(A)-53, Mumbai, dated 16/08/2017 and 06/09/2017, in turn they arose out of the penalty order passed by the AO u/s 271(1)(b) of the Income Tax Act, 1961(hereinafter ‘the Act’) for Assessment Year 2013-14. Since, facts are heard together and are disposed of by this consolidated order.
The assessee has more or less filed common grounds of appeal in all appeals.
For the sake of brevity, grounds of appeal taken by the assessee in are reproduced hereunder:
“1.The Commissioner (Appeals)-53, erred in upholding the learned A.O’s action of levying separate 5 penalty order u/s 271(1)(b) for every associated non compliance on the part of assessee in gross contravention of the principles of natural justice in relation to the disputed item under challenge and agitated in this appeal.” 3. The ld. AR for the assessee at the time of hearing, submitted that there is delay of 38 days to 63 days in filing these appeals for which necessary petition for condonation of delay along with affidavit has been filed narrating reasons for delay in filing the appeal. The Ld. AR further submitted that the assessee was initially advised by the consultant not to prefer appeal against the order of the Ld. AO in levying penalty u/s 271(1)(b) of the Act, considering the amount involved in dispute, but on later stage, when the assessee has consulted different consultant, they advised us to file appeal, keeping in view the fact that the department may initiate prosecution proceedings, hence, the assessee has taken decision to file appeal before the Tribunal challenging the order of the Ld. CIT(A) in confirming penalty levied u/s 271(1)(b) of the Act.
Therefore, there is reasonable cause for not filing appeal and hence, the delay may be condoned and the issue may be decided on merit. by the assessee submitted that reason given by the assessee in its petition does not come within the ambit of reasonable cause, therefore, the delay in filing appeal should not be condoned.
Having heard both sides and considered the material available on record, we find that reason given by the assessee for not filing appeal within time allowed under the Act, comes within the ambit of reasonable cause as provided u/s 273B of the Act, because the assessee was on the bona-fide belief that no appeal could be filed against the order considering smallness of the amount involved in dispute, but when it comes to the notice that the Department may initiate prosecution proceedings, the assessee has taken a decision to file appeal. Therefore, considering the reasons given by the assessee for not filing appeal within the time allowed under the Act, we are of the considered view that there is reasonable cause for not filing the appeal and hence delay in filing the appeal has been condoned and admitted the appeals to be heard on merits.
The brief, facts of the impugned dispute are that during the course of assessment proceedings, the AO noticed that the assessee has failed to comply with notices issued u/s 142(1)/143(2) dated 30/12/2015, 09/12/2015, 11/11/2015 and 21/12/2015, therefore, issued a show-cause notice u/s 271(1)(b) of the Act, and called upon the assessee to explain as to why penalty shall not be levied for non-compliance with statutory notices issued u/s 142(1)/143(2) of the Act. In response, the assessee various occasion, however due to some reasons beyond its control, the notices issued u/s 143(2)/142(1) on the dates mentioned in your show cause notices could not be attended because the information sought during the course of assessment proceedings is voluminous and the assessee is required to collect various information, therefore, in absence of necessary information as required in the said notice, the assessee could not attended on the dates specified in the notice, but facts remains that the assessee has complied with all the required documents which is evident from the fact that the assessment has been completed u/s 143(3) of the Act, Therefore, failure to comply with one notice cannot be taken as non-cooperation for assessment proceedings so as to levy penalty u/s 271(1)(b) of the Act. The AO after considering the relevant submissions of the assessee and also taken note of the fact that the assessee has not complied with notice, levied penalty of Rs.10,000/- each for failure to complied with notice issued u/s 142(1)/143(2) of the Act.
6. Aggrieved by the penalty orders, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee has reiterated its submissions made before the AO to argue that it has complied with all notices issued issued u/s 142(1) and 143(2) of the Act, except in a cases where the AO has levied penalty u/s 271(1)(b) of the Act on four notices, which is evident from the fact that the details sought by the AO has been fully complied with and the AO has completed assessment u/s 143(3) of the Act. The reasons for not attending on the particular date is because of voluminous therefore, the assessee could not appear on the dates specified in penalty notice issued u/s 271(1)(b) of the Act, but fact remains that it has complied with all requirements of the AO which is evident from the fact that the AO has passed assessment order u/s 143(3) of the Act. Under these facts, levying penalty for non-compliance with one or two notice is unwarranted.
The Ld. CIT(A) after considering the submissions of the assessee held that the assessee has admitted the fact of non-compliance to notices u/s 143(2) and 142(1) of the Act. Further the assessee has failed to offer any valid reason for non-compliance, therefore, there is no error in the order of the Ld. AO in levying penalty u/s 271(1)(b) of the Act, for failure to comply with statutory notices issued u/s 143(2)/(1421(1) of the Act.
Accordingly, dismissed the appeal filed by the assessee.
Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us.
The Ld. AR for the assessee submitted that the Ld. CIT(A) was erred in confirming penalty u/s 271(1)(b) of the Act, for non-compliance of certain notices issued u/s 142(1)/143(2) of the Act, without appreciating the fact that the assessee has fully complied with all notices issued by the AO except those four notices and also supplied with necessary information as called for in connection with assessment proceedings, which is evident from the fact that the AO has passed assessment order u/s 143(3) of the Act. The Ld. AR for the assessee submitted that had it been the case of the AO that is right in levying penalty for non-compliance of statutory notices, but the assessee has fully cooperated with the AO and also supplied with necessary information and hence non-compliance of one or two notice cannot be considered as serious offence, more particularly whenthe assessee has explained the reasons for non-appearance as on the date of hearing. The ld. CIT(A) without appreciating these facts, simply upheld the penalty levied by the AO and hence the penalty levied by the AO should be deleted.
The Ld. DR, on the other hand, strongly supported orders of the Ld. CIT(A)
We have heard both parties, perused the material available on record and gone through order of the authorities below. There is no dispute with regard to the fact that the assessee has not complied with notices issued u/s 142(1)/143(2) of the Act on four occasions. It is admitted fact that the assessee has filed necessary details as called for by the AO in connection with assessment proceedings, which is evident from the fact that the AO has completed u/s 143(3) of the Act, after considering necessary information supplied by the assessee. It is also an admitted fact that the assessee has explained the reasons for non-compliance with certain notices issued u/s 142(1)/143(2) of the Act, as per which the AO has called for voluminous information in respect of certain issues which requires more time to collect information called for by the AO because of which the assessee could not appear as on the dates specified in the show- cause notice issued u/s 271(1)(b) of the Act. We find that although the assessee has that on subsequent dates, it has complied with all information called for by the AO and also attended on various occasions which is evident from the fact that the AO has completed assessment u/s 143(3) of the Act. We further noted that the assessee has explained the reasons for non-appeared as on the date of hearing, as per which the AO has called for voluminous information which took more time to collect information sought by the AO, because of this assessee could not appear on some dates.
Therefore, we are of the considered view that the initial failure to attend for one or two notices cannot be taken seriously, when the assessee has complied with subsequent notices issued u/s 143(2)/142(1) of the Act, and also submitted complete details as called for by the AO. Had it been a case for the AO that the assessee is not cooperative at all stages of assessment proceedings and not filed any information which leads to completion of assessment ex-parte u/s 144 of the Act, then the AO is right in taking recourse to levy penalty u/s 271(1)(b) of the Act, for failure to comply with statutory notices issued u/s 143(2)/142(1) of the Act. In this case, on perusal of facts, we find that the AO has completed assessment u/s 143(3) of the Act, on the basis of information supplied by the assessee. Therefore, initial failure of the assessee to comply with certain notices cannot be looked in isolation with subsequent compliance of the assessee to all notice, when it comes to levy of penalty u/s 271(1)(b) of the Act.
Therefore, we are of the considered view that initial failure of the assessee to comply with certain notices is a technical one, when it had complied with subsequent notices course of assessment proceedings. Hence, we are of the considered view that the AO was erred in levying penalty u/s 271(1)(b) of the Act for non-compliance of certain notices issued u/s 142(1)/143(2) of the Act. The Ld. CIT(A) without appreciating the facts simply confirmed penalty levied by the AO, hence we reverse the order of the Ld. CIT(A) and direct the AO to delete the penalty levied u/s 271(1)(b) of the Act.
In the result, all appeals filed by the assessee are allowed.
Order pronounced in the open Court on 26/06/2019.