M/S. RASHI ENTERTAINMENT PVT. LTD.,NEW DELHI vs. ACIT, NEW DELHI
What did the Tribunal hold?
The Tribunal noted that the CIT(A)'s order was passed before the Settlement Commission's decision. Therefore, the Tribunal set aside the issue to the CIT(A) to verify the settlement and decide accordingly.
What were the facts?
The Assessing Officer (AO) levied a penalty on the assessee for non-compliance with notices issued under Section 142(1) and 143(2) of the Income Tax Act. The assessee claimed that non-compliance was due to the non-availability of seized documents after a search action and a pending settlement application.
What were the issues?
Whether penalty under Section 271(1)(b) is leviable for non-compliance with notices when the assessee has a pending settlement application and claims inability to comply due to seized documents.
Which sections of the Income-tax Act were involved?
Section 142(1),Section 143(2),Section 271(1)(b),Section 153A,Section 245D(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Heard together (7 matters)
Read from the judgment's own cause title. This page is filed under one of them.
ORDER Per N. K. Saini, AM: These appeals by the assessee are directed against the separate orders each dated 28.10.2014 of ld. CIT(A)-VI, New Delhi.
Since the issue involved is common in all these appeals which were heard together so these are being disposed off by this consolidated order for the sake of convenience and brevity.
ITA Nos 6939 to 6945/Del/2014 2 Rashi Entertainment Pvt. Ltd. 3. Firstly we will deal with the appeal in for the assessment year 2006-07. The only grievance of the assessee in this appeal relates to the sustenance of penalty of Rs.20,000/- levied by the AO u/s 271(1)(b) of the Income Tax Act, 1961 (hereinafter referred to as the Act).
Facts of the case in brief are that the AO issued the notice u/s 142(1) of the Act on 26.04.2013 fixing the case for hearing on 13.05.2013 and again issued notice u/s 143(2) of the Act on 12.09.2013 fixing the case for hearing on 19.09.2013. In response to those notices, none attended nor any reply was filed. The AO, therefore, asked the assessee to show cause as to why the penalty for non-compliance of the said notices should not be imposed, the assessee was required to furnish his reply on or before 30.09.2013. Since no reply was filed, the AO levied the penalty of Rs.20,000/- u/s 271(1)(c) of the Act as the assessee failed on two occasions to comply with the notices issued on 26.04.2013 and 12.09.2013.
Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that a search action was initiated on 23.01.2012 on the premises of the assessee but complete records and documents seized during the course of search were not provided to the assessee and copies of some of the seized material provided were not legible. It was stated that the assessee was constrained from filing his return u/s 153A of the to 6945/Del/2014 3 Rashi Entertainment Pvt. Ltd. Act, therefore the notices issued by the AO remained uncomplied. It was further stated that the assessee over telephone had duly expressed his concern to the AO on the date of hearing and upon being satisfied no formal letter was filed. It was also stated that the AO unilaterally proceeded to levy the penalty u/s 271(1)(b) of the Act without appreciating the facts of the case and circumstances existing beyond the control of the assessee as well as without affording proper opportunity of being heard to the assessee, therefore, the non-compliance could not be attributed towards deliberate malafide intentions or willful non- compliance on the part of the assessee.
However, the ld. CIT(A) sustained the penalty by observing that the assessee failed to show any reasonable cause for non-compliance to notices. At the same time, he observed that the assessee had filed settlement application which had been admitted by the Settlement Commission vide order dated 07.03.2014 u/s 245D(1) of the Act. The ld. CIT(A) categorically stated in para 5 of the impugned order that if the settlement is awarded in favour of the assessee for the relevant years then the penalty order passed by the AO will not sustain.
Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submission made before the authorities below and further submitted that now the Settlement Commission has settled the issue. Therefore, the penalty u/s 271(1)(b) of the Act is not leviable, to 6945/Del/2014 4 Rashi Entertainment Pvt. Ltd. particularly when there was a plausible explanation given by the assessee.
In his rival submissions, the ld. DR supported the impugned order passed by the ld. CIT(A) and further submitted that since there was non- compliance to the notices by the assessee, the penalty u/s 271(1)(b) of the Act was rightly levied by the AO.
We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the order passed by the ld. Settlement Commission was not available to the ld. CIT(A) who observed that if the Settlement is awarded in favour of the assessee for the relevant years then the penalty order passed by the AO will not sustain. We, therefore, set aside this issue to the ld. CIT(A) to verify as to whether the application filed by the assessee before the ld. Settlement Commission has been settled and then decide the issue as per his observation given in para 5 of the impugned order. For the aforesaid proposition, both the parties agreed. Accordingly, the case is remanded back to the file of the ld. CIT(A).
For the remaining appeals i.e. in to 6945/Del/2014, the issue and the relevant facts are identical as were involved in ITA No. 6939/Del/2014. Therefore, our findings given in the former part of this ITA Nos 6939 to 6945/Del/2014 5 Rashi Entertainment Pvt. Ltd. order for the assessment year 2006-07 shall apply mutatis mutandis for the assessment years 2007-08 to 2012-13.
In the result, the appeals of the assessee are allowed for statistical purposes. (Order Pronounced in the Court on 28/09/2017)
More judgments on Section 142(1)
- Sar Business Tradelink Private Limited… vs Income Tax Officer, Ward - 1(2), RaipurITA 599/RPR/2026[2014-15]Status: Heard21 Oct 2026AY 2014-15
- Subhash Chand Saini, Jaipur vs ITO Ward, Behror, BherorITA 36/JPR/2023[2017-18]Status: Disposed21 Oct 2026AY 2017-18
- Hemal Paresh Madeka, Rajkot vs Asst.Commissioner of Income Tax…ITA 955/RJT/2026[2020-21]Status: Disposed19 Oct 2026AY 2020-21
- Venish Vinodray Lalani, Rajkot vs Income Tax Officer, MorbiITA 197/RJT/2026[2019-20]Status: Disposed19 Oct 2026AY 2019-20
- Gaurav Jiteshbhai Joshi, Rajkot vs Income Tax Officer, Ward 1(1)(1), RajkotITA 1000/RJT/2026[2022-23]Status: Disposed19 Oct 2026AY 2022-23
Recent GST High Court judgments
Search GST case law →- M/S B.K. Agency Under The Proprietor Of Bhola Prasad vs. The Chief Commissioner, CGSTPatna · 2 Nov 2026
- Shree Hanumant Steel Traders vs. Assistant CommissionerChhattisgarh · 1 Nov 2026
- R.K.Service Station, Balasore vs. Commissioner CT And GST Odisha, CuttackOrissa · 31 Oct 2026
- Tankala Soumya vs. Assistant Commissioner Of State Tax, CT And GST, Rayagada Circle, RayagadaOrissa · 31 Oct 2026
- M/S Pooja, Town Hallroad, Cuttack vs. State Tax Officer, Cuttack-I West Circle,CuttackOrissa · 31 Oct 2026