ARAMBAGH FOREIGN LIQUOR,HOOGHLY vs. ITO, WD-2(4), KOLKATA, KOLKATA

This is an appeal filed by the assessee against the order of Ld. CIT(A)-6, Kolkata dated 11.01.2016 for AY 2011-12 confirming the penalty imposed by the AO u/s. 271(1)(b) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).

The only issue in dispute is against the action of Ld. CIT(A) in confirming the imposition of penalty of Rs.10,000/- u/s. 271(1)(b) of the Act. Brief facts of the case are that notices u/s. 143(2) and 142(1) of the Act were issued and duly served on the assessee. According to AO, as per notice u/s/. 143(2) of the Act dated 10.09.2012 the assessee was required to submit documents, account and other evidence in support of the return filed by him however it did not make any compliance to the said notice. Thereafter, according to AO, he issued notice u/s. 142(1) dated 07.05.2013 of the Act, which was served on the assessee for furnishing details but according to AO, assessee made no compliance. However, further notice u/s. 142(1) of the Act along with requisition was issued on 12.08.2013 fixing the date of hearing on 29.08.2013, on that date the AO acknowledges that Ld. Authorized representative on behalf of the assessee appeared and sought for 2 Arambagh Foreign Liquor., AYs- 2011-12 adjournment. The case was adjourned to 20.09.2013. According to AO, on 20.09.2013 few documents were submitted but other relevant documents as required u/s. 142(1) of the Act were not filed. Thereafter, the case was again refixed for hearing on 04.10.2013 and 04.11.2013 but no compliance was made. On 06.11.2013 penalty notice u/s. 271(1)(b) of the Act was issued and served on the assessee to show cause as to why penalty u/s. 271 should not be imposed in this case. But no compliance was also made. Therefore, the AO finding no other alternative concluded that it is a fit case for imposition of penalty/s. 271(1)(b) of the Act and hence, he imposed penalty of Rs.10,000/- for the aforesaid non- compliance. On appeal, the Ld. CIT(A) confirmed the action of the AO in imposing penalty of Rs.10,000/- u/s. 271(1)(b) of the Act. Aggrieved, assessee is in appeal before us.

We have heard rival submissions and gone through the facts and circumstances of the case. At the outset itself, the Ld. Counsel for the assessee Shri Sarnath Ghosh, Advocate drew our attention to the fact that the impugned order of the Ld. CIT(A) is an ex parte order and that penalty u/s. 271(1)(b) of the Act was passed mainly because of the omission on the part of Accountant of the assessee. The Ld. Counsel for the assessee pointed out that the accountant of the assessee was sacked, who in retaliation took away/misplaced the cash book of the assessee. Because of which there was a delay of two and half months in producing the cash book before the AO. It was also brought to our notice that in the assessment order, the AO himself has acknowledged that the Ld. AR of the Assessee Shri Sarnath Ghosh, Advocate had appeared before him and had duly filed documents requisitioned by him. We also note from a perusal of the assessment order that the Ld. AR Shri Sarnath Ghosh, Advocate used to appear before the AO and had filed all documents sought for, except the cash book. We note that the order impugned is an ex parte order and the assessee wanted to bring on record the affidavit of the assessee to prove that there was reasonable cause for not producing the cash book on 22.11.2013 before the AO. According to Ld. AR, since there was reasonable cause for not appearing/producing the cash book sought for by the AO, penalty is not justified and since it is an ex parte order, the Ld. AR wanted to file certain documents like affidavit before the Ld. CIT(A) to justify and show that reasonable cause existed in his case and, thereby the penalty imposed on the assessee u/s. 271(1)(b) of the Act can be successfully defended before the Ld. CIT(A). In the light of 3 Arambagh Foreign Liquor., AYs- 2011-12 the above submission and facts narrated above, we are inclined to set aside the order of Ld. CIT(A) and remand the matter back to the file of Ld. CIT(A) to adjudicate the appeal on merits after giving reasonable opportunity of being heard to the assessee. The assessee is at liberty to file affidavit or any other documents to show that there existed reasonable cause for not appearing/producing documents sought for by the AO. With the aforesaid observation, the appeal of assessee is allowed for statistical purposes.

In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced in the open court on 02.02.2018 Sd/- Sd/- (Dr. A. L. Saini) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 2nd February, 2018 Jd.(Sr.P.S.) Copy of the order forwarded to: 1. Appellant – Arambagh Foreign Liquor, C/o Shri Sarnath Ghosh, Advocate, Seven Brothers Lodge, P.O. Buroshibtala, P.s. Chinsurah, Dist. Hooghly, Pin-712105 Respondent – ITO, Ward-2(4), Kolkata. 2 3. The CIT(A) Kolkata.