JUGAL KISHORE PARWAL,JAIPUR vs. INCOME TAX OFFICER, WARD-4(5), JAIPUR

1 ITA NO. 286/JP/2022 JUGAL KISHORE PARWAL VS ITO, WARD 4(5), JAIPUR आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC’’ JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ds le{k BEFORE: Hon’ble SHRI SANDEEP GOSAIN, JUDICIAL MEMBER vk;dj vihy la-@ITA No. 286 to 291/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 1986-87, 1987-88, 1989-90 & 1992-93 cuke Shri Jugal Kishore Parwal The ITO Flat No. 601, Abhinandan Apartments, Vs. Ward – 4(5) A-9, Shastri Nagar, Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AHNPP 7666 F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Raj Kumar Yadav, Advocate jktLo dh vksj ls@ Revenue by: Mrs. Monisha Choudhary, JCIT lquokbZ dh rkjh[k@ Date of Hearing : 04/10/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 9 /11/2022 vkns'k@ ORDER PER: SANDEEP GOSAIN, JM These bunch of six appeals have been filed by the assessee against separate orders of the ld. CIT(A) as per the details mentioned hereunder:- ITA Nos. A.Y. Section Date of order by the ld. CIT(A) 286/JP/2022 1986-87 271 01-06-2022, ld. CIT(A) NFAC, Delhi 287/JP/2022 1986-87 271(1) (c ) 01-06-2022, ld. CIT(A) NFAC, Delhi 288/JP/2022 1987-88 154 25-02-2008, ld. CIT(A)-3, Jaipur 289/JP/2022 1989-90 271(1)(b) 16-07-2004, ld. CIT(A)-1,

Jaipur 290/JP/2022 1992-93 271(1)(b) 01-06-2022, ld. CIT(A) NFAC, Delhi 291/JP/2022 1992-93 271(1)(c) 01-06-2022, ld. CIT(A) NFAC, Delhi

2.0 The Grounds raised by the assessee in respective appeals are as under:- ITA No. 286/JP/2022 – A.Y. 1986-87 ‘’1.That the AO was not justified in imposing the penalty of Rs.47,230/ u/s 273(2)(b) of the Act. 2. That the penalty proceeding was without proper and valid service of notice(s) within the meaning of Section 282 of the Act. 3. That on the facts, in totality of the circumstance and material on records, the ld. CIT(A) grossly erred in assuming, presuming, inferring and holding that there was a delay of more than 21 years in filing appeal. The penalty8 order alongwith demand notice was served on the assessee on 20-02-2020. Thus, the appeal was filed within limitation of 30 days from the date of service of the order/demand notice. 4. That the assessee had also filed documentary evidence and an affidavit that the impugned penalty order and demand notice was served on 20-02- 2020. 5. That the ld. CIT(A) grossly erred in not admitting the appeal and thereby dismissing the same.’’

ITA No. 287/JP/2022 – A.Y. 1986-87 ‘’1.That the AO was not justified in imposing the penalty of Rs.6,29,730/ u/s 271(1)(c) of the Act.That the penalty proceeding was without proper and valid service of notice(s) within the meaning of Section 282 of the Act. That the ld. CIT(A) grossly erred in not admitting the appeal and thereby dismissing the same.’’

ITA No. 288/JP/2022 – A.Y. 1987-88 ‘’1.That the AO was not justified in not allowing the claim of Rs.2,40,000/- as claimed vide rectification application. 2. That on the facts, in totality of the circumstances and material on records, the ld. CIT(A) grossly erred in assuming, presuming, inferring and holding that no documentary evidence had been furnished by the assessee in support of the claim. 3. That an affidavit was filed reiterating the fact of claim of tax payment of Rs.2,40,000/-. 4. That the findings are without material, contrary to the material on record, perverse, vitiated and against the principles of natural justice, the impugned order is illegal and liable to be quashed. 5. That the humble appellant craves for leave to add or alter or amend any of the aforesaid ground(s) at or before the date of hearing.’’ ITA No. 289/JP/2022 – A.Y. 1989-90 1.That the AO was not justified in imposing the penalty of Rs.19,500/ u/s 271(1)(b) of the Act. 2. That the penalty proceeding was without proper and valid service of notice(s) within the meaning of Section 282 of the Act. 3. That on the facts, in totality of the circumstance and material on records, the ld. CIT(A) grossly erred in assuming, presuming, inferring and holding that there was a delay of more than 21 years in filing appeal. The penalty order alongwith demand notice was served on the assessee on 20-02-2020. Thus, the appeal was filed within limitation of 30 days from the date of service of the order/demand notice. 4. That the assessee had also filed documentary evidence and an affidavit that the impugned penalty order and demand notice was served on 20-02- 2020. 5. That the ld. CIT(A) grossly erred in not admitting the appeal and thereby dismissing the same.’’

ITA No. 290/JP/2022 – A.Y. 1992-93 1.That the AO was not justified in imposing the penalty of Rs.15,000/ u/s 271(1)(b) of the Act. 2. That the penalty proceeding was without proper and valid service of notice(s) within the meaning of Section 282 of the Act. 3. That on the facts, in totality of the circumstance and material on records, the ld. CIT(A) grossly erred in assuming, presuming, inferring and holding that there was a delay of more than 21 years in filing appeal. The penalty order alongwith demand notice was served on the assessee on 20-02-2020. Thus, the appeal was filed within limitation of 30 days from the date of service of the order/demand notice. 4. That the assessee had also filed documentary evidence and an affidavit that the impugned penalty order and demand notice was served on 20-02- 2020. 5. That the ld. CIT(A) grossly erred in not admitting the appeal and thereby dismissing the same.’’ ITA No. 291/JP/2022 – A.Y. 1992-93 1.That the AO was not justified in imposing the penalty of Rs.1,42,920/- u/s 271(1)(b) of the Act. 2. That the penalty proceeding was without proper and valid service of notice(s) within the meaning of Section 282 of the Act. 3. That on the facts, in totality of the circumstance and material on records, the ld. CIT(A) grossly erred in assuming, presuming, inferring and holding that there was a delay of more than 21 years in filing appeal. The penalty order alongwith demand notice was served on the assessee on 20-02-2020. Thus, the appeal was filed within limitation of 30 days from the date of service of the order/demand notice. 4. That the assessee had also filed documentary evidence and an affidavit that the impugned penalty order and demand notice was served on 20-02- 2020. 5. That the ld. CIT(A) grossly erred in not admitting the appeal and thereby dismissing the same.’’

3.0 First of all, we take up the appeal of the assessee in ITA No. 287/JP/2022 for the assessment year 1986-87 in the matter of Section 271(1)© of the Act for adjudication. 3.1 Brief facts of the case are that the assessee filed his return of income on 24-09-1990 declaring total income at Rs.13,230/- during the year under consideration. However, the AO assessed the total income at Rs.12,80,460/-. 3.2 Aggrieved by the order of the AO, the assessee preferred an appeal before the ld. CIT(A) who upheld the order of the AO and dismissed the appeal filed by the assessee. 3.3 However, in further appeal before ITAT, the matter was restored back to the AO with the direction to make de novo assessment and in view thereof in second round of assessment, the AO assessed the total income of the assessee at Rs.13,00,960/- vide order of assessment dated 20-03-1997 and simultaneously penalty proceedings was initiated against the assessee u/s 271(1)© and 273(2)(b) of the Act. 3.4 Further, in the quantum proceedings, the ld. CIT(A) dismissed the appeal filed by the assessee and on second appeal before ITAT, the matter was restored back to the ld. CIT(A) for afresh adjudication vide order dated 14-07-2005 and consequently the ld. CIT(A) while complying with the direction of the ITAT in the

quantum appeal passed order dated 29-02-2008 in Appeal No. 144/JPR/05-06, finally assessed the total income at Rs.1,13,230/-. 3.5 It is important to mention here that in the meantime the AO imposed penalty on the basis of earlier addition and passed order on 27-08-1998 u/s 271(1)© of the Act. While imposing penalty of Rs.6,29,730/-, the effect of main quantum appeal order passed by the ld. CIT(A) on 29-02-2008 was not given by the AO. Therefore, separate application and grievance petition was also filed by the assessee to give effect to the ld. CIT(A)’s order and ultimately appeal effect was given by the AO on 22-09-2017. In this regard, the copy of order has been placed on record at Paper Book Pages PB 15-16, (Revised at PB-18). 3.6 It is further important to mention here that after giving effect to the appeal order by the AO, the AO asked the assessee for the first time to deposit penalty. However, according to the assessee, he was totally unaware with regard to passing of any penalty order as no order of penalty was ever communicated or served upon the assesee. Therefore, the assessee applied the certified copy of the order of penalty and ultimately got the same on 19-02-2020. Thus according to the assessee, he got the information of the order of passing of the penalty order on 19-02-2020 for the first time. Accordingly, the assessee filed the appeal before the ld. CIT(A), NFAC, Delhi who dismissed the said appeal on the ground of Limitation. Thus, in this way, the first appeal has been filed by the assessee against

the order of penalty before the Bench. At the very first instance, while appearing on behalf of the assessee, the ld. AR relied upon the written submission submitted by him before the Bench and the same are reproduced below. ‘’SUBMISSIONS

Ground No. 1- The learned CIT(A) erred in dismissing the appeal on the ground that there was a delay of more than 21 years in filing the appeal. 1. Appeal was within it’s limitation: - As submitted (supra), that penalty order and notice of demand was not served on the assessee prior to 19.02.2020. The first time, penalty order and notice of demand was not served on the assessee on 19.02.2020 when assessee has come to know and applied for certified copies of penalty order etc. on 19.02.2020 (Copy of application at P.B. 19). and same were provided on 19.02.2020 (P.B. 19). Thus, the appeal was filed on 18.03.2020. 1.1 Report No.40 of Direct Taxes mandate that as soon as an appeal is received in the office of the CIT (A), the same is scrutinised and the CIT (A) is required to send an intimation to the concerned AO in form ITNS-51 enclosing a copy of the appeal memo. The reverse of this form requires certain data or particulars which are to be filled by the AO and returned to the CIT(A). In the order sheet, the information with reference to date of forwarding ITNS 51 to AO and date of receipt of report from AO is required to be filled up. Such entries, inter alia, include information as to whether appeal is within the limitation period and whether admitted tax payable has been paid by the appellant. 1.2 It is an admitted fact from the order dated 01.06.2022 passed by the learned CIT(A) that in compliance of said mandates, ITNS-51 was issued and served to the learned AO on 08.012021. The learned AO has not filed any objection in respect of statement of facts as submitted by the appellant. 1.3 It is submitted that the learned AO had not raised any objection before the learned CIT(A) as to whether the appeal is belated or the date of service of the orders was not 19.02.2020. It is the learned CIT(A) who ipso facto had issued a notice dated 04.05.2022 to the assessee and asked to furnish following details-

“In your case appeal, you have mentioned that the true copy of penalty order dated 27.08.1998 passed u/s 271(1)(c) of the I.T. Act, 1961 was duly served on 20.02.2020. You are requested to provide the documentary evidence regarding the date of service of penalty order dated 27.08.1998 passed u/s 271(1)(c) for the A.Y. 1986-87. In case of non-submission of such evidence, it is observed that there is delay of 21 years and 179 days as per Form No. 35. Therefore, please show cause as to why the appeal should not be treated as late filed as per provisions of section 249(2) of the I.T. Act”

1.4 The appellant filed reply dated 11.05.2022 (P.B. 24-25) with affidavit (P.B. 35-36) that the learned AO has given the certified copy of order etc. on 19.02.2020. The learned CIT(A) without calling any report or objection from the learned AO on the reply (P.B. 24-25) and the affidavit (P.B. 35-36), hold that receipt of the certified copies of the penalty orders could not be treated as service of original penalty order and the demand notice dated 27.08.1998. We submit when the learned CIT(A) had a serious doubt about limitation period, then it was the onerous duty of the learned CIT(A) to called upon the report or relevant record from the learned AO before adjudicating the limitation aspect but utterly failed to do so. It is further submitted that the learned AO has not raised any objection regarding the service of the orders or appeal is barred by time. It was the learned CIT(A) who ipso facto on assumptions and presumptions hold that the appeal is barred by time. Such finding is without bringing any evidence on record that the order in appeal had served on the assessee in the year 1998. 1.5 The learned CIT(A) has put heavily reliance on Sub-section (2) of Section 249 of the Act and by reproduced the same at page 3-4 of the order, hold that the appeal is sought to be initiated beyond the prescribed time limit as per sub-section (2) of section 249 of the Act. We submit the learned CIT(A) has reproduced the new provisions. The appeal is of the assessment year 1986- 87 and thus applicable provisions are here under- “249. Form of appeal and limitation. (1) ---- (2) The appeal shall be presented within thirty days of the following date, that is to say, - (a) where the appeal relates to any tax deducted under sub-section (1) of section 195, the date of payment of the tax, or (b) where the appeal relates to any assessment or penalty, the date of service of the notice of demand relating to the assessment or penalty;

Provided that where an application has been made under section 146 for reopening an assessment, the period from the date on which the application is made to the date on which the order passed on the application is served on the assessee shall be excluded, or (c) in any other case, the date on which intimation of the order sought to be appealed against is served.” [emphasis supplied; under lined by us]. 1.6 It is an admitted fact that impugned appeal relates to penalty. It is also an admitted fact that the penalty was imposed vide order dated 27.08.1998 and the notice of demand was also prepared on 27.08.1998. The appellant’s claim is that penalty order and notice of demand were served on 19.02.2020 (P.B. 19; 35-36). The appellant was presented the appeal on 18.03.2020. Thus, as per provisions of clause (b) of sub-section (2) of section 249 of the Act, the appeal was presented within thirty days of the date of service of the notice of demand. The appeal therefore was within its limitation of 30 days. 1.7 On 25.08.2022, the learned D/R has put their reliance upon the order of the learned CIT(A) and argued that learned CIT(A) has dismissed the assessee’s appeal on delay. The Hon’ble Member of the ITAT has been directed to the learned Departmental Representative to file the status report regarding the service of penalty order. But the same has not been filed by the learned Departmental Representative till today. 1.8 The appellant had also applied for inspection of relevant record vide application dated 05.09.2022 (P.B. 37-40). It was also requested in the said application (P.B. 37-40) that the copies of order, proof of their service and to whom these were served, be also provided; viz; - “2. Copy(ies) of all Penalty Notices issued for the assessment Year 1986-87 to the assessee under sections 271(1)(c) and 273(1)(b) of the Income-tax Act, 1961 with proof to whom these were served; 3. Proof of service of Penalty order of sections 271(1)(c) and 273(1)(b) of the Income-tax Act, 1961 and to whom these were served. 4. Copy of Complete Order sheets of assessment record as well as Penalty record of the assessment year 1986-87.” 1.9 The learned AO has not provided the requisite information till to date though copying fees (P.B.39) stands deposited with the said application. 1.10 Now the sole question for consideration is as to when the penalty order and notice of demand was served upon the assessee? 1.11 The penalty order and notice of demand never served prior to 19.02.2020- Section 282 of the Act provides the manner in which a valid service can be affected. It reads as follows: -

“282. Service of notice generally. - (1) A notice or requisition under this Act may be served either by post or as if it were summons issued by a court under the Code of Civil Procedure, 1908 (5 of 1908).” 1.12 The appellant had applied for inspection of relevant record vide application dated 05.09.2022 (P.B. 37-40). Inspection was provided on 19.09.2022. The appellant, therefore on the basis of inspection of the relevant record, do hereby solemnly declare and affirmed that the learned AO had not sent the impugned penalty order and notice of demand by post. If was sent, there must be a receipt of post or returned envelope in the penalty record but there was nothing as such on the record. 1.13 There is a legal maxim in the jurisprudence- “res ipsa loquiter”. As submitted, the penalty was imposed vide order dated 27.08.1998 and the notice of demand was also prepared on 27.08.1998. The process server went on 27.08.1998 to serve the penalty order etc. on assessee. The same was served through affixture on same very day i.e. 27.08.1998 (P.B. 51-52). It is a conclusive proof that the said penalty order was never sent by post. 1.14 Since, the penalty order etc. never sent by post. So, the question arises whether the service was effected in accordance with the provisions of Civil Procedure Code, 1908 (In short, “the CPC”). The relevant provisions of the service of summons under the CPC are contained in Order V Rules 12 to 20. Rule 12 provides that service shall be made on the defendant in person wherever it is practicable unless he has an agent empowered to accept the service in which case service on such agent shall be sufficient. It is an admitted fact that personal service on the assessee was not affected in the present case. The claim of the department is that service of penalty order etc. was effected by affixture. Rule 17 provides service by affixture and the same is being reproduced as under: - “17. Procedure when defendant refused to accept service, or cannot be found: Where the defendant or his agent or such other person as aforesaid refused to sign the acknowledgement, or where the serving officer, after using all due and reasonable diligence, cannot find the defendant, who is absent from his residence at the time when service is sought to be effected on him at his residence within a reasonable time and there is no agent empowered to accept service of the summons on his behalf, nor any other person on whom service can be made, the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house in which the defendant ordinarily resides or carries on business or personally works for gain and shall then return the original to the Court from which it was issued, with a report endorsed thereon or annexed thereto stating that he has so affixed the copy, the circumstances under which he did so and the name and address of the person (if any) by whom the house was identified and in whose presence the copy was affixed.”

1.15 Rule 19 provides that where a summon is returned under Rule 17, the Court shall, if the return under that rule has not been verified by the affidavit of the serving officer and may, if it has been so verified, examine the serving officer on oath, or cause him to be so examined by another Court, touching his proceedings and may make such further enquiry in the matter as it thinks fit; and shall either declare that the summons has been duly served or order such service as it thinks fit. “Rule 20. Substituted service - Where the Court is satisfied that there is reason to believe that the defendant is keeping out of the way for the purpose of avoiding service, or that for any other reason the summons cannot be served in the ordinary way, the Court shall order the summons to be served by affixing a copy thereof in some conspicuous place in the Court- house and also upon some conspicuous part of the house (if any) in which the defendant is known to have last resided or carried on business or personally worked for gain, or in such other manner as the Court thinks fit.” 1.16 We submit that before ordering for substituted service, the learned AO must be satisfied that the assessee is keeping out of the way for the purposes of avoiding service or that for any other reason the penalty order and notice of demand cannot be served in the ordinary way. Further, before affixture the serving officer must use its due and reasonable diligence to find out the assessee and if the circumstances as mentioned in Rule 17 exist then only the penalty order and notice of demand may be served by affixture that too in the presence of witnesses by whom the house was identified and in whose presence the copy was affixed. We rely- CIT v. Ramendra Nath Ghosh; 82 ITR 888 (SC) (PB 58-60), relevant para 8-10; In this case, the service was affected by affixture by the Inspector of Income-tax but in his report, he did not mention the names and addresses of the person who identified the place of business of the assessee nor did he mention in his report or in the affidavit filed by him that he personally knew the place of business of the assessee. The Supreme Court held that the service of notice was not in accordance with law. Dr. K.C. Verma v. ACIT; (2003) 84 ITD 33 (Delhi bench of ITAT) PB 61-66), relevant para 8-10; In this case, the notice was issued and served on the same day. It was held that the alleged service of notice was not in accordance with law. Facts of the case do not point out that any effort was made to find out the whereabout of the assessee. There is also no report to the effect that assessee was not available, despite proper effort, at the residence. Further, the alleged affixture of the notice was not in the presence of any witness, which is the requirement of law. There is also no material on the record on the basis of which the AO could have reason to believe that; defendant was keeping out of the way for the purposes of avoiding service or that for any other reason, summons could not be served in ordinary way. Further, there is no order passed by the AO to the effect; that service by affixture was made in terms of Rule 20. So, it appears that the so- called service was in utter disregard of the provisions of Order V Rules 17, 19 & 20. Accordingly, it was held that there was no valid service of notice.

1.17 In the impugned appeal, the service was affected by affixture by one Ganeshnarayan. There is also no material on the record on the basis of which the learned AO could have reason to believe that the appellant was keeping out of the way for the purposes of avoiding service or that for any other reason, penalty order and notice of demand could not be served in ordinary way. Further, there is no order passed by the learned AO to the effect; that service by affixture was made in terms of Order V Rule 20 of CPC. So, the so-called service was in utter disregard of the provisions of Order V Rules 17, 19 & 20 of the CPC. 1.18 Further, the said Ganeshnarayan in his report; did not mention the names and addresses of the person who had identified the place (P.B. 52). The said Ganeshnarayan was not filed his affidavit that he personally knew the place of the assessee. The learned AO was also not examined him oath regarding service. Thus, the service of penalty order and the notice of demand was not in accordance with law. 1.19 It is submitted that the report of said Ganeshnarayan shows that witness of affixture was one Sohanlal (P.B. 52) but address of Sohanlal was not mentioned/written on the said report though mandatory. We further submit that the affixture report of show cause notice dated 16.06.1998 (P.B. 49-50) shows that said Sohanlal was also witness of that affixture. But the appellant is neither acquainted to said Sohanlal nor he was a neighbor of appellant. 1.20 It is also submitted that every time presence of said Sohanlal create a serious doubt that indeed said Sohanlal was an alive person or not. It appears so that either said Ganeshnarayan was put false signature in the name of Sohanalal or service was manipulated by the learned AO because address of Sohanalal is not mentioned in both reports (P.B. 50 & 52). 1.21 In the light of above, we submit that the penalty order and notice of demand was never served prior to 19.02.2020. The burden to prove the service was on the learned lower authorities but utterly failed to discharge the burden. Further one side the assessee has filed all the details, affidavit documents regarding the services, and the learned AO has also not filed any objection in this regard as admitted by the learned CIT(A) himself, other side the learned CIT(A) has not brought any contrary documentary evidences on record in his support, he has only proceeded his own assumption, presumption and guess work ignoring the material evidences available or placed on record. 1.22 It is settled principle of law that an allegation remains a mere allegation unless proved. Suspicion cannot take the place of the reality. We rely-

Dhakeshwari Cotton Mills, 26 ITR 775 (SC); R.B.N.J. Naidu v. CIT, 29 ITR 194 (Nag); Kanpur Steel Co. Ltd. v. CIT, 32 ITR 56 (All) and CIT v. Kulwant Rai, 291 ITR 36 (Del). 1.23 The finding of learned CIT(A) that affidavit is not notarized is perverse- As submitted here in above, the learned CIT(A) had suo moto issued a notice dated 04.05.2022 on assumption and presumptions that there is delay of 21 years and 179 days as per Form No. 35. In response thereto, the appellant filed reply dated 11.05.2022 along with dully sworn affidavit. However, the learned CIT(A) observed that the affidavit is a self-serving document and further that such affidavit is not notarized. We submit the finding that such affidavit is a self-serving document is illegal. The law mandates that the evidence of formal character may be given on affidavit. Further, the finding that affidavit is not notarized, is improper. Non-notarising of an affidavit is a clerical mistake. It can be cure. Further, Clause (b) of sub-section (1) of Section 131 of the Act empowered to the learned CIT(A) to call for the appellant and examined him on oath. It reads as- “131. Power regarding discovery, production of evidence etc. (1) The Assessing Officer, Deputy Commissioner (Appeals)] Joint Commissioner, Commissioner (Appeals) and Chief Commissioner or Commissioner shall, for the purpose of this Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters, namely: - (a)----- (b) enforcing the attendance of any person, including any officer of a banking company and examination him on oath;” 1.24 In the light of above, the findings are without material, contrary to the material on record, perverse, vitiated and against the principles of natural justice, the impugned order is illegal and liable to be quashed. 1.25 The finding of the learned CIT(A) that assessee has not adduced any reasonable cause which prevented it from filling the appeal within 30 days is perverse. We submit it is not the case that the assessee had been received the order and after receiving, has not filed the appeal within the time or appeal filed after the 30 days. The assessee had filed the appeal within time from the date of receiving the order and notice of demand. There was no evidence on record that the order was served upon the assessee prior to 19.02.2022. The learned Departmental Representative has also not filed any report or iota of evidence. The judgments referred by the learned CIT(A) is therefore not applicable in the present case.

1.26 Further the learned CIT(A) has in their notice dated 04.05.2021 only asked to provide the documentary evidence regarding the date of service of penalty order. In case of non-submission of such evidences the appeal should not be treated as belated. The assessee has filed the reply with affidavit. But the learned CIT(A) has dismissed the appeal without issuing any show cause notice as to why the appeal should be dismissed on the ground of delay and without an opportunity of being heard. 1.27 Thus, looking to the above facts, evidences and material we submit there is no delay in filling the appeal, hence the question to file an application for condonation of delay do not arise. It was onerous duty of the learned CIT(A) to prove and brought the documentary evidence that there was delay. Thereafter confront to the assessee and asked to file the application of condonation of delay, if required. Hence the action of the learned CIT(A) was illegal, invalid and against the principles of natural justice. Ground No. 2- The learned AO was not justified in imposing the penalty of rupee 6,29,730 under section 271(1)(c) of the Act. A.O.- Show cause notice dated 20.03.1997 was issued but no reply was submitted by the assessee. Show cause notice again issued on 16.06.1998 and served by affixture but neither assessee was appeared nor any reply was filed. Therefore, it is implied that assessee had admitted the concealment of income of rupee 13,00,960. Penalty worked out on 100% of tax sought to be evaded. CIT (A)- The learned CIT(A) has not stated anything on the merit of the case though written submission on merit was filed (P.B. 9-18). Our submission— 2.1. Section 271(1)(c) and Section 274 of Act are relevant to examine the question involved in the case. A reading of the aforementioned sections in juxtaposition goes to shows that in order to impose the penalty, the learned AO, apart from others, ought to have proved the following ingredients: - (1) Assessee has been furnished return of income, and (2) In assessment proceedings, it was found that in such return- (i) there was Concealment of the particulars of income; or (ii) there was furnishing of inaccurate particulars of income, (3) intention of the assessee was to evade the tax,

(4) assessment has become final; (5) the assessee had been heard prior to imposition of the penalty, (6) for hearing, a notice, having specific ground of the penalty, was served on the assessee; and (7) If penalty exceeds twenty-five thousand, then prior sanction for imposition of the penalty was obtained from the appropriate authority. In other words, aforementioned conditions are sine qua non for imposition of the penalty. We submit the learned AO has failed to bring the aforesaid ingredients on the record and therefore the impugned penalty is invalid, improper and liable to deleted. 2.2 There is no concealment of income: - The learned AO imposed the impugned penalty on 27.08.1998 on the ground that assessee had admitted the concealed income of rupee 13,00,960 (P.B. 51-52). We submit the learned AO assessed the income at rupee 13,00,960 on 20.03.1997 (P.B. 44- 45) but the learned CIT(A) had reduced it up to rupee 1,13,230 vide order dated 29.02.2008 (P.B. 2-12). The department has not preferred any appeal against it and thus, it has become final. The finding arrived at by the learned AO is therefore contrary to the record and is perverse. The impugned penalty is misplaced and deserves to be deleted. 2.3 The penalty was without awaiting the final order: - The learned AO while imposing the impugned penalty, indulged in assumptions; presumptions and held that the CIT(A) confirmed the order, ignored the fact that the appeal was pending before the ITAT and assessment was not become final. The material dates and events of the case, as emerges from the record, are as under: - Sl. Date Particulars Remarks/Comments No. 1 24.09.1990 Return was furnished. Income was declared at rupee 13,230/- 2 29.01.1993 Assessment was made u/s 144 of the Income was assessed at Act. rupee 12,80,460/-. 3 16.03.1993. Learned CIT(A) dismissed the appeal. 4 21.03.1995 The ITAT set aside the assessment. It was sent back to the learned AO with a direction to made de novo assessment.

5 20.03.1997 Assessment was again made. Income was assessed at rupee 13,00,260/- (P.B. 41-45). penalty proceedings under section 20.03.1997 271(1)(c) and 273(2)(b) were also separately initiated (P.B. 45-48). 23.02.1998 Learned CIT(A) dismissed the appeal. It was dismissed for want of prosecution. Appeal was filed in ITAT. 7 16.06.1998 The notice u/s 271(1)(c) of the Act was The learned AO claims issued (P.B. 49-50). that it was served through affixture. 8 27.08.1998 Penalty of rupee 6,29,730/- u/Sec Penalty order was never 271(1)(c) of the Act was imposed on served prior to 19.02.2020 the ground that assessee has (P.B. 19; 35-36). concealed income of rupee 13,00,960/- (P.B. 51-52). 9 The ITAT set-aside the order dated It was sent back with a 14.07.2005 direction that appeal be 23.02.1998 of the learned CIT(A). decided on merit as per law. 10 29.02.2008 The learned CIT(A)-III has allowed the (P.B. 2-12). appeal in part. 11 22.09.2017 Appeal effect was issued (P.B. 15-16). Finally, income was assessed at rupee 1,13,230/- and tax was payable at rupee 37,658. The above material dates and events shows that the assessment order had become final on 29.08.2008, whereas the impugned penalty was imposed on 27.08.1998. Section 275 of the Act provides that penalty shall not be imposed unless and until assessment order has become final. 2.4 No proper opportunity of hearing: - The assessee must have been heard prior to imposition of the penalty. But not heard. The learned AO claimed that show cause notice u/s 271(1)(c) had issued on 20.03.1997 (P.B. 47-48). On perusal of the said notice, it shows that it a vague notice. 2.4.1 The learned AO also claimed that again a show cause notice u/s 271(1)(c) was issued on 16.06.1998 and served through affixture (P.B. 49-50). As evident from the said notice, it was issued on 16.06.1998. It was affixed on

same very day i.e., 16.06.1998. On inspection of the relevant record on 19.09.2022 (P.B. 37-38), we found that it was not dispatched by post or any other mood of service whereas Section 282 of the Act provides that a notice issued under the Act may be served on the person therein named either by post or as if it were a summons issued by a court under the CPC. We submit no such notice was served on the assessee and therefore no reasonable opportunity of being hearing was given to the assessee prior imposition of penalty. Sections 274 mandates that a reasonable opportunity of hearing must be given to the assessee to enable him to appear, answer and file their reply of defence on the day, date and time specified. The sub-section (1) of section 274 is read as follow; viz.- “274. Procedure. (1) No order imposing a penalty under this chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard.” 2.4.2 The learned AO has failed to discharge his burden. The penalty therefore is imposed in violation of principles of audi alterum partem and is void ab initio. Reliance is- J. P. Sharma and Sons v. CIT, [1985] 151 ITR 138 (Raj) - The purpose and intent of the provisions of s. 274(1) are that the assessee should have full opportunity of hearing before penalty is levied upon him. 2.5 The specific ground of penalty had never been communicated: - The term ‘reasonable opportunity’ postulates that the facts, on the basis of which the penalty is proposed to be imposed, must have been communicated to the assessee but never communicated. In the impugned penalty order, the learned AO has claimed that the assessee has concealed the income. But both penalty notices (P.B. 47-49), shows that they do not have any such ground. Notice dated 20.03.1997 (P.B. 47-48) is on printed form of I.T.A. S-29 and have not struck down inappropriate portion, blanks are not filled up or struck down. Thus, both notices are vague and void ab initio. 2.6 Penalty notice was without applying of mind and is defective: - The impugned penalty notice dated 20.03.1997 as issued u/s 274 r.w.s. 271 of the Act (P.B. 47-48), is defective as it does not spell out the grounds on which the penalty is sought to be imposed. It is issued in a standard Performa and the irrelevant portion of the notice has not been struck off. It shows that the learned AO has not applied his mind to the specific charges against the appellant. The learned AO has not specified that in which of limb the case of

appellant would fall i.e., for “concealment of particular of income or for furnishing of inaccurate particulars of income”. We rely- Shri Chandmal Kumawat v. ITO; ITA No. 441/JP/2017 Order dated 21.12.2017 of Jaipur bench of ITAT (P.B. 67-78), relevant para 18; It is held that where the factum of non-striking off of the irrelevant clause in the notice has been held as reflective of non-application of mind by the AO and in the light of facts and circumstances of the present case and the above discussion, the penalty imposed under section 271(1)(c) is liable to be deleted.

Shri Mahendra B. Chowhan v. ACIT; ITA No. 1590/Bang/2019 Order dated 19.10.2020 of Bangalore bench of ITAT (P.B. 79-93), relevant para 12-16. Manjunath Cotton Mills (Karnataka High Court) The matter is directly covered by the above judicial precedents, therefore the penalty so imposed may please be deleted in toto. 2.7 Independent evidence is necessary: - It is sine qua non for imposition of a penalty that the learned AO must have brought on record as to how and in what manner the assessee was concealed their income or have furnished inaccurate particulars of income and thereafter must have issued a specific notice. We submit there is nothing on record which shows that the learned AO was issued a specific notice. We place reliance on the following decision: - CIT vs. Reliance Petroproducts Pvt. Ltd.; 322 ITR 158 (SC) The Pr. Commissioner Of Income Tax vs M/S Deccan Mining Syndicate Pvt. ltd., (Karn. H.C.) Order dated 21.06.2018. 2.8 No Penalty if addition is made on estimate basis: - It is found as a matter of fact from the assessment order and the appellate order, that the learned AO made additions (remained after first appeal at rupee 1,00,000; whereas the learned AO claimed it at rupee 13,00,260) on estimate basis. There is no positive fact or finding had been found so as to even make the addition. We submit in such circumstances penalty could not be levied. We rely: - CIT v. Krishi Tyre Retreading and Rubber Industries, (2014) 360 ITR 580 (Raj); In this case, the assessee was engaged in retreading of old (worn out) tyres of all vehicles. Besides the job work, the assessee also sold such raw material to local parties. A survey operation was carried out at the business premises of the assessee on 16.11.1995, where some

documents were found, which were not satisfactorily explained and accordingly, on account of the discrepancies, an estimated addition was made. The Tribunal restricted the addition, inter alia, referring to the fact that addition was made on estimate basis. Penalty was imposed by the AO. On appeal, it was held that the addition had been sustained purely on estimate basis and no positive fact or finding had been found so as to even make the addition; no penalty under section 271(1)(c) of the Act could be said to be leviable. SHARDABEN SHANKERJI THAKORE SHARDA NIVAS vs. I T O, ITAT (AHMD A) - quantification of penalty is depended upon addition made to income of assessee. And in this case quantification of addition has not been finalized before imposition of the penalty. 2.9 Further it is also injustice with the assessee that when the additions for which the penalty is imposed have been deleted and still the penalty is collected for those addition, which is not survive. We submit that the learned CIT(A) should have been considered the matter on the merit. It is the case where a person is being punished for the offence which is not committed by him. The appellant therefore prays that the appeal be accepted and impugned penalty of rupee 6,29,730.00 may please be deleted or in the alternative it should be restricted for rupee 37,658; the tax worked out on the final assessed income of rupee 1,13,230 vide appeal effect dated 22.09.2017.’’

3.7 On the contrary, the ld. DR relied upon the order passed by the ld. CIT(A). 3.8 The Bench has heard both the parties and perused the materials available on record as well as the written submissions filed by the assessee. From the records placed before the Bench, it is noticed that order of assessment was passed thereby total income of the assessee was assessed at Rs.13,00,960/- and simultaneously penalty proceedings were initiated against the assessee. However, in the second round of litigation, the ld. CIT(A) restricted the income of the assessee on estimate basis at Rs.1,13,230/- but in the meantime, the order of penalty was on 27-08-1998 on the basis of old assessment order which was substituted by the order of the ld.

CIT(A). However, the penalty order was never revised by the AO. It may be worthwhile to mention that as per positive case of the assessee the penalty order for the first time was communicated to the assessee on 19-02-2020. Therefore, there was no delay on the part of the assessee for preferring appeal before the ld. CIT(A) but the ld. CIT(A) had dismissed the appeal of the assessee on the ground of Limitation. In this regard, the ld. AR of the assessee prayed before the Bench that the assessee has filed reply dated 11-05-2022 with affidavit that the AO had given the certified copy order of penalty on 19-02-2020 itself. Thus, it is noticed that penalty order and notice of demand was never served prior to 19-02-2020. Therefore, in the view of the Bench, there was no delay on the part of the assessee in preferring appeal before the ld. CIT(A). 3.9 Now coming to the merits of the addition, admittedly penalty proceedings in this case was initiated on the basis of old assessment order which was not in existence and the ld. CIT(A) had drastically reduced the addition by restricting it at Rs.1,13,230/- on estimate basis vide order dated 29-02-2008. Therefore, in these circumstances, the penalty order based on earlier assessment order wherein total income of the assessee was assessed at 13,00,960/-, would not survive as the AO was under obligation to revise the order of penalty in view of the order of the ld. CIT(A) where total income of the assessee was restricted to Rs.1,13,230/-. In this way, it is noted that the penalty order of the AO does not survive and hence no

penalty can be imposed on the basis of earlier assessment order of the AO which had already been set aside by the ld. CIT(A). Furthermore, since the order of ld. CIT(A) restricting the penalty was purely based on estimate basis. Therefore, there were no positive facts or findings in making addition. Thus, in these circumstances, more particularly, where addition is made on estimate basis, no penalty is sustainable as has been held in the case of CIT vs Krishi Tyre Retreading and Rubber Industries (2014) 360 ITR 580 (Raj) wherein it was held that addition had been sustained purely on estimate basis and positive fact or findings had been found so as to even make the addition; no penalty under section 271(1)(c) of the Act could be said to be leviable. In view of the decision of Hon’ble Rajasthan High Court in the case CIT vs Krishi Tyre Retreading and Rubber Industries (supra), the Bench finds that the penalty levied u/s 271(1)(c) of the Act in the case of the assessee deserves to be deleted. Thus the appeal of the assessee in ITA No. 287/JP/2022 is allowed. 4.0 As regards the other appeals of the assessee relating to penalty mentioned hereinabove, it is not imperative to repeat the same facts as the Bench finds that the facts and circumstances in other appeals are same, therefore, the decision taken by this Bench in ITA No. 287/JP/2022 shall apply mutatis mutandis in ITA No. 286, 289, 290 and 291/JP/2022. Thus these appeals of the assessee are allowed.

5.0 As regards the appeal of the assessee in ITA No.288/JP/2022 wherein the ld. CIT(A) vide his order dated 29-02-2008 had restricted the addition amounting to Rs.1,20,410/- by observing at page 9 of his order under:- ‘’………it is held that estimation of appellant’s income at Rs.1 Lac for the year under consideration, in addition to the returned income, will be fair and reasonable. Therefore, the addition is restricted to Rs.1,20,410/- and the balance addition is deleted. 5.1 After hearing both the parties and perusing the materials available on record, the Bench finds to restore the issue as to not giving tax credit of Rs.2.40 lacs by the AO. It is also noted from the ld. CIT(A)’s order dated 8-06-2022 for the assessment year 1987 wherein the assessee has taken up this issue of giving tax credit at 4 page of his order as under:- ‘’1. It is also submitted that learned AO has allowed the credit in similar circumstances in assessment year 1986-87 on the basis of such affidavit but not allowed in assessment year 1987-88. We submit the finding of the learned AO is therefore against the principles of natural justice, equity and in violation of principles of equality before the law.’’

Hence, in this matter, it will be in the interest of equity and justice to restore the matter to the file of the AO to consider it as per law and provide the tax credit effect, if arises by taking indemnity bond from the assessee. Before parting, the Bench makes it clear that its decision to restore the matter back to the file of the A.O. for A.Y. 1987-88 shall in no way be construed as having any reflection or

expression on the merits of the dispute, which shall be adjudicated by A.O. independently in accordance with law. Thus the appeal of the assessee in ITA No. 288/JP/2022 is allowed for statistical purposes. 6.0 In the result, the appeals of the assessee in ITA No. 286, 287,289,290 & 291/JP/2022 are allowed and ITA No. 288/JP/2022 is allowed for statistical purposes. Order pronounced in the open court on 9/11/2022.

Sd/- ¼lanhi xkslkbZ½ (Sandeep Gosain) U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 9 /11/2022 *Mishra आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Shri Jugal Kishore Parwal, Jaipur 2. izR;FkhZ@ The Respondent- The ITO, Ward 4(5), Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No.286 to 291/JP/2022) vkns'kkuqlkj@ By order,

Asstt. Registrar