M/S DIVYA ENTERPRISE,SURAT vs. INCOME TAX OFFICER, WARD - 3(3)(2), SURAT

Assessee represented by Shri Arjav Vidani, CA Department represented by Shri Vinod Kumar, Sr. DR Date of Institution of appeal 28/03/2023 Date of hearing 20/04/2023 Date of pronouncement 21/04/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income Tax (Appeals) (in short, the ld. CIT(A)) dated 31/01/2023 for the Assessment Year (AY) 2014-15. The assessee has raised following grounds of appeal: “1. Learned Assessing Officer has erred in law ad fact by imposing penalty under Section 271F of Rs. 5,000/-

2. Your appellant prays and with your Honours pre permission reserve the right to add, alter, amend or withdraw ay of above ground of appeal.”

2. Brief facts of the case are that the Assessing Officer levied penalty of Rs. 5,000/- under Section 271F of the Income Tax Act, 1961 (in short, the M/s Divya Enterprise Vs ITO Act) vide order dated 29/06/2018 by holding that the case of assessee was reopened on the basis of information that the assessee has taken accommodation entry of loan from M/s Tishiya Trading Company, which is sister concern of Kamal Zaveri Group, which is a paper company, involving in providing accommodation entries. The assessee obtained unsecured loan of Rs. 15.00 lacs on 7th March 2014, from Tishiya Trading Company, which escaped the assessment and required to be taxed. The Assessing Officer after serving notice under Section 148 of the Act dated 01/03/2017 and serving various other notices, completed assessment under Section 144 r.w.s. 147 of the Act determining total income of Rs. 15.00 lacs. The Assessing Officer also initiated penalty under Section 271F of the Act by taking a view that the assessee has not filed return of income for the assessment year under consideration. Show cause notice for levy of penalty was issued to assessee on 22/12/2017. The Assessing Officer recorded that no reply of such show cause notice was filed by the assessee. The Assessing Officer accordingly passed the order under Section 271F dated 29/06/2018.

3. Aggrieved by the penalty under Section 271F of the Act, the assessee filed appeal before the ld. CIT(A)/NFAC. Before the ld. CIT(A), the assessee submitted its written submission vide submission dated 15/11/2022. The submission of assessee are recorded in para 7.2 of order of ld. CIT(A). In the submission, the assessee stated that the assessee M/s Divya Enterprise Vs ITO firm closed their business in the year 2009 and left Surat. The notice was served at the address which was left, in fact, the notice was not served on the assessee. The person who has occupied the erstwhile place of business, informed the assessee at their native place to comply the assessment proceedings. The assessee participated in the assessment proceedings which is duly acknowledged by the Assessing Officer in the assessment order. The case of assessee was reopened due to identical name with some other tax evader. The addition in the assessment order and penalty was levied without verification. The ld. CIT(A) after considering the submission of assessee, dismissed the appeal by holding that the Assessing Officer was justified in imposing penalty under Section 271F of the Act of Rs. 5,000/- for non-filing of return of income. Further aggrieved, the assessee has filed the present appeal before this Tribunal.