PARESHBHAI HARSHADBHAI GOHIL,SURAT vs. DY. COMMISSIONER OF INCOME TAX, CC-2, SURAT

The ld. CIT(A) after considering the submission of assessee held that it is a case where the assessee had totally ignored the notice under Section 142(1) of the Act and confirmed the penalty levied under Section 271(1)(b) of the Act for Rs. 10,000/-. Further aggrieved, the assessee has fled the present appeal before this Tribunal.

I have heard the submissions of the learned authorised representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) of the Revenue and have also perused the orders of the lower authorities carefully. The ld. AR of the assessee submits that assessment order was passed by Assessing Officer on 4 to 430/Srt/2022 Pareshbhai Harshadbhai Gohel Vs DCIT 25.05.2021 by accepting return of income. The assessing officer accepted the explanation of assessee and accepted the return income. The Assessing Officer levied penalty under Section 271(1)(b) for non-compliance of notice dated 03.12.2020. The ld. AR submits that in the month of December, 2020, it was a severe period of Covid-19 infection throughout the country and the assessee could not file his explanation and sought adjournment. It is not the case of assessing officer that the assessee remained silent on various notices and response before the Assessing Officer. The assessee subsequently made full compliance, the explanation offered by assessee on various issues was not accepted and ultimately made various additions/disallowances by the Assessing Officer in final assessment order. Before the ld. CIT(A), the assessee explained that there was reasonable cause for non- filing/response and seeking time for making compliance to the notices issued by assessing officer. Though, the ld. CIT(A), not accepted that complete details filed by assessee, yet the penalty order for alleged default, was sustained to ITA No.424 to 430/Srt/2022 Pareshbhai Harshadbhai Gohel Vs DCIT the extent of Rs. 10,000/-, however, in other similar cases the penalty was restricted to the extent of Rs. 5,000/-.

The ld. AR submits that the Coordinate Benches of the Tribunal in a series of decisions held that when the assessment has been made under Section 143(3) and not under Section 144, it means that subsequent compliance in the assessment proceedings was considered as a good compliance and the defaults committed earlier were ignored by the Assessing Officer and therefore, there is no cause for levying of such penalty under Section 271(1)(b) of the Act. The ld. AR of the assessee accordingly prayed for deleting the penalty of Rs. 10,000/-. To support his submission, the ld. AR has relied upon the following decisions:

On the other hand, the ld. Sr. DR for the revenue supported the orders of lower authorities. The ld. Sr. DR submits that acceptance of return of income has no effect on non- compliance of notice during the assessment. The penalty under Section 271(1)(b) or 272A(1)(d) is levied for non- compliance of notice issued by Assessing Officer or by ld. CIT(A). The alleged subsequent compliance was made by assessee when penalty was levied by Assessing Officer. Before levying penalty, the assessee was given full opportunity before levying penalty under Section 271(1)(b) or under Section 272A(1)(d) of the Act as the case may be. From the order of lower authorities, it is clearly discernible that assessee is in habit for non-compliance. This is a fit case for levy of penalty, as has been levied by Assessing Officer and confirmed by the ld. CIT(A).

I have considered the rival submissions of both the parties and have gone through the orders of lower authorities. I have also deliberated upon the various case laws relied by to 430/Srt/2022 Pareshbhai Harshadbhai Gohel Vs DCIT the ld. AR of the assessee. I find that the Assessing Officer passed the assessment order on 25.05.2021 and accepted returned income. I noted that the Assessing officer levied the penalty of Rs. 10,000/- for non-compliance of notice vide his order dated 03/12/2020, that is prior to passing the assessment order. I further find that the ld. CIT(A) has not accepted the explanation of assessee and sustained the penalty to the extent of Rs. 10,000/-. Before me the ld AR for the assessee vehemently submitted that it was severe pandemic during the period when the assessee was served first notice under section 142(1) dated 03.12.2022, thus, I find convincing force in the submission of ld. AR of the assessee that during corresponding period, wherein the assessee could not make compliance of notice issued by Assessing Officer was a severe Covid-19 pandemic period. However, thereafter the assessee made full compliance of various notices issued by Assessing officer and ultimately the explanation or submission furnished and assessment order was passed under section 143(3).

I further find that Division Bench of Delhi Tribunal in Akhil Bhartiya Prathmik Shmshak Sangh Bhawan Trust Vs ADIT to 430/Srt/2022 Pareshbhai Harshadbhai Gohel Vs DCIT (supra) held that where assessee had not complied with notice under Section 142(1) but assessment order was passed under Section 143(3) and not under Section 144, that meant that subsequent compliance in the assessment proceedings was considered as a good compliance and defaults committed earlier were ignored by Assessing Officer and, therefore, penalty under Section 271(1)(b) was not justified. I further find that similar view was followed in a series of decisions as has been relied by the ld. AR for the assessee in his submission. Thus, considering the fact that assessment in the present case was completed under Section 153A/143(3) in accepting return of income, I find that it was sufficient compliance, merely because the assessee could not make compliance due to some bonafide reason, no penalty under Section 271(1)(b) of the Act could be levied on the assessee.

In view of aforesaid factual and legal position, I direct the Assessing Officer to delete the entire remaining impugned penalty. In the result, ground of appeal raised by assessee is allowed.