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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
आदेश/O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 22.02.2023 passed by learned Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”] by which the penalty-order dated 25.10.2016 passed by ITO, Ward-1(1), Ujjain [“Ld. AO”] imposing a penalty of Rs. 10,000/- u/s 271(1)(b) of Income-tax Act, 1961 [“the act”] has been upheld, the assessee has filed this appeal.
Heard the learned Representatives of both sides and the case records perused. Page 1 of 5
Shri Harvinder Singh Kalra, Ujjain vs. ITO Wd. 1(1), Ujjain Assessment year 2014-15 3. Ld. AR for assessee makes a brief submission on case history of assessee and submits that in the present case, there had been two rounds of assessment-proceedings by AO, one by way of original scrutiny- assessment u/s 143(3) through order dated 29.07.2016 and other by way of consequential-assessment u/s 144 read with section 263 through order dated 27.08.2019. He submits that the impugned penalty of Rs. 10,000/- u/s 271(1)(b) had been imposed, vide penalty-order dated 25.10.2016, for non-compliance of notice u/s 142(1) dated 25.04.2016 (fixed for compliance on 06.05.2016) issued by AO during original scrutiny-assessment and not during consequential-assessment.
With aforesaid brief details, Ld. AR assails the penalty-order on two counts as under:
(i) Firstly, he submitted that the assessee was a having reasonable cause for non-compliance of the notice dated 25.04.2016 issued by AO; the said cause was also submitted to CIT(A) and is narrated by CIT(A) in Para No. 5 of appeal-order too. He submitted that by impugned notice dated 25.04.2016, the AO sought compliance from assessee on 06.05.2016 but during the period from 22.04.2016 to 21.05.2016, there was “Simhasta” with “Shahi Snan on 09.05.2016”, a great festival of “Kumbh”, which was attended by persons from all over India. And the assessee’s guests and relatives also came and stayed with assessee. Therefore, it was difficult for assessee to comply with the notice issued by AO. Ld. AR submitted that owing to this reason only, the non-compliance of notice issued by AO occurred. Ld. AR submitted in such situation, no penalty should be imposed having regard to the provision of section 273B which reads as under:
Shri Harvinder Singh Kalra, Ujjain vs. ITO Wd. 1(1), Ujjain Assessment year 2014-15 “273B. Notwithstanding anything contained in the provisions of clause (b) of sub-section (1) of section 271, ……., no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.” (ii) Secondly, Ld. AR submitted that although the AO has imposed penalty for non-compliance of notice u/s 142(1) but it is to be noted that the AO passed assessment-order u/s 143(3) and not u/s 144. He submitted that the non-compliance of notice issued u/s 142(1) entails two consequences, one is penalty u/s 271(1)(b) and other is ex-parte assessment u/s 144. But in the present case, the AO made assessment u/s 143(3) accepting returned income of assessee after verification of assessee’s submissions and did not resort to ex-parte assessment u/s 144. Ld. AR also filed a copy of assessment-order passed by AO u/s 143(3) after conclusion of hearing as per direction given by the bench. That means, Ld. AR contended, the AO has relieved the assessee from non-compliance of notice.
Ld. DR, though supported the order passed by AO, but left the matter to the wisdom of Bench.
We have considered the submissions of both sides and perused the orders of lower authorities. After a careful and judicious consideration, we find merit in the twin submissions made by Ld. AR. Firstly, we find that the AO required the assessee to make compliance on 06.05.2016 but during the period from 22.04.2016 to 21.05.2016 there was a festival of “Kumbh” in the city of Ujjain and the assessee had to take care of his guests and relatives, which constituted a practical and reasonable cause. On perusal of Para No. 6.2 of CIT(A) order, we find that the CIT(A) has mistakenly turned down the assessee’s explanation by mentioning “the date 07.07.2016 on which Shri Harvinder Singh Kalra, Ujjain vs. ITO Wd. 1(1), Ujjain Assessment year 2014-15 assessee was asked to comply is out of the purview of the period claimed by assessee to be busy with relatives i.e. 22.04.2016 to 21.05.2016”. From the penalty-order, it is discernible that the date of 07.07.2016 taken into account by CIT(A) is the date fixed by AO in show-cause notice issued u/s 274 whereas the AO has imposed penalty for non-compliance of 142(1) notice on 06.05.2016. Therefore, the CIT(A) has picked a wrong date while adjudicating first-appeal and turned down assessee’s explanation which is not correct. In any case, we are satisfied that the assessee has given a reasonable cause of non-compliance on 06.05.2016. Secondly, we also find merit in the contention of Ld. AR that by making assessment u/s 143(3) and not invoking section 144, the AO has relieved the assessee from non- compliance of section 142(1). In fact, the AO has mentioned in the assessment-order about the notice dated u/s 28.08.2015 u/s 143(2) and notice dated 25.04.2016 u/s 142(1) issued by him and thereafter noted “In response to the aforesaid notices, Shri A.K. Goyal, ITP attended the assessment proceedings from time-to-time with whom the case was discussed. Written submissions filed by the assessee have been verified and kept on record.” Therefore, Ld. AR is very much correct in submitting that the assessment-order has been passed u/s 143(3) after considering the submissions made by assessee. Needless to mention that the purpose of notice u/s 142(1) is to collect details/documents required for making assessment and in the present case, the AO has accepted the submissions made by assessee before him and thereafter passed assessment-order
Shri Harvinder Singh Kalra, Ujjain vs. ITO Wd. 1(1), Ujjain Assessment year 2014-15 accepting the returned income of assessee without any variation. Therefore, both ways, as argued by Ld. AR, the present case does not warrant sustenance of penalty. Hence, we quash the penalty and allow this appeal of assessee.
Resultantly, this appeal of assessee is allowed.
Order pronounced in the open court on 03.10.2023.