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Income Tax Appellate Tribunal, “ SMC ” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI MAKARAND V. MAHADEOKAR, ACCOUNTNAT MEMBER
] ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTNAT MEMBER Assessment Year: 2015-16 Fatehsinh Udesinh Parmar, The Income Tax Officer, At. Dena Para, Vs Ward-3(1)(4), Hami Dena Road, Vadodara Vadodara-390022 Gujarat PAN: AWWPP2183 M अपीलाथ�/ (Appellant) �� यथ�/ (Respondent) Assessee by : Shri Anil B Thakkar, AR Revenue by : Shri N.J. Vyas, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 15/05/2024 घोषणा क� तार�ख /Date of Pronouncement: 31/05/2024 आदेश/O R D E R
PER MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER
This appeal is filed by the assessee as against the order dated 4-8-2023 passed by the Commissioner (Appeals), National Faceless Appeal Centre, Delhi, (hereinafter referred to as 'NFAC'), dismissing the appeal against the order penalty passed by the Assessing Officer (hereinafter referred as “AO”) under section 271(1)(b) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') relating to the assessment year (A.Y) 2015-16.
Fatehsinh Udesinh Parmar vs. ITO Asst. Year: 2015-16
2 2. The brief fact of the case is that the assessee is an individual having Income from job-work in painting. The assessee was identified as non-filer and there was an information that the assessee was received contract income of Rs. 2,05,05,483/- and commission income of Rs.10,000 during the year under consideration. Therefore, the case was reopened u/s147 and notice under section 148 was issued on 31.03.2021. However, there was no compliance by the assessee in response to the notice u/s 142(1).
Two show cause notices were sent to the assessee on 7.4.2022 and 5.8.2022 under section 271(1)(b) as why not to levy of penalty for noncompliance of the notices issued under section 142(1) of the Act. Subsequently order u/s 144 r.w.s. 147 was passed by the AO determining total income at Rs. 32,82,480/-.
The assessee responded vide reply dated 2-8-222, along with the affidavit, stating that he is resident of small village Dena, and he is SSC fail and his father is farmer. He also stated that he does not have any knowledge of Income Tax and other laws and he is totally dependent on one of the staff members of a company for which he does job work. He further stated that he handed over these notices to Shri Rajanbhai on whom he was dependent. He also produced some judicial pronouncements in his reply. However, the assessing officer, not being satisfied with the reply form the assessee levied a penalty of Rs. 10,000 under section 271(1)(b) of the Act.
5. Aggrieved against the above penalty order, the assessee filed appeal before the learned Commissioner (Appeals)/NFAC. Same facts, as put forward before the AO were reiterated by the assessee before NFAC. The Fatehsinh Udesinh Parmar vs. ITO Asst. Year: 2015-16
3 explanation offered were not accepted by NFAC and dismissed the appeal of the assessee confirming levy of penalty under section 271(1)(b) of the Act.
Aggrieved against the same, the assessee is in appeal before us raising the sole ground that –
The learned Commissioner (Appeals) erred in upholding penalty of Rs. 10,000 u/s 271(1)(b) of the Act levied by the Learned Income Tax Officer. He ought not to have upheld the same based on the facts of the case.
We have given our thoughtful consideration and perused the materials available on record. It is seen from the submission made by the assessee that the assessee is a small-time job-worker. He further stated that he is dependent on third person for tax related matters and claimed that he is not well educated.
The imposition of penalties under section 271(1)(b) is not mandatory, rather it is discretionary, because if the assessee proves that there was a 'reasonable cause' for the said failure, then the assessing officer ought to have considered the same and then proceed with levying penalties. A perusal of the above provisions of under section 271(1)(b) shows that the Parliament has used the words 'may' and not 'shall', thereby making their intention clear in as much as that levy of Penalty is discretionary and not automatic.
Fatehsinh Udesinh Parmar vs. ITO Asst. Year: 2015-16
4 7. The said conclusion is further justified by section 273B of the Act namely 'Penalty not to be imposed in certain cases'. A careful reading of section 273B encompasses that certain penalties 'shall' not be imposed in cases where 'reasonable cause' is successfully pleaded. It is seen that penalty imposable under section 271(1)(b) also included therein.
7.1. By the said provisions, the Parliament has unambiguously made it clear that no penalty 'shall be' imposed, if the assessee 'proves that there was a reasonable cause for the said failure. As noticed, if the statutory provision shows that the word 'shall' has been used in section 271(1)(b), then the imposition of penalty would have been mandatory. Section 273B as mentioned above further throws light on the legislative intent as it specifically provides that no penalty 'shall' be imposed if the assessee proves 'that there was reasonable cause for the said failure'.
In the facts of the present case, it is seen that the explanation offered by the assessee, by filing an affidavit, has been ignored by the assessing officer as well as the learned Commissioner (Appeals)-NFAC and confirmed the penalty u/s 271(1)(b) without considering provisions of section 273B of the Act.
Applying the provisions of Section 273B of the Act, we have no hesitation in deleting the penalty levied under section 271(1)(b) since 'reasonable cause' is clearly demonstrated by the assessee. Therefore, the penalty levied under section 271(1)(b) is deleted.
Fatehsinh Udesinh Parmar vs. ITO Asst. Year: 2015-16 5 10. In the result, the appeal filed by the assessee is allowed. Order pronounced in the Open Court on 31 May, 2024 at Ahmedabad.