M/S STERLIGHT FINCOM PVT.LTD ,NAGPUR vs DCIT,CENTRAL CIRCAL -2(3) , NAGPUR

Income Tax Appellate Tribunal, “SMC’ BENCH, NAGPUR (At e-Court, Pune

Before: SHRI R.S. SYAL

For Appellant: Shri Kapil Hirani

For Respondent: Shri G.J. Ninawe

आदेश / ORDER

PER R.S.SYAL, VP : This batch of seven appeals by the assessee poses a challenge to the consolidated order passed by the CIT(A)-3, Nagpur on 02-05-2017 confirming the penalty of Rs.10,000/- each imposed by the Assessing Officer (AO) u/s.271(1)(b) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the A.Yrs. 2002-03 to 2008-09. 2. Briefly stated, the facts of the case are that the assessee was subjected to search and assessment for the years under consideration were framed ex parte u/s 153C of the Act. In so far as the factual details qua the extant penalty for the A.Y. 2002-03 are concerned, the AO issued a notice u/s.142(1) dt. 23-12-2009 for filing certain details. The assessee did not comply with such notice. Thereafter, a notice u/s.271(1)(b) was issued requiring the assessee to show cause as to why penalty should not be imposed under section 271(1)(b) of the Act. The assessee still did not submit any explanation, which led to the imposition of penalty of Rs.10,000/- by the AO. The assessee contended before the ld. CIT(A) that the notice u/s.142(1) was not received by the assessee inasmuch as it was served on one Shri Chaitanya Kochar, who was neither a Director nor a Shareholder or Principal Officer of the company. The ld. CIT(A) remained unconvinced and affirmed the penalty order. Aggrieved thereby, the assessee has approached the Tribunal. Facts and circumstances for the other appeals under consideration are similar to those for the A.Y. 2002-03

I have heard the rival submissions and gone through the relevant material on record. It is seen that the notices, which led to the imposition of penalty u/s.271(1)(b) of the Act for all the years under consideration, were admittedly issued and served upon one Shri Chaitanya Kochar, who was neither a Director nor a Shareholder or the Principal Officer of the assessee company.

Shri Chaitanya Kochar and his family members, as per the Departmental record, were directors of a group of bogus companies engaged in providing accommodation entries. At this stage, it is relevant to mention that the appeals are against the imposition of penalty u/s.271(1)(b) which talks of imposing penalty for non-compliance with the notice issued by the Department under certain sections including section 142(1).

Merits of the additions become irrelevant insofar as the question of issuance of notice and the consequential penalty u/s.271(1)(b) is concerned. It goes without saying that notice u/s.142(1) needs to be properly served on the assessee who is required to submit his reply. If notice is served on a wrong person, who is not authorized to receive the same, it cannot be said that the assessee is at fault in not responding to such notice. It is apparent from the factual panorama recorded above that the notices were issued by the AO on a person who was not authorized to receive them on behalf of the assessee company. In such circumstances, there can be no question of imposing or confirming any penalty to 258/NAG/2017 M/s. Sterlight Fincom Pvt. Ltd., u/s.271(1)(b) of the Act. I, therefore, order to delete the penalty for all the years under consideration.

In the result, all the appeals are allowed. Order pronounced in the Open Court on 21st September, 2022.

(R.S.SYAL) उपा�य�/ VICE PRESIDENT पुणे Pune; �दनांक Dated : 21st September, 2022 Satish

M/S STERLIGHT FINCOM PVT.LTD ,NAGPUR vs. DCIT,CENTRAL CIRCAL -2(3) , NAGPUR