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

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

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 u/s.271(1)(b) of the Act. I, therefore, order to delete the penalty

for all the years under consideration.

पुणे Pune; "दनांक Dated : 21st September, 2022 Satish

आदेश क" ""त"ल"प अ"े"षत / Copy of the Order is forwarded to : 1. अपीलाथ" / The Appellant;

आदेशानुसार/ BY ORDER,

//// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date