AKASH MAGANLAL PATEL,SURAT vs. DY. COMMISSIONER OF INCOME TAX-1, CENTRAL CIRCLE, SURAT

It is therefore prayed that the above penalty may please be deleted as learned members of the tribunal may deem it proper.

Brief facts of the case are that a search and seizure action under Section 132 of the Act was carried out on 23/01/2018 against the assessee, who was engaged in dealing with various Crypto Currencies. The assesse is one of the person of the group indulging in Crypto Currency. Consequent upon said search and incriminating material, notice under Section 153A was issued to the assessee on 30/05/2019. In response to notice under Section 153C, the assessee filed his return of income on 29/06/2019 declaring/offering income of Rs.1,81,450/-. The assessment was completed on 24/08/2021 accepting the returned income of the assessee 2 to 147/Srt/2022 Akash Maganlal Patel Vs DCIT under Section 143(3) r.w.s. 153A of the Act. The Assessing Officer while passing the penalty order under Section 271(1)(b) of the Act had recorded that during the assessment proceedings, notice under Section 142(1) was issued to the assessee for calling certain details. The Assessing Officer initiated and levied penalty under section 271(1)(b). The assessing officer while passing impugned order noted that vide notice dated 02/12/2020, the date of hearing for compliance was fixed on 14/12/2020, the assessee sought adjournment and the date was fixed for compliance on 01/1/2021. On 01/01/2021, the case was further adjourned to 11/01/2021.The assessee defaulted in making compliance of notice dated 02/12/2020.

The Assessing Officer issued notice under Section 274 r.w.s. 271(1)(b) of the Act dated 23/01/2021 asking the assessee as to why penalty be not levied for non-compliance of notice under Section 142(1) of the Act. The assessing officer recorded that no reply was filed by the assessee. The Assessing Officer in para 5 of his order, recorded that vide notice dated 02/12/2020 and 17/12/2020, the assessee was required to response by 14/12/2020 and 28/12/2020, the assessee was given sufficient time but no response was made. The Assessing Officer levied penalty of Rs. 20,000/- vide order dated 02/02/2021.

We 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 the assessee has made full compliance during the assessment for all the assessment years. The assessment was completed under Section 143(3) r.w.s. 153A of the Act in accepting the returned income in all the years. The Assessing Officer levied penalty for non-compliance of notice dated 02/12/2021, despite the fact that the Assessing Officer to 147/Srt/2022 Akash Maganlal Patel Vs DCIT himself allowed the adjournment application of assessee and adjourned the case for 01/01/2021 and again on 11/01/2021. Thus, no cause of action for levying penalty were survived. The assessee furnished complete details which was accepted and no variation in the returned income for all the assessment years was made by Assessing Officer.

The ld. AR for the assesse submits that in December, 2020 and January, 2021 was the pandemic period of severe Covid-19 infection. The Hon’ble Supreme Court in suo moto writ petition vide order dated 23/09/2021 which was extended from time to time directed for extension of period of limitation for compliance of various statutory provisions. The ld. AR submits that due to nationwide severe pandemic infection, the assessee as well as his representative was taking proper care and caution and this fact was informed to the lower authorities. The ld AR for the assessee submits that before ld CIT(A), the assessee filed his detail submissions and has shown sufficient cause within the meaning of Section 273B.The ld. AR submits that the Coordinate Bench 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 copy of compliance and the defaults committed earlier were ignored by the Assessing Officer and to 147/Srt/2022 Akash Maganlal Patel Vs DCIT therefore, there is no cause for levy of penalty under Section 271(1)(b) of the Act. 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 for the revenue submits that the ld CIT(A) has already granted half of the relief to the assessee.

We have considered the rival submissions of both the parties and have gone through the orders of lower authorities. We have also deliberated upon the various case laws relied by the ld. AR of the assessee including the decision of Hon’ble Supreme Court in suo moto writ petition No. 3/2020. We find that the Assessing Officer finalised the assessment order on 24/08/2021 under section 143(3) rws 153A. While finalizing the 7 to 147/Srt/2022 Akash Maganlal Patel Vs DCIT assessment order, no variation in the returned income or assessed income was made in four assessment orders. Moreover, the assessment was completed under Section 143(3) r.w.s. 153C of the Act. We find that before ld CIT(A) the assessee specifically contended that there was severe Covid-19 pandemic during the relevant period and everybody is doing work with safety measures and that his Accountant were busy in audit work. The submissions of assessee was not accepted as bonafide explanation with the scope of section 273B. Though, the Assessing Officer levied penalty for two default, however, the ld CIT(A) restricted it to one default only. In our view, the assesse has shown sufficient cause within the meaning of Section 273B in his submissions before ld CIT(A) and the ld CIT(A) ought to have accepted the same. In our view the assessee has shown sufficient cause within the scope of section 273B of the Act.

We have further noted that the notice dated 02/12/2020 was issued to the assessee. In response to said notice, the assessee sought adjournment on 14/12/2020. The adjournment was allowed to assessee and on the request of assessee, the hearing of the case was fixed on 01/01/2021 and again for 11.01.2021. In our view, once the Assessing Officer himself allowed adjournment, the cause of action for non-compliance was waived on that to 147/Srt/2022 Akash Maganlal Patel Vs DCIT moment itself. In our view, the action of ld. CIT(A) in confirming the penalty for one default is also liable to be set aside.

As recorded above, the assessee has shown sufficient cause for non- compliance before ld CIT(A). The ld CIT(A) was having co-terminus power thus, he ought to have deleted the entire penalty levied under section 271(1)(b) or 272A(1)(d). We find that the assessee has relied on various case laws, wherein coordinate benches of Tribunal have taken view that when the assessment was framed under Section 143(3), merely because the assessee could not make compliance for single hearing due to bonafide reason on the penalty under Section 271(1)(b) of the Act cannot be imposed on the assessee for such bonafide default due to reasons beyond his control. In view of aforesaid factual and legal position, we direct the Assessing Officer to delete the impugned penalty. In the result, ground of appeal raised by assessee is allowed.

In the result, all these appeals of the assessee are allowed.