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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Shri Waseem Ahmed & Shri Siddhartha Nautiyal
Assessee by: Withdrawal Application Revenue by: Shri S.S. Rathi, Sr. D.R. Date of hearing : 09-03-2022 Date of pronouncement : 30-03-2022 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This is an appeal filed by the assessee against the order of the Ld. CIT(A) dated 20-12-2018 in Appeal No. CIT(A)/Jam/186/18-19/2348.
The assessee has raised the following grounds of appeal:
Page No 2 Ramkrushna Cot Gin Corp. vs. ITO
Sr. No. Grounds of Appeal Tax Effect 1 Rs. 10,000/- The Ld. CIT(A) has erred in law and facts in confirming order levying penalty U/s. 271(l)(b) of Rs. 10,000/-. The same needs cancellation.
2 The Ld. CIT(A) has erred in law and facts in Rs. 10,000/- confirming order levying penalty U/s. 271(l)(b) of Rs. 10,000/- although no legal service of the notices for which penalty is levied is there. The penalty needs cancellation.
3 The Ld. CIT(A) has erred in law and facts in not Rs. 10,000/- considering the aspect that the order levying penalty has been passed without confirming statutory position. The penalty order passed is bad in law. The penalty needs cancellation.
4 The Ld. CIT(A) has erred in law and facts in not Rs. 10,000/- considering the aspect that the order passed levying penalty is bad in law, illegal and not sustainable in the eye of law. The penalty needs cancellation.
5 The Ld. CIT(A) has erred in law and facts in not Rs. 10,000/- considering the aspect that the initiation of the penalty proceedings itself was bad in law. The penalty needs cancellation.
6 The Ld. CIT(A) has erred in not considering that Rs. 10,000/- no reasonable & adequate time has been provided by the Ld. A.O. The penalty needs cancellation.
7 The Ld. CIT(A) has erred in law and facts in not Rs. 10,000/- providing adequate and reasonable time. The- penalty needs cancellation.
Page No 3 Ramkrushna Cot Gin Corp. vs. ITO
8 Rs. 10,000/- Without prejudice, no reasonable opportunity has been given by the Ld. CIT (A) at appellate stage. The same needs annulment.
9 Without prejudice, the assessee was having Rs. 10,000/- reasonable cause on consideration of which no penalty ought to have been levied. The penalty needs cancellation 10 Rs. 10,000/- Taking into consideration over all legal, statutory and settled law beside factual aspects of the case no penalty ought to have been levied. The penalty needs cancellation 11 The appellant craves leave to reserve his right to Rs. 10,000/- amend / alter / add and/or substitute any / all grounds of appeal before the actual hearing takes place.
Rs. 10,000 TOTAL TAX EFFECT
The Brief facts of the case are that the assessee filed return of income declaring total income of Rs. 14,93,690/-. The assessment was finalized u/s 144 of the Act assessing total income at Rs. 10,69,98,670/-. During the course of assessment proceedings, several notices were issued requisitioning the assessee’s appearance, but neither the assessee nor its AR attended nor any explanation/ compliance was made in response to the notices. The details of notices issued to assessee are tabulated below.
Page No 4 Ramkrushna Cot Gin Corp. vs. ITO Sr. Section of Date of issue Remarks Status No. Notice 1 142(1) 05/06/201 5 Served by RPAD Not Complied with 2 142(1) 10/06/2015 Served by RPAD Not Complied with 3 142(1) 15/07/2015 Served by RPAD Not Complied with 4 142(1) 18/01/2016 Served by RPAD Not Complied with
Since all the notices remained uncompiled with, the assessment order was passed u/s 144 of the Act and Ld. AO also initiated penalty proceedings u/s 271(1)(b) of the Act. In the proceedings for levy of penalty u/s 271(1)(b) of the Act by the Ld. AO, neither the assessee nor his AR caused any appearance. Accordingly, the Ld. AO levied penalty of Rs. 10,000/- per default for each of the four defaults totaling to Rs. 40,000/- u/s 271(1)(b) of the Act.
The assessee filed appeal against order passed u/s 271(1)(b) of the Act before CIT(A). However, despite issuance of several notices of hearing, none responded / attended the hearing before CIT(A) and accordingly, Ld. CIT(A) passed order considering the penalty order u/s 271(1)(b) of the Act passed by the Ld. AO and the Statement of Facts as per Form 35 filed by the assessee. The Ld. CIT(A) gave part relief to the assessee and restricted the penalty to Rs. 10,000/- on the basis that penalty should be restricted to first default of non-appearance only and penalty cannot be imposed for each and every notice issued u/s 142(1) of the Act which remains un-compiled with on the part of the appellant. If the default is the same, penalty should be Page No 5 Ramkrushna Cot Gin Corp. vs. ITO imposed for the first default only. This is in view of the fact that 271(1)(b) of the Act is of a deterrent nature and not for purpose of earning revenue. The Ld. CIT(A) placed reliance on the case of Smt. Rekha Rani v. DCIT 60 taxmann.com 131 and on ITAT Ahmedabad in Shri Mahendra J. Patel v. ACIT in Ahd/ 2016, while allowing relief to the appellant.
Before us none appeared for the assessee and AR of the assessee filed written submission dated “Nil’. We have perused the facts of the case, the orders passed by various authorities and the written submissions filed by the AR of the assessee. The Ld. AR for assessee in the written submission filed before us has submitted that Ld. CIT(A) has erred in law and in fact in confirming penalty u/s 271(1)(b) of the Act even for the first default since in the assessment order no specific date of service on the assessee has been mentioned in respect of the first notice dated 05/06/2015 issued u/s 142(1) of the Act.Also, there was a very short time gap between issuance of first notice dated 05/06/2015 and the second notice which was issued on 10/06/2015. Therefore, Ld. CIT(A) has erred in confirming penalty in respect of even the first notice as well.
However, we note that the written submissions are absolutely silent on why the assessee failed to comply with subsequent notices issued by Ld. AO u/s 142(1) of the Act dated 10/06/2015, 15/07/2015 and 18/01/2016. The assessee has repeatedly defaulted in responding to various notices issued by the Ld. AO u/s 142(1) of the Act and the assessment order had to be passed ex-parte in absence of any response/ co-operation by the assessee. The assessee has given no plausible explanation for his recurring non-compliance Page No 6 Ramkrushna Cot Gin Corp. vs. ITO to various notices issued. Therefore, we are of the view that the Ld. CIT(A) has taken a well-reasoned view and has not erred in restricting addition to one default based on various judicial precedents cited in the appeal order. It may not be out of place to reproduce the relevant extracts of the decision in the case of Shri Mahendra J. Patel vs. ACIT which states as below:
On perusal of the above decision, we observe that if there is a failure on the part of the assessee to comply with the notice under Section 143(2) of the Act or 142(1) of the Act, there lies a remedy with the Assessing Officer for framing "best judgement assessment" under the provisions of Section 144 of the Act and penalty under Section 271(1)(b) of the Act should not be imposed again and again. However, in the case of assessee, we observe that he failed to comply with the notice dated 24.07.2013 and again remained silent in further four notices, as narrated above in the table. It, therefore, shows that at least on two occasions, assessee is liable to pay penalty under Section 271(1)(b) for the Act for non-compliance to the notices dated 02.05.2013 and 10.09.2013. We, therefore, in view of the decision of Co-ordinate Bench in the case of Smt. Rekha Rani (supra) and in view of the facts discussed above, hold that assessee is liable to pay Rs.20,000/- as penalty under Section 271(1)(b) of the Act as against Rs.60,000/- imposed by the ld. Assessing Officer.
We are therefore view that Ld. CIT(A) has taken a very reasonable view in the matter by restricting the penalty to only one default of non- Page No 7 Ramkrushna Cot Gin Corp. vs. ITO compliance, though the Ld. AO has issued four notices u/s 142(1) of the Act, all of which remained un-compiled with.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 30-03-2022