Case Law Details
Kusum Mittal Vs ITO (ITAT Jaipur)
From the records, we noticed that the penalty has been imposed by the AO for non-compliance of notice under section 142(1) of the IT Act dated 24.05.2019 issued during the assessment proceedings under section 147/243(3) of the Act. It is categorically mentioned in the written submission filed by the assessee that the assessee had never received the notice till the completion of assessment proceedings and, therefore, ex party assessment as well as penalty for non-compliance of notice under section 271(1)(b) of the Act is not sustainable. In order to prove its contention, the assessee has also filed an affidavit wherein the same facts have been narrated. Apart from this, assessee has also relied upon the information received from the Income Tax Department under Right to Information Act wherein the assessee had sought specific information with regard to service and delivery of notice under section 142(1) dated 24.05.2019. In this regard the information supplied by the department categorically mentioned that the department is not having any proof with regard to service and delivery of notice under section 142(1) of the Act. Since the assessee has filed an Affidavit coupled with report from the Income Tax Department in order to prove that service of notice under section 142(1) of the Act was never effected upon the assessee, therefore, keeping in view the factual position of the present case, we are of the view that proper service of notice is vital for imposition of penalty under section 271(1)(b) of the Act. In this regard, we draw reliance in case of CIT vs. Har Parshad (1990) 49 Taxman 168 (P&H). Moreover, the Affidavit filed by the assessee and the report of the IT Department which has been placed on record and relied upon by the assessee, has not been rebutted or controverted by the ld. D/R. Therefore, considering the un-rebutted documents relied upon by the assessee and also keeping in view the principles laid down by the Hon’ble High Court in case of CIT vs. Har Parshad (supra), we are of the view that since there is no proof of delivery and service of notice under section 142(1), therefore, in our view no penalty is attracted under section 271(1)(b) of the Act. The penalty is deleted.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This appeal by the assessee is directed against the order dated 24.05.2022 of ld. CIT (A), National Faceless Appeal Centre (NFAC), Delhi passed under section 250 of the IT Act for the assessment year 2012-13. The only issue involved in the present appeal relates to penalty of Rs. 10,000/- imposed by the AO under section 271(1)(b) of the Income Tax Act, 1961.
2. None appeared on behalf of the assessee. However, the ld. A/R filed the written submissions and requested to decide the appeal on the basis of written submissions. In the written submissions, the ld. A/R submitted as under :-
“ The penalty has been imposed by the AO for non-compliance of a single notice under section 142(1) dated 24.05.2019 issued during the assessment proceedings under section 147/143(3). The Hon’ble NFAC confirmed the action of AO by its order dated 24.05.2022.
The appellant had duly submitted before the AO as well as the NFAC through an affidavit (copy enclosed herewith) that till the completion of the assessment proceedings, she had never received any notice. Therefore, ex-party assessment as well as penalty for non compliance of notice under section 271(1)(b) is illegal and both are liable be deleted. However, both the authorities failed to consider the submissions of the appellant.
It is submitted the NFAC did not also verify the receipt and delivery report of the impugned notice dated 24.05.2019 from the assessment records of the AO.
Subsequently, in order to ascertain the true facts of service of all the notice, the appellant applied to the AO for obtaining certified copy of the proceedings sheet along with detail of service of notice issued during the assessment proceedings.
By its reply dated 16.08.2002, the AO provided the certified copy of notice and proceedings sheet. The AO, however, admitted that details of mode of delivery and proof of delivery were not available on the assessment record (copy enclosed).
It is submitted in absence of any proof for delivery and service of impugned notice dated 24.05.2019 the department cannot make a case that the notice was delivered and served on the appellant. No case can be made out against the appellant that she failed to comply with the notice dated 24.05.2019. Accordingly, the penalty imposed for non-compliance of notices is liable to set aside.
It is settled law that proper service of notice is vital for valid assessment and imposition of penalty under Income Tax Laws. If it is proved that there was no valid service of notice, then both the quantum assessment and the penalty for noncompliance has to be set aside. Reliance is placed on CIT v. Har Parshad, (1990) 49 Taxman 168 (P&H), wherein assessment was held to be invalid where the same was completed without proper service of notice.
In the present case, the admission of the AO in letter dated 16.8.2022 proves it beyond doubt that there has been no valid service of any notice, issued during the ex-party assessment proceeding, on the appellant.
Without prejudice to the above, it is submitted that in the present case the penalty is also unreasonable and unjustified as the quantum assessment is also illegal and liable to set aside. The AO has wrongly taxed the subject transaction of sale of rural agriculture land which is not a capital asset and does not come in the ambit of chargeability of tax. Therefore, the quantum assessment in itself is liable to be set aside.
In view of above facts and submission, it is humbly prayed that penalty as levied by the AO may please be deleted.”
3. On the contrary, the ld. D/R relied on the orders passed by the lower authorities.
4. We have heard the ld. D/R and also perused the written submissions filed by the assessee and also documents placed on record. From the records, we noticed that the penalty has been imposed by the AO for non compliance of notice under section 142(1) of the IT Act dated 24.05.2019 issued during the assessment proceedings under section 147/243(3) of the Act. It is categorically mentioned in the written submission filed by the assessee that the assessee had never received the notice till the completion of assessment proceedings and, therefore, ex party assessment as well as penalty for non-compliance of notice under section 271(1)(b) of the Act is not sustainable. In order to prove its contention, the assessee has also filed an affidavit wherein the same facts have been narrated. Apart from this, assessee has also relied upon the information received from the Income Tax Department under Right to Information Act wherein the assessee had sought specific information with regard to service and delivery of notice under section 142(1) dated 24.05.2019. In this regard the information supplied by the department categorically mentioned that the department is not having any proof with regard to service and delivery of notice under section 142(1) of the Act. Since the assessee has filed an Affidavit coupled with report from the Income Tax Department in order to prove that service of notice under section 142(1) of the Act was never effected upon the assessee, therefore, keeping in view the factual position of the present case, we are of the view that proper service of notice is vital for imposition of penalty under section 271(1)(b) of the Act. In this regard, we draw reliance in case of CIT vs. Har Parshad (1990) 49 Taxman 168 (P&H). Moreover, the Affidavit filed by the assessee and the report of the IT Department which has been placed on record and relied upon by the assessee, has not been rebutted or controverted by the ld. D/R. Therefore, considering the un-rebutted documents relied upon by the assessee and also keeping in view the principles laid down by the Hon’ble High Court in case of CIT vs. Har Parshad (supra), we are of the view that since there is no proof of delivery and service of notice under section 142(1), therefore, in our view no penalty is attracted under section 271(1)(b) of the Act. The penalty is deleted. The ground of the assessee is allowed.
5. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 15/09/2022.
