Case Law Details
Vinars Enterprise Vs ITO (ITAT Rajkot)
Non-response to notice is because of disputes between Partners & Inadequate time to reply, so levy of penalty u/s. 271(1)(b) deleted.
The main submission of the assessee is that the assessing officer has given only 15 days’ time to respond to the notices which is inadequate, therefore penalty for non-compliance should not be levied and relied upon few case laws. The assessee also claimed the disputes between the partners which prevented from not participating in the assessment proceedings and therefore request to delete the penalty.
Revenue supported the orders of the Ld. CIT(A) and held that the Ld. CIT(A) has confined the penalty levied u/s. 271(1)(b) only to the notices which was duly served and not complied by the assessee. The assessee would have requested the Assessing Officer for extension of time to reply the notices issued to it, however assessee has not responded to any of the notices which has resulted in for passing ex parte assessment orders by the A.O. Therefore the levy of penalty confirmed by the Ld. CIT(A) does not require any interference and the appeal filed by the Assessee is liable to be dismissed.
ITAT held that Ld. CIT(A) partially deleted the penalty levied against the assessee, wherein notices have been served to the assessee beyond the date of hearing or service of notices is not proved by the ld. A.O. Thus literally only one proper notice was served to the assessee, wherein adequate time is not given to the assessee to file its reply. Further as explained by the assessee, non-response to the notice is because of disputes between the Partners, considering the facts of the present case, the levy of penalty u/s. 271(1)(b) is liable to be deleted.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
These two appeals have been filed by the Assessee against the separate orders dated 06.12.2019 passed by the Commissioner of Income Tax (Appeals)-1, Rajkot as against partly confirming the penalty levied u/s. 271(1)(b) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Years (A.Ys) 2012-13 & 2013-14 respectively.
2. The brief facts of the case is that the assessee is a Firm, filed its Return of Income for the Assessment Year 2012-13 on 25.08.2012 admitting the total income of Rs. 10,900/-, and for the Assessment Year 2013-14 filed its Return of Income on 13.09.2013 admitting the total income of Rs. 32,272/-. Both the assessments were taken up for scrutiny assessment and notices u/s. 143(2) and 142(1) issued on various occasions. However the assessee neither responded to the notice nor offered any explanation to the Assessing Officer. Therefore the assessments were completed under best judgment u/s. 144 of the Act on 30.03.2015 and 31.03.2016 respectively for the Assessment Years 2012-13 & 2013-14. The assessing officer initiated penalty proceedings u/s. 271(1)(b) for non-compliance by the assessee to the various statutory notices issued u/s. 142(1)/143(2) of the Act.
2.1. The assessee explained vide letter dated 10.09.2016 that there were disputes between main partners who attending the Income Tax matter and due to total non-cooperation, the assessee firm could not comply with the notices, which has resultant in ex parte assessment orders. It is therefore requested that the noncompliance of notice being not intentional, the same can be kindly condoned and also pleaded some of the notices have been received after the date of hearing. The Assessing Officer considered the above explanation and not satisfied with the explanation offered and therefore levied a penalty of Rs. 60,000/- for non-compliance of notices for the Assessment Year 2012-13. Similarly for the Assessment Year 2013-14, the A.O. levied penalty of Rs. 50,000/-u/s. 271(1)(b) of the Act.
3. Aggrieved against the same, the assessee filed an appeals before the Ld. CIT(A)-1, Rajkot. The ld. CIT(A) partly allowed the appeal for the Assessment Year 2012-13 on the ground that three notices were issued u/s. 142(1), date of service is not mentioned/proved. Therefore deleted. The only notice dated 22.12.2014 is shown to have been served before the date of hearing and the assessee has not responded to that notice. Therefore the Ld. CIT(A) confined the penalty of Rs. 10,000/- and partly allowed the appeal. For the Assessment year 2013-14, the ld. CIT(A) confined the penalty to the notice served on 20.08.2015 and 14.03.2016 and therefore confined the penalty of Rs. 20,000/-.
4. Aggrieved against the same, the assessee is in appeal before us. None appeared on behalf of the assessee and written submissions on behalf of the assessee is being filed. The main submission of the assessee is that the assessing officer has given only 15 days’ time to respond to the notices which is inadequate, therefore penalty for non-compliance should not be levied and relied upon few case laws. The assessee also claimed the disputes between the partners which prevented from not participating in the assessment proceedings and therefore request to delete the penalty.
5. Per contra ld. D.R. appearing for the Revenue supported the orders of the Ld. CIT(A) and held that the Ld. CIT(A) has confined the penalty levied u/s. 271(1)(b) only to the notices which was duly served and not complied by the assessee. The assessee would have requested the Assessing Officer for extension of time to reply the notices issued to it, however assessee has not responded to any of the notices which has resulted in for passing ex parte assessment orders by the A.O. Therefore the levy of penalty confirmed by the Ld. CIT(A) does not require any interference and the appeal filed by the Assessee is liable to be dismissed.
6. We have given our thoughtful consideration and perused the materials available on record. In fact the Ld. CIT(A) has confined the levy of penalty u/s. 271(1)(b) very particularly to the notices which has issued and served on the assessee, wherein the assessee failed to comply/reply to the notices. Thus the ld. CIT(A) partially deleted the penalty levied against the assessee, wherein notices have been served to the assessee beyond the date of hearing or service of notices is not proved by the ld. A.O. Thus literally only one proper notice was served to the assessee, wherein adequate time is not given to the assessee to file its reply. Further as explained by the assessee, non-response to the notice is because of disputes between the Partners, considering the facts of the present case, the levy of penalty u/s. 271(1)(b) is liable to be deleted.
7. In the result, both the appeals filed by the Assessee are hereby allowed.
Order pronounced in the open court on 16 -09-2022
