Dimki Hemang Jhaveri Vs ACIT (ITAT Surat)
Conclusion: Penalty for initial assessment year i.e., assessment year 2012-13 was sustained and for remaining assessment years i.e., 2013-14 to 2018-19 penalties levied either under section 271(1)(b) or 272A(1)(d) were deleted as AO considered a single default for initiation and levying penalty for default on a single occasion, but levied penalties in all years was not justified.
Held: Search action was carried out on residential premises of assessee. Several incriminating documents were found and seized. Assessee was issued with notice to file Income Tax Return and seeking details for seven assessment years within 5 days. AO completed assessment but assessee failed to supply documents due to shortage of time. However, AO levied Penalty for all seven years by treating it as single default at Rs. 10,000 per year which amounted to Rs. 70,000 for seven years. Aggrieved by the order, assessee filed an appeal before CIT (A). CIT(A) deleted the Quantum of assessment but confirmed the penalty levied by AO for seven years. Aggrieved by the order, assessee filed seven separate appeals before ITAT. Tribunal clubbed the appeals and decided the matter by common order. Assessee argued that there was only one default and therefore penalty could be levied only for the one default. Revenue relied on lower authorities order and stated that the CIT(A) considered all submissions by the assessee before confirming the penalty. It was held that there was no dispute that pursuant the search action, AO was making assessment orders of current assessment year as well as for six years immediately prior to year in which action search was carried out. It was also matter of fact that AO issued a consolidated notice under section 142(1) for all assessment years. AO had given only five days’ time to make compliance. It was also undisputed fact that neither assessee nor his representative attended or complied notice nor sought any adjournment. AO considered a single default for initiation and levying penalty for default on a single occasion, but levied penalties in all years. Thereby treating it seven defaults on a single day. In our view, only it was a single default and imposing seven-time penalties i.e. in each and every year was unreasonable. Thus, penalty for initial assessment year i.e., assessment year 2012-13 was sustained and for remaining assessment years i.e., 2013-14 to 2018-19 penalties levied either under section 271(1)(b) or 272A(1)(d) were deleted.
