Nirav J. Ravani Sanghavi Vs DCIT (ITAT Rajkot)
ITAT Rajkot held that as notices were served to e-mail ID of old income tax practitioner of the assessee, assessee was not aware of the issuance of the same and hence didn’t replied. Held that penalty u/s 271(1)(b) of the Income Tax Act cannot be imposed when assessee proves that there was reasonable cause for the failure.
Facts- The main issue here is that AO initiated penalty proceedings u/s 271(1)(b) of the Income Tax Act against the assessee for non-compliance of 142(1) notice.
The assessee contended that all the notices of hearing were emailed to “[email protected]” which email account pertain to the former Authorized Representative and Income Tax Practitioner (ITP) of the assessee namely Mr. Divyesh Doshi, in whose place the assessee had appointed another Tax Professional for all the assessment proceedings. The assessee, however, by oversight failed to update the email address of the newly appointed Tax Consultant to the Assessing Officer.
CIT(A) confirmed the levy of penalty u/s 271(1)(b) and dismissed the appeals filed by the assessee. Being aggrieved, the present appeal is filed.
Conclusion- Section 273B as noted further throws light on the legislative intent, as it specifically provides that no penalty “shall” be imposed, if the assessee proves “that there was reasonable cause for the said failure”.
In our considered opinion, the assessee could not said to be in default, when the assessee was not served with the notices. The assessee also pleaded that he is not aware of the faceless assessment proceedings and the ITBA portal of the Income Tax Department which has resulted in filing statutory appeals before the CIT(A) with a delay of 96 days. Thus, without proper service of notices to the assessee, the assessee cannot be levied with penalty under Section 271(1)(b) for non-compliance of such notices. For the above reasons we hold that the levy of penalty under Section 271(1)(b) is unjustified and therefore, the same are deleted.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
These seven appeals are filed by the assessee as against separate appellate orders all dated 09.06.2022 passed by the Commissioner of Income Tax (Appeals)-11, Ahmedabad confirming the levy of penalty under Section 271(1)(b) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Years 2013-14 to 2019-20.
2. The brief facts of the case is the assessee is an individual who derives income from a partnership firm and investments. The assessee filed its regular Return of Income under Section 139 of the Act for all the Assessment years. On 26.09.2018 a search action under Section 132 of the Act was carried out in the premises of Shri Himanshi Riyani who is one of the key persons/accountant in Aryan Arcade Ltd. which developed the Om Decora Square Nine, Rajkot. During the course of search, documents containing information related to or pertained to this assessee was seized. Therefore, proceeding under Section 153C of the Act was initiated on 26.10.2020. The assessee was duly served upon a notice under Section 153C on the registered email, requiring the assessee to file a Return of Income in response to the notice. As there was no response from the assessee, a detailed questionnaire under Section 142(1) was issued on 17.02.2021 by the Assessing Officer. As there was no response to this notice, a final show-cause notice under Section 144 r.w.s 153C was issued on 28.02.2021. Even of these notices as there was no response from the assessee, therefore, the Assessing Officer compelled to pass best judgment assessment order under Section 144 on 25.03.2021. The details of assessment are as follows:
