Shiv Kumar Nayyar Vs ACIT (ITAT New Delhi)
lthough the assessee in the instant case has not complied to the statutory notice issued by the AO on 5th October, 2016 fixing the case for hearing on 25th October, 2018 which is the basis for levy of penalty u/s 271(1)(b) of the Act, however, ultimately the order has been passed u/s 143(3). Coordinate Benches of the Tribunal in a number of decisions have held that where the assessment order was finally passed u/s 143(3) and not u/s 144 of the Act due to subsequent compliance during the assessment proceedings, that would be considered as good compliance and the defaults committed earlier should be ignored and taking a lenient view the penalty u/s 271(1)(b) of the I.T. Act 1961 should not be levied. Further, the Coordinate Bench of the Tribunal in the case of one of the group member namely Smt. Neetu Nayyar vs ACIT and Smt. Meena Nayyar vs. ACIT (supra) has also deleted the penalty levied by the AO u/s 271(1)(b) and sustained by the Ld. CIT(A) under identical circumstances. Since the assessment in the instant case has ultimately been completed u/s 143(3) of the Act on the basis of various details filed by the assessee before the AO, therefore, considering the totality of the facts of the case and relying on the decision of the Tribunal in the case of Smt. Neetu Nayyar vs. ACIT (supra) and Smt. Meena Nayyer vs. ACIT (supra) I am of the considered opinion that it is not a fit case for levy of penalty u/s 271(1)(b) of the Act. I, therefore, set aside the order of the Ld. CIT(A) and direct the AO to cancel the penalty so levied by him for all the 6 years. The grounds raised by the assessee are accordingly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
The above two appeals filed by the assessee are directed against the common order dated 27/05/2019 of the Ld. CIT(A), 27, New Delhi for the assessment years 2011-12 and 2012-13 respectively. Since common grounds have been raised by the assessee in both the appeals, therefore, these were heard together and are being disposed of by this common order.
2. The only grounds raised by the assessee in both the appeals relate to the order of the Ld. CIT(A) in confirming the penalty of Rs. 10,000/- each u/s 271(1)(b) levied by the AO.
3. Facts of the case, in brief, are that notices u/s 153A of the I. T. Act, 1961 were issued on 22.09.2017 for A.Ys. 2011-12 to 2016-17 and notices u/s 143(2) were issued on 22.09.2017 for A.Y. 2017-18. On 13.08.2018 notice u/s 142(1) alongwith questionnaires were issued to the assessee and case was fixed for hearing on 23.08.2018. On 07.09.2018 show cause notice of penalty u/s 271(l)(b) was issued for A.Ys. 2011-12 to 2017-18 and case was fixed on 14.09.2018. In compliance to the said notice the assessee filed copy of ITR and bank statement only. Another notice u/s 142(1) dated 05.10.2018 was issued to the assessee for appearing on 25.10.2018 with details enclosed with notice. However, no compliance was made by assessee even to this notice for all these assessment years. The AO, therefore, issued show cause notice to the assessee asking him to explain as to why penalty u/s 271(1)(b) of the I.T. Act shall not be levied for all these assessment years. In absence of any compliance made by the assessee, penalty u/s 271(l)(b) was levied by AO on 06.12.2019 for A.Ys. 2011-12 to 2017-18.
4. Before the Ld. CIT(A), it was submitted that
1. In the penalty order, the Ld AO has stated that in response to the penalty show cause notice dated 09.11.2018 fixing the hearing for 19.11.2018 – none attended the proceeding, whereas on 19.11.2018 the AR of the appellant appeared along with the letter stating there in that as the notice u/s 142(1) fixing the case for 25.10.2018 was received by the appellant on 27.10.2018, compliance of the notice u/s 142(1) could not be made. In the office copy of reply of Sh. Neetu Nayyar the Ld AO has himself signed and also noted some facts. Thus, there is no non-compliance on the part of the appellant.
2. In the penalty order the Ld AO is talking about the non compliance of notice u/s 142(1) dated 05.10.2018 whereas in the show cause notice dated 09.11.2018 the Ld AO has mentioned that there is non-compliance of notice u/s 142(1) dated 16.10.2018.
3. In the questionnaire dated 05/16.10.2018 attached along with notice u/s 142(1) your kind honor will observe that very exhaustive details based on the seized material have been asked to be submitted by 25.10.2018. In fact this questionnaire was received after 27.10.2018.
Without Prejudice to above, it is submitted that even for the sake of argument, if the above notice was received within 2-3 days of the notice dated 16.10.2018 – the details were not possible to be compiled upto 25.10.2018 on account of non-availability of reasonable time. And if the time allowed for the compliance of the notice is not sufficient, penalty u/s 271(l)(b) cannot be levied. For this proposition, reliance is placed on the judgment of the Hon’ble Delhi ITAT in the case of Chogori Distribution (P) Ltd vs DCIT, ITA 4435/Delhi/2015.
4. The assessment has been completed by the Ld AO u/s 153A/ 143(3). And various higher authorities has held that when assessment has been completed u/s 143(3), penalty u/s 271(1)(b) cannot be imposed. For this proposition, Reliance is placed on the following judgments:
i. Globus Infocom Limited, New Delhi vs DCIT, Delhi ITAT, ITA 738/Del/2014
ii. Akhil Bhartiya Prathmik Shikshak Sangh vs Assistant Director of income Tax, Delhi ITAT, ITA 2900/Del/2005
5. However, the Ld. CIT(A) was not satisfied with the arguments advanced by the assessee and sustained the penalty levied by the AO for both the years by observing as under :-
6. “All the grounds relate to issue of penalty u/s 271(l)(b) and are decided as under:
6.1 he chronology of events is as under:
