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M/s. Infinity Industries Pvt. Ltd. Versus The DCIT, Cen. Cir. 12, Mumbai

2015 (6) TMI 714 - ITAT MUMBAI

Penalty Order u/s. 271(1)(b) r.w.s. 274 - Held that:- In the present case assessee has never been put to the notice to explain as to why penalty should not be imposed under section 271(1)(b) as there was only an indication in the notice issued under section 142(1) that the failure of the assessee to attend the proceedings on 12/2/2013 would entail the assessee for levy of penalty under section 271(1)(b) of the Act. But that cannot be said to be fulfillment of the requirement of section 274(1) as .....

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etitioner: Ms. Bhumika Vora For the Respondent :Shri Sachhidanand Dubey ORDER PER BENCH: These appeals are filed by the assessee and they are directed against order passed by Ld. CIT(A)-37, Mumbai dated 01/11/2013 for assessment years 2004-05 to 2009-10. Grounds of appeal in all the appeals are identical and read as under: 1. On the facts and circumstances of the Appellant s case and in law Learned CIT(A) erred in confirming the levied by the AO by provision of section 271(1)(b) of the Income Ta .....

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ere heard and it was common contentions of both the parties that the view taken in the said case would be equally applicable to the present case. It is in this manner these appeals were heard. 3. We have decided the appeals in the case of Mr. Lakhamshi J. Gala vs. DCIT,Cen. Cir.12 in ITA Nos.109/MUM/2014 to 115/MUM/2014, Assessment Years 2004-05 TO 2010-11 vide our order of even date. The said order for the sake of completeness is reproduced below: These appeals are filed by the assessee and the .....

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the provision of Sec. 274 of the Income Tax Act 1961. 3. The appellant craves leaves to add, to amend, alter modify and/ or withdraw any or all the above grounds of appeal, each of which are without prejudice to one another. 2. In all these cases penalty of ₹ 10,000/- is imposed under section 271(1)(b) of the Income Tax Act, 1961(the Act). In all these cases facts are identical and these appeals were disposed of by Ld. CIT(A) by a consolidated order. 3. The penalty order in each of the cas .....

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961 is hereby initiated. Penalty u/s.271(1)(b) levied of ₹ 10,000/- Issue demand notice accordingly. 3.1 Thus it can be seen from the above order that firstly, on the basis of notice issued under section 142(1) of the Act impugned penalty has been imposed and secondly, the failure of the assessee was to attend the date given in the notice under section 142(1) on 12/2/2013. 3.2 The assessee objected the levy of penalty in the appeal filed before Ld. CIT(A) on the ground that i) no notice un .....

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/2/2013, it was clearly mentioned that non-compliance will be penalized by levy of penalty under section 271(1)(b) of the Act. Thus, it was claimed by the AO that notice u/s. 142(1) was duly served and assessee was put to notice that penalty will be levied for non-compliance. On these facts, Ld. CIT(A) has concluded that assessee did not comply with several notices issued by the AO and only at the very end the AO levied penalty under section 271(1)(b) and assessment was finally completed under s .....

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n imposed by the AO only for the default of the assessee for non-appearance on 12/2/2013. It was submitted that admittedly for levy of penalty under section 271(1)(b) no separate notice was issued but only on the basis of observation of the AO in the notice issued under section 142(1) the impugned penalty has been imposed and confirmed. It was submitted that on similar facts in group case i.e. in the case of M/s. Speciality Paper Ltd., Ld. CIT(A) has deleted the penalty and reference in this reg .....

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r section 142(1) of the Act dated 28/1/2013 and not for the noncompliance of notice dated 5/2/2013. Thus, it was submitted by Ld. AR that Ld. CIT(A) has committed an error in sustaining the penalty and in absence of show cause notice for levy of penalty, the penalty should have been deleted. 5. On the other hand, relying upon the order passed by Ld. CIT(A) it was submitted by Ld. DR that assessee was clearly informed that non-compliance of notice under section 142(1) of the Act would result into .....

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been imposed. The default of the assessee as mentioned in the impugned penalty order is regarding notice issued under section 142(1) on 5/2/2013, which require the assessee to attend the assessment proceedings personally and give evidence on 12/2/2013 at 11.30 AM. It is for non-compliance of such notice impugned penalty has been imposed. The penalty order has already been reproduced in the above part of this order. The assessment orders in respect of A.Y 2004-05 to 2009-10 are identically worded .....

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. relating to the assessee was found and simultaneously action u/s. 132 of the Income Tax Act, 1961 was carried out on the premises of the assessee at Room no.1, 1st Floor; 23 Central Building, Chowpatty Sea Face, Mumbai- 400007. 2. Subsequently notice u/s. 153A of I.T. Act, 1961 dated 07.03.2011 was issued and duly served on the assessee. In response to the notice, the assessee filed his return of income for A.Y. 2004-05 on 23.03.2011 declaring a total income of ₹ 27,82,940/-. 3. Thereaft .....

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2011. However, on the designated date no one attended. On 19.05.2011 Assessee has submitted letter adjournment and the case is adjourned to 30.05.2011. 5. Subsequently, the assessee made his first partial submission on 15.06.2011 and second partial submission was made on 21.10.2011. 6. Further notice u/s. 142(1) dated 15.10.2012 was issued asking the assessee to submit complete details as requested in the questionnaire issued earlier. The date for compliance of this notice was fixed on 29.10.201 .....

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opportunity of being heard, and further the assessment will be completed ex-parte without further notice. The date for hearing was fixed on 06.11.2012, but on the designated date no one attended. 8. In view of consistent non-compliance on the part of the assessee one more reminder notice u/s.142(1) dated 7/12/2012 was issued and duly served on the assessee. In this notice the assessee was asked to show cause that if the assessee fails to attend the hearing with all details then why the assessme .....

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d date no one attended, In response to the above mentioned notices, the assessee has submitted some details on 08.01.2013. 10. Penalty u/s 271(1)(b) r.w.s. 274 of LT. Act, !l.961 has been initiated vide penalty order dated 14.2.2013. 11. Since the details submitted by the assessee were not complete, notice u/s 142(1) dated 21.01.2013 along with questionnaire was issued and duly served on the assessee calling for various details. The date for compliance of this notice was fixed on 28.01.2013. But .....

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6.1 It can be seen from the above observations of AO that it does not refer even to the noticed issued under section 142(1) dated 5/2/2013, which required the assessee to attend the assessment proceedings and to submit the evidence on 12/2/2013. Thus, the failure of the assessee to attend the proceedings on 12/2/2013 has not been even made ground for framing ex-parte assessment under section 144 of the Act. In respect of assessment year 2010-11 also no reference has been made to the impugned not .....

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ether levy of impugned penalty is justified or not. Admittedly, penalty has been imposed only on the basis of some observations of AO in the notice issued under section 142(1) on the basis of which it is claimed that assessee was put to the notice that in case of failure of the assessee, penalty under section 271(1)(b) would be levied. Whether such observations of AO in the notice issued under section 142(1) would be sufficient compliance with the provisions of section 274(1), which describe the .....

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ven describing failure of the assessee for a particular date to comply with the notice. Notice under section 142(1) was for 12/2/2013 and upon non-compliance of that notice, the AO was required to issue further notice to the assessee, if he wanted to levy penalty under section 271(1)(b) to fulfill the compliance of section 274(1). The requirement of section 274 is that order imposing penalty cannot be passed unless the assessee has been heard or has been given a reasonable opportunity of being h .....

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ry to the statutory provisions of section 274(1). Section 274(1) has been interpreted by the Courts that it provides principles of natural justice that even where a provision for penalty is not attended with a specific provision for giving a hearing, the assessee should be given such opportunity to show, if he can, that default or delay in complying with the substantive provisions of law was not without reasonable cause and reference in this regard can be made to the following decisions: CAg IIT .....

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