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Mr. Lakhamshi J. Gala Versus The DCIT, Cen. Cir. 12, Mumbai

2015 (6) TMI 715 - 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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Petitioner: Ms. Bhumika Vora For the Respondent : Shri Jeevanlal Lavidiya 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 2010-11. 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 .....

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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 case is same and for the sake of clarity the order is reproduced below: Penalty Order u/s. 271(1)(b) r.w.s. 274 of the I.T.Act, 1961. In the case notice u/s. 142(1) of the I.T. Act, 1961 was issued to you on 05/02/2013 and was duly served, requiring you to attend personally and give evidence on 12/02/2013 at 11.30 AM. But there was neither compliance, nor anybod .....

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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 under section 142(1) was received and ii) on the ground that no show cause notice was issued before levy of penalty under section 271(1)(b) of the Act. The submissions made by the assessee before Ld. CIT(A) were forwarded to the concerned AO. In reply the AO submitted that notice under section 142(1) dated 5/2/2013 was served on the assessee and copy of acknowl .....

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otices 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 section 144 of the Act. Ld. CIT(A) further observed that assessee did not give evidence of compliance with several notices issued under section 142(1) of the Act and did not explain non-compliance. Therefore, Ld. CIT(A) has confirmed the levy of penalty, which is agitated in the present appeals. 4. After narrating the facts, it was submitted by Ld. AR that Ld. .....

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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 regard was made to order passed by Ld. CIT(A) dated 27/6/2014 for assessment year 2004-05 to 2009-10, copy was also placed on our record and was also given to Ld. DR. In the said case similar report was obtained and after finding that no show cause notice was issued for levy of penalty, it was held that by Ld. CIT(A) that it was in violation of cardinal princip .....

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t 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 the levy of penalty under section 271(1)(b) of the Act and this was sufficient compliance with the provisions of section 274(1) of the Act and, therefore, Ld. CIT(A) was right in sustaining the penalty and his order should be upheld. 6. We have heard both the parties and their contentions have carefully been considered. It may be mentioned here that we have .....

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s 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 so as it relates to mentioning the reason for proceeding to make best judgment assessment under section 144 r.w.s. 153A of the Act. For the sake of convenience the observations of the AO in the assessment order for A.Y 2004-05 to that extent are reproduced below: The search & Seizure action u/s 132 of the Income Tax Act, 1961 was carried out in the case .....

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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. Thereafter, notice u/s 143(2) was issued on 11.04.2011 and duly served on the assessee. The date for hearing was fixed on 25.04.2011, but on the designated date no one from the assessee. On 26.04.2011 Assessee submitted letter of adjournment and the case is adjourned till further date. 4. Further, notice u/s. 142(1) dated 25.04.2011 along with questionnaire was issu .....

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e to submit complete details as requested in the questionnaire issued earlier. The date for compliance of this notice was fixed on 29.10.2012, but on the designated date no one attended, nor had any adjournment letter been filed. 7. In view of consistent non-compliance on the part of the assessee more reminder notice u/s. 142(1) dated 29.10.2012 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 al .....

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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 assessment should not be completed u/s.144 of the Income Tax Act, 1961. Further it was mentioned that, it is the last opportunity of being heard, and further the assessment will be completed ex-parte without further notice. The date for hearing was fixed on 14.12.2012, but on the designated date no one attended. 9. Furthermore, notice u/s 142(1) dated 31.12.012 was .....

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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 no one attended on the desired date. 12. It is very evident from the facts as mentioned in the aforesaid Aft paragraphs that there is continuous non-compliance of various notices onA the part of the assessee and hence the assessment is being completed on the basis of the materials, documents and information as available on record with this office exparte u/ .....

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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 notice dated 5/2/2013 which required the assessee to attend the proceedings on 12/2/2013. For the sake of brevity the relevant portion of the assessment order for A.Y. 2010-11 is not reproduced. 6.2 Thus, it can be seen that the impugned failure of the assessee dose not result into best judgment assessment and the said notice has not been even referred in the as .....

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ns of AO in the notice issued under section 142(1) would be sufficient compliance with the provisions of section 274(1), which describe the procedure for imposing the penalty under Chapter XXI. It is described in section 274(1) that no order imposing penalty under this chapter shall be made unless the assessee has been heard, or has been given reasonable opportunity of being heard . The notice issued under section 142(1) required the assessee to submit evidence to support his case but that does .....

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74 is that order imposing penalty cannot be passed unless the assessee has been heard or has been given a reasonable opportunity of being heard. For imposition of penalty no opportunity has been given to the assessee. The assessee must be put to notice to show cause as to why he/she was unable to fulfill the requirements of the notice. Such opportunity is missing in the present case. Therefore, even not going into the question that whether there is a reference in the assessment order of the fail .....

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