TMI Blog2005 (2) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of return in response to notice under s. 148 was accepted by him as a 'sufficient cause' while accepting assessee's application(s) under s. 146 of the Act, therein sufficiency of the said cause would itself justify the existence of a 'reasonable cause' for delay in filing of the said return under s. 148, and therein no penalty under s. 271(1)(a) could be imposed upon the assessee." The learned counsel for the assessee submitted that these were purely legal grounds which do not call for any investigation into the facts. Therefore, these may be admitted. 3. The learned Departmental Representative did not raise any objection to the admission of additional grounds of appeal. 4. I have heard both the parties and given my thoughtful consideration to the submissions of the learned counsel for admission of two additional grounds. These are purely legal grounds which do not call for any investigation into the new facts. Reliance was placed on the judgment of Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (1999) 157 CTR (SC) 249 : (1998) 229 ITR 383 (SC). These grounds are, therefore, admitted. 5. As regards the original grounds of appeal taken in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed return of income in response to notice issued under s. 148 of IT Act. In view of these facts, I do not find any merits in contention of appellant that letter was filed with Department in response to s. 148 notice that return filed may be treated as having been filed in response to this notice. Learned Authorised Representative's other contention that period of default should have been considered only upto 12th Feb., 1981, was on the basis that since there was letter from the appellant and assessment was framed under s. 144 of IT Act on said date, the period of default at the most was only upto that date. The said contention is also not acceptable in absence of any such letter (having) been filed by appellant and not proved to have been filed even during the appellate proceedings and the fact that in response to notice issued under s. 148, the return was submitted on 3rd Nov., 1984 with delay in submission of return of 56 months and only after the return and in compliance to the notices, the assessment was completed by AO under s. 143(3) of IT Act on 28th Feb., 1986. There was no reasonable cause to explain the default and in view of these facts there are no merits in contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The AO accepted such application and reopened the assessment under s. 146. Again, the reopened assessment was completed under s. 144 on 23rd March, 1984. The assessee again moved an application under s. 146 explaining that it was prevented by a reasonable cause in not complying with the notices. The AO accepted the application and again reopened the assessment. The assessee filed a return on 3rd Nov., 1984, stating that it was a duplicate return. But, no evidence was furnished either before the authorities below or even before me that it was a duplicate return. Even, such plea was not taken before me. 7.2 The learned counsel for the assessee submitted that applications filed under s. 146 had been accepted twice and assessments were reopened. Thus, the AO was satisfied that there was a sufficient cause for not filing the return of income. He submitted that for the purpose of levy of penalty under s. 271(1)(a), the assessee is required to explain the reasonable cause for delay in filing the return of income. Relying on the judgment of Hon'ble Punjab Haryana High Court in the case of Leader Engineering Works vs. ITO (2003) 185 CTR (P H) 277 : (2003) 264 ITR 65 (P H), the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 146 only in the following circumstances : (i) If he was satisfied that the assessee was prevented by sufficient cause from making return required under sub-s. (2) of s. 139, or (ii) that he did not receive notices issued under sub-s. (1) of s. 142, or sub-s. (2) of s. 143, or (iii) that he had not been given a reasonable opportunity to comply or was prevented by sufficient cause from complying with the terms of any notice referred to in cl. (ii), i.e., notice issued under s. 142(1) or under s. 143(2). He submitted that nowhere s. 146 provided condoning the default in filing the return of income late in response to notice issued under s. 148. Thus, he contended that the submissions of the learned counsel that the AO by accepting the application under s. 146 twice has accepted that there was a sufficient cause for filing the return of income late was factually wrong and contrary to the provisions of the Act. He further contended that the penalty has been rightly imposed by the AO and sustained by the learned CIT(A). 9. I have heard both the parties at some length and given my thoughtful consideration to the rival submissions with reference to facts, evidence and mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted therein. If the AO simply mentions that the notice under s. 273 has been issued without recording or specifying a particular default as contemplated under s. 273(1)(a), 273(1)(b) and 273(1)(c), such order would also be bad in law because the AO has not applied his mind at the time of recording satisfaction. The above-referred two judgments of the Hon'ble Delhi High Court and judgment of Hon'ble Supreme Court including the judgment of Hon'ble Punjab Haryana High Court in the case of D.M. Manasvi vs. CIT would equally apply. However, the position under s. 271(1)(a) is materially different from the provisions of ss. 271(1)(c) and 273(1)(a), 273(1)(b) and 273(1)(c) as s. 271(1)(a) contemplates only single default, i.e., filing the return of income late. It is trite law that both assessment proceedings and penalty proceedings are distinct and separate proceedings. While completing the assessment, the AO is not required to decide the issue regarding levy of penalty. The provisions of s. 274 specifically provide that no penalty should be imposed without allowing the assessee an opportunity of being heard. Thus, it is prima facie satisfaction and not the final conclusion about the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty imposed by the AO was without jurisdiction and liable to be quashed because the penalty proceedings were not initiated in the assessment order or even in the order-sheet. But, these are not the facts of the present case. In this case, the AO has clearly mentioned in the assessment order that the penalty proceedings under s. 271(1)(a) have been initiated. This was followed by a notice issued under s. 271(1)(a). This, in my view, is sufficient compliance with the provisions of the Act and the judgment of the Hon'ble Kerala High Court is not applicable to the facts of the present case. This ground of appeal is rejected. 9.2 As regards next submission of the learned counsel that the AO had accepted the plea of the assessee that there was sufficient cause in filing the return of income late because the assessee's applications under s. 146 had been allowed twice, I do not find any force therein. As has rightly been pointed out by the learned Departmental Representative, the AO could accept application under s. 146 if he was satisfied that the assessee was prevented by sufficient cause for making return under sub-s. (2) of s. 139 or did not receive the notices under s. 142(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dt. 25th May, 1999, fixing the case for 31st May, 1999, was served by affixture because neither the assessee nor the learned counsel gave any address of the assessee. This notice also remained uncomplied with. Subsequent opportunity was also allowed by notice dt. 10th Aug., 1999, and this notice was also served by affixture. None attended before the AO. These facts clearly show that the AO had made all efforts to serve notice on the assessee through normal course. Even, the learned counsel of the assessee was contacted but he declined to indicate the address of the assessee. Thus, the AO was justified in directing the notice server to serve notice by affixture as it was not possible to serve the notice through normal means, moreso, when the assessee has all throughout been non-co-operative. I do not agree with the learned counsel that the AO must record statement of the notice server before ordering service by affixture. He is only required to satisfy himself that the service through normal means was not possible. This could be done on the written report of the notice server. The fact recorded by the AO in the penalty order that the learned counsel was contacted for finding out t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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