The order of the Bench was delivered by
G. MANJUNATHA, Accountant Member:-These two appeals filed by the assessee are directed against the order of the CIT(A)-3, Visakhapatnam dated 21.12.2015 for the assessment years 2012-13 & 2013-14, confirming levy of penalty u/s 271(1)(b) r.w.s. 274 of the Income Tax Act, 1961 (hereinafter called as 'the Act'). Since, the facts are identical and issues are common, they are clubbed, heard together and disposed-off by way of this common order for the sake of convenience.
2. The brief facts of the case are that there was a search and seizure action in the case of M/s. Gayatri Constructions on 20.12.2012. The assessee was also subjected to search u/s 132 of the Act. Consequently, the assessment proceedings u/s 153A of the Act was initiated. In response to notice u/s 153A of the Act, the assessee filed ‘e’ returns for the assessment year 2007-08 to assessment year 2013- 14. Subsequently, notices u/s 142(1) & 143(2) of the Act were issued calling for certain information in connection with the assessment proceedings. The assessee neither appeared before the A.O. nor furnished any information as required by the A.O. Accordingly, the A.O. initiated penalty proceedings u/s 271(1)(b) of the Act. However, the assessment was completed u/s 143(3) r.w.s. 153A of the Act for the assessment years 2007-08 to 2013-14.
4. In response to penalty notice, the assessee filed a reply and submitted that non-attendance on the date of hearing is not intentional, as she was busy in collecting information sought by the A.O. in connection with the assessment proceedings. The assessee further submitted that the A.O. has sought huge information for a period of 7 years, as such she could not able to gather all the information within the time given in the notice. However, the fact is that she had complied with all the information sought by the A.O. and the assessing officer has completed the assessment u/s 143(3) r.w.s. 153A of the Act and accordingly, levy of penalty for initial failure to attend for hearing is unjustified. The A.O. after considering the explanations furnished by the assessee, held that the assessee failed to appear on the date of hearing and also failed to seek adjournment. The A.O. further held that the assessee has not offered any explanations for not appearing on the date fixed for hearing, therefore, opined that the assessee has not complied with statutory notices and hence, she is liable to pay penalty for failure to comply with the notices issued u/s 143(2) & 142(1) of the Act. Accordingly, levied penalty u/s 271(1)(b) of the Act, for each such failure for the assessment years 2007-08 to 2013-14.
5. Aggrieved by the penalty order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the A.O. The assessee further submitted that the A.O. was not correct in levying penalty u/s 271(1)(b) of the Act as she had cooperated with the A.O. for completion of assessment, which is evident from the fact that the assessment order is passed u/s 143(3) r.w.s. 153A of the Act. The assessee further submitted that the A.O. has issued all the notices with a short period of 7 days to 15 days to furnish huge information for a period of 7 years. Since, the information called for by the A.O. is voluminous, she could not gather all the information within a span of short period given in the notice and hence could not appear on the date fixed for hearing, therefore, requested to delete penalty levied u/s 271(1)(b) of the Act. In support of her contention relied upon the following judgements:
1) Swarnaben M. Khanna & Ors Vs. DCIT (2010) 132 TTJ 0001(UO) Ahd Trib.
2) Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust Vs. ADIT (2008) 115 TTJ 0419 Ahd Trib
3) Karnavati CIT(A), Rajahmundry Air Conditiners (P) Ltd Vs. ITO (2012) 32 CCH Ahd. Trib.
4) Pole Star Securities Ltd. Vs. ACIT (2014) 40 CCH 0374 Del Trib.
6. The CIT(A) after considering the explanations furnished by the assessee, held that a mere non-compliance of initial notices without a different recourse taken by the A.O. does not warrant levy of penalty u/s 271(1)(b) of the Act. The intention for non-compliance must persist and that alone can give inference to the assessing officer for levying penalty. In the instant case, though there was initial failure on the part of the assessee for compliance of notices, the proceedings were completed u/s 143(3) of the Act after supplying full information to the satisfaction of the A.O., therefore, the non-compliance will become technical and nonserious in so far as assessment proceedings u/s 143(3) of the Act. With these observations, directed the A.O. to delete penalty levied in cases where the A.O. has given 8 days time for appearance. However, in the cases where the A.O. has given 26 days time, the CIT(A) opined that the assessee failed to offer any explanations for not appearing on the date fixed for hearing and hence, the A.O. was right in levy of penalty u/s 271(1)(b) of the Act. Aggrieved by the CIT(A) order, the assessee is in appeal before us.
7. The Ld. A.R. for the assessee submitted that the Ld. CIT(A) is not justified in partly sustaining penalty levied u/s 271(1)(b) of the Act for the assessment years 2012-13 and 2013-14, as the assessee has explained before the A.O., the reasons for non-appearance as on the date of hearing. The A.R. further submitted that the CIT(A) ought to have appreciated the fact that the assessee’s case falls within the scope of section 273B of the Act, as such levy of penalty is not warranted. The Ld. A.R. further drew our attention to the decision of coordinate bench of ITAT, Visakhapatnam in assessee’s husband case in ITA No.81/Vizag/2016 dated 26.8.2016 and submitted that under similar set of facts, the ITAT held that the explanations offered by the assessee that she could not attend on the dates of hearing because of insufficient time given by the A.O. to collect voluminous information appears to be reasonable and bonafide. Since, the facts of the present case are identical to the facts of the case decided by the ITAT, the penalty levied by the A.O. may be deleted.
8. On the other hand, the Ld. D.R. strongly supporting the order of CIT(A) submitted that the A.O. has given sufficient time for the assessee to appear for hearing. The assessee neither appeared nor sought any adjournment, therefore, the A.O. was right in levy of penalty for noncompliance of statutory notices issued u/s 143(2) & 142(1) of the Act and his order should be upheld.
9. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The A.O. levied penalty u/s 271(1)(b) of the Act, for failure to comply with statutory notices issued u/s 142(1) of the Act. The A.O. was of the opinion that the assessee has failed to offer proper explanation for nonattendance as on the date of hearing. It is the contention of the assessee that non-attendance as on the date of hearing is not intentional as the A.O. has called for voluminous information for 7 assessment years, within a short period of 7 to 15 days. The information called for by the A.O. is voluminous and she could not gather all the information within a span of short period of 7 to 15 days and accordingly, not able to appear before the A.O. as on the date of hearing.
10. Having heard both the sides, we find force in the arguments of the assessee for the reason that the A.O. has given insufficient time to gather voluminous information for a period of seven years. We further observed that the assessment was finally completed u/s 143(3) r.w.s. 153A of the Act, after fully supplied with all material facts required for assessment proceedings. Hence, we are of the view that the initial failure becomes technical, which does not warrant levy of penalty u/s 271(1)(b) of the Act. We further observed that a similar issue has been considered by this bench, in assessee’s husband case in ITA No.81/Vizag/2016 dated 26.8.2016, wherein the coordinate bench of this Tribunal, under similar set of facts has held that the explanations offered by the assessee that she could not attend as on the date of hearing because of insufficient time given by the A.O. to collect voluminous information appears to be reasonable and bonafide. The relevant portion of the order is extracted below:
21. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The A.O. levied penalty u/s 271(1)(b) of the Act for failure to comply with statutory notices issued u/s 142(1) of the Act. The A.O. was of the opinion that the assessee has failed to offer proper explanation for non-attendance as on the date of hearing. It is the contention of the assessee that nonattendance as on the date of hearing is not intentional, as the A.O. has called for voluminous information for 7 assessment years within a short period of 7 to 15 days. The information called for by the A.O. is voluminous and he could not gather all the information and accordingly, not able to appear before the A.O. as on the date of hearing. We find force in the arguments of the assessee for the reason that the assessee has appeared on all the occasions and furnished necessary information for completion of assessment which is evident from the fact that the A.O. has completed the assessment u/s 143(3) of the Act. Though, assessee initially not appeared before the A.O. in one or two occasions, the reason given by the assessee for non-appearance appears to be reasonable and bonafide. Therefore, we are of the view that the A.O. was not correct in levying penalty u/s 271(1)(b) of the Act. Though, the CIT(A) appreciated the facts, failed to consider the explanation offered by the assessee for the assessment year 2013-14, in view of voluminous information called for by the A.O. and also the assessment being a search assessment. Normally, search assessments are done for 7 years, wherein the assessee is required to furnish information at one stretch for all the assessment years, for which sufficient time is required. In the present case on hand, the A.O. has given 7 to 15 days time. In our opinion, it is difficult to gather all the required information within a short period. Therefore, we are of the view that the explanations offered by the assessee that he could not attend on the dates of hearing because of insufficient time to collect voluminous information appears to be reasonable and bonafide. Accordingly, we direct the A.O. to delete the penalty levied for the assessment year 2013-14.
11. In this view of the matter and also respectfully following the coordinate bench decision, in the case of Pillala Ramakrishna Rao Vs. ACIT in ITA No.81/Vizag/2016, we are of the view that the reasons given by the assessee for non-appearance for hearing on the date fixed for hearing appears to be reasonable and bonafide. Therefore, we direct the A.O. to delete penalty levied u/s 271(1)(b) of the Act for the assessment years 2012-13 & 2013-14.
12. In the result, appeals filed by the assessee are allowed.
The order pronounced in the open court on 6th Jan, 2017.