Income Tax Appellate Tribunal - Chandigarh
Asa Ram, Kurukshetra vs Assessee on 2 June, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH 'B', CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND SHRI T.R.SOOD, ACCOUNTANT MEMBER
ITA No. 1024/Chd/2014
(Assessment Year : 2007-08)
Asa Ram, Vs. The Income Tax Officer,
L/H of Shingara Mal(Deceased), Ward 1,
Village Karah Sahib, Kurukshetra.
Pehowa, District Kurukshetra.
PAN: ABBPT5610M
(Appellant) (Respondent)
Appellant by : Shri Sudhir Sehgal
Respondent by : Shri R.K.Gupta, DR
Date of hearing : 27.05.2015
Date of Pronouncement : 02.06.2015
O R D E R
PER BHAVNESH SAINI, J.M. :
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), Karnal dated 5.12.2013 for assessment year 2007-08, challenging the levy of penalty under section 271(1)(b) of the Income Tax Act.
2. The facts in brief, are that the penalty under section 271(1)(b) of the Act was levied as the assessee had failed to attend the assessment proceedings before the Assessing Officer and the Assessing Officer completed the assessment 2 under section 144/147 of the Act. During the assessment proceedings, the legal heir of the assessee contended that the assessee had already expired and notice might have been received by the counsel and that he was under the bonafide belief that the counsel might have attended the assessment proceedings. The legal heir of the assessee also took the ground that the appeal has been filed before the learned CIT (Appeals). The Assessing Officer dismissed the contention of the assessee as the legal heir Shri Asa Ram had attended the proceedings alongwith the counsel on 5.12.2011 during the assessment proceedings but there was no compliance made on the subsequent date of hearing i.e. on 13.12.2011. Further the assessee also failed to comply the show cause notice dated 21.12.2011 fixing the hearing on 26.12.2011, which resulted into ex-parte order dated 27.12.2011.
3. It was submitted before the learned CIT (Appeals) that the impugned penalty order is illegal, arbitrary and bad in law as it was passed on a dead person and that the penalty cannot be imposed on a dead person. The learned CIT (Appeals), however, noted that the legal heir of the assessee Shri Asa Ram with counsel attended the proceedings before the Assessing Officer on 5.12.2011 but no compliance was made on subsequent notices issued for hearing fixed on 13.12.2011 and 26.12.2011. The learned CIT (Appeals) noted that since the assessee failed to comply with the statutory notices, therefore, penalty was correctly levied and accordingly dismissed the appeal of the assessee. 3
4. We have heard the learned representatives of both the parties, considered the material available on record and gone through the findings of the authorities below. The copy of the assessment order is placed on record, which was passed under section 144/147 of the Act dated 27.12.2011 in the name of Shri Sihngara Mal, the assessee through legal heir. In the assessment order it was noted that the notice under section 148 of the Act was issued on 21.3.2011 but not complied with and notice under section 142(1) was issued to furnish the return of income on or before 30.9.2011 but the assessee did not make any compliance to this notice upto 3.11.2011. Further notice was issued under section 142(1) of the Act and the assessee was required to make compliance on or before 11.11.2011, copy of reasons was also supplied, in which it was briefly explained that the assessee has not shown interest income, labour charges and milling charges totaling to sum of Rs.7,45,854/-. On 11.11.2011 written reply signed by Shri Asa Ram, legal heir of the assessee was received by the Assessing Officer intimating that his father Shri Shingara Mal (assessee) had already expired on 21.4.2010 and that he is one of the major legal heir of his father and original return already filed by his father may be treated as return having been filed in response to notice under section 148 of the Act. The Assessing Officer, therefore, treated the return of income originally filed on 8.11.2007 as return filed in response to notice under section 148 of the Act. Thereafter statutory notices under section 143(2) and 142(1) of the Act were issued on 11.11.2011 fixing 4 the case for 5.12.2011, which was attended by the legal heir of the assessee and the counsel and the case was adjourned to 13.12.2011 and they were required to furnish reply to the reasons recorded under section 148 of the Act, copy of which had already been supplied to them but no compliance has been made. The Assessing Officer gave further opportunity to the assessee by issuing notice dated 21.12.2011 under section 142(1) of the Act asking the assessee to file reply to the reasons recorded under section 148 of the Act. In the absence of any reply from the side of the assessee, the Assessing Officer passed ex-parte assessment order and addition of Rs.7,45,854/- was made to the income of the deceased assessee.
5. In the background of these facts recorded in the assessment order, the Assessing Officer levied penalty of Rs.10,000/- for non-compliance of the notice under section 271(1)(b) of the Act specially for not complying the notice issued on 21.12.2011 The learned CIT (Appeals) also confirmed the penalty order and dismissed the appeal of the assessee.
6. Considering the facts noted in the assessment order and the impugned order, it is clear that the assessee originally filled return of income on 8.11.2007 and assessee expired on 21.4.2010. The notice under section 148 of the Act for completion of the reassessment proceedings was issued on 21.3.2011 and according to assessment order, it was served on 26.3.2011 but no return has been filed upto 5 3.11.2011. When the assessee had already expired in April, 2010 and no intimation about the death of the assessee was available to the Revenue Department prior to reply filed by the legal heir of the assessee, there was no reason for making any compliance to the notices issued by the Assessing Officer under section 148 and 142(1) of the Act by the deceased assessee. In the reasons recorded under section 148 of the Act, the Assessing Officer recorded that the income escaped assessment on account of income not shown on account of interest income, labour charges and milling charges. The legal heir Shri Asa Ram of deceased assessee filed reply before the Assessing Officer on 11.11.2011 intimating that the assessee Shri Shingara Mal had already expired on 21.4.2010 and he is one of the major legal heir of his father and also stated that the return filed by his father originally may be treated as return having been filed in response to notice under section 148 of the Act. The Hon'ble Rajasthan High Court in the case of CIT Vs. Pushpa Devi, 250 ITR 495 held as under :
" H e l d , ( i ) t h a t t h e a c t i o n o f t h e I n c o me - t a x O f f i c e r i n n o t i s s u i n g n o t i c e t o a l l t h e l e g a l r e p r e s e n t a t i v e s wa s n o t bona f ide and diligent. L i t i g a t i o n wa s t h e d i r e c t r e s u l t o f d i s r e g a r d o f t h e b a s i c r e q u i r e me n t o f i s s u i n g n o t i c e t o a l l the legal representatives.
(ii) T h a t t h e a s s e s s m e n t o r d e r m a d e wi t h o u t n o t i c e to all the legal representatives of the deceased on submission of the returns suff ered from procedural irregularities only and wa s liable to be corrected by setting aside the order and directing that the notice be i s s u e d t o a l l t h e l e g a l r e p r e s e n t a t i v e s i n a c c o r d a n c e wi t h 6 l a w. T h e a s s e s s me n t wa s n o t v o i d a n d n o t l i a b l e t o b e annulled."
7. Considering the facts of the case in the light of the above decision in the case of Smt.Pushpa Devi (supra), it is clear that the Assessing Officer has not issued notice to all the legal heirs of the assessee and further prior to intimation of death of the deceased assessee, there was no question of making any compliance of statutory notice by the deceased assessee. The action of the Assessing Officer, therefore, not issuing notice to all the legal representatives of the deceased assessee was thus not bonafide and diligent. Further the notices under section 143(2) and 142(1) of the Act were issued for 5.12.2011 and on that date Shri Asa Ram son of the deceased assessee appeared with the counsel and the case was adjourned to 13.12.2011 on their request and they were required to furnish the reply to the reasons recorded under section 148 of the Act but no compliance was made as per the Assessing Officer. Therefore, the Assessing Officer gave further opportunity by issuing notice dated 21.12.2011 asking the legal heir of the assessee to furnish requisite reply to the reasons recorded under section 148 of the Act for completion of the assessment. The scheme of the Income Tax Act provides that on issue of notice under section 148 of the Act, the assessee is required to furnish return of income in compliance to the notice under section 148 of the Act and in case the assessee objects to the reopening of the assessment under section 148 of the Act, the assessee may file objection to challenge the reopening of the assessment under section 7 148 of the Act. In the present case, the legal heir of the assessee intimated the Assessing Officer about the death of the deceased assessee and also requested to take the original return of income filed by the deceased assessee as return having been filed in response to notice under section 148 of the Act, which the Assessing Officer had accepted and treated the return filed under section 148 of the Act. Therefore, there is no question of non-compliance of the notice either by the deceased assessee or by his legal heir in filing the return of income in response to notice under section 148 of the Act. The Assessing Officer further issued notice for furnishing reply to the reasons recorded under section 148 of the Act and also issued notice on 21.12.2011 directing the assessee/LR to furnish requisite reply to the reasons recorded under section 148 of the Act for which penalty under section 271(1)(b) of the Act had been levied. We find no reason for levying of the penalty in said circumstances against the assessee because no provisions have been provided under section 148 of the Act for filing any reply by the assessee to the reasons recorded under section 148 of the Act. It is only when the assessee objects to the reopening of the assessment may file objection in his discretion. If the assessee does not object to the recording of the reasons or reopening of the assessment under section 147/148 of the Act, the Assessing Officer may proceed with the reassessment proceedings. Therefore, in our view, there was no non-compliance on the part of the deceased assessee or the legal heir to the notice issued on 21.12.2011. Considering the above discussion it is clear that there was no 8 default on the part of the deceased assessee or the legal heir to attract levy of penalty under section 271(1)(b) of the Act. Further when all the legal heirs have not been served with the notices as per law, the penalty should not have been imposed against one of the legal heirs of the deceased assessee. We may also note here that the assessee explained before the learned CIT (Appeals) that the legal heirs of the deceased assessee were involved in murder case and their key person is behind the bars for the last five years and the family was busy and tense in following-up the criminal case under section 302 IPC. Section 273B of the Act provides that no penalty under section 271(1)(b) of the Act be imposable on the person or the assessee, as the case may be, for any failure referred to in the above provisions if the assessee proves that there was reasonable cause for the said failure. The explanation of one of the legal heirs of the deceased assessee clearly shows that since the legal heirs of the deceased assessee were involved in criminal case under section 302 IPC, therefore, there may not be proper compliance from their side, though we have noted that there was no non-compliance on the part of the deceased assessee or the legal heir. It is well settled law that levy of penalty is not automatic in each and every case and the facts and circumstances of the case shall have to be taken into consideration. The facts and circumstances of this case clearly show that it is not a fit case of levy of penalty under section 271(1)(b) of the Act.
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8. Considering the totality of the facts & circumstances and discussion above, we are of the view that it is not a fit case for levy of penalty. We accordingly set aside the orders of the authorities below and delete the penalty.
9. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on this 2nd day of June, 2015.
Sd/- Sd/-
(T.R.SOOD) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 2 n d June, 2015
*Rati*
Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.
Assistant Registrar, ITAT, Chandigarh