The Income Tax Appellate Tribunal (ITAT), New Delhi, has recently, in an appeal filed before it, held that statutory notice should not be issued in a casual and mechanical manner.
The aforesaid observation was made by New Delhi ITAT when an appeal was filed before it by the assessee Simple Singh, Kartar Singh & Co, as against the order of the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 29.04.2022.
The issues raised in the assessee’s appeal being as to whether the CIT(A), NFAC, New Delhi has erred in law and otherwise, ignoring the facts that the notice on the basis of which the penalty was imposed, was never been served either an appellant or on her authorized agent, that the CIT(A) only relied upon on letter received from the AO, in respect of the notice issued but never bothered whether the same has been served or gone astray, making it most arbitrary and uncalled for in any case , being highly excessive, and further that the CIT(A), was not justified while confirming the penalty imposed by Assessing Officer without affording an opportunity to the assessee to rebut the claim of non-service of notice , as against the principles of law and natural justice, the relevant facts pertaining to the issues were that the assessee’s assessment was re-opened u/s 144/147 of the Income Tax Act, 1961 and was concluded on 20.12.2018.
During the course of the assessment proceedings, the Assessing Officer (AO), issued astatutory notices u/s 142(1) of the Income Tax Act and also issued a show cause notice u/s 271(1)(b) of the Act, against the non-compliance of the statutory notices. Thereafter, the AO levied penalty u/s 271(1)(b) of the Income Tax Act, amounting to Rs.10,000/- to the assessee.
Aggrieved by this, the assessee preferred an appeal before the CIT(A), who also sustained the penalty. And it is being further aggrieved by the order of the CIT(A), that the assessee has preferred the instant appeal before the New Delhi ITAT.
With Shri R.P.Narang, the Counsel for the assessee arguing that the non-compliance by the assessee was due to non-service of the notice, since the notice was sent to an incorrect address, he contended that this fact was duly brought to the notice of CIT(A), thereby further reiterating the submissions as made in the written submissions. On the contrary, Shri Abhishek Kumar, Sr. DR, opposed these submissions and supported the orders of the authorities below.
“It is not disputed by the Revenue that the notice was sent on the address given in the income tax return filed by the assessee. Therefore, it cannot be inferred that the assessee had not provided the correct address to the Assessing Authority”, the Delhi ITAT commented.
Adding to these comments, the Bench comprising of Pradip Kumar Kedia, the Accountant Member, along with Kul Bharat, the Judicial Member observed:
“Looking to the totality of the facts and circumstances of the case, we are of the considered view that the assessing authority ought to have served notice at the correct address as mentioned in income tax return. The statutory notice should not be issued in a casual and mechanical manner. The Assessing Authority should verify the records placed before it and ensure the statutory notice is served on the current address of the assessee.”
Thus, allowing the assessee’s appeal, the New Delhi ITAT concluded:
“Looking to the facts of the present case in our considered view, the AO was not justified in levying of the impugned penalty. We therefore, direct the AO to delete the penalty amounting to Rs.10,000/- levied u/s 271(1)(b) of the Act. Thus, grounds raised by the assessee are allowed.”
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