1 ITA Nos. 352 to 358/Nag/2016. IN INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) S.No. ITA No. Asstt. Year. 1. 352/Nag/2016 2005-06. 2. 353/Nag/2016 2006-07. 3. 354/Nag/2016 2007-08. 4. 355/Nag/2016 2008-09. 5. 356/Nag/2016 2009-10. 6. 357/Nag/2016 2010-11. 7. 358/Nag/2016. 2011-12. Dharampal Ramkumar Agrawal, Asstt. Commissioner of Income-tax, (HUF), Nagpur. Vs. Central Circle-1(2), Nagpur. PAN AABCP0526C. Appellant. Respondent. Appellant by : Dr. J.M. Ranade. Respondent by : Shri A.R. Ninawe. Date of Hearing : 28-09-2016 Date of Pronouncement : 28th Sept., 2016 ORDER These are appeals by assessee against common order of learned CIT(Appeals) dated 03-05-2016 pertaining to assessment years 2005-06 to 2011-2012. 2. Common issue raised is that learned CIT(Appeals) erred in confirming levy of penalty u/s 271(1)(b) of Rs.10,000/- each. 3. In this case AO has passed order u/s 143(3) of I.T. Act read with section 153A. In this case penalty u/s 271(1)(b) was imposed on 2 ITA Nos. 352 to 358/Nag/2016. ground that as per notice u/s 143(2) issued on 07-01-2013 and served on 11-01- 2013 assessee was requested to attend and submit details on 15-01-2013. But assessee did not comply with above. On 14-02-2013 show cause letter was issued and same was served on 15-02-2013 in response to which assessee submitted reply. Thereafter assessment was framed u/s 143(3) of I.T. Act. In these facts penalty u/s 271(1)(b) was levied. 4. Before learned CIT(Appeals) assessee, inter alia, made following submissions : 1. assessee is member of group known as SHREE AGRAWAL COAL GROUP . search u/s 132 of Income-tax Act, 1961, was conducted on this group including assessee on 16th March, 2011. assessment in this case was finalized on 04.03.2013 u/s 143(3) r.w.s. 153A of Income Tax Act, 1961. 2. Notice u/s 143(2) was issued on 07.01.2013, however in case of AY 2011-12 notice u/s 143(2) was issued on 24.09.2012. Counsel of assessee filed his power of attorney on 18.12.2012. assessee s accountant was present in Income tax office with books of accounts, documents, papers etc. on various dates but however, AO did not record his presence and declined to see books of accounts, documents, papers produced. assessee had also filed adjournment application on date of hearing. Assessee counsel also appeared on several occasions but his attendance was not marked. Since assessee was not able to submit details due to above reasons assessee approached higher authorities JCIT and CIT (Central) stating fact that its accountant and staff was not allowed to submit details or to produce books of account. assessee had met Chief Commissioner and complained about harassment being meted out to this group as he was not able to please AO. CC directed assessee to meet CIT (Central) and explain his grievance. assessee met CIT(Central) and explained his situation and fear that AO will add huge amount in his cases as he is unable to please him. But no action was taken on assessee complains. assessee even wrote grievance letter to CBDT, vigilance Ministry of Finance, etc. But still AO made huge additions of Rs. 215 crores. This is clear case of high pitched assessments. Thus assessee was prevented by sufficient and reasonable cause as explained above. Copies of letters written to higher authorities are enclosed herewith. Thus assessee was prevented by sufficient cause from producing books of accounts and 3 ITA Nos. 352 to 358/Nag/2016. details before AO in this case. As result, AO did not verify books of account, bills, vouchers and other documents. In appeal before CIT(A) assessee, requested him to allow assessee to submit details which assessee was prevented by reasonable cause from filing with AO. CIT(A) accepted request of assessee and allowed it to file fresh evidence under rule 46A of Income-tax Rules, 1962. Accordingly quantum appeals were decided by CIT(A) on merits. 5. Assessee also referred to decision of ITAT in case of Akhil Bhariya Prathmik Shikshak Sangh Bhawan Trust vs. Asstt. Director of Income-tax 5 DTR 429. However, learned CIT(Appeals) did not find contentions acceptable. He concluded as under : In case of Akhil Bhariya Prathmik Shikshak Sangh Bhawan Trust vs. Asstt. Director of Income-tax as well as in case of Swarnaben M. Khanna & Ors., it was held that if assessment order is passed u/s 143(3) and not u/s 144 then non compliance is deemed to have been waived. In present case, although assessments have been made u/s 143(3) and not u/s 144, yet it is seen that assessee has not furnished details and documents requested by AO. It is seen from assessment orders for each year that AO has stated in order that no compliances were made by assessee and no documents and details were submitted by assessee. Therefore, facts are clearly distinguishable in view of specific observation of AO that no details whatsoever were furnished. In fact, reading of assessment orders gives idea that assessment orders read like best judgment orders u/s 144 in which AO had to make additions for want of any details on record. In fact, in appeal on quantum issues, on all issues detailed remand report had to be called for AO in which assessee asked to submit details in remand proceedings. In view of facts discussed above, it is held that in any case, assessment orders were passed u/s 143(3) since assessee did not give any details during assessment proceedings and AO had to pass orders without details on record. It is held that assessee has not complied with notices of AO issued by him u/s 143(2). In circumstances, penalty levied by him of Rs.10,000/- for each of assessment years from AY 2005-06 to 2011-12 is upheld. 6. Against above order, assessee is in appeal before ITAT. 4 ITA Nos. 352 to 358/Nag/2016. 7. I have heard both counsel and perused records. At outset learned counsel of assessee submitted that assessee s counsel and staff did go to AO on specified date but AO refused to admit their entrance. Learned counsel submitted that assessee has also filed petition before higher authorities in this regard. Learned counsel further submitted that assessment in this case has been completed u/s 143(3) of I.T. Act and not section 144 of I.T. Act. Hence learned counsel submitted that in these circumstances, ratio from case law referred above fully applies to assessee s case. Hence learned counsel submitted that there was due reasonable cause for non attendance as well as case law in assessee s favour. Hence learned counsel submitted that penalty of Rs.10,000/- levied in this case deserves to be set aside. 8. Per contra learned D.R. relied upon orders of authorities below. 9. I have carefully considered submissions. I note that in this case as per facts emanating from orders of authorities below assessee was given notice which was served on 11-01-2013 by which assessee was requested to attend and submit details on 15-01-2013. It was this non attendance of assessee against which penalty u/s 271(1)(b) was levied. On 14-02-2013 show cause letter was issued which was served on 15-02-2013 in response to which assessee submitted reply. Thereafter assessment order u/s 143(3) was passed. Now perusal of facts clearly indicate that this was case of search and seizure on big group. Four days time to submit details in such case is not at all reasonable from any stretch of imagination. Further more assessee did reply to subsequent show cause notice and assessment was framed u/s 143(3) of I.T. Act. This has also to be looked into on anvil of assessee s submission that AO has refused assessee recording of attendance specified date and for which assessee has petitioned to higher authorities. 5 ITA Nos. 352 to 358/Nag/2016. 10. In these circumstances, in my opinion, there was reasonable cause for non attendance of assessee. Hence on anvil of section 273B penalty is not leviable. Again issue is squarely covered by decision of ITAT, Delhi Bench in case of Akhil Bhariya Prathmik Shikshak Sangh Bhawan Trust vs. Asstt. Director of Income-tax (supra). I may gainfully refer to concluding portion of Tribunal s order as under : . .3 We have considered facts of case and rival submissions. We find that Hon'ble Gujarat (sic-Rajasthan) High ' Court has clearly distinguished between cls. (a) and (c) of sub-so (1) of S. 275. Under cl. (a), levy of penalty is dependent upon findings of appellate authorities, which is not case under cl. (c). In this case, default of non- attendance to notices was not subject-matter in quanturntappeat and it in no way depended upon outcome in appeal, penalty depends upon whether default was willrul or not, Therefore, we are of view that ratio of case of Hissaria Bros. (supra) will be applicable in this case also. Consequently, it is also held that order ought to have been passed on or before 31st Sept., 2001, failing which levy will become barred by limitation. 2.4 Coming to issue of recording of satisfaction, it may be mentioned that mere initiation of penalty does not amount to satisfaction as held by Hon'ble Delhi High Court In case of CIT vs. Ram Commercial Enterprises Ltd. (2001) 167 CTR (Del) 321 : (2000) 246 ITR 568 (Del). In absence of recording of satisfaction in assessment order, mere initiation of penalty will not confer jurisdiction on AD to levy penalty. 2.5 We also find that finally order was passed under s. 143(3) and not under s. 144 of Act. This means that subsequent compliance in assessment proceedings was considered as good compliance and defaults committed earlier were ignored by AD. Therefore, in such circumstances, there could have been no reason to come to conclusion that default was willful. 2.6 In view of aforesaid discussion, it is held that learned CIT(A) was not right in upholding levy of penalty. Thus, appeal is allowed. 11. I find that above case law fully applies on facts of case. Learned CIT(Appeals) has erred in distinguishing this case law as he has opined that assessment order in present case though passed u/s 143(3) of I.T. Act it appeared to him to be passed u/s 144 of I.T. Act. In my considered opinion this is not at all tenable ground for distinguishing decision of ITAT. 6 ITA Nos. 352 to 358/Nag/2016. 12. Further as above facts clearly indicate that it is technical breach and in such circumstances, as held by Hon ble Apex Court in case of Hindustan Steel Ltd. vs. State of Orissa 83 ITR 26, penalty need not be levied. Hence in background of aforesaid discussion and precedent I have no hesitation in deleting levy of penalty. Accordingly orders of authorities below are set aside and issue is decided in favour of assessee. 13. In result, these appeals filed by assessee stand allowed. Order pronounced in Open Court on this 28th day of Sept., 2016. Sd/- ( SHAMIM YAHYA) ACCOUNTANT MEMBER. Nagpur, Dated: 28th Sept., 2016. Copy forwarded to : 1. Dharampal Ramkumar Agrawal, 216, Devkripa Society, Wardhaman Nagar, Nagpur-440006. 2. A.C.I.T., Central Circle-1(2), Nagpur. 3. C.I.T.- (Central), Nagpur. 4. CIT(Appeals), -3, Nagpur. 5. D.R., ITAT, Nagpur. 6. Guard File True Copy By Order Assistant Registrar, Income Tax Appellate Tribunal, Nagpur Bench, Nagpur. Wakode. Dharampal Ramkumar Agrawal (HUF) v. Asstt. Commissioner of Income-tax, Central Cricle-1(2), Nagpur