Shiv Kumar Nayyar vs ACIT Central Circle-20: Challenging Penalty Levied u/s 271(1)(b) for Non-Compliance During Assessment Year 2015-16

Case Overview: Shiv Kumar Nayyar vs ACIT Central Circle-20

Case Number: ITA 6207/DEL/2019

Appellant: Shiv Kumar Nayyar, New Delhi

Respondent: ACIT Central Circle-20, New Delhi

Assessment Year: 2015-16

Case Filed On: 2019-07-22

Order Type: Final Tribunal Order

Date of Order: 2021-03-08

Pronounced On: 2021-03-08

Introduction

The case of Shiv Kumar Nayyar vs ACIT Central Circle-20 was brought before the Income Tax Appellate Tribunal (ITAT), Delhi Bench, in response to a penalty imposed under Section 271(1)(b) of the Income Tax Act, 1961. The penalty was levied for non-compliance with several notices issued during the assessment proceedings for the year 2015-16. The appellant, Shiv Kumar Nayyar, challenged the penalty, asserting that there had been compliance with the notices issued by the Assessing Officer (AO).

Background

In this case, nine appeals were filed by the assessees against the orders of the CIT(A)-27, New Delhi, dated May 27, 2019, and May 28, 2019. These orders confirmed the penalties levied by the AO under Section 271(1)(b) for multiple assessment years, including 2015-16. The appeals were heard together due to the commonality of issues and grounds of appeal across the different years.

A notice under Section 153A was issued to the assessee on September 22, 2017, followed by several show-cause notices. Despite these notices, the assessee allegedly failed to respond adequately, leading to the imposition of a penalty of Rs. 10,000 under Section 271(1)(b) for the assessment year 2015-16.

Details of Non-Compliance and Penalty

The sequence of events leading to the penalty is as follows:

• September 22, 2017: Notice issued under Section 153A.
• March 22, 2018: Show cause notice issued, fixing the case for March 28, 2018.
• August 2, 2018: Another notice under Section 153A issued.
• September 7, 2018: Further show cause notice issued, fixing the case for September 14, 2018.
• October 5, 2018: Notice under Section 142(1) along with a questionnaire issued, fixing the case for October 25, 2018.
• November 9, 2018: Penalty notice under Section 274 issued, fixing the case for November 19, 2018.

Despite these notices, the assessee failed to respond, leading to the penalty being levied on December 6, 2018.

Appellant’s Arguments

During the tribunal hearing, the appellant’s representative argued that there had been compliance with the notice issued on November 19, 2018. A letter dated November 19, 2018, was submitted to the AO, explaining that the notice fixing the hearing on October 25, 2018, had not been received by the assessee. The representative highlighted that the AO had made a noting on this letter regarding the non-receipt of the notice.

Therefore, the appellant argued that the penalty was unjustified as there had been compliance, and the non-receipt of the notice was beyond the assessee’s control.

Respondent’s Arguments

The respondent’s representative contended that the assessee had a history of non-compliance, which justified the penalty. The DR (Departmental Representative) emphasized that the appellant had consistently failed to attend hearings and comply with notices, thereby warranting the penalty under Section 271(1)(b).

Tribunal’s Observations and Judgment

Upon reviewing the case, the tribunal noted that the AO’s rationale for levying the penalty was based on the appellant’s alleged failure to attend the hearing on November 19, 2018. However, the tribunal found that the appellant had indeed responded on that date, explaining the non-receipt of the previous notice. This response was documented and acknowledged by the AO, as evidenced by the noting on the appellant’s letter.

The tribunal further observed that the AO’s statement regarding non-compliance was contrary to the facts on record. Given that the appellant had provided a reasonable explanation for the non-receipt of the notice and had otherwise complied with the subsequent notice, the tribunal held that the penalty was unwarranted.

Conclusion

The Income Tax Appellate Tribunal, Delhi Bench, concluded that the penalty imposed under Section 271(1)(b) for the assessment year 2015-16 was unjustified. The tribunal allowed the appellant’s appeal, thereby setting aside the penalty order dated December 6, 2018.

The judgment serves as a reminder of the importance of ensuring that all procedural requirements are met before imposing penalties, particularly in cases where non-compliance may be attributed to factors beyond the assessee’s control.

Final Tribunal Order

The final order, pronounced on March 8, 2021, by Judicial Member Bhavnesh Saini and Accountant Member Dr. B. R. R. Kumar, allowed the appeal filed by Shiv Kumar Nayyar and quashed the penalty levied under Section 271(1)(b) for the assessment year 2015-16.

Order Pronounced in the Open Court on 08/03/2021.

Judicial Member: Bhavnesh Saini

Accountant Member: Dr. B. R. R. Kumar

Shiv Kumar Nayyar vs ACIT Central Circle-20: Challenging Penalty Levied u/s 271(1)(b) for Non-Compliance During Assessment Year 2015-16