2023 (8) TMI 430 - AT - Income Tax

Penalty u/s 271(1)(b) - notice issued but not served - providing opportunity to the assessee - assessee is a lady aged 63 years, housewife and has no source of earning - HELD THAT - There is no evidence on record put on by the AO as to what efforts have been carried out by the AO to serve the said notices and there is no specific finding in the assessment order whether the assessee refused to accept the notice or was not found at the place or was not residing at that place. Simply penalty has been imposed by considering that the notices were issued. In our view, service of notice is only a formality and, therefore, no true or genuine efforts were made by the AO to serve the notices. Since there is no proof on the court file with regard to service of notice, therefore, in our view, no penalty is attracted. Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of the penalty order u/s 271(1)(b) for non-compliance due to non-service of notice.

Summary:

Condonation of Delay:
The appeal filed by the assessee was delayed by 13 days. The assessee, an illiterate 63-year-old housewife with no income, was unaware of the assessment order dated 06.12.2022. The delay was attributed to her lack of personal email and reliance on a family member's email. The Tribunal, satisfied with the reasonable cause provided, condoned the delay in filing the appeal.

Penalty u/s 271(1)(b) - Non-Service of Notice:
The assessee argued that the penalty u/s 271(1)(b) was imposed without proper service of notice. The Assessing Officer (AO) presumed undisclosed income due to a time deposit of Rs. 20,00,000/- and issued notices u/s 148, 142(1), and show cause notices, which were never served to the assessee. The Tribunal noted that there was no evidence of efforts made by the AO to serve the notices and no specific findings on whether the assessee refused to accept the notice or was not found at the place. The Tribunal emphasized the importance of proper service of notice as per section 282 of the IT Act and the principles of natural justice.

Citing the Supreme Court judgment in CIT vs. Ramendra Nath Ghosh (82 ITR 888) and the Jaipur Bench Tribunal decision in Shri Chouth Mal Sahram vs. ITO (ITA No. 311/JP/2018), the Tribunal held that the penalty imposed was invalid due to the non-service of notices. Consequently, the Tribunal set aside the impugned order and deleted the penalty.

Conclusion:
The appeal of the assessee was allowed, and the penalty u/s 271(1)(b) was deleted due to the non-service of notices and failure to provide an opportunity of being heard, thereby upholding the principles of natural justice.