M/s MYM Technologices Ltd.,, Hyderabad v. ACIT, Hyderabad

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO:1306/HYD/2008 ASSTT. YEAR :200 2-03 ITA NO.1307/HYD/2008 2003-04 ITA NO.1308/HYD/2008 2004-05 M/S MYM TECHNOLOGIES LTD. HYDERABAD (PAN AAACK 8669 E) VS ACIT CIRCLE 16(2) HYDERABAD (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI JITENDRA KUMAR RESPONDENT BY : SHRI H. PHANI RAJU DR O R D E R PER: CHANDRA POOJARI ACCOUNTANT MEMBER THESE THREE APPEALS PREFERRED BY THE ASSESSEE ARE DIRECTED AGAINST THE DIFFERENT ORDERS PASSED BY THE CIT(A)-V HYDERABAD DATED 9.5.2008 AND PERTAINS TO THE ASSESSMENT YEARS 2002-03 20 03-04 AND 2004-05. SINCE THE ASSESSEE BEING SAME IN THESE APPEALS T HEY ARE CLUBBED TOGETHER HEARD TOGETHER AND DISPOSED OFF VIDE THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. ITA NO.1306/HYD/2008 IS RELATING TO LEVY OF PENA LTY U/S 271B OF THE INCOME TAX ACT 1961 AND THE OTHER TWO APPEALS O F THE ASSESSEE ARE RELATING TO LEVY OF PENALTY US 271(1)(B) OF THE I T ACT. 3. FIRST WE WILL TAKE UP THE CASE IN ITA NO.1306/HYD/ 2008. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN BUSINESS OF SOFTWARE DEVELOPMENT. FOR THE 2 2 ASSESSMENT YEARS 2002-03 IT HAS NOT FILED ITS RETURN OF I NCOME AS PER THE PROVISIONS OF SECTION 139(1) OF THE ACT. THEREAFTE R THE ASSESSING OFFICER HAS ISSUED A NOTICE U/S 142(1) ON 7.10.2003 REQU ESTING THE ASSESSEE TO FURNISH THE RETURN. IN RESPONSE TO THIS NOTICE SERVED ON 31.10.2003 THE ASSESSEE HAS NOT MADE ANY COMPLIANCE. A S THERE WAS NO COMPLIANCE FROM THE ASSESSEE THE ASSESSING OFFICER HAS ISSUED SUMMON U/S 131 OF THE ACT REQUIRING THE MANAGING DIRECT OR OF THE ASSESSEE COMPANY TO APPEAR AND TO PRODUCE THE BOOKS OF ACCOU NTS FOR THE ASSESSMENT YEARS 2002-03 ON 21.3.2005. IN RESPONSE TO THE ABOVE SUMMON ISSUED BY THE ASSESSING OFFICER TO THE MANAGING DI RECTOR OF THE ASSESSEE COMPANY APPEARED ALONG WITH THEIR AUTHORIZED R EPRESENTATIVE ON 21.3.2005. SUBSEQUENTLY THE ASSESSEE HAS FILED THE R ETURN OF INCOME FOR THE ASSESSMENT YEARS 2002-03 ON 28.3.2005 SHOWI NG INCOME AT NIL AFTER SETTING OFF OF BROUGHT FORWARD BUSINESS LOSS UNDER NORMAL PROVISIONS OF THE ACT. ALONG WITH THE RETURN THE ASSE SSEE HAS ENCLOSED THE ANNUAL REPORT FOR THE YEAR 2001-02. AS PER THE SAID ANNUAL REPORT THE TURNOVER OF THE COMPANY DURING THE PREVIOUS YEAR WAS FOR RS.4 36 20 000. HOWEVER THE ASSESSEE HAS NOT FILED ANY A UDIT REPORT AS REQUIRED U/S 44AB OF THE ACT. THE ASSESSING OFFICER ISSUE D NOTICE U/S 148 OF THE ACT ON 28.3.2005 AND LATER ON COMPLETED TH E ASSESSMENT U/S 143(3) READ WITH 147 OF THE ACT ON 10.3.2006 DETERMI NING TOTAL INCOME UNDER NORMAL PROVISIONS AT NIL AND TAXABLE BOOK PR OFIT 115JB AT RS.20 00 136. AS THE ASSESSEE HAS FAILED TO GET ITS ACCOUNT AUDITED IN RESPECT OF THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEARS 2002-03 AND FURNISH THE AUDIT REPORT AS REQUIRED U/S 44AB OF THE A CT THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS U/S 271B OF TH E ACT WHILE COMPLETING THE ASSESSMENT. 4.1 THE ASSESSING OFFICER HAS ISSUED A SHOW CAUSE NOTICE U/S 271B OF THE ACT ON 10.3.2006 REQUIRING THE ASSESSEE TO F URNISH ITS REPLY/EXPLANATION AS TO WHY PENALTY SHOULD NOT BE LEV IED. THE SAID 3 3 NOTICE SENT THROUGH REGISTERED POST COULD NOT BE SERVED O N THE ASSESSEE AND THE SAME WAS RETURNED BY THE POSTAL AUTHORITIES WIT H REMARK LEFT R/N. LATER THE ASSESSING OFFICER ISSUED ANOTHER SHOW CAU SE LETTER DATED 28.7.2006 FIXING THE CASE OF HEARING ON 14.8.20 06. THE LETTER ALSO COULD NOT BE SERVED AND WAS RETURNED BY THE POSTAL AUTHORITIES WITH THE SAME REMARK LEFT R/N. UNDER THIS CIRCUMSTANCE THE ASSESSING OFFICER HAS SERVED THE SAID SHOW CAUSE NOTICE ON THE ASSESSEE B Y AFFIXTURE AT THE LAST KNOWN ADDRESS OF THE ASSESSEE THRO UGH HIS INSPECTOR ON 24.8.2006. THE ASSESSEE HAS BEEN GIVEN OPPOR TUNITY FOR FURNISHING REPLY ON 31.8.2006. HOWEVER THE ASSESSEE HAS NOT FURNISHED ANY REPLY NOR MADE ANY COMPLIANCE ON THE SAID DATE I.E . 31.8.2006. UNDER THESE CIRCUMSTANCES I.E. IN THE ABSENCE OF ANY REPL Y FROM THE ASSESSEE THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS FAILE D TO GET ITS ACCOUNTS AUDITED U/S 44AB OF THE ACT WITHOUT ANY REA SONABLE CAUSE. ACCORDINGLY AFTER CONSIDERING THE TURNOVER OF RS.4 36 2 0 000 DURING THE PREVIOUS YEAR HE LEVIED PENALTY OF RS.1 00 000 U/S 27 1B OF THE ACT. 5. ON APPEAL TO CIT(A) HE HAS CONFIRMED THE ORDE R OF THE ASSESSING OFFICER. FURTHER AGGRIEVED THE ASSESSEE IS IN APP EAL BEFORE US. 6. THE AR SUBMITTED THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE AND THEREFORE NO PENALTY U/S 271B IS LE VIABLE. THERE WAS A CHANGE OF MANAGEMENT AND THE NAME OF THE COMPANY ALSO CHANGED ON CHANGE OF MANAGEMENT AND THERE WAS A DISPU TE BETWEEN THE OLD AND THE NEW MANAGEMENT AND WHICH WAS CONTINUE D FOR LONG TIME AND THE NEW MANAGEMENT COULD NOT ACQUIRE CONTROL ON THE ADMINISTRATION INCLUDING THE PREPARATION OF INCOME TAX RETURN OF THE ASSESSEE. THE NEW MANAGEMENT HAD BONA FIDE BELIEF THAT RETURN FOR THE ASSESSMENT YEAR 2002-03 WOULD BE FILED BY THE OLD MANAG EMENT WHICH IS BASED ON THE FOLLOWING FACTUAL FACTS: 4 4 A) THE NEW MANAGEMENT WAS ADVISED DURING THE TAKE OVER T HAT ASSESSEE COMPANY HAS BEEN FILING THE RETURNS BEFORE RANGE 3 HYDERABAD IN THE NAME OF M/S SAROH INFORTECH. B) THE ASSESSEE COMPANY RECEIVED A NOTICE FROM RANGE 3 HYDER ABAD ADVISING A HEARING OF THE CASE. THE ASSESSEE COMPANY APPE ARED ON 1.3.2004 AND 3.3.2004 THROUGH ITS AR MR. JITENDE R KUMAR. THE ASSESSEE COMPANY ADVISED THE ASSESSING OFFICER ABOUT THE CHANGE OF NAME FROM M/S SAROH INFOTECH LTD. TO MYM TECHNOLOG IES LIMITED. C) THE ASSESSING OFFICER ADVISED THAT THE JURISDICTION OF THE COMPANY LIES WITH CIRCLE 16(2) SINCE ALPHABET M FALLS THERE AT . ASSESSING OFFICER ADVISED THAT FILES WILL BE TRANSFERRED TO JURISD ICTIONAL OFFICER. D) THE ASSESSEE COMPANY TOOK NOTICE OF THE FACT OF NON FILIN G OF RETURN ONLY AFTER THE ISSUE OF NOTICE RECEIVED CALLING FOR APPEARANCE BEFORE THE ASSESSING OFFICER RANGE 16(2). THE ASSESSEE COMPANY WAS INFORMED THAT NEITHER RETURN OF INCOM E FILED NOR FILE OF SAROH INFOTECH LIMITED WAS TRANSFER RED FROM THE ASSESSING OFFICER RANGE.3 E) THE ASSESSEE COMPANY EVENTUALLY FILED THE RETURN OF INCOM E BELATEDLY ON 28.3.2005 F) THE NEW MANAGEMENT CARRIED AN HONEST IMPRESSION THAT M/ S SAMBASIVA RAO & CO CONTINUED TO ACT AS TAX AUDITORS F OR THE ASSESSMENT YEAR 2002-03. G) THE ASSESSEE COMPANY UPON INQUIRY WAS INFORMED BY M/S SAMBASIVA RAO & CO THAT THEY HAD CEASED TO BE ACTING A S TAX AUDITORS HAVING SUBMITTED A RESIGNATION LETTER TO OLD MANAGEMENT. THIS FACT WAS NOT TO THE KNOWLEDGE OF THE NEW MANAGEME NT. BY THE TIME THIS DEFAULT SURFACED IT WAS BEYOND RECTIFIABLE POSITION. 7. HE RELIED ON THE JUDGEMENT OF MADYA PRADESH HIGH COURT IN THE CASE OF GRAMIN VIDYUT SAHAKARI SAMITY MARYADIT VS. ACIT (305 ITR 89). HE SUBMITTED THAT THE ASSESSEE IS LIABLE TO TAX U/S 1 15J OF THE INCOME TAX ACT 1961 AND THE ABSENCE OF TAX AUDIT REPO RT IN ANY WAY AFFECTED THE INCOME TAX PROCEEDINGS AS SUCH PENALTY U/S 27 1B NOT LEVIABLE. HE SUBMITTED THAT THE ASSESSEE HAS BEEN FILING RETURN OF 5 5 INCOME TAX REGULARLY FOR SO MANY YEARS AND FAILURE ON THE PART OF THE ASSESSEE TO FILE TAX AUDIT REPORT EXCEPT IN THE ASSESSMENT Y EAR UNDER CONSIDERATION MAY NOT RESULT IN LEVY OF PENALTY. THER E IS NO INTENTIONAL DEFAULT BY THE ASSESSEE. NO PENALTY MAY BE LEVIED. HE RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF PROGRESSIVE CONSTRU CTIONS (P) LTD. VS. ITO (1987) (20 ITD 182) (HYD.TRIBUNAL). HE SUBMITT ED THAT THE ASSESSEE HAS NOT BEEN GIVEN PROPER OPPORTUNITY TO FILE I TS OBJECTIONS AS SUCH PENALTY CANNOT BE LEVIED. HE RELIED IN THE CASE OF CIT VS. K.C. VERMA (152 TAXMAN 598) AND SUBMITTED THAT NO PROPER NOTICE OF PENALTY HAS BEEN GIVEN TO THE ASSESSEE AS SUCH PENALTY ORDE R IS BAD IN LAW. HE RELIED IN THE CASE OF KIRAN MACHINES VS. ITO (2 03 ITR 274) (MAD.). FURTHER HE RELIED ON THE JUDGMENT IN THE CA SE OF CHANDRA AGENCIES VS. ITO (2004) (249 ITR 001). 8. ON THE OTHER HAND THE DR RELIED ON THE ORDER O F THE CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIAL ON RECORD. IN THE PRESENT CASE THE ASSESSEE HAS NEVER FILED THE AUDIT REPORT U/S 44AB OF THE IT ACT FOR THE ASSESSMENT YEAR UND ER CONSIDERATION. THE CONTENTION OF THE ASSESSEES COUNSEL IS T HAT THE ASSESSEE HAS NOT GIVEN PROPER OPPORTUNITY TO EXPLAIN ITS FAILURE. THIS PLEA OF THE ASSESSEES COUNSEL IS DEVOID OF MERIT. THE ASSE SSING OFFICER MADE ALL EFFORTS TO SERVE THE NOTICE TO THE ASSESSEE AND H E HAS SENT INSPECTOR TO MAKE AN INQUIRY REGARDING THE WHEREABOUT S OF THE ASSESSEE. THE INSPECTOR INFORMED THE DEPARTMENT THE WHER EABOUTS OF THE ASSESSEE NOT KNOWN. FURTHER THE REGISTERED POST WAS RETURNED AS UNSERVED WITH A REMARK LEFT R/N. THEREAFTER A N OTICE WAS SERVED AFFIXTURE TO THE LAST KNOWN ADDRESS ON 24.8.2006. THE CHANGE OF ADDRESS WAS NOT INFORMED TO THE DEPARTMENT. IN VIEW O F THIS THERE IS A FAILURE BY THE ASSESSEE TO INFORM THE ASSESSING OFFICER THE CHANGE OF ADDRESS IF ANY FOR PROPER SERVING OF THE NOTICE FROM T HE DEPARTMENT. ANOTHER ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE 6 6 ASSESSEE IS NOT IN POSSESSION OF THE RECORDS OF THE ASSESSEE COMPA NY. THIS CANNOT BE ACCEPTED IN VIEW OF THE FACT THAT THE ASSE SSEE HAS CONDUCTED ITS 7 TH AGM AT THEIR REGISTERED OFFICE ON 27.12.2002 AT 10AM AND FOR HOLDING THE AGM THE ASSESSEE REQUIRED TO PRESENT AUDIT REPORT AND PROFIT AND LOSS ACCOUNTS FOR THE CONCERNED YEAR. IT M EANS THAT THE ASSESSEE HAS OBTAINED AUDIT REPORT AFTER DULY PRODUCING T HE BOOKS OF ACCOUNTS TO THE AUDITOR WHICH IS NECESSARY FOR THE PURPOSE O F AUDIT. FURTHER THE AUDIT REPORT HAS ALSO CONFIRMED THE BOOKS OF ACCOUNTS WERE PRODUCED TO THE AUDITOR FOR THE PURPOSE OF AUDIT. IN OUR OPINION THE MANAGEMENT IS FULLY ACCESS TO THE RECORDS OF THE ASSESSEE COMPA NY. THE ASSESSEE HAVING BEEN TRANSACTED ALL ITS BUSINESS IN TH E ASSESSMENT YEAR UNDER CONSIDERATION AND ALSO GOT PREPARED ITS F INANCIAL STATEMENT AND GOT AUDITED ITS BOOKS OF ACCOUNTS AND PRESENTED THE SAME IN THE AGM AND THEREAFTER IT SAYS THAT THE ASSESSEE IS NOT IN A CCESS OF THE BOOKS OF THE ACCOUNT DUE TO CHANGE OF MANAGEMENT CANNO T BE ACCEPTED AND IN OUR OPINION THE ASSESSEE IS REQUIRED TO COMPLY THE REQUIREMENT OF SECTION 44AB AND HAVING FAILED TO DO SO WITHOUT REASONABLE CAUSE THE ASSESSEE IS LIABLE TO PAY PENALTY U/S 271B OF THE IT ACT AND THE LEVY OF PENALTY BY THE LOWER AUTHORIT Y IS JUSTIFIED AND THE SAME IS CONFIRMED. THE VARIOUS JUDGEMENTS CITED BY THE ASSE SSEES COUNSEL IS ON DIFFERENT SET OF FACTS WHICH ARE OF NO ASSISTA NCE TO THE ASSESSEE. IN THE RESULT THE APPEAL OF THE ASSESSEE IN ITA NO.1306 /HYD/ IS DISMISSED. 10. NOW COMING TO THE SECOND APPEAL OF THE ASSESSEE IN IT A NO.1307/HYD/2008 THE FACTS OF THE CASE ARE AS FOLLOWS: 11. THE ASSESSEE FILED AUDIT REPORT FOR THE ASSESSMENT YE AR 2003-04 IN FORM 3CA AND 3CD ON 1.12.2003. HOWEVER THE ASSESSEE DID NOT FILE ITS RETURN OF INCOME IN THE ASSESSMENT YEAR 2003-04. A NOTI CE U/S 148 OF 7 7 THE IT ACT WAS ISSUED ON 26.12.2005 TO THE ASSESSEE CALLIN G FOR THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04 WITHIN 30 DAYS FROM THE DATE OF SERVICE OF THE NOTICE WHICH WAS DULY SERVED T O THE ASSESSEE ON 3.3.2006. THERE IS NO RESPONSE FROM THE ASSESSEE. A SH OW CAUSE LETTER DATED 31.7.2006 WAS ISSUED TO THE ASSESSEE EXPRESSING TO COMPLETE THE ASSESSMENT EXPARTE TO THE BEST OF JUDGEMENT OF THE ASSESSING OFFICER AND TO FILE ITS OBJECTIONS IF ANY WITHIN SEVEN DAYS FROM THE DATE OF RECEIPT THE NOTICE. THE LETTER WAS RETUR NED UNSERVED BY THE POSTAL DEPARTMENT WITH A MARK LEFT R/N. FURTHER THE ASSESSING OFFICER HAS SERVED THE SAID SHOW CAUSE NOTICE ON THE ASSESSEE BY AFIX TURE ON 24.8.2006 AT THE LAST KNOWN ADDRESS OF THE ASSESSEE. THE RE WAS NO RESPONSE FROM THE ASSESSEE. LATER NOTICE WAS SERVED ON 31. 8.2006 ASKING WHY THE PENALTY U/S 271 (1)(B) OF THE ACT COULD NOT BE LEVIED FOR THE FAILURE MENTIONED ABOVE AND THE DATE OF HEARIN G WAS FIXED ON 21.9.2006. HOWEVER NO RESPONSE FROM THE ASSESSEE ON THE DATE OF HEARING I.E. 21.9.2006 BUT THE ASSESSEE FILED A LETTER DATED 6.10.2006 STATING THAT THE ASSESSEE COMPANY RECEIVED A SHOW CAUSE NOTICE INTIMATING THE PROPOSAL TO LEVY THE PENALTY U/S 271( 1)(B). SINCE THE ASSESSEE COMPANY FILED AN APPEAL BEFORE THE CIT(A) AGAIN ST THE ASSESSMENT ORDER AND THEREFORE THE PENALTY PROCEEDINGS M AY BE KEPT IN ABEYANCE UNTIL DISPOSAL OF THE APPEAL. HOWEVER THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(B) OF RS.10 000 SINCE THERE W AS NO APPEAL PENDING AS ON THE DATE OF PASSING THE PENALTY ORDER ON 28.3.2007. ON APPEAL TO CIT(A) THE PENALTY WAS CONFIRMED. FURTHE R AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE PENALTY WAS LEVIED FOR NON COMPLIA NCE OF THE NOTICE ISSUED U/S 148. SINCE THE ASSESSEE NOT FILED THE RETURN O F INCOME THE ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT. IN OUR HUMBLE OPINION THE PENALTY U/S 271(1)(B) CANNOT BE LEVIED FOR THIS KI ND OF DEFAULT WHICH 8 8 IS AGAINST THE PROVISIONS OF 271(1)(B) OF THE ACT. SECTI ON 271 (1) (B) OF THE ACT READS AS FOLLOWS: SECTION 271: IF THE ASSESSING OFFICER OR THE CIT(A ) IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT ANY PE RSON: B) HAS FAILED TO COMPLY WITH A NOTICE (UNDER SUB SE CTION (2) OF SECTION 115WD OR UNDER SUB SECTION (2) OF SECTION 115WE OR UNDER SUB SECTION (1) OR SECTION 142 OR SUBSECTION (2) OF SECTION 143 OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB SECTION (2A) OF S ECTION 142 OR HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY- I I) IN THE CASES REFERRED TO IN CLAUSE (B) IN ADDIT ION TO TAX IF ANY PAYABLE BY HIM A SUM OF TEN THOUSAND RUPEES FOR EACH SUCH FAI LURE. 13. IN THE PRESENT CASE IN OUR OPINION THE NON COM PLIANCE OF NOTICE U/S 148 AND PASSING OF THE EXPARTE ORDER ARE NOT COVERED BY THE PROVISIONS OF THE SECTION 271(1)(B) OF THE ACT AS SUCH LEV Y OF PENALTY IS NOT CORRECT. ACCORDINGLY WE CANCEL THE PENALTY ON THIS I SSUE AND THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04 IS AL LOWED. 14. NOW COMING TO THE APPEAL OF THE ASSESSEE IN ITA NO.1308/HYD/2008 THE BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED ITS TAX AUDIT REPORT IN 3CA AND 3CD ALONG WIT H SCHEDULES ON 1.11.2004. HOWEVER THE ASSESSEE DID NOT FILE ANY RETUR N OF INCOME FOR THE ASSESSMENT 2003-04. A NOTICE U/S 142(1) OF THE ACT WA S SERVED ON 26.12.2005 TO THE ASSESSEE CALLING FOR RETURN OF INCOME F OR THE ASSESSMENT YEAR 2004-05 WHICH WAS DULY SERVED ON THE ASSESSEE ON 3.3.2006 AND THERE WAS NO RESPONSE FROM THE ASSESSEE ON TH E DATE OF HEARING FIXED ON 10.3.2006. A SHOW CAUSE LETTER DA TED 31.7.2006 WAS ISSUED TO THE ASSESSEE PROPOSING TO COMPLETE THE ASSESSMENT EX PARTE TO THE BEST JUDGEMENT OF THE ASSESSING OFFICER IF THE ASSESSEE FAILS TO FILE ITS OBJECTIONS IF ANY. THE LETTER WAS RETURNED UNSERVED B Y THE POSTAL AUTHORITIES WITH A MARK LEFT. FURTHER THE INSPECTO R ATTACHED TO THE ASSESSING OFFICER SERVED THE SHOW CAUSE LETTER BY AFFIXTURE ON 24.8.2006 AT THE LAST KNOWN ADDRESS. BUT THERE HAS BEEN NO RESPONSE FROM THE 9 9 ASSESSEE TILL THE DATE OF HEARING. LATER THE ASSESSMENT WA S COMPLETED U/S 144 THEREAFTER PENALTY WAS LEVIED U/S 271(1)(B). THE SAME WAS CONFIRMED BY THE CIT(A). AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 15. THE AR SUBMITTED THAT THERE IS REASONABLE CAUSE FO R FAILURE TO COMPLY WITH THE STATUTORY NOTICE ISSUED BY THE ASSESSING OFFICER HENCE THE PENALTY U/S 271(1)(B) IS NOT LEVIABLE. THE MANAG ING DIRECTOR OF THE ASSESSEE COMPANY HAS SCHEDULED TO ATTEND HEARING ON 26.12.2 005 IN THE HIGH COURT. THE AR WAS OUT OF STATION ON THIS DAT E AND HENCE HE COULD NOT BE MADE TO ATTEND THE HEARING. A NOTICE FI XING THE HEARING ON 31.7.2007 WAS NOT SERVED TO THE ASSESSEE AS SUCH NO COMPLIA NCE AND IT CANNOT BE SAID THAT NO COMPLIANCE OF THE NOTICE. HE SU BMITTED THAT THE ASSESSING OFFICER NOT SERVED THE NOTICE PROPERLY AS SUCH WITHOUT PROPER SERVICE OF NOTICE LEVYING OF PENALTY IS INVALID . HE RELIED ON VARIOUS JUDGEMENTS CITED IN EARLIER PARAS OF THE ORDER S. FURTHER HE RELIED CHANDRA AGENCIES VS. ITO (249 ITR 01) AND WO RLD WIDE EXPORTS (P) LIMITED VS. ITO (91 ITD 519) (DEL.). 16. THE DR RELIED ON THE ORDER OF THE CIT(A). 17. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE THE PENALTY HAS BEEN LEVIED FOR NON COMPLIANCE OF NOTICE ISSUED U/S 142(1) OF THE INCOME TAX ACT. A NOTICE WAS ISSUED ON 26.12.2005 FIXING THE CASE FOR HEARING ON 10.3.2006. THIS NOTICE WAS DULY SERVED TO THE ASSESSEE ON 3.3.2006. THE CONTENTION OF THE ASSESSEE COUNSEL IS THAT THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY WAS BUSY IN ATTENDING HIS PERSONAL MATTER OF HEARING IN THE HIGH COURT ON 26.12.2005. WE MAKE IT CLEAR THAT ON THIS DATE 26 .12.2006 THE ASSESSEE IS NOT REQUIRED TO ATTEND BEFORE THE ASSESSING OFFI CER AND THE ASSESSEE IS REQUIRED TO ATTEND ONLY ON 10.3.2006. IF TH E DIRECTOR IS BUSY 10 10 OR THE AUDITOR IS NOT AVAILABLE ON THIS DATE I.E. O N 26.12.2005 THERE IS NO CONSEQUENCE BECAUSE THEY HAVE NOT REQUIRED TO PRESENT BEFORE THE ASSESSING OFFICER ON THIS DATE. THEY ARE REQUIRED TO ATT END ONLY ON 3.3.2006. HENCE THE EXPLANATION GIVEN BY THE ASSESSEES COUNSEL THAT ON 26.12.2005 THE MANAGING DIRECTOR OR THE AUDITOR OF THE ASSESSEE COMPANY IS BUSY IS NOT REASONABLE CAUSE TO EXONERATE THE ASSESSEE FROM THE LEVY OF PENALTY. FURTHER THE ARGUMENT OF THE ASSESSEES COUNSEL IS THAT A NOTICE SERVED BY FIXING THE DATE ON 24 .8.2006 IS INVALID. THIS ARGUMENT HOLDS NO WATER. THE PENALTY IS LEVIED N OT FOR THE NON COMPLIANCE OF NOTICE SERVED ON 24.8.2006 BUT ON ACCOUNT OF NON COMPLIANCE OF NOTICE DATED 26.12.2005 REQUIRING THE A SSESSEE TO APPEAR BEFORE THE ASSESSING OFFICER ON 3.3.2006. HENCE THE ARGUM ENT ADVANCED BY THE ASSESSEES COUNSEL IS VOID OF MERIT. 18. IN OUR OPINION FOR THE ASSESSMENT YEAR 2004-05 THE ASSESSEE HAS NOT FILED LETTER FOR THE ADJOURNMENT OF TH E CASE IN RESPONSE TO THE NOTICE ISSUED U/S 142(1) AND THE ASSESSEE HAS OFFERE D NO REASONABLE CAUSE FOR NOT APPEARING ON 3.3.2006 BEFORE THE ASSESSING OFFICER. IN OUR OPINION THE PENALTY SHOULD BE LEVI ED U/S 271(1) (B) OF THE INCOME TAX ACT AND THE SAME IS CONFIRMED. 19. IN THE RESULT THE APPEALS OF THE ASSESSEE IN ITA N OS. 1306/HYD/2008 & ITA.NO.1308/HYD/2008 ARE DISMISSED AND I N ITA NO.1307/HYD/2008 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JANUARY 2010 SD/- SD/- (G.C. GUPTA) (CHANDRA POOJARI) VICE PRESIDENT ACCOUNTANT MEMBER DATED 13 TH JANUARY 2010. 11 11 COPY FORWARDED TO: 1. M/S MYM TECHNOLOGIES LTD. 7-1-307/G/6 BEHIND YELL AMMA TEMPLE BALKAMPET HYDERABAD 2. ACIT CIRCLE 16 (2) HYDERABAD 3. CIT(A)-V HYDERABAD. 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP