ORDER
1. All these appeals are against the orders of the learned Commissioner of Income-tax (Appeals) confirming the levy of penalties under section 271(1)(b) of the Income-tax Act, 1961 ["the Act" for short], filed by the respective assessees for assessment years 2000-01 to 2006-07. As the circumstances leading to the levy of penalties are the same, the reasoning advanced by the Assessing Officer for levy of penalty and by the learned Commissioner of Income-tax (Appeals) for confirming the penalties are the same, they are disposed of together for the sake of convenience.
2. The undisputed facts leading to the levy of penalty are that a search and seizure action in the cases of assessee-group was conducted on 18-1-2006. Notice under section 153A was also issued for filing return of income. Thereafter, for the assessment year 2006-07, the Assessing Officer issued notice under section 142(1) on 14-8-2007 to Shri Kaushal M. Khanna asking him to furnish the details of income returned, details of disclosure made during the course of search and the manner in which such undisclosed income was earned. The relevant para of the notice dated 14-8-2007 reads as under:
"1. Vide your letter dated 25-1-2006 you have admitted undisclosed income of Rs. 5,00,00,000. You are requested to please give year-wise and person-wise bifurcation of income/investment of the undisclosed income of Rs. 5,00,00,000 and how this income is shown in the return of income filed for the search assessments with details of tax payments. You are also requested to explain how the income has been earned and what is the basis of disclosure of Rs. 5 crore."
It seems that Shri Kaushal M. Khanna did not comply with the above notice. Later, a show-cause notice was issued on 11-9-2007 to all the assessees as above [who have filed appeals before us] for all the assessment years for showing cause as to why penalty under section 271(1)(b) be not levied for non-compliance of notice under section 142(1). It seems there was no explanation furnished in response to this notice as well by either Shri Kaushal M. Khanna or by others in any of the assessment years involved. The Assessing Officer, accordingly, levied the penalty of Rs. 10,000 on each of the assessees for each of the assessment years from assessment years 2000-01 to 2006-07 for non-compliance of notice under section 271(1)(b).
3. The learned Commissioner of Income-tax (Appeals) presumed that the notice under section 142(1) was issued on 14-8-2007 to all the assessees requiring each of them to furnish the details on 27-8-2007 for each of the assessment years. He, accordingly, confirmed the penalties in case of each of the assessees and for each assessment year.
4. Before us, the learned AR submitted that the notice under section 142(1) was issued to all the four persons, viz., Shri Kaushal M. Khanna, Sangeetaben K. Khanna, Madanlal M. Khanna and Swarnaben M. Khanna for assessment year 2006-07 only. However, in addition to this, the ld. Assessing Officer had issued letters on 14-8-2007 in some cases also on 17-8-2007 requiring these assessees to furnish detailed information for all the six assessment years and such notice was required to be complied with by 27-8-2007. However, in the letter so issued in the case of Shri Kaushal M Khanna, it was mentioned that this letter be treated as notice under section 142(1). However, in the case of Sangeetaben M. Khanna, the letter issued on 17-8-2007 did not mention that the above letter is a notice under section 142(1). Even in the notice under section 142(1) issued for the assessment year 2006-07 it was not mentioned that a separate letter for compliance is being issued. In fact, the notice did not mention as to what requirement the assessee was requiring to comply. In the case of Madanlal M. Khanna and Smt. Swarnaben M. Khanna, the notice under section 142(1) was issued only for assessment year 2006-07 and not for any other years like in the case of Shri Kaushal M. Khanna and Sangeetaben K. Khanna. The letter issued by the Assessing Officer requiring the detailed information on 14-8-2007 did not mention that above letter is notice under section 142(1). Notice under section 142(1) for assessment year 2006-07 was issued on 17-8-2007 and did not refer to any compliance as per letter already issued on 14-8-2007. Thus, there are serious defects in the issuance of the notice. Further, the learned AR submitted that no proper time was given for making compliance in respect of such detailed information. Shri Kaushal Khanna on behalf of all the other family members went to the office of the Assessing Officer, and submitted an adjournment application which was received by the office of the Assessing Officer but there was no response on this notice. The assessees thereafter received show-cause notice for levy of penalty and for that also adequate time was not given to furnish any explanation. The notice for levy of penalty was issued on 11-9-2007 and penalty was levied on 18-9-2007. It was not practically possible to comply either with the notice, letter or show-cause notice. Further, the learned AR submitted that the assessee had changed the counsel as earlier counsel was not attending to the requirements of Income-tax Department and notices so issued but in absence of proper advice the assessee could not furnish the satisfactory explanation. Under these circumstances, the penalty so levied should be cancelled. He referred to the decision of the ITAT Delhi Bench-G in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust v. Assistant DIT [2008] 115 TTJ (Delhi) 419 . Against this, the learned DR relied on the orders of the authorities below.
5. We have considered the rival submissions and perused the material on record. The undisputed facts as emerge from the above discussion are that the statutory notice under section 142(1) was issued to the four assessees for assessment year 2006-07 only and not for any other assessment years. No notice under section 142(1) was issued to these assessees in respect of other assessment years. So far as letters requiring compliance issued by the Assessing Officer on 14-8-2007/17-8-2007 are concerned, it is noticed that except in the case of Shri Kaushal M. Khanna, the letters did not mention that compliance is required to be made under section 142(1). Before levying penalty under section 271(1)(b), there must be specific notice to the assessee for specific assessment year with specific requirements to be complied with. The compliance must have relevance to the assessment year in question and it must have apparent nexus with the assessment for that assessment year to be framed. General information sought may not be relevant for any particular assessment year. In addition, adequate time should be given to the assessee for making compliance. The notices were issued on 14-8-2007 in some cases and compliance were required to be made by 24-8-2007. Thereafter the Assessing Officer proceeded to initiate the penalty proceedings. In our considered view, it is against the principles of natural justice as no reasonable opportunity is given to them for making compliance of the information sought. For the sake of convenience, we refer to the compliance sought by the Assessing Officer vide letter dated 14-8-2007 containing five pages from Shri Kaushal M. Khanna as similar compliance was sought by him from others as well. If there is apparent impossibility of compliance or compliance could take naturally long time, then the Assessing Officer is expected to give adequate time to the assessees before he infers that they are tending to non-compliance and avoiding to furnish information. The statutory provision for levy of penalty is not for mere technical non-compliance but for actual or habitual defaulters. On the face of present facts where the Assessing Officer has hastily proceeded to initiate penalty proceedings in all the cases, it is difficult to infer that these assessees were intending to make non-compliance, information sought by the Assessing Officer is very detailed and requires assistance from professionals like Advocate or Chartered Accountant. An affidavit has been filed from Shri Kaushal M. Khanna before the ld. CIT(A), i.e., erstwhile Chartered Accountant who was handling his tax matters, has left all these assessees and the family is in search of new counsel for making compliance made by the Income-tax Department. It shows that these assessees had really intended to comply with the notices and, therefore, it should not be inferred that there was a default which could invite penalty under section 271(1)(b). The ITAT Delhi Bench-G in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust (supra) has held that if assessment order is passed under section 143(3), and not under section 144 then non-compliance is deemed to have been waived.
6. Considering all these facts and circumstances and the authority referred to above, we hold that neither the Assessing Officer nor the Learned Commissioner of Income-tax (Appeals) has made out a case for sustaining the penalties. Accordingly, the penalties in all these assessment years for all the assessees are cancelled.
7. In the result, the appeals filed by the assessees are allowed.