ASA RAM, Kurukshetra V. ITO, Kurukshetra

ITA 1024/CHANDI/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9904 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 21-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Reassessment proceedings
• Section: 273B; 142(1); 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 1024/CHD/2014 (ASSESSMENT YEAR : 2007-08) ASA RAM, VS. THE INCOME TAX OFFICER, L/H OF SHINGARA MAL(DECEASED), WARD 1, VILLAGE KARAH SAHIB, KURUKSHETRA. PEHOWA, DISTRICT KURUKSHETRA. PAN: ABBPT5610M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI R.K.GUPTA, DR DATE OF HEARING : 27.05.2015 DATE OF PRONOUNCEMENT : 02.06.2015 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS), KARNAL DATED 5.12.2013 FOR ASSESSMENT YEAR 2007-08, CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1 )(B) OF THE INCOME TAX ACT. 2. THE FACTS IN BRIEF, ARE THAT THE PENALTY UNDER SECTION 271(1)(B) OF THE ACT WAS LEVIED AS THE ASSESSEE HAD FAILED TO ATTEND THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESS ING OFFICER AND THE ASSESSING OFFICER COMPLETED THE ASS ESSMENT 2 UNDER SECTION 144/147 OF THE ACT. DURING THE ASSE SSMENT PROCEEDINGS, THE LEGAL HEIR OF THE ASSESSEE CONTEND ED THAT THE ASSESSEE HAD ALREADY EXPIRED AND NOTICE MIGHT HAVE BEEN RECEIVED BY THE COUNSEL AND THAT HE WAS UNDER THE B ONAFIDE BELIEF THAT THE COUNSEL MIGHT HAVE ATTENDED THE ASS ESSMENT PROCEEDINGS. THE LEGAL HEIR OF THE ASSESSEE ALSO TOOK THE GROUND THAT THE APPEAL HAS BEEN FILED BEFORE THE LE ARNED CIT (APPEALS). THE ASSESSING OFFICER DISMISSED THE CONTENTION OF THE ASSESSEE AS THE LEGAL HEIR SHRI ASA RAM HAD ATTENDED THE PROCEEDINGS ALONGWITH THE COUNSEL ON 5.12.2011 DURING THE ASSESSMENT PROCEEDINGS BUT THERE WAS NO COMPLIA NCE MADE ON THE SUBSEQUENT DATE OF HEARING I.E. ON 13.1 2.2011. FURTHER THE ASSESSEE ALSO FAILED TO COMPLY THE SHOW CAUSE NOTICE DATED 21.12.2011 FIXING THE HEARING ON 26.12 .2011, WHICH RESULTED INTO EX-PARTE ORDER DATED 27.12.2011 . 3. IT WAS SUBMITTED BEFORE THE LEARNED CIT (APPEAL S) THAT THE IMPUGNED PENALTY ORDER IS ILLEGAL, ARBITRA RY AND BAD IN LAW AS IT WAS PASSED ON A DEAD PERSON AND THAT T HE PENALTY CANNOT BE IMPOSED ON A DEAD PERSON. THE LEARNED C IT (APPEALS), HOWEVER, NOTED THAT THE LEGAL HEIR OF TH E ASSESSEE SHRI ASA RAM WITH COUNSEL ATTENDED THE PROCEEDINGS BEFORE THE ASSESSING OFFICER ON 5.12.2011 BUT NO COMPLIANC E WAS MADE ON SUBSEQUENT NOTICES ISSUED FOR HEARING FIXED ON 13.12.2011 AND 26.12.2011. THE LEARNED CIT (APPEA LS) NOTED THAT SINCE THE ASSESSEE FAILED TO COMPLY WITH THE S TATUTORY NOTICES, THEREFORE, PENALTY WAS CORRECTLY LEVIED AN D ACCORDINGLY DISMISSED THE APPEAL OF THE ASSESSEE. 3 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES, CONSIDERED THE MATERIAL AVAILABLE ON R ECORD AND GONE THROUGH THE FINDINGS OF THE AUTHORITIES BELOW. THE COPY OF THE ASSESSMENT ORDER IS PLACED ON RECORD, WHICH WAS PASSED UNDER SECTION 144/147 OF THE ACT DATED 27.12.2011 I N THE NAME OF SHRI SIHNGARA MAL, THE ASSESSEE THROUGH LEG AL HEIR. IN THE ASSESSMENT ORDER IT WAS NOTED THAT THE NOTIC E UNDER SECTION 148 OF THE ACT WAS ISSUED ON 21.3.2011 BUT NOT COMPLIED WITH AND NOTICE UNDER SECTION 142(1) WAS I SSUED TO FURNISH THE RETURN OF INCOME ON OR BEFORE 30.9.201 1 BUT THE ASSESSEE DID NOT MAKE ANY COMPLIANCE TO THIS NOTICE UPTO 3.11.2011. FURTHER NOTICE WAS ISSUED UNDER SECTIO N 142(1) OF THE ACT AND THE ASSESSEE WAS REQUIRED TO MAKE COMPL IANCE ON OR BEFORE 11.11.2011, COPY OF REASONS WAS ALSO SUPP LIED, IN WHICH IT WAS BRIEFLY EXPLAINED THAT THE ASSESSEE HA S NOT SHOWN INTEREST INCOME, LABOUR CHARGES AND MILLING C HARGES TOTALING TO SUM OF RS.7,45,854/-. ON 11.11.2011 WR ITTEN REPLY SIGNED BY SHRI ASA RAM, LEGAL HEIR OF THE ASS ESSEE WAS RECEIVED BY THE ASSESSING OFFICER INTIMATING THAT H IS FATHER SHRI SHINGARA MAL (ASSESSEE) HAD ALREADY EXPIRED ON 21.4.2010 AND THAT HE IS ONE OF THE MAJOR LEGAL HEI R OF HIS FATHER AND ORIGINAL RETURN ALREADY FILED BY HIS FA THER MAY BE TREATED AS RETURN HAVING BEEN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSING OFFICE R, THEREFORE, TREATED THE RETURN OF INCOME ORIGINALLY FILED ON 8.11.2007 AS RETURN FILED IN RESPONSE TO NOTICE UN DER SECTION 148 OF THE ACT. THEREAFTER STATUTORY NOTICES UNDE R SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED ON 11.11.2 011 FIXING 4 THE CASE FOR 5.12.2011, WHICH WAS ATTENDED BY THE L EGAL HEIR OF THE ASSESSEE AND THE COUNSEL AND THE CASE WAS AD JOURNED TO 13.12.2011 AND THEY WERE REQUIRED TO FURNISH REPLY TO THE REASONS RECORDED UNDER SECTION 148 OF THE ACT, COPY OF WHICH HAD ALREADY BEEN SUPPLIED TO THEM BUT NO COMPLIANC E HAS BEEN MADE. THE ASSESSING OFFICER GAVE FURTHER OPP ORTUNITY TO THE ASSESSEE BY ISSUING NOTICE DATED 21.12.2011 UND ER SECTION 142(1) OF THE ACT ASKING THE ASSESSEE TO FILE REPLY TO THE REASONS RECORDED UNDER SECTION 148 OF THE ACT. IN THE ABSENCE OF ANY REPLY FROM THE SIDE OF THE ASSESSEE, THE ASSESSING OFFICER PASSED EX-PARTE ASSESSMENT ORDER AND ADDITION OF RS.7,45,854/- WAS MADE TO THE INCOME OF THE DECEASED ASSESSEE. 5. IN THE BACKGROUND OF THESE FACTS RECORDED IN TH E ASSESSMENT ORDER, THE ASSESSING OFFICER LEVIED PENA LTY OF RS.10,000/- FOR NON-COMPLIANCE OF THE NOTICE UNDER SECTION 271(1)(B) OF THE ACT SPECIALLY FOR NOT COMPLYING TH E NOTICE ISSUED ON 21.12.2011 THE LEARNED CIT (APPEALS) AL SO CONFIRMED THE PENALTY ORDER AND DISMISSED THE APPEA L OF THE ASSESSEE. 6. CONSIDERING THE FACTS NOTED IN THE ASSESSMENT O RDER AND THE IMPUGNED ORDER, IT IS CLEAR THAT THE ASSESS EE ORIGINALLY FILLED RETURN OF INCOME ON 8.11.2007 AND ASSESSEE EXPIRED ON 21.4.2010. THE NOTICE UNDER SECTION 14 8 OF THE ACT FOR COMPLETION OF THE REASSESSMENT PROCEEDINGS WAS ISSUED ON 21.3.2011 AND ACCORDING TO ASSESSMENT ORDER, IT WAS SERVED ON 26.3.2011 BUT NO RETURN HAS BEEN FILED UP TO 5 3.11.2011. WHEN THE ASSESSEE HAD ALREADY EXPIRED IN APRIL, 2010 AND NO INTIMATION ABOUT THE DEATH OF THE ASSES SEE WAS AVAILABLE TO THE REVENUE DEPARTMENT PRIOR TO REPLY FILED BY THE LEGAL HEIR OF THE ASSESSEE, THERE WAS NO REASON FOR MAKING ANY COMPLIANCE TO THE NOTICES ISSUED BY THE ASSESSING O FFICER UNDER SECTION 148 AND 142(1) OF THE ACT BY THE DECE ASED ASSESSEE. IN THE REASONS RECORDED UNDER SECTION 1 48 OF THE ACT, THE ASSESSING OFFICER RECORDED THAT THE INCOME ESCAPED ASSESSMENT ON ACCOUNT OF INCOME NOT SHOWN ON ACCOUN T OF INTEREST INCOME, LABOUR CHARGES AND MILLING CHARGES . THE LEGAL HEIR SHRI ASA RAM OF DECEASED ASSESSEE FILED REPLY BEFORE THE ASSESSING OFFICER ON 11.11.2011 INTIMATING THAT THE ASSESSEE SHRI SHINGARA MAL HAD ALREADY EXPIRED ON 2 1.4.2010 AND HE IS ONE OF THE MAJOR LEGAL HEIR OF HIS FATHER AND ALSO STATED THAT THE RETURN FILED BY HIS FATHER ORIGINA LLY MAY BE TREATED AS RETURN HAVING BEEN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. THE HON'BLE RAJASTH AN HIGH COURT IN THE CASE OF CIT VS. PUSHPA DEVI, 250 ITR 4 95 HELD AS UNDER : HELD, (I) THAT THE ACTION OF THE INCOME-TAX OFFICE R IN NOT ISSUING NOTICE TO ALL THE LEGAL REPRESENTATIVES WAS NOT BONA FIDE AND DILIGENT. LITIGATION WAS THE DIRECT RESULT OF DISREGARD OF THE BASIC REQUIREMENT OF ISSUING NOTIC E TO ALL THE LEGAL REPRESENTATIVES. (II) THAT THE ASSESSMENT ORDER MADE WITHOUT NOTICE TO ALL THE LEGAL REPRESENTATIVES OF THE DECEASED ON SUBMISSION OF THE RETURNS SUFFERED FROM PROCEDURAL IRREGULARITIES ONLY AND WAS LIABLE TO BE CORRECTED BY SETTING ASIDE THE ORDER AND DIRECTING THAT THE NOTI CE BE ISSUED TO ALL THE LEGAL REPRESENTATIVES IN ACCORDAN CE WITH 6 LAW. THE ASSESSMENT WAS NOT VOID AND NOT LIABLE TO BE ANNULLED. 7. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DECISION IN THE CASE OF SMT.PUSHPA DEVI (SUP RA), IT IS CLEAR THAT THE ASSESSING OFFICER HAS NOT ISSUED NOT ICE TO ALL THE LEGAL HEIRS OF THE ASSESSEE AND FURTHER PRIOR T O INTIMATION OF DEATH OF THE DECEASED ASSESSEE, THERE WAS NO QUE STION OF MAKING ANY COMPLIANCE OF STATUTORY NOTICE BY THE DE CEASED ASSESSEE. THE ACTION OF THE ASSESSING OFFICER, T HEREFORE, NOT ISSUING NOTICE TO ALL THE LEGAL REPRESENTATIVES OF THE DECEASED ASSESSEE WAS THUS NOT BONAFIDE AND DILIGENT. FURT HER THE NOTICES UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED FOR 5.12.2011 AND ON THAT DATE SHRI ASA RAM SON OF THE DECEASED ASSESSEE APPEARED WITH THE COUNSEL AND THE CASE WAS ADJOURNED TO 13.12.2011 ON THEIR REQUEST AND THEY W ERE REQUIRED TO FURNISH THE REPLY TO THE REASONS RECORD ED UNDER SECTION 148 OF THE ACT BUT NO COMPLIANCE WAS MADE A S PER THE ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFIC ER GAVE FURTHER OPPORTUNITY BY ISSUING NOTICE DATED 21.12.2 011 ASKING THE LEGAL HEIR OF THE ASSESSEE TO FURNISH REQUISITE REPLY TO THE REASONS RECORDED UNDER SECTION 148 OF THE ACT FOR C OMPLETION OF THE ASSESSMENT. THE SCHEME OF THE INCOME TAX AC T PROVIDES THAT ON ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT, THE ASSESSEE IS REQUIRED TO FURNISH RETURN OF INCOM E IN COMPLIANCE TO THE NOTICE UNDER SECTION 148 OF THE A CT AND IN CASE THE ASSESSEE OBJECTS TO THE REOPENING OF THE A SSESSMENT UNDER SECTION 148 OF THE ACT, THE ASSESSEE MAY FILE OBJECTION TO CHALLENGE THE REOPENING OF THE ASSESSMENT UNDER SECTION 7 148 OF THE ACT. IN THE PRESENT CASE, THE LEGAL HEI R OF THE ASSESSEE INTIMATED THE ASSESSING OFFICER ABOUT THE DEATH OF THE DECEASED ASSESSEE AND ALSO REQUESTED TO TAKE TH E ORIGINAL RETURN OF INCOME FILED BY THE DECEASED ASSESSEE AS RETURN HAVING BEEN FILED IN RESPONSE TO NOTICE UNDER SECTI ON 148 OF THE ACT, WHICH THE ASSESSING OFFICER HAD ACCEPTED A ND TREATED THE RETURN FILED UNDER SECTION 148 OF THE ACT. T HEREFORE, THERE IS NO QUESTION OF NON-COMPLIANCE OF THE NOTIC E EITHER BY THE DECEASED ASSESSEE OR BY HIS LEGAL HEIR IN FILIN G THE RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 148 O F THE ACT. THE ASSESSING OFFICER FURTHER ISSUED NOTICE FOR FUR NISHING REPLY TO THE REASONS RECORDED UNDER SECTION 148 OF THE ACT AND ALSO ISSUED NOTICE ON 21.12.2011 DIRECTING THE ASSE SSEE/LR TO FURNISH REQUISITE REPLY TO THE REASONS RECORDED UND ER SECTION 148 OF THE ACT FOR WHICH PENALTY UNDER SECTION 271( 1)(B) OF THE ACT HAD BEEN LEVIED. WE FIND NO REASON FOR LEVYIN G OF THE PENALTY IN SAID CIRCUMSTANCES AGAINST THE ASSESSEE BECAUSE NO PROVISIONS HAVE BEEN PROVIDED UNDER SECTION 148 OF THE ACT FOR FILING ANY REPLY BY THE ASSESSEE TO THE REASONS REC ORDED UNDER SECTION 148 OF THE ACT. IT IS ONLY WHEN THE ASSES SEE OBJECTS TO THE REOPENING OF THE ASSESSMENT MAY FILE OBJECTI ON IN HIS DISCRETION. IF THE ASSESSEE DOES NOT OBJECT TO TH E RECORDING OF THE REASONS OR REOPENING OF THE ASSESSMENT UNDER SE CTION 147/148 OF THE ACT, THE ASSESSING OFFICER MAY PROCE ED WITH THE REASSESSMENT PROCEEDINGS. THEREFORE, IN OUR V IEW, THERE WAS NO NON-COMPLIANCE ON THE PART OF THE DECEASED A SSESSEE OR THE LEGAL HEIR TO THE NOTICE ISSUED ON 21.12.201 1. CONSIDERING THE ABOVE DISCUSSION IT IS CLEAR THAT T HERE WAS NO 8 DEFAULT ON THE PART OF THE DECEASED ASSESSEE OR THE LEGAL HEIR TO ATTRACT LEVY OF PENALTY UNDER SECTION 271(1)(B) OF THE ACT. FURTHER WHEN ALL THE LEGAL HEIRS HAVE NOT BEEN SERV ED WITH THE NOTICES AS PER LAW, THE PENALTY SHOULD NOT HAVE BEE N IMPOSED AGAINST ONE OF THE LEGAL HEIRS OF THE DECEASED ASSE SSEE. WE MAY ALSO NOTE HERE THAT THE ASSESSEE EXPLAINED BEFO RE THE LEARNED CIT (APPEALS) THAT THE LEGAL HEIRS OF THE D ECEASED ASSESSEE WERE INVOLVED IN MURDER CASE AND THEIR KEY PERSON IS BEHIND THE BARS FOR THE LAST FIVE YEARS AND THE FAM ILY WAS BUSY AND TENSE IN FOLLOWING-UP THE CRIMINAL CASE UNDER S ECTION 302 IPC. SECTION 273B OF THE ACT PROVIDES THAT NO PE NALTY UNDER SECTION 271(1)(B) OF THE ACT BE IMPOSABLE ON THE PE RSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFER RED TO IN THE ABOVE PROVISIONS IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. THE EXPLAN ATION OF ONE OF THE LEGAL HEIRS OF THE DECEASED ASSESSEE CLEARLY SHOWS THAT SINCE THE LEGAL HEIRS OF THE DECEASED ASSESSEE WERE INVOLVED IN CRIMINAL CASE UNDER SECTION 302 IPC, THEREFORE, THE RE MAY NOT BE PROPER COMPLIANCE FROM THEIR SIDE, THOUGH WE HAV E NOTED THAT THERE WAS NO NON-COMPLIANCE ON THE PART OF THE DECEASED ASSESSEE OR THE LEGAL HEIR. IT IS WELL SETTLED LA W THAT LEVY OF PENALTY IS NOT AUTOMATIC IN EACH AND EVERY CASE AND THE FACTS AND CIRCUMSTANCES OF THE CASE SHALL HAVE TO BE TAKE N INTO CONSIDERATION. THE FACTS AND CIRCUMSTANCES OF THI S CASE CLEARLY SHOW THAT IT IS NOT A FIT CASE OF LEVY OF P ENALTY UNDER SECTION 271(1)(B) OF THE ACT. 9 8. CONSIDERING THE TOTALITY OF THE FACTS & CIRCUMS TANCES AND DISCUSSION ABOVE, WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY. WE ACCORDINGLY SET ASID E THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE PENALTY. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND DAY OF JUNE, 2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 ND JUNE, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH