Sanjay Kumar Agarwal, Sikkim V. DCIT, CC-XXII, KOLKATA, Kolkata

ITA 1116/KOL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1728 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 22-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Bonafide belief; Retrospective amendment
• Section: 143(3); 153A; 6; 132; 10; 139

Judgement Text

I.T.A. NOS.1116,1118 & 1120/K OL/14 SA NJAY KUMAR AGARWAL PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1116/KOL/ 2014 ASSESSMENT YEAR: 2008-2009 SANJAY KUMAR AGARWAL C/O. SOCIETY HARDWARE STORES, P.S. ROAD, GANGTOK, SIKKIM [PAN: ATEPA 8461 G] ...APPELLANT -VS.- DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-XXII, KOLKATA, 110, SHANTI PALLY, E.M. BYE PASS, AAYAKAR BHAWAN POORVA, KOLKATA-700 107 ...RESPONDENT I.T.A. NO. 1118/KOL/ 2014 ASSESSMENT YEAR: 2009-2010 SANJAY KUMAR AGARWAL C/O. SOCIETY HARDWARE STORES, P.S. ROAD, GANGTOK, SIKKIM [PAN: ATEPA 8461 G] ...APPELLANT -VS.- DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-XXII, KOLKATA, 110, SHANTI PALLY, E.M. BYE PASS, AAYAKAR BHAWAN POORVA, KOLKATA-700 107 ...RESPONDENT I.T.A. NOS.1116,1118 & 1120/K OL/14 SA NJAY KUMAR AGARWAL PAGE 2 OF 7 I.T.A. NO. 1120/KOL/ 2014 ASSESSMENT YEAR: 2010-2011 SANJAY KUMAR AGARWAL C/O. SOCIETY HARDWARE STORES, P.S. ROAD, GANGTOK, SIKKIM [PAN: ATEPA 8461 G] ...APPELLANT -VS.- DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-XXII, KOLKATA, 110, SHANTI PALLY, E.M. BYE PASS, AAYAKAR BHAWAN POORVA, KOLKATA-700 107 ...RESPONDENT APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE, FOR THE ASSESSEE SHRI SALLONG YADEN, ADDITIONAL CIT, D.R., FOR THE D EPARTMENT DATE OF HEARING : 07-06-2017 DATE OF PRONOUNCEMENT : 09-08-2017 O R D E R PER SHRI S.S. VISWANETHRA RAVI, J.M: THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST THE CONSOLIDATED ORDER DATED 11.04.2014, OF COMMIS SIONER OF INCOME TAX (APPEALS), CENTRAL-III, KOLKATA WHEREBY HE CONFIRMED THE PENALTY OF RS.98,139/-, RS.1,00,000/- AND RS.46,255/- IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271B OF THE ACT FOR A.YS 2008-09,09-10 AND 10-11 RESPECTIVELY. I.T.A. NOS.1116,1118 & 1120/K OL/14 SA NJAY KUMAR AGARWAL PAGE 3 OF 7 2. THE ONLY GROUND THAT IS TO BE DECIDED IS AS TO W HETHER THE LD. CIT-A CORRECT IN CONFIRMING THE PENALTY IMPOSED BY THE AO U/S 271B OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. SINCE THE ASSESSEE AND THE ISSUE RAISED THEREIN ARE COMMON AND IDENTICAL, ALL THE APPEALS CLUBBED AND HEARD TOGETH ER AND DISPOSED OF THE SAME BY THIS COMMON ORDER FOR THE SAKE OF CONVENIEN CE. THEREFORE, THE COMMON FACTS AS ARRAYED IN ITA 1116/KOL/2014 ARE DI SCUSSED HEREIN UNDER . 4. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO BELONGS TO BEGRAJ GROUP. A SEARCH AND SEIZURE ACT ION UNDER SECTION 132 WAS CONDUCTED IN THE CASES BELONGING TO THE SAID GROUP INCLUDING THE CASE OF THE ASSESSEE. CONSEQUEN T TO THE SAID ACTION, A NOTICE UNDER SECTION 153A OF THE INC OME TAX ACT WAS ISSUED BY THE ASSESSING OFFICER TO THE ASSESSEE . AS NOTED BY THE ASSESSING OFFICER, THE ASSESSEE, HOWEVER, HA D MEANWHILE FILED HIS RETURN OF INCOME FOR THE YEAR U NDER CONSIDERATION UNDER SECTION 139 OF THE ACT ON 23.12 .2011 DECLARING TOTAL INCOME OF RS.24,31,220/-. IN THE SA ID RETURN, THE ASSESESE STATED THAT HE DERIVES INCOME FROM SAL ARY, HOUSE PROPERTY AND BUSINESS. THE ASSESSING OFFICER ACCEPT ED THE SAME IN THE ASSESSMENT COMPLETED UNDER SECTION 143( 3) VIDE AN ORDER DATED 30.12.2011. HE ALSO IMPOSED PENALTY OF RS.36,675/- UNDER SECTION 271B OF THE ACT BEING 1.5 % (ONE- HALF PERCENT) OF THE SUM OF RS.98,139/- DISALLOWED BY HIM ON ACCOUNT OF ASSESSEES FAILURE TO FILE TAX AUDIT REP ORT AS REQUIRED U/SECTION 44AB OF THE ACT. 5. THE PENALTY IMPOSED BY THE ASSESSING OFFICER UND ER SECTION 271B OF THE ACT WAS CHALLENGED BY THE ASSES SEE IN THE APPEAL FILED BEFORE THE CIT(APPEALS) AND SINCE THE SUBMISSION I.T.A. NOS.1116,1118 & 1120/K OL/14 SA NJAY KUMAR AGARWAL PAGE 4 OF 7 MADE BY THE ASSESSEE IN SUPPORT OF HIS CASE ON THE ISSUE OF IMPOSITION OF PENALTY UNDER SECTION 271B OF THE ACT WAS NOT FOUND ACCEPTABLE BY HIM, THE CIT(APPEALS) CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECT ION 271B OF THE ACT AFTER RECORDING HIS OBSERVATIONS/FINDINGS A S UNDER:- 3. DISCUSSION AND DECISION: THE SIKKIM ISSUE NEED NOT BE RE-DISCUSSED AGAIN HE RE, AS IT HAS ALREADY BEEN DISCUSSED AT LENGTH IN THE APPEAL ORDER FOR TH E PENALTY UNDER SECTION 271 (1) ( C ) FOR THE A.Y 2009-10 PASSED BY MY LD. PREDECESSOR IN OFFICE. PLAIN FACT IS THAT IT WAS VERY CLEAR VIDE CBDT IN STRUCTION NO. 8 OF 2008 EXPLAINING AND CLARIFYING ON THE INSERTION OF SUB-SECTION 26AAA TO SECTION 10(W.R.E.F 01.04.1990), VIDE THE FINANCE ACT 2010, THAT NON- SIKKIMESE INDIVIDUALS WILL BE TAXABLE FROM A.Y 2008 -09 ONWARDS. THUS BY THIS INSERTION TO THE STATUTE, AND THE INSTRUCTI ON CLARIFYING BY THE CBDT, THE DISPUTE FOR PRACTICAL PURPOSE HAD ENDED. IT SEEMS THAT APPELLANT IS TRYING TO HARP MAINLY ON THE SIKKIM ISSUE SO AS TO WHITTLE THE VALIDITY OF THE SEARCH O N HIM. THE SEARCH PREMISES AT SILIGURI ARE JOINT-FAMILY PREMISES. THE APPELLANT IS NO NEW NOVICE TO BUSINESS. HE IS I N THE CONTRACT BUSINESS FOR SEVERAL YEARS. HE HAILS FROM A BUSINES S FAMILY. THE FAMILY IS BASED AT SILIGURI. THE APPELLANT/ FAMILY IS WELL AWARE OF THE INCOME- TAX ACT AND REQUIREMENTS FOR STATUTORY AUDIT U/S. 4 4AB. IT IS A CLEAR PURPOSELY AVOIDING TO COME UNDER THE AMBIT OF INCOME-TAX ACT BY TRYING TO CLAIM AND STILL CLING O N TO THE SIKKIM ISSUE, THAT BY THEN FOR ALL PRACTICAL PURPOSES HAD BECOME FINAL. THE APPELLANT WAS DEFINITELY REQUIRED U/S. 44AB TO GET ITS ACCOUNTS AUDITED; WHICH HE HAD FAILED TO DO. THE AR GUMENTS AND PLEASE SUBMITTED ARE MERE EXCUSES. AS REGARDS THE JUDICIAL DECISIONS CITED BY THE LD.AR, THEY ARE DIFFERENT IN FACTS, CIRCUMSTANC ES, AND ISSUE. 6. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THIS TRIBUNAL. 7. THE LD.AR SUBMITS THAT THE ASSESSEE IS A SETTLER OF THE STATE OF SIKKIM. THE NON-SIKKIMESE INDIVIDUALS RESI DING IN SIKKIM WERE MADE EXEMPT FROM INCOME-TAX UPTO 31-03- 2007. THEREAFTER, THE GOVERNMENT OF INDIA ISSUED A CIRCUL AR NO. 8/2008 DT. 29-07-08, WHEREIN THE EXEMPTION TO INCOM E-TAX IN RESPECT OF NON-SIKIMESE WERE REMOVED. MEANWHILE, TH E TRADE BODIES OF SIKKIM MADE REPRESENTATIONS TO CHIEF MIN ISTER AND HONBLE GOVERNOR TO GIVE EXEMPTION TO NON-SIKKIMESE . THE LD.AR FURTHER SUBMITS THAT A WRIT PETITION ALSO FIL ED IN THE I.T.A. NOS.1116,1118 & 1120/K OL/14 SA NJAY KUMAR AGARWAL PAGE 5 OF 7 HONBLE HIGH COURT OF SIKKIM AND ASSESSEE WAS UNDER BONAFIDE BELIEF THAT ALL THE NON-SIKKIMESE INDIVIDUALS WILL SUCCEED IN GETTING THE EXEMPTION AGAIN FROM GOVT. OF INDIA. TH E LD.AR ALSO SUBMITS THAT THE ASSESSEE HAVING IN THAT BELIEF DID NOT FILE RETURN OF INCOME AND ACCOUNTS WERE NOT AUDITED. THE ASSESSEE WAS NOT AWARE THE CIRCULAR NO. 08/2008 AS IT WAS NO T IN PUBLIC DOMAIN. THE ASSESSEE WAS PREVENTED BY REASONABLE CA USE TO GET ITS ACCOUNTS AUDITED U/S. 44AB OF THE ACT AND P RAYED TO ALLOW THE GROUNDS OF APPEAL IN ALL THE ABOVE THREE A.YS UNDER CONSIDERATION AND DELETE THE IMPUGNED PENALTY IMPO SED BY THE AO AND CONFIRMED BY THE CIT-A. 8. ON THE OTHER HAND, THE LD.DR SUBMITS THAT THE C IRCULAR NO. 08/2008 ISSUED BY THE GOVERNMENT OF INDIA IS AP PLICABLE TO THE ASSESSEE AND THE ASSESSEE FILED RETURN OF INCOM E FOR THE A.Y 2008-09. HE DID NOT GET ITS ACCOUNTS AUDITED AS PER SECTION 44AB OF THE ACT. THE LD.DR PRAYED TO DISMISS THE GR OUNDS OF APPEAL RAISED BY THE ASSESSEE. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS PER THE PROVISIONS CONTAINED IN SECTION 271B, THE ASSESSING OFFICER MAY, DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PE NALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM EQUA L TO ONE-HALF PERCENT OF TOTAL SALES, TURN OVER OR GROSS RECEIPTS IN BUSINESS OR GROSS RECEIPTS IN PROFESSION IN SUCH PREVIOUS YEAR. BUT IN THE PRESENT CASE, AS ARGUED BY THE LD.AR THAT EXEMPTION TO INCOME- TAX WAS GIVEN TO ALL THE RESIDENTS IN THE STATE OF SIKKIM. BUT, HOWEVER, THE GOVT. OF INDIA ISSUED A CIRCULAR TAKIN G AWAY THE RIGHT OF EXEMPTION TO INCOME-TAX TO NON-SIKIMESE IN DIVIDUALS ETC. WE FIND FROM DISCUSSION OF THE IMPUGNED ORDER OF THE CIT- A THAT THE CIT-A THAT ON THE INSERTION OF SUB SECTI ON 26AAA TO I.T.A. NOS.1116,1118 & 1120/K OL/14 SA NJAY KUMAR AGARWAL PAGE 6 OF 7 SECTION 10 WITH RETROSPECTIVE EFFECT FROM 1-4-1990 AND THE CIRCULAR NO.08/2008 CLARIFIED THAT NON-SIKKIMESE IN DIVIDUALS ARE TAXABLE UNDER THE INCOME-TAX ACT FROM A.Y 2008- 09 ONWARDS. IT IS ALSO ON RECORD THAT SIKKIM CHAMBER O F COMMERCE MADE REPRESENTATION AND CHALLENGED THE SAME IN THE HONBLE HIGH COURT OF SIKKIM. DURING THE SAID PERIOD THE AS SESSEE WAS UNDER BONAFIDE BELIEF THAT ONE DAY OR OTHER HE WILL GET THE EXEMPTION. IT IS OBSERVED FROM RECORD THAT THE ASSE SSEE SUBMITTED THAT EFFECT OF SAID CIRCULAR CAME TO HIS KNOWLEDGE WHEN THE AO ISSUED NOTICE U/S. 153A OF THE ACT. IN RESPONSE TO WHICH, THE ASSESSEE FILED HIS RETURN OF INCOME, WHI CH WAS ACCEPTED BY THE AO WITHOUT ANY MODIFICATION OF THE SAME U/S. 143(3) OF THE ACT. THEREFORE, WE ARE OF THE OPINIO N THAT THE ASSESSEE WAS IN THE BOANFIDE BELIEF, WHICH IS PREVE NTED BY SUFFICIENT CAUSE IN GETTING HIS ACCOUNTS AUDITED AS REQUIRED U/S. 44AB OF THE ACT. THUS, IT IS NOT A FIT CASE TO IMPO SE PENALTY U/S. 271B OF THE ACT BY THE AO AND CONFIRMED BY THE CIT- A AND IT IS LIABLE TO BE DELETED. THUS, ACCORDINGLY, WE CANCEL THE PENALTY OF RS. RS.36,675/- AND GROUND RAISED BY THE ASSESSEE I N THIS REGARD IS ALLOWED. THE ASSESSING OFFICER AND THE CIT(APPEALS) CONCERNING THE ASSESSEE HEREIN SHALL N OT BE INFLUENCED BY THIS ORDER AND SHALL NOT BE TAKEN AS PRECEDENT FOR SUBSEQUENT ASSESSMENT YEARS ON THE SA ME ISSUE. 10. NOW, COMING TO OTHER TWO APPEALS FILED FOR AYS 2009-10 AND 10- 11 IN ITA 1118/KOL/2014 AND ITA 1120/KOL/2014 RESPECTIVELY , AS DISCUSSED ABOVE, THE FACTS ARE ADMITTEDLY UNDISPUTE D EXCEPT THE AMOUNTS IN RESPECT OF PENALTY IMPOSED BY THE AO. SINCE, WE EXPRESSED OUR OPINION IN A SIMILAR ISSUE IN THE AFOREMENTIONED PARAS THAT FAILURE TO FILE THE AUDIT REPORT WAS BEYOND THE CONTROL OF ASSESSEE, BY FOLLO WING THE SAME, WE CANCEL THE PENALTY IMPOSED BY THE AO U/SEC 271B OF THE ACT AND AS I.T.A. NOS.1116,1118 & 1120/K OL/14 SA NJAY KUMAR AGARWAL PAGE 7 OF 7 CONFIRMED BY THE CIT-A FOR THE A.YS 2009-10 AND 20 10-11. ACCORDINGLY, GROUND RAISED INVOLVING THE SAME ARE ALLOWED. 11. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ITA 1116/KOL/ 2014 FOR AY 2008-09 AND ITA 1118/KOL/2014 FOR AY 2009-10 AND ITA 1120/KOL/2014 FOR A.Y 2010-11 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09-08-2017. SD/- SD/- P.M. JAGTAP S.S. VISWANET HRA RAVI ACCOUNTANT MEMBER JUDICI AL MEMBER -08-2017 COPIES TO :(1) SHRI SANJAY KUMAR AGARWAL, C/O. SOCIETY HARDWARE STORES, P.S. ROAD, GANGTOK, SIKKIM (2) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-XXII, KOLKATA, 110, SHANTI PALLY, E.M. BYE PASS, AAYAKAR BHAWAN POORVA, KOLKATA-700 107 (3) COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL- III, KOLKATA; (4) COMMISSIONER OF INCOME TAX,KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/DDO INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA PRADIP PAUL/SR. P.S.