Smt. Mangala, Bangalore V. DCIT, Bangalore

ITA 1124/BANG/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8642 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-01-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 30-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BIJU
• Assessee Lawyers: S V RAVISHANKAR
• Section: 142(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER SL. NO. ITA NOS. & ASSESSMENT YEAR APPELLANT RESPONDENT 1. ITA NO. 1115/BANG/2016 AY: 2003-04 ITA NO. 1116/BANG/2016 AY: 2004-05 ITA NO. 1117/BANG/2016 AY: 2005-06 ITA NO. 1118/BANG/2016 AY: 2006-07 ITA NO. 1119/BANG/2016 AY: 2007-08 ITA NO. 1120/BANG/2016 AY: 2008-09 SHRI. G. VENUGOPAL PAN : AHUPV9290J DEPUTY COMMISISONER OF INCOME TAX, CENTRE CIRCLE 1(4), BANGALORE. ITA NO. 1133/BANG/2016 AY: 2003-04 ITA NO. 1134/BANG/2016 AY: 2004-05 ITA NO. 1135/BANG/2016 AY: 2005-06 ITA NO. 1136/BANG/2016 AY: 2006-07 ITA NO. 1137/BANG/2016 AY: 2007-08 ITA NO. 1138/BANG/2016 AY: 2008-09 SMT. V. SULAKSHNA DEVANAHALLI PAN : CANPS6553H ITA NOS. 1115 TO1120, 1133 TO 1138, 1127 TO 1132, 1121 TO 11 26/BANG/2016 PAGE 2 OF 7 ITA NO. 1127/BANG/2016 AY: 2003-04 ITA NO. 1128/BANG/2016 AY: 2004-05 ITA NO. 1129/BANG/2016 AY: 2005-06 ITA NO. 1130/BANG/2016 AY: 2006-07 ITA NO. 1131/BANG/2016 AY: 2007-08 ITA NO. 1132/BANG/2016 AY: 2008-09 SMT. A. MUNIRATNAMMA, PAN : AXWPM7160Q ITA NO. 1121/BANG/2016 AY: 2003-04 ITA NO. 1122/BANG/2016 AY: 2004-05 ITA NO. 1123/BANG/2016 AY: 2005-06 ITA NO. 1124/BANG/2016 AY: 2006-07 ITA NO. 1125/BANG/2016 AY: 2007-08 ITA NO. 1126/BANG/2016 AY: 2008-09 SMT. MANGALA PAN : AWAPM 8493 P ASSESSEE BY : SHRI. S. V. RAVISHANKAR, ADVOCATE REVENUE BY : SHRI. M. K. BIJU, JCIT DATE OF HEARING : 19.01.2017 DATE OF PRONOUNCEMENT : 20.01.2017 ITA NOS. 1115 TO1120, 1133 TO 1138, 1127 TO 1132, 1121 TO 11 26/BANG/2016 PAGE 3 OF 7 O R D E R PER BENCH THESE ARE THE APPEALS FILED BY THE ASSESSEES DIRE CTED AGAINST THE ORDER OF CIT(APPEALS), BANGLAORE-6, BANGALORE DATED 07-03-2016, CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271(1) (B) OF THE INCOME TAX ACT, 1961. SINCE THE ISSUE INVOLVED IN ALL THESE APPEALS IS COMMON, WE DISPOSE OFF THE SAME VIDE THIS COMMON ORDER. 2. BRIEFLY, THE APPELLANT RAISED THE FOLLOWING GROU NDS OF APPEALS. THE APPELLANT ARE INDIVIDUALS. A SEARCH AND SEIZE OPE RATIONS UNDER PROVISIONS OF SECTION 132 OF THE INCOME TAX ACT WAS CONDUCTED IN THE CASE OF ASHWANTHNARAYANA GROUP OF COMPANIES ON 26.08.2008. IT IS THE CASE OF THE AO THAT CONSEQUENT UPON THE SEARCH AND SEIZE OP ERATIONS IN THE SAID CASE, CERTAIN INCRIMINATING MATERIAL PERTAINING TO THE APPELLANT, WAS FOUND AND THEREFORE THE AO ISSUED NOTICE UNDER THE PROVIS IONS OF SECTION 153C DATED 28.07.2010 CALLING UPON THE APPELLANT TO FILE THE RETURN OF INCOME ON OR BEFORE 31.07.2010 FOR THE AY 2003-04 TO 2009-10. ACCORDING TO THE AO, DESPITE CONTACTING THE APPELLANT OVER TELEPHONE SEV ERAL TIMES TO FILE THE RETURN OF INCOME, THERE WAS NO RESPONSE FROM THE AP PELLANT TO FILE THE RETURN ITA NOS. 1115 TO1120, 1133 TO 1138, 1127 TO 1132, 1121 TO 11 26/BANG/2016 PAGE 4 OF 7 OF INCOME. THEREFORE, A SHOW CAUSE NOTICE PROPOSIN G TO LEVY OF PENALTY UNDER THE PROVISIONS OF SECTION 271(1)(B) OF THE IN COME TAX DATED 06.10.2010, WAS ISSUED FOR NON-COMPLIANCE OF THE NO TICE AND THE SAME WAS SERVICED ON 12.10.2010 AND THE APPELLANT HAD NOT FI LED ANY EXPLANATION WITH RESPECT TO SAID SHOW CAUSE NOTICE. THEREFORE, THE AO PROCEEDED WITH THE LEVY OF PENALTY UNDER THE PROVISIONS OF 271(1)(B) O F THE INCOME TAX BY LEVYING PENALTY OF RS.10,000/- FOR EACH YEAR VIDE O RDER DATED 20.10.2010. 3. BEING AGGRIEVED BY THE PENALTY ORDER, THE APPELL ANT PREFERRED AN APPEAL BEFORE THE CIT(A), WHEREIN IT WAS CONTENDED THAT THE DELAY IN FILING THE RETURN OF INCOME IS ON ACCOUNT OF THE FACT THAT THE CHARTERED ACCOUNTANT WHO IS ENTRUSTED WITH THE RESPONSIBILITY OF FILING THE RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 153C WAS BUSY WITH THE FILING OF RETURNS OF INCOME OF HIS CLIENTS DUE IN THE MONTH OF JULY AND IT WAS FURTHER CONTENDED THAT TIME GRANTED TO FILE THE RETURN OF INCOME WAS LESS THAN 15 DAYS, WHICH WAS NOT SUFFICIENT/REASONABLE TIME TO FILE THE RETU RN OF INCOME AND THUS IT WAS CONTENDED THAT THE TIME ALLOWED BY THE AO WAS I NSUFFICIENT, AND SINCE THE NOTICE PER SE WAS INVALID, NO PENALTY COULD BE LEVIED. HOWEVER, THE CIT(A) REJECTED THE EXPLANATION AND HELD THAT THE D EFAULT ON THE PART OF THE APPELLANT IS DELIBERATE AND WILLFUL NONCOMPLIANCE A ND THEREFORE CONFIRMED THE LEVY OF PENALTY. ITA NOS. 1115 TO1120, 1133 TO 1138, 1127 TO 1132, 1121 TO 11 26/BANG/2016 PAGE 5 OF 7 4. BEING AGGRIEVED, THE APPELLANT IS IN APPEAL BEFO RE US IN THE PRESENT APPEALS. IT WAS CONTENDED ON BEHALF OF THE APPELLA NT THAT NOTICE CALLED UPON THE APPELLANT TO FILE THE RETURN OF INCOME WIT HIN THE PERIOD OF LESS THAN 15 DAYS IS INVALID AND THEREFORE THE QUESTION OF CO MPLIANCE DOES NOT ARISE. ALTERNATIVELY, IT WAS ALSO SUBMITTED THAT SINCE THE CHARTERED ACCOUNTANT WHO WAS GIVEN THE RESPONSIBILITY OF FILING THE RETU RNS WAS BUSY WITH THE FILING OF RETURN OF INCOME OF HIS CLIENTS DUE IN THE MONTH OF JULY 2010, THE APPELLANT COULD NOT COMPLY WITH THE NOTICE WELL WIT HIN THE TIME. HOWEVER, SINCE THE RETURNS WERE SUBSEQUENTLY FILED ON 20.10 .2010 AND THE RETURNS OF INCOME WERE ACCEPTED BY THE AO IN THE ASSESSMENT AF TER SCRUTINY PROCEEDINGS, THERE WAS NO PREJUDICE CAUSED TO THE R EVENUE. IT IS ONLY TECHNICAL BREACH OF LAW AND THEREFORE NO PENALTY IS EXIGIBLE AND RELIANCE IN THIS REGARD WAS PLACED IN THE DECISION OF HINDUSTAN STEELS LTD., VS. STATE OF ORISSA 83 ITR. ON THE OTHER HAND, LEARNED DR PLACE D RELIANCE ON THE ORDERS OF THE LOWER AUTHORITIES. 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IS WHE THER THE LEVY OF PENALTY WAS JUSTIFIED IN THE FACTS OF THE PRESENT CASE UNDE R THE PROVISIONS OF SECTION 271(1)(B) FOR THE DELAY IN FILING THE RETURNS OF IN COME IN RESPONSE TO NOTICE UNDER SECTION 153C OF THE ACT. THE RELEVANT PROVIS IONS OF SECTION 271(1)(B) READS AS UNDER: 271 ITA NOS. 1115 TO1120, 1133 TO 1138, 1127 TO 1132, 1121 TO 11 26/BANG/2016 PAGE 6 OF 7 (A) (B) HAS 57 [***] FAILED TO COMPLY WITH A NOTICE 58 [UNDER SUB-SECTION (2) OF SECTION 115WD OR UNDER SUB-SECTI ON (2) OF SECTION 115WE OR] UNDER SUB-SECTION 142 OR SUB-SECTION (2) OF SECTION 143 [OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB-SECTION (2A) OF SECTION 142], OR 65 [(II) IN THE CASES REFERRED TO IN CLAUSE (B), 66 [IN ADDITION TO TAX, IF ANY, PAYABLE] BY HIM, 67 [A SUM OF TEN THOUSAND RUPEES] FOR EACH SUCH FAILURE;] 6. FROM THE BEAR READING OF THE ABOVE PROVISIONS, I T IS CLEAR THAT THE PENALTY IS LEVIABLE ONLY IN THE CASES WHERE ANY PER SON HAS FAILED TO COMPLY WITH THE NOTICE ISSUED UNDER SUB-SECTION (2) OF SEC TION 115WE OR UNDER SUB-SECTION (1) OF SECTION 142 OR SUB-SECTION (2) O F SECTION 143 [OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB-SECTION (2 A) OF SECTION 142] IS LIABLE FOR PENALTY IN ADDITION TO TAX IF ANY PAYABL E A SUM OF RS.10,000/- FOR EACH SUCH FAILURE IN THE CASES REFERRED TO IN CLAUS E (B), [IN ADDITION TO TAX, IF ANY, PAYABLE] BY HIM, [A SUM OF TEN THOUSAND RUPEES ] FOR EACH SUCH FAILURE. IN THE PRESENT CASES, THE PENALTY WAS OBVIOUSLY LEV IED FOR DELAY IN FILING THE RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTIO N 153. BUT THE PROVISIONS OF SECTION 271(1)(B) DOES NOT EMPOWER TH E AO TO IMPOSE THE PENALTY IN THE CASE OF DELAY OR FAILURE TO FILE THE RETURNS IN RESPONSE TO NOTICE UNDER SECTION 153C OF THE ACT. THOUGH THE A O MENTIONED THAT THE PENALTY IS LEVIED FOR NONCOMPLIANCE UNDER SECTION 1 42(1) AND SECTION 153C, THERE IS NO WHISPER AS TO WHETHER IN THE PENA LTY ORDER ANY NOTICE UNDER SECTION 142(1) WAS ISSUED TO THE ASSESSEE. T HEREFORE THE QUESTION ITA NOS. 1115 TO1120, 1133 TO 1138, 1127 TO 1132, 1121 TO 11 26/BANG/2016 PAGE 7 OF 7 OF COMPLIANCE WITH SUCH NOTICE UNDER 142(1) DOES NO T ARISE. THUS, WE FIND THAT THE PENALTY ORDERS DOES NOT HAVE ANY LEGAL BAS IS. THEREFORE, THE ORDERS PASSED BY THE AO IMPOSING PENALTY UNDER SECT ION 271(1)(B) HAS NO STATUTORY BASIS AND HAS NO LEGS STAND. THEREFORE, WE DIRECT THE AO TO DELETE THE PENALTY OF RS.10,000/- EACH IN EACH CASE . 7. IN THE RESULT, ALL THE APPEALS FILED BY THE APPE ALS ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF JANUARY, 2017. SD/- SD/- (GEORGE GEORGE K) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNT ANT MEMBER BANGALORE. DATED: 20 TH JANUARY, 2017. /NS/ COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.