Shri Dharmesh M. Patel, Ahmedabad V. The Income tax Officer,Ward-9(2), Ahmedabad

ITA 1148/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5569 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-07-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 01-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: U S BHATI
• Keywords: Opportunity of being heard; Set aside
• Section: 271(1)(c); 143(3); 143(2); 142(2A); 263; 63; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' [BEFORE SHRI MAHAVIR SINGH,JM & SHRI A N PAHUJA,AM] ITA NOS.1148 AND 1149/AHD/2008 (ASSESSMENT YEARS:-1999-2000 AND 2001-02) SHRI DHARMESH M PATEL, PROP. M/S ALPA TRANSPORT, 1, JAWAHAR KUNJ SOCIETY, NEAR PARADISE PARK, SHANTINAGAR, OLD WADAJ, AHMEDABAD [PAN: AIFPP 5556 R] V/S INCOME-TAX OFFICER, WARD- 9(2),AHMEDABAD [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI U S BHATI, AR REVENUE BY:- SHRI K MADHUSUDAN, DR O R D E R A N PAHUJA: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS DATED 26 TH FEBRUARY, 2008 OF THE LD. CIT(APPEALS)-XV, AHMEDABAD, UPHOLDING THE LEVY OF PENALTY OF RS. RS.49,37,209/- IN THE ASSESSMENT YEAR 1999-2000 A ND RS.37,84,325/- IN THE AY 2001-02 U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961[HEREINAFTER REFERRED TO AS THE ACT]. 2 FACTS, IN BRIEF, AS PER RELEVANT ORDERS FOR THE A Y 1999-2000 ARE THAT THE RETURN DECLARING NIL INCOME WAS FILED ON 31-12-1999 BY THE ASSESSEE, A CIVIL CONTRACTOR, WITHOUT ENCLOSING PRE SCRIBED AUDIT REPORT U/S 44AB OF THE ACT. AFTER PROCESSING U/S 14 3(1) OF THE ACT, THE RETURN WAS TAKEN UP FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 13.12.2000. SINCE THE ASSESSEE DID NOT RESPOND TO VARIOUS NOTICES ISSUED BY THE AO U/S 143(2) OF T HE ACT NOR SUBMITTED PRESCRIBED AUDIT REPORT AS AFORESAID, SPE CIAL AUDIT U/S 142(2A) OF THE ACT WAS UNDERTAKEN VIDE ORDER DATED 21.3.2002 . IN THE LIGHT OF FINDINGS IN THE AUDIT REPORT U/S 142(2 A) OF THE ACT, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 3 1-10-2002 WITH THE ADDITIONS OF RS.1,39,03,756/-RESULTING IN DETE RMINATION OF ITA NOS.1148 & 1149/AHD/2008 FOR AYS 1999-2000 AND 2001-02 SHRI DHARMESH M PATEL 2 INCOME OF RS.42,65,778/-. INTER ALIA, PENALTY PROC EEDINGS U/S 271(1)(C) OF THE ACT WERE ALSO INITIATED FOR FURNIS HING INACCURATE PARTICULARS OF INCOME. 2.1 SINCE THE ASSESSEE DID NOT APPEAR BEFORE THE LD. CIT(A) DESPITE SUFFICIENT OPPORTUNITY PROVIDED, THE APPEAL OF THE ASSESSEE AGAINST THE AFORESAID ASSESSMENT WAS DISMISSED BY THE LD. CIT(A) VIDE HIS ORDER DATED 28.11.2003 FOR NON-PROSECUTIO N. THE FATE OF THIS ORDER IN FURTHER APPEAL IS NOT KNOWN. 2.2 THEREAFTER, FRESH ASSESSMENT WAS DIRECTED BY THE LD. CIT-IV, AHMEDABAD IN AN EXPARTE ORDER DATED 27-2-2004 U/S 263 OF THE ACT. AS A RESULT, ASSESSMENT WAS COMPLETED ON AN IN COME OF RS.69,06,052 VIDE ORDER DATED 24.2.2005. INTER ALIA , PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE ALSO INIT IATED. 2.3 ON APPEAL, THE CIT(A)-XV, AHMEDABAD VIDE HIS ORDER DATED 7.12.2005 DISMISSED THE ASSESSEE'S APPEAL AND CONF IRMED ALL THE ADDITIONS MADE BY THE AO. 2.4 AFTER RECEIPT OF THE AFORESAID ORDER OF THE LD CIT(A), THE AO IMPOSED A PENALTY OF RS.49,37,209/- U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME @100% O F THE TAX SOUGHT TO BE EVADED ON THE INCOME OF RS.1,65,44,030/-. 3. ON APPEAL, THE LD. CIT(A) UPHELD THE LEVY OF P ENALTY , THE ASSESSEE HAVING FAILED TO FURNISH ANY EVIDENCE IN SUPPORT OF HIS CLAIMS BEFORE THE AO DESPITE OPPORTUNITY VIDE LET TERS/NOTICES DATED 5.12.01, 7.1.02, 18.1.2002, 13.2.2002, 28.10.2002, 31.10.2002 OF THE AO NOR COULD SUBSTANTIATE THEIR EXPLANATION DURING THE PE NALTY PROCEEDINGS DESPITE ITA NOS.1148 & 1149/AHD/2008 FOR AYS 1999-2000 AND 2001-02 SHRI DHARMESH M PATEL 3 NUMBER OF OPPORTUNITIES FOR HEARING ON 12.6.07, 23 .7.07, 31.8.07, 16.10.07, 23.11.07, 26.11.07 30.11.07 AND 21.2.07 PROVIDED BY THE LD. CIT(A). 4. LIKEWISE, IN THE ASSESSMENT YEAR 2001-02, ASS ESSMENT WAS COMPLETED U/S 144 OF THE ACT ON AN INCOME OF RS. 1, 00,11,051/- IN PURSUANCE TO RETURN DECLARING NIL INCOME FILED ON 3 1.10.2001, THE ASSESSEE HAVING FAILED TO RESPOND TO VARIOUS NOTICE S ISSUED BY THE AO. INTER ALIA, PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE ALSO INITIATED FOR FURNISHING INACCURATE PARTICULAR S OF INCOME. 4.1 ON APPEAL, THE LD. CIT(A) UPHELD THE ADDITION S MADE BY THE AO, VIDE HIS ORDER DATED 30.9.2005. 4.2 AFTER RECEIPT OF THE AFORESAID ORDER O F THE LD CIT(A), THE AO IMPOSED A PENALTY OF RS.37,84,325/- U/S 271(1)(C ) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME @100% O F THE TAX SOUGHT TO BE EVADED ON THE INCOME OF RS.1,08,68,218/-. 5. ON APPEAL, THE LD. CIT(A) UPHELD THE LEV Y OF PENALTY , THE ASSESSEE HAVING FAILED TO SUBSTANTIATE THEIR EXPL ANATION DURING THE PENALTY PROCEEDINGS DESPITE NUMBER OF OPPORTUNITIES FOR HE ARING ON 12.6.07, 19.2.07, 30.11.07, 17.12.07, 7.1.08, 25.1.08,5.2.08 & 21.2.0 8 PROVIDED BY THE LD. CIT(A). 6. THE ASSEESSEE IS NOW IN APPEAL BEFORE US AG AINST THE AFORESAID ORDERS OF THE LD. CI(A),UPHOLDING THE LE VY OF PENALTY IN THESE TWO ASSESSMENT YEARS. AT THE OUTSET, THE LD. AR ON BEHALF OF THE ASSESSEE SUBMITTED THAT ORDERS OF THE LD. CIT(A ) IN QUANTUM APPEALS HAVING BEEN BEEN SET ASIDE BY THE ITAT , THE PENALTIES HAVE ALSO TO BE SET ASIDE. THE LD. DR DID NOT OPPOS E THESE SUBMISSIONS ON BEHALF OF THE ASSESSEE. ITA NOS.1148 & 1149/AHD/2008 FOR AYS 1999-2000 AND 2001-02 SHRI DHARMESH M PATEL 4 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE RELEVANT ORDERS OF THE ITAT IN QUANTUM APPEALS IN THESE TWO ASSESSMENT YEARS. WE FIND THAT THE ITAT IN THEIR ORDER DATED 20-02-2009 IN QUANTUM APPEAL IN ITA NO.509/AHD/2006 AGAINST THE ORDER DATED 7.12.2005 OF THE LD. CIT(A) FOR AY 1999-2000, CONCL UDED AS UNDER: 3 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS HAVE ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. I T IS PERTINENT TO NOTE THAT THE AO FRAMED THE ASSESSMENT U/S 144 SECTION 263 OF THE ACT. LOOKING TO THE FACTS AND VARIOUS EVIDENCES FURNISHED BEFORE US , WE ARE CONVINCED THAT THE ASSESSEE WAS FACING MULTIPLE CRIMINAL PROCEEDIN GS AND WAS PREVENTED BY SUFFICIENT CAUSE TO REPRESENT BEFORE THE AUTHORI TIES BELOW WITH THE NECESSARY FACTS AND FIGURES. IN VIEW OF ABOVE, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE MATTER IS RESTORED BACK TO THE FILE O F THE AO WITH THE DIRECTION THAT THE AO SHALL RE-FRAME THE ASSESSMENT IN ACCORD ANCE WITH LAW AS PER DIRECTIONS GIVEN BY THE V CIT(A) IN HIS ORDER U/S 2 63 OF THE ACT. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERATE THE AO BY F URNISHING ALL NECESSARY FACTS DETAILS AND FIGURES AS MAY BE REQUIRED BY THE AO. THE AO SHALL RE- ADJUDICATE THE MATTER AFRESH IN ACCORDANCE WITH LAW AFTER REASONABLE OPPORTUNITY OF BEING HEARD TO-THE ASSESSEE. 7.1 SIMILARLY, THE ITAT IN THEIR ORDER DATED 11-0 9-2009 IN QUANTUM APPEAL IN ITA NO.4227/AHD/2007 AGAINST THE ORDER D ATED 30.9.2005 OF THE LD. CIT(A) FOR AY 2001-02, FOLLOWING THEIR AFORESAID ORDER DATED 20.2.2009 FOR THE AY 1999-2000, SET ASIDE TH E MATTER TO THE FILE OF THE AO . 8 WE FIND THAT HONBLE HONBLE SUPREME COURT I N THE CASE OF K.C.BUILDERS VS. ACIT,265 ITR 562(SC) HELD THAT ORDINARILY, PENA LTY CANNOT STAND IF THE ASSESSMENT ITSELF IS SET ASIDE. WHERE AN ORDER OF A SSESSMENT OR REASSESSMENT ON THE BASIS OF WHICH PENALTY HAS BEEN LEVIED ON TH E ASSESSEE, HAS ITSELF BEEN FINALLY SET ASIDE OR CANCELLED BY THE TRIBUNAL OR O THERWISE, THE PENALTY CANNOT STAND BY ITSELF AND THE SAME IS LIABLE TO BE CANCEL LED. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. R.DALMIA,(1992)107 TAXATION 107 , HELD THAT NO PENALTY SURVIVES AFTER DELETION OF ADDITIONS, FORMING THE B ASIS FOR THE LEVY OF PENALTY. SINCE THE VERY BASIS UPON WHICH THE PENALTY HAS BEEN IMPO SED DOES NOT EXIST IN VIEW OF ITA NOS.1148 & 1149/AHD/2008 FOR AYS 1999-2000 AND 2001-02 SHRI DHARMESH M PATEL 5 AFORESAID ORDER DATED 20.2.2009 OF THE ITAT FOR TH E AY 1999-2000 AND ORDER DATED 11-09-2009 FOR THE AY 2001-02, WE ARE OF THE OPINION THAT PENALTY LEVIED IN RELATION TO THE ADDITIONS UP HELD BY THE LD. CIT(A) DOES NOT SURVIVE AND IMPUGNED ORDERS ARE , THEREFORE, SET ASIDE. HOWEVER, THE AO IS FREE TO INITIATE THE PENALTY PROCEEDINGS IN ACCORDANCE WITH LAW WHILE COMPLETING THE ASSESSMENT IN THESE TWO ASSESSMENT YEARS IN PURSUAN CE TO THE DIRECTIONS OF THE ITAT. WITH THESE OBSERVATIONS, GROUND NO.1 IN THES E TWO APPEALS, IS ALLOWED. 9. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TERMS OF THE RESIDUARY GROUND NO.2 IN THESE TWO APPEALS, ACCORDINGLY, THESE GRO UNDS ARE DISMISSED. 10. IN THE RESULT, BOTH THESE APPEALS ARE A LLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 23-07-2010 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 23-07-2010 COPY OF THE ORDER FORWARDED TO: 1. SHRI DHARMESH M PATEL, PROP. M/S ALPA TRANSPORT, 1, JAWAHAR KUNJ SOCIETY, NR. PARADISE PARK, SHANTINAGA R, OLD WADAJ, AHMEDABAD 2. THE ITO, WARD-9(2), AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XV, AHMEDABAD 5. DR, BENCH-B, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD