P. Murali Mohana Rao, Hyderabad V. Addl. Commissioner of Income Tax, Range-1, Hyderabad

ITA 1173/Hyd/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6057 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-04-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 07-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M NAVEEN
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Opportunity of being heard; Initiation of penalty proceedings; Reasonable cause
• Section: 273B; 143(3); 131; 144; 139

Judgement Text

ITA NO 1173 OF 2017 P M URALI MOHANA RAO HYDERABAD. PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1173/HYD/2017 (ASSESSMENT YEAR: 2011-12) SHRI P. MURALI MOHANA RAO HYDERABAD PAN: AAWPP7457L VS ADD. COMMISSIONER OF INCOME TAX, RANGE-1 HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P. MURALI MOHANA RAO FOR REVENUE : SHRI M. NAVEEN, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2011-12 AGAIN ST THE ORDER OF THE CIT (A)-1, HYDERABAD, DATED 24.04. 2017 CONFIRMING THE PENALTY LEVIED BY THE ADDL. CIT U/S 272A(1)(C) OF THE ACT. THE ASSESSEE HAS RAISED THE FOLLOWING GROU NDS OF APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS)-L, HYDERABAD, IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LD. CIT(A) ERRED IN DISMISSING THE APPEAL. 3. THE LD. CIT(A) ERRED IN UPHOLDING THE PENALTY L EVIED OF RS.30,OOO/ U/S 272A(1)(C). 4. THE LD. CIT(A) GROSSLY ERRED IN NOT APPRECIATIN G THE WRITTEN SUBMISSIONS FILED DURING THE COURSE OF APPELLATE PR OCEEDINGS ON 10.09.2015. 5. THE LD. CIT(A), DECIDED THE APPEAL WITHOUT ADJU DICATING ON THE FACTS OF THE CASE AS SUBMITTED IN THE WRITTEN S UBMISSIONS MADE ON 10.09.2015. DATE OF HEARING: 17.04 . 201 8 DATE OF PRONOUNCEMENT: 06.06.2018 ITA NO 1173 OF 2017 P M URALI MOHANA RAO HYDERABAD. PAGE 2 OF 12 6. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT T HE PENALTY LEVIED OF RS.30,OOO/-FOR THE SAID NON-COMPLIANCE FO R SUMMONS DATED 03.06.2011, 06~06.2011 AND 13.06.2011 IS NOT EXIGIBLE AT ALL. 7. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT O UT OF THE THREE DATES MENTIONED BY THE ASSESSING OFFICER, THE RE IS NO SINGLE OCCASION IN WHICH THERE IS NONCOMPLIANCE FRO M THE APPELLANT. 8. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT T HERE SHOULD BE AT LEAST 7 DAYS GAP BETWEEN THE DATE OF SERVE OF NOTICE AND THE DATE OF HEARING AND THAT ALL THE THREE DATE S OF HEARING SUFFER FROM THIS DEFECT IN THE APPELLANT'S CASE. 9. THE LD. CLT(A), BEFORE RELYING ON THE STATEMENT OF THE MANAGEMENT OF M/S.AMERICAN LNFOSERV PVT. LTD., OUGH T TO HAVE GIVEN THE APPELLANT AN OPPORTUNITY FOR CROSS E XAMINING THE MANAGEMENT. 10. WITHOUT PREJUDICE TO OTHER GROUNDS, THE LD. CL T(A) OUGHT TO HAVE APPRECIATED THAT THE VERY ISSUANCE OF SUMMONS U/S 131 OF THE ACT TO THE APPELLANT WHO IS THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE VIZ., M/ S. AMERICAN LNFOSERV PVT. LTD., CALLING FOR FORM 3CA, 3CD, 29B & 56F IS NOT JUSTIFIED. 11. WITHOUT PREJUDICE TO OTHER GROUNDS, THE LD. CL T(A) OUGHT TO HAVE APPRECIATED THAT THE ADDL. CLT, RANGE-I, HYDER ABAD, WHO HAS LEVIED THE IMPUGNED PENALTY HAS NO JURISDIC TION TO ISSUE THE VERY NOTICE U/S 272A(1)(C) OF THE ACT. 12. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT NO AUTHORISED REPRESENTATIVE, INCLUDING THE APPELLANT, IS LEGALLY PERMITTED TO BE THE CUSTODIAN OF BOOKS OF ACCOUNT A ND OTHER DOCUMENTS RELATING TO ITS CLIENTS. 13. THE LD. CLT(A) OUGHT TO HAVE APPRECIATED THAT THE ORIGINAL PROCEEDINGS IN THE CASE OF M/ S. AMERICAN LNFOSERV PVT. LTD., WERE BEFORE THE DCLT 1(1), HYDERABAD, WHEREAS THE P ENALTY WAS IMPOSED ON THE APPELLANT BY THE ADDL, CLT, RANG E-I, HYDERABAD. 14. WITHOUT PREJUDICE TO OTHER GROUNDS, THE LD. CL T(A) OUGHT TO HAVE APPRECIATED THAT THE WHOLE PENALTY PROCEEDINGS U/S 272A(1)(C) OF THE ACT ARE VITIATED ON THE GROUND TH AT THERE IS OVER WRITING ON THE DATE OF HEARING IN THE NOTICE I SSUED U/ S 131 DATED 27.05.2011. 15. WITHOUT PREJUDICE TO OTHER GROUNDS, THE LEARNE D CIT (A) OUGHT TO HAVE APPRECIATED THAT THERE WAS A REASONAB LE CAUSE AS STIPULATED IN SECTION 273B OF THE ACT FOR THE AP PELLANT FOR ITA NO 1173 OF 2017 P M URALI MOHANA RAO HYDERABAD. PAGE 3 OF 12 NOT ATTENDING IN RESPONSE TO THE SUMMONS ISSUED U/S 131 OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THERE WAS A SUR VEY IN THE CASE OF M/S. AMERICAN INFOSERVE PVT LTD U/S 133 A OF THE ACT ON 25.5.2011 AND THEREAFTER, THE RETURN OF INCOME F ILED BY THE ASSESSEE ON 18.09.2010 WAS TAKEN FOR SCRUTINY BY IS SUANCE OF A NOTICE U/S 143(2) ON 1.6.2011. THEREAFTER, THE REPR ESENTATIVE OF THE SAID COMPANY, SHRI P. MURALI MOHANA RAO, THE AP PELLANT BEFORE US, WAS ISSUED SUMMONS U/S 131 FOR PRODUCTIO N OF AUDIT WORKING SHEETS, COPY OF FORM 3CA, 3CD, 29B AND 56F OF THE COMPANY FOR THE FINANCIAL YEARS 2005-06 TO 2010-11 ON 03.06.2011. ON 3.6.2011, A LETTER WAS FILED ON BEHA LF OF SHRI MURALI MOHAN RAO, STATING THAT HE IS OUT OF THE COU NTRY AND IS NOT AVAILABLE TILL 06.06.2011. THE DY. CIT, THEREFORE, ADJOURNED THE CASE TO 6.6.2011. BUT THERE WAS NO RESPONSE ON THE SAID DATE. SUBSEQUENTLY, THE STATEMENTS OF THE DIRECTOR AND EM PLOYEES OF M/S. AMERICAN INFOSERV PVT. LTD WERE RECORDED U/S 1 31 WHEREIN THEY APPEAR TO HAVE STATED THAT ITS BOOKS OF ACCOUN T ARE BEING MAINTAINED BY THE AUDITOR M/S. P. MURALI & CO. THER EAFTER, ANOTHER SUMMONS U/S 131 WAS ISSUED ON 7.6.2011 TO S HRI P. MURALI MOHANA RAO FOR HIS PERSONAL APPEARANCE AND P RODUCTION OF BOOKS OF ACCOUNT IN THE CASE OF M/S. AMERICAN IN FOSERV PVT. LTD, POSTING THE CASE FOR HEARING ON 13.6.2011. SIN CE THERE WAS NO RESPONSE TO THESE SUMMONS ON 13.06.2011, THE DY. CIT-1(1), HYDERABAD REFERRED THE MATTER TO THE ADD. CIT ON 16 .06.2011 FOR INITIATION OF PENALTY PROCEEDINGS U/S 272A(1)(C). A CCORDINGLY, THE ADDL. CIT ISSUED NOTICE TO THE AR ON 17.06.2011 POS TING THE CASE FOR HEARING ON 01.07.2011 WHICH WAS SERVED ON THE A R ON 21.06.2011. ON 01.07.2011, SHRI P. MURALI MOHANA RA O, ALONG WITH THE REPRESENTATIVE OF THE ASSESSEE APPEARED AN D FILED A LETTER STATING THAT THERE WAS A MINOR COMMUNICATION GAP BE TWEEN HIM ITA NO 1173 OF 2017 P M URALI MOHANA RAO HYDERABAD. PAGE 4 OF 12 AND THE DY. CIT, AND THAT HE WAS GOING TO ATTEND FO R THE HEARING BEFORE HIM. SHRI MURALI WAS DIRECTED TO SHOW COMPLI ANCE BY WAY OF PRODUCTION OF BOOKS OF ACCOUNT AND OTHER DOCUMEN TS BY 8.7.2011. HOWEVER, THEY WERE NOT FILED BEFORE THE D Y. CIT. THEREAFTER, SOME MORE NOTICES WERE ALSO ISSUED TO T HE AR, BUT THERE WAS NO RESPONSE FROM HIM. HOWEVER, ON 9.12.20 11, A LETTER WAS FILED ON BEHALF OF M/S. AMERICAN INFOSERV PVT. LTD STATING THAT THE PENALTY IS NOT AUTOMATIC AND WHEN REASONABLE CA USE IS SHOWN BY THE ASSESSEE, THE SAID PENALTY MAY NOT BE LEVIED . THE AR ALSO APPEARED ON 30.12.2011 AND STATED THAT WHATEVER INF ORMATION IS PROVIDED BY THE COMPANY TO HIM, THE SAME WAS FURNIS HED BY HIM AND THERE IS NO CASE OF ANY NON-COMPLIANCE BY HIM T O THE NOTICES/SUMMONS ISSUED TO HIM. HOWEVER, THE ADDL. C IT OBSERVED THAT THERE WAS NO COOPERATION FROM THE ASSESSEE M/S . AMERICAL INFOSERVE PVT. LTD ON THE DATE OF SURVEY AND EVEN T HEREAFTER, NEITHER DID ANY RESPONSIBLE PERSON APPEAR, NOR WERE THE BOOKS OF ACCOUNT PRODUCED. OBSERVING THAT SHRI MURALI MOHANA RAO IS AN AUDITOR AND IS BESTOWED WITH CRUCIAL RESPONSIBILITY OF TAX AUDIT AND THAT HE HAS NOT COMPLIED WITH THE SUMMONS ON TH REE OCCASIONS AND HAS NOT FILED THE AUDIT WORKING SHEET S OR BOOKS OF ACCOUNT, THE ADD. CIT WAS OF THE OPINION THAT THE P ENALTY IS LEVIABLE. HE THEREFORE, LEVIED AN AMOUNT OF RS.30,0 00 FOR NON- COMPLIANCE OF THE SUMMONS U/S 131 ON 3.6.2011, 6.6. 2011 AND 13.6.2011. AGGRIEVED, THE AR PREFERRED AN APPEAL BE FORE THE CIT (A), WHO CONFIRMED THE ORDER OF THE AO AND THE APPE LLANT SHRI P. MURALI MOHANA RAO IS IN APPEAL BEFORE US. 3. THE AGGRIEVED PARTY IN PERSON, SHRI P. MURALI MO HANA RAO, APPEARED AND SUBMITTED THAT HE WAS REPRESENTIN G THE ASSESSEE COMPANY M/S. AMERICAN INFOSERV PVT. LTD BE FORE THE AO ITA NO 1173 OF 2017 P M URALI MOHANA RAO HYDERABAD. PAGE 5 OF 12 AND THAT SUMMONS U/S 131 WERE ISSUED TO HIM ON 27.0 5.2011 FOR APPEARANCE AND PRODUCTION OF THE DOCUMENTS OF THE A SSESSEE ON 3.6.2011. HE SUBMITTED THAT AS HE WAS OUT OF THE CO UNTRY ON THE SAID DATE, A LETTER WAS FILED BEFORE THE AO INFORMI NG HIM THAT HE WILL NOT BE IN INDIA TILL 6.6.2011. HE SUBMITTED TH AT INSPITE OF THE SAID INFORMATION BEING GIVEN, THE DY. CIT HAD ADJOU RNED THE CASE TO 6.6.2011 ON WHICH DATE HE WAS NOT AVAILABLE IN T HE COUNTRY. HE SUBMITTED THAT HE WAS NOT AWARE OF THE STATEMENT GI VEN BY THE DIRECTOR & EMPLOYEES OF THE ASSESSEE COMPANY M/S. A MERICAN INFOSERV PVT. LTD U/S 131 OF THE ACT THAT THE BOOKS OF ACCOUNT OF THE SAID COMPANY ARE WITH HIM OR THE REASON FOR SAY ING SO. HE SUBMITTED THAT THE SECOND SUMMONS U/S 131 WERE ISSU ED ON 7.6.2011 FOR APPEARING ON 13.6.2011 ON WHICH DATE H E HAD APPEARED BEFORE THE DCIT, BUT THE DY. CIT HAS RECOR DED THAT THERE WAS NO RESPONSE TO THE SUMMONS AND IMMEDIATELY ON 1 6.6.2011, THE MATTER WAS REFERRED TO THE ADD. CIT, RANGE-1, H YDERABAD FOR INITIATION OF PENALTY PROCEEDINGS U/S 272A(1)(C) OF THE ACT. 4. SHRI P. MURALI MOHAN RAO SUBMITTED THAT THE NOTI CE U/S 272A(1)(C) OF THE ACT HAS TO BE ISSUED FOR EACH OF THE NONCOMPLIANCE TO THE SUMMONS U/S 131(1) OF THE ACT, WHEREAS ONLY ONE NOTICE HAS BEEN ISSUED FOR ALL THE THREE D ATES OF HEARING. HE SUBMITTED THAT THE ASSESSEE HAD REASONABLE CAUSE FOR NOT APPEARING BEFORE THE AO ON 3.6.2011 AS WELL AS 6.6. 2011 AS IS RECORDED BY THE ADDL. CIT HIMSELF, IN THE PENALTY O RDER. FURTHER, HE ALSO SUBMITTED THAT THE DEMAND NOTICE FOR PENALT Y HAS BEEN ISSUED BY THE ADD. CIT IN VIOLATION OF THE PROCEDUR E LAID DOWN IN SECTION 274(3) OF THE I.T. ACT. HE SUBMITTED THAT T HE ADDL. CIT COULD NOT HAVE ISSUED THE DEMAND NOTICE TO THE AR A S HE HAD NO JURISDICTION OVER HIM. ITA NO 1173 OF 2017 P M URALI MOHANA RAO HYDERABAD. PAGE 6 OF 12 5. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE ADDL. CIT AND SUBMITTED THAT THE AR, PARTY-IN- PERSON, FAILED TO EXPLAIN THE REASONABLE CAUSE FOR NON-COMPLIANCE TO THE SUMMONS ISSUED U/S 131 OF THE ACT AND THAT T HE ADD. CIT HAD FOLLOWED THE DUE PROCEDURE IN LEVYING THE PENAL TY U/S 272A(1)(C) OF THE ACT.. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE APPELLANT BEFORE US IS THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE COMPANY M/S. AMERICA N INFOSERV LTD. IN RESPONSE TO THE SUMMONS ISSUED U/S 131(1) O F THE ACT ON 27.5.2011, FOR PRODUCTION OF BOOKS OF ACCOUNT AND R ELATED DOCUMENTS ON 3.6.2011, WE FIND THAT THE APPELLANT H AD FILED A LETTER INFORMING THAT HE IS OUT OF THE COUNTRY AND WILL NOT BE AVAILABLE TILL 6.6.2011. THE ADD. CIT HAS RECORDED THIS FACT IN THE PENALTY ORDER AND THEREFORE, IT IS NOT UNDERSTANDAB LE AS TO WHY AND HOW THE NEXT DATE OF HEARING WAS FIXED ON 6.6.2 011 WHEN THE AO WAS VERY WELL AWARE THAT THE APPELLANT WOULD NOT BE AVAILABLE ON THAT DATE. THEREFORE, WE ARE OF THE OPINION THA T THE APPELLANT HAD REASONABLE CAUSE FOR NON-APPEARANCE BEFORE THE AO ON THE ABOVE DATES OF HEARING AND IT CANNOT BE CONSIDERED AS A CASE OF NONCOMPLIANCE. AS FAR AS THE SUMMONS U/S 131(1) DAT ED 7.6.2011 FOR THE PERSONAL APPEARANCE OF THE APPELLA NT AND PRODUCTION OF BOOKS OF ACCOUNT ON 13.6.2011 IS CONC ERNED, THE APPELLANTS STAND IS THAT HE HAD APPEARED BEFORE TH E AO AND THAT THERE WAS SOME COMMUNICATION GAP BETWEEN THEM AS TH E AO HAD HEARING PROBLEM AND THAT ON 1.7.2011, THE ASSESSEE HAD APPEARED BEFORE THE ADDL. CIT AND EXPLAINED THE REASONS FOR NON- ITA NO 1173 OF 2017 P M URALI MOHANA RAO HYDERABAD. PAGE 7 OF 12 COMPLIANCE ON 13.6.2011 AND HAD ALSO INTIMATED HIS WILLINGNESS TO ATTEND THE HEARING BEFORE THE DY. CIT ON FURTHER DATES OF HEARING. THUS, ACCORDING TO HIM, IT CANNOT BE A CAS E OF WILFUL NON- COMPLIANCE TO THE SUMMONS U/S 131 OF THE ACT AND IS NOT A CASE FOR LEVY OF PENALTY U/S 272A(1)(C) OF THE ACT. 7. FOR THE SAKE OF CLARITY AND READY REFERENCE, THE RELEVANT PROVISIONS ARE REPRODUCED HEREUNDER: SECTION 272A(1) IF ANY PERSON:- (A) BEING LEGALLY BOUND TO STATE THE TRUTH OF ANY MATT ER TOUCHING THE SUBJECT OF HIS ASSESSMENT, REFUSES TO ANSWER ANY QU ESTION PUT TO HIM BY AN INCOME- TAX AUTHORITY IN THE EXERCISE OF ITS POWERS UNDER THIS ACT; OR (B) REFUSES TO SIGN ANY STATEMENT MADE BY HIM IN THE C OURSE OF ANY PROCEEDINGS UNDER THIS ACT, WHICH AN INCOME- TAX AU THORITY MAY LEGALLY REQUIRE HIM TO SIGN; OR (C) TO WHOM A SUMMONS IS ISSUED UNDER SUB- SECTION (1) OF SECTION 131 EITHER TO ATTEND TO GIVE EVIDENCE OR PRODUCE BO OKS OF ACCOUNT OR OTHER DOCUMENTS AT A CERTAIN PLACE AND TIME OMIT S TO ATTEND OR PRODUCE BOOKS OF ACCOUNT OR DOCUMENTS AT THE PLACE OR TIME; OR (D) FAILS TO COMPLY WITH A NOTICE UNDER SUB-SECTION (1 ) OF SECTION 142 O4 SUB-SECTION (2) OF SECTION 143 OR FAILS TO C OMPLY WITH A DIRECTION ISSUED UNDER SUB-SECTION (2A) OF SECTION 142; HE SHALL PAY, BY WAY OF PENALTY (A SUM OF TEN THOUS AND RUPEES) FOR EACH SUCH DEFAULT OR FAILURE (2) I F ANY PERSON FAILS- (A) TO COMPLY WITH A NOTICE ISSUED UNDER SUB-SECTION (6 ) OF SECTION 94; OR (B) TO GIVE THE NOTICE OF DISCONTINUANCE OF HIS BUSINES S OR PROFESSION AS REQUIRED BY SUB-SECTION (3) OF SECTIO N 176; OR (C) TO FURNISH IN DUE TIME ANY OF THE RETURNS, STATEMEN TS OR PARTICULARS MENTIONED IN SECTION 133 OR SECTION 206 [ OR SECTIO N 206C] OR SECTION 285B; OR ITA NO 1173 OF 2017 P M URALI MOHANA RAO HYDERABAD. PAGE 8 OF 12 (D) TO ALLOW INSPECTION OF ANY REGISTER REFERRED TO IN SECTION 134 OR OF ANY ENTRY IN SUCH REGISTER OR TO ALLOW COPIES OF SU CH REGISTER OR OF ANY ENTRY THEREIN TO BE TAKEN; OR (E) FURNISH THE RETURN OF INCOME WHICH HE IS REQUIRED T O FURNISH UNDER SUB-SECTION (4A) OR SUB-SECTION (4C) OF SECTI ON 139 OR TO FURNISH IT WITHIN THE TIME ALLOWED AND IN THE MANNE R REQUIRED UNDER THOSE SUB- SECTIONS OR (F) TO DELIVER OR CAUSE TO BE DELIVERED IN DUE TIME A C OPY OF THE DECLARATION MENTIONED IN SECTION 197A; OR (G) TO FURNISH A CERTIFICATE AS REQUIRED BY SECTION 203 LL[OR SECTION 206C]; OR (H) TO DEDUCT AND PAY TAX AS REQUIRED BY SUB-SECTION (2 ) OF SECTION 226; _ (I) TO FURNISH A STATEMENT AS REQUIRED BY SUB-SECTION ( 2C) OF SECTION 192;] (J) TO DELIVER OR CAUSE TO BE DELIVERED IN DUE TIME A C OPY OF THE DECLARATION REFERRED TO IN SUB-SECTION (LA) OF SECT ION 206C;] (K) TO DELIVER OR CAUSE TO BE DELIVERED A COPY OF THE S TATEMENT WITHIN THE TIME SPECIFIED IN SUB-SECTION (3) OF SECTION 20 0 OR THE PROVISO TO SUB- SECTION (3) OF SECTION 206C;] (L) TO DELIVER OR CAUSE TO BE DELIVERED THE 17[ STATEME NTS] WITHIN THE TIME SPECIFIED IN SUB-SECTION (1) OR SECTION 20 6(A) _(M) TO DELIVER OR CAUSE TO BE DELIVERED A STATEMEN T WITHIN THE TIME AS MAY BE PRESCRIBED UNDER SUB-SECTION (2A) OF SECT ION 200 OR SUB- SECTION (3A) OR SECTION 206C HE SHALL PAY, BY WAY OF PENALTY, A SUM [OF ONE HUND RED RUPEES] FOR EVERY DAY DURING WHICH THE FAILURE CONTINUES: [PROVIDED THAT THE AMOUNT OF PENALTY FOR FAILURES I N RELATION TO (A DECLARATION MENTIONED IN SECTION 197A, A CERTIFICAT E AS REQUIRED BY SECTION 203 AND] RETURNS UNDER SECTIONS 206 AND 206C AND [S TATEMENTS UNDER SUB- SECTION (2A) OR SUB-SECTION (3) OF SECTION 200 OR T HE PROVISO TO SUB-SECTION (3) OR UNDER SUB-SECTION (3A) OF SECTION 206C]] SHA LL NOT EXCEED THE AMOUNT OF TAX DEDUCTIBLE OR COLLECTIBLE60, AS THE CASE MAY BE:] [PROVIDED FURTHER THAT NO PENALTY SHALL BE LEVIED U NDER THIS SECTION FOR THE FAILURE REFERRED TO IN CLAUSE (K), IF SUCH FAILURE RELATES TO A STATEMENT ITA NO 1173 OF 2017 P M URALI MOHANA RAO HYDERABAD. PAGE 9 OF 12 REFERRED TO IN SUB-SECTION (3) OF SECTION 200 OR TH E PROVISO TO SUB-SECTION (3) OF SECTION 206C WHICH IS TO BE DELIVERED OR CAUSED TO BE DELIVERED FOR TAX DEDUCTED AT SOURCE OR TAX COLLECTED AT SOURCE, AS T HE CASE MAY BE, ON OR AFTER THE 1ST DAY OF JULY, 2012.] (3) ANY PENALTY IMPOSABLE UNDER SUB-SECTION (1) OR SUB-SECTION (2) SHALL BE IMPOSED (A) IN A CASE WHERE THE CONTRAVENTION, FAILURE OR D EFAULT IN RESPECT OF WHICH SUCH PENALTY IS IMPOSABLE OCCURS IN THE COURSE OF A NY PROCEEDING BEFORE AN INCOME-TAX AUTHORITY NOT LOWER IN RANK THAN A 62[JO INT] DIRECTOR OR A 62[JOINT] COMMISSIONER, BY SUCH INCOME-TAX AUTHORIT Y; (AA) IN A CASE FALLING UNDER CLAUSE (D) OF SUB-SECT ION (1) BY THE INCOME-TAX AUTHORITY WHO HAD ISSUED THE NOTICE OR DIRECTION RE FERRED TO THEREIN; (B) IN A CASE FALLING UNDER CLAUSE (F) OF SUB-SECTI ON (2), BY THE [PRINCIPAL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER OR [PRINCIPAL C OMMISSIONER OR] COMMISSIONER; AND (C) IN ANY OTHER CASE, BY THE [JO INT] DIRECTOR OR THE [JOINT] COMMISSIONER (4) NO ORDER UNDER THIS SECTION SHALL BE PASSED BY ANY INCOME-TAX AUTHORITY REFERRED TO IN SUB-SECTION (3) UNLESS THE PERSON ON WHOM THE PENALTY IS PROPOSED TO BE IMPOSED IS GIVEN AN OPPORTUNITY OF B EING HEARD IN THE MATTER BY SUCH AUTHORITY WE FIND THAT THE PENALTY U/S 272A(1) IS NOT AUTOMAT IC AND COMPULSORY. THE PROVISIONS OF SECTION 272A(1) AND ( 2) AND CLAUSE (C) OR (D) OF SUB-SECTION (1) ARE COVERED BY THE PR OVISIONS OF 273B OF THE ACT; AS PER WHICH, WHERE THE ASSESSEE HAS PR OVED THAT THERE WAS A REASONABLE CASE FOR THE DEFAULT, THE PENALTY IS NOT LEVIABLE. 8. FURTHER, SECTION 274 LAYS DOWN PROCEDURE FOR LEV Y OF PENALTY AS UNDER: SECTION 274 OF THE I.T. ACT (1) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHA LL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD, OR HAS BEE N GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. (2) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHA LL BE MADE- (A) BY THE INCOME- TAX OFFICER, WHERE THE PENALTY EXCE EDS TEN THOUSAND RUPEES; ITA NO 1173 OF 2017 P M URALI MOHANA RAO HYDERABAD. PAGE 10 OF 12 (B) BY THE ASSISTANT COMMISSIONER, WHERE THE PENALTY E XCEEDS TWENTY THOUSAND RUPEES, EXCEPT WITH THE PRIOR APPRO VAL OF THE JT. COMMISSIONER. (3) AN INCOME- TAX AUTHORITY ON MAKING AN ORDER UNDER THIS CHAPTER IMPOSING A PENALTY, UNLESS HE IS HIMSELF TH E ASSESSING OFFICER, SHALL FORTHWITH SEND A COPY OF S UCH ORDER TO THE ASSESSING OFFICER'. 9. UNDER SUB SECTION (1) ABOVE, NO ORDER IMPOSING A PENALTY UNDER THIS SECTION SHALL BE PASSED BY ANY I NCOME TAX AUTHORITY REFERRED TO IN SUB-SECTION (3) OF SECTION 272A, UNLESS THE PERSON ON WHOM THE PENALTY IS PROPOSED TO BE IMPOSE D, IS GIVEN ON OPPORTUNITY OF BEING HEARD IN THE MATTER BY SUCH AUTHORITY. THIS PROVISION R.W.S 273B, THEREFORE, PRESUPPOSES T HAT IF THE PERSON IS ABLE TO EXPLAIN THE REASONABLE CAUSE FOR THE SAID FAILURE, NO PENALTY UNDER THIS SECTION IS LEVIABLE. UNDER SU B-SECTION (2) ABOVE, NO ORDER IMPOSING PENALTY SHALL BE MADE BY T HE ITO, WHERE THE PENALTY EXCEEDS RS.10,000; AND NO ORDER OF PENA LTY SHALL BE MADE BY THE ASSTT. COMMISSIONER/DY. COMMISSIONER, W HERE THE PENALTY EXCEEDS RS.20,000, EXCEPT WITH THE PRIOR AP PROVAL OF THE JT. COMMISSIONER. IN THE CASE BEFORE US, THE CAUSE OF ACTION FOR LEVY OF PENALTY HAS ARISEN ON EACH DATE OF DEFAULT AND THE PENALTY OF RS.10,000 HAS BEEN LEVIED FOR EACH DATE OF NONCO MPLIANCE. THEREFORE, IN EFFECT, THE PENALTY LEVIED IS ONLY RS .10,000 PER DEFAULT AND IN SUCH CIRCUMSTANCES, IT IS THE ITO/AO WHO HAS THE POWER TO PASS THE PENALTY ORDER AND NOT THE ADD. CI T. THEREFORE, WE HOLD THAT THE ADDL. CIT HAD NO JURISDICTION TO P ASS THE PENALTY ORDER IN THE CASE BEFORE US. 10. FURTHER, WE ALSO FIND THAT THE AR HAS GIVEN THE EXPLANATION FOR REASONABLE CAUSE FOR NON-COMPLIANCE OF THE SUMMONS U/S 131 FOR EACH DAY OF THE DEFAULT. THE FA CT THAT THE ASSESSMENT OF THE COMPANY WAS ULTIMATELY COMPLETED U/S 143(3) ITA NO 1173 OF 2017 P M URALI MOHANA RAO HYDERABAD. PAGE 11 OF 12 OF THE ACT ALSO PROVES THAT THE ASSESSEE COMPANY HA S FURNISHED THE RELEVANT DETAILS. THE COORDINATE BENCH OF THE T RIBUNAL IN THE CASE OF P.C. PANTULU VS. DCIT IN ITA NO.276/HYD/201 7 DATED 11.4.2018 HAD CONSIDERED SIMILAR SITUATION TO HOLD AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE DOCUMENTS PLACED ON RECORD ALONG WITH CASE LAW RELIED UPON. IT IS TRUE THAT ASSESSEE HAS PHYSICAL DISABIL ITY, RESTRICTING HIS MOVEMENTS. HE HAS AUTHORISED THE AR TO APPEAR BEFORE THE AO, WHO COMPLIED WITH THE NOTICES SUBSEQUENTLY. EVEN THOUGH THERE WAS FAILURE TO COMP LY WITH THE INITIAL TWO NOTICES GIVEN, CONSIDERING THAT AO HAS COMPLETED ASSESSMENT U/S. 143(3) AND NOT U/S. 144, THE SUBSEQUENT COMPLIANCE CAN BE CONSIDERED AS 'GOOD COMPLIANCE' FOR THE EARLIER NOTICES GIVEN. THE CO-O RDINATE BENCH IN THE CASE OF GLOUBS INFOCOM LIMITED VS. DCI T (SUPRA) HAS ON SIMILAR CIRCUMSTANCES HELD AS UNDER: '5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE INSTANT APPEAL IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF IT AT DELHI IN THE CASE OF AKHIL BHARTIYA PRATHM IK SHIKSHAK SANGH BHAWAN TRUST VS ACIT 5 DTR 429 (DELH I TRIBUNAL) WHEREIN THE COORDINATE BENCH IN PARAS 2.4 AND 2.5 HAS HELD AS UNDER:- '2.4 COMING TO THE ISSUE OF RECORDING OF SATISFACTI ON, IT MAY BE MENTIONED THAT MERE INITIATION OF PENALTY DOES N OT AMOUNT TO SATISFACTION AS HELD BY HON'BLE DELHI HIG H COURT IN THE CASE OF CIT VS. RAM COMMERCIAL ENTERPRISES LTD . (2001) 167 CTR (DEL) 321 : (2000) 246 ITR 568 (DEL) . IN ABSENCE OF RECORDING OF THE SATISFACTION IN THE ASS ESSMENT ORDER, MERE INITIATION OF PENALTY WILL NOT CONFER J URISDICTION ON THE AD TO LEVY THE PENALTY. 2.5 WE ALSO FIND THAT FINALLY THE ORDER WAS PASSED UNDER S. 143(3) AND NOT UNDER S. 144 OF THE ACT. THIS MEANS THAT SUBSEQUENT COMPLIANCE IN THE ASSESSMENT PROCEEDINGS WAS CONSIDERED AS GOOD COMPLIANCE AND THE DEFAULTS COMM ITTED EARLIER WERE IGNORED BY THE AO. THEREFORE, IN SUCH CIRCUMSTANCES, THERE COULD HAVE BEEN NO REASON TO C OME TO THE CONCLUSION THAT THE DEFAULT WAS WILLFUL'. 6.1. RESPECTFULLY FOLLOWING THE SAME, WE ARE OF THE OPINION THAT THE INITIAL NON-COMPLIANCE MAY NOT RESULT IN L EVY OF PENALTY, AS ASSESSEE HAS BONAFIDE REASONS FOR NON- ITA NO 1173 OF 2017 P M URALI MOHANA RAO HYDERABAD. PAGE 12 OF 12 COMPLIANCE. ACCORDINGLY, PENALTY LEVIED IS HEREBY CANCELLED. 7. IT IS TO BE OBSERVED THAT AO ISSUED ONLY ONE NOT ICE AND LEVIED TWO PENALTIES FOR NON-COMPLIANCE ON TWO DATE S. TECHNICALLY SPEAKING, EACH NON-COMPLIANCE REQUIRES SEPARATE SHOW-CAUSE NOTICE/PROCEEDING AND AO CANNOT LEVY TWO PENALTIES IN ONE SINGLE PROCEEDING. HOWEVER, TH IS IS FOR ADVICE OF THE AO TO FOLLOW IN FUTURE SO THAT THERE CANNOT BE ANY TECHNICAL DEFECTS WHILE COMPLETING PENALTY PROCEEDINGS. 11. IN THE CASE BEFORE US ALSO, THE AR HASD BONAFID E REASONS FOR NON-COMPLIANCE AND THE AO HAD ISSUED ON LY ONE NOTICE FOR NON-COMPLIANCE ON THREE DATES. THEREFORE , RESPECTFULLY, FOLLOWING THE ABOVE DECISION (TO WHICH ONE OF US I. E. THE JM IS A SIGNATORY), WE HOLD THAT THE PENALTY IS NOT SUSTAIN ABLE. 12. IN THE RESULT, THE PENALTY IS DELETED FOR ALL T HE DEFAULTS AND THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JUNE, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 6 TH JUNE, 2018. VINODAN/SPS COPY TO: 1 SHRI P.MURALI MOHANA RAO, P. MURALI & CO. CAS, 6- 3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500082 2 ADD.CIT, RANGE - 1, HYDERABAD 3 CIT (A) - 1, HYDERABAD 4 PR. CIT 1, HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER