M/S XOTIC TRAVEL & FOREX PVT. LTD., JAIPUR V. INCOME TAX OFFICER, WARD-2-4, JAIPUR

ITA 1234/JPR/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6270 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 29-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK SHARMA CIT DHK
• Assessee Lawyers: SUNIL GOYAL; ANURAG GOYAL CAS
• Keywords: Depreciation; Reasonable cause; Non compliance; Unabsorbed depreciation
• Section: 273B; 143(3); 142(1); 40(a)(ia); 143(2); 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH SMC, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; DS LE{K BEFORE: SHRI SHRI VIJAY PAL RAO, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 1231, 1232, 1233, 1234 & 1235/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14. M/S. XOTIC TRAVEL & FOREX PVT. LTD., 35/86, RAJAT PATH, MANSAROVAR, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 2(4), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACX 1139 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SUNIL GOYAL & SHRI ANURAG GOYAL (CAS) JKTLO DH VKSJ LS@ REVENUE BY : SHRI ABHISHEK SHARMA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03.10.2019. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 10/10/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THESE FIVE APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST A COMPOSITE ORDER OF LD. CIT (A)-1, JAIPUR DATED 11.09.2018 ARISING FROM FIVE PENALTY ORDERS PASSED BY THE AO UNDER SECTION 271(1)(B) OF THE IT ACT FOR THE AS SESSMENT YEAR 2013-14. THE ASSESSEE HAS RAISED COMMON GROUNDS IN THESE APPEALS . THE GROUNDS RAISED IN ITA NO. 1231/JP/2018 ARE AS UNDER :- 1. THAT THE ORDER OF THE LEARNED AO IMPOSING PENA LTY OF RS. 10,000/- ON THE ASSESSEE FOR ALLEGED DEFAULT UNDER SECTION 271(1)(B) OF INCOME TAX ACT IS BAD IN LAW AND AGAIN ST FACTS OF THE CASE. THE CIT (A) HAS ERRED IN CONFIRMING THE O RDER. 2. THAT THE LEARNED AO HAS ERRED IN HOLDING THAT TH E ASSESSEE DID NOT COMPLY WITH THE NOTICE ISSUED UNDER SECTION 142 (1) DATED 9.11.2015. 2 ITA NOS. 1231, 1232, 1233, 1234 & 1235/JP/2018. M/S. XOTIC TRAVEL & FOREX PVT. LTD., JAIPUR. 3. THE SHOW CAUSE NOTICE DATED 1.7.2016 ISSUED BY T HE LEARNED AO FOR PENALTY PROCEEDINGS UNDER SECTION 271(1)(B) WAS VAGUE AND DID NOT SPECIFY THE EXACT DEFAULT OF THE ASSESSEE. THIS GROUND OF APPEAL HAS NOT BEEN DECIDED BY THE CIT (A). 4. THAT THE ASSESSEE CRAVES HIS RIGHT TO ADD, ALTER , AMEND OR DELETE ANY GROUNDS OF APPEAL AT THE TIME HEARING OR EARLIE R. 2. THE ASSESSEE IS A COMPANY AND ENGAGED IN THE BUS INESS OF TOUR, TRAVEL AND FOREIGN EXCHANGE. THE ASSESSEE FILED ITS RETURN OF INCOME ON 23.09.2013 DECLARING LOSS OF RS. 24,24,512/- AND UNABSORBED DEPRECIATION OF RS. 7,42,029/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 29 .01.2016 WHEREBY THE AO DETERMINED THE TOTAL INCOME AT RS. 2,69,000/- BEING THE ADDITION MADE UNDER SECTION 40(A)(IA) OF THE IT ACT. SINCE THERE WAS NON-COMPL IANCE OF THE NOTICE ISSUED UNDER SECTION 142(1), THE AO INITIATED THE PROCEEDINGS UN DER SECTION 271(1)(B) BY ISSUING SHOW CAUSE NOTICES DATED 30.01.2016 AND THEN ON 1 ST JULY, 2016. THE AO PASSED FIVE SEPARATE PENALTY ORDERS UNDER SECTION 271(1)(B ) ALL DATED 29.07.2016 ON ACCOUNT OF DEFAULTS/NON-COMPLIANCE BY THE ASSESSEE OF THE FIVE NOTICES ISSUED UNDER SECTION 142(1) DATED 07.08.2015, 07.09.2015, 09.10. 2015, 26.10.2015 AND 09.11.2015. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COULD NOT SUCCEED. 3. BEFORE THE TRIBUNAL, THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT THE SHOW CAUSE NOTICES ISSUED BY THE AO ARE VERY VAGUE WITHO UT SPECIFYING THE DEFAULT/NON- COMPLIANCE ON THE PART OF THE ASSESSEE. HE HAS REF ERRED TO THE SHOW CAUSE NOTICE AND SUBMITTED THAT THE AO HAS NOT MENTIONED WHICH O F THE NOTICES WAS NOT COMPLIED BY THE ASSESSEE AND UNDER WHICH SECTION THE ALLEGED NOTICE WAS ISSUED. THEREFORE, IN THE ABSENCE OF SPECIFYING THE DEFAULT, THE ASSES SEE WAS DENIED AN OPPORTUNITY TO 3 ITA NOS. 1231, 1232, 1233, 1234 & 1235/JP/2018. M/S. XOTIC TRAVEL & FOREX PVT. LTD., JAIPUR. MEET THE CHARGES LEVIED BY THE AO. THUS HE HAS SUB MITTED THAT THE INITIATION OF PROCEEDINGS UNDER SECTION 271(1)(B) ARE NOT LEGAL A ND LIABLE TO BE QUASHED. THE SECOND CONTENTION OF THE LD. A/R OF THE ASSESSEE IS THAT THE SO CALLED NOTICES WERE NOT RECEIVED BY THE ASSESSEE AND, IN VIEW OF THE NA TURE OF BUSINESS OF THE ASSESSEE, THE MAJORITY OF THE STAFF REMAINS OUT OF STATION. A POSSIBILITY OF NON RECEIPT OF NOTICE IS NOT RULED OUT. THEREFORE, HE HAS SUBMITTED THAT EVEN IF THE NOTICES ARE SERVED UPON THE ASSESSEE, DUE TO THE FACT THAT THE ASSESSE ES STAFF REMAIN OUT OF STATION AS PER BUSINESS REQUIREMENT AND SUBSEQUENT COMPLIANCE OF THE ASSESSEE WOULD FALL IN THE CATEGORY OF REASONABLE AND BONAFIDE EXPLANATION UNDER SECTION 273B OF THE IT ACT. ALTERNATIVELY, THE LD. A/R HAS SUBMITTED THAT THE AO HAS ALLEGED THE DEFAULT OF NOTICE ISSUED UNDER SECTION 142(1) FIVE TIMES WHERE AS IT IS ONLY ONE NOTICE AND WILL BE COUNTED AS ONE DEFAULT FOR WHICH THE AO HAS LEVI ED FIVE PENALTIES WHICH IS NOT LEGAL AND JUSTIFIED. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF DELHI BENCHES OF THE TRIBUNAL IN CASE OF SMT. REKHA RANI VS. DCIT, 154 ITD 617 (DELHI-TRIB.). THUS THE LD. A/R HAS SUBMITTED THAT AT THE MOST IT CAN BE CONSIDERED ONLY ONE DEFAULT AND NOT FIVE DEFAULTS. 4. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THE AO HAS GIVEN THE DETAILS OF DEFAULTS IN THE ASSESSMENT ORDER AND SPE CIFICALLY HIGHLIGHTED THAT THE ASSESSEE HAS NEITHER COMPLIED WITH THE NOTICES NOR ATTENDED THE RESPECTIVE DATE OF HEARING. THUS THE DEFAULT IS SPECIFIED IN THE ASSE SSMENT ORDER DATED 29.01.2016 WHICH IS KNOWN TO THE ASSESSEE AND THERE IS NO OTHE R DEFAULT MENTIONED BY THE AO EXCEPT THESE FIVE NOTICES. THUS THE SHOW CAUSE NOTI CES ISSUED SUBSEQUENT TO THE ASSESSMENT ORDER SHALL BE UNDERSTOOD ALONG WITH THE SPECIFIC DEFAULT MENTIONED BY THE AO IN THE ASSESSMENT ORDER. HE HAS FURTHER CON TENDED THAT THE ASSESSEE HAS 4 ITA NOS. 1231, 1232, 1233, 1234 & 1235/JP/2018. M/S. XOTIC TRAVEL & FOREX PVT. LTD., JAIPUR. NEVER RAISED THIS ISSUE OF NON RECEIPT OF NOTICE BE FORE THE AO AND ONLY AFTER THE PENALTY ORDER WAS PASSED, THE ASESSEE HAS TAKEN THI S PLEA OF NON RECEIPT OF NOTICES. HE HAS REFERRED TO THE ORDER OF THE AO AND SUBMITTE D THAT THE AO HAS NOT ONLY ISSUED ONE NOTICE BUT THERE ARE FIVE NOTICES ONE AF TER ANOTHER AND ASSESSEE HAS NOT COMPLIED WITH A SINGLE NOTICE. THUS IN THE ABSENCE OF ANY REASONABLE CAUSE FOR NOT MAKING THE COMPLIANCE TO THE NOTICE ISSUED UNDER SE CTION 142(1), THE PENALTY UNDER SECTION 271(1)(B) IS ATTRACTED FOR EACH OF THE DEFA ULTS. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE AO HAS STATED IN PARA 1 OF THE ASSESSMENT ORDER THAT THE NOTICES UNDER SECTION 142(1) WERE ISSUED O N 5 OCCASIONS AND THE ASSESSEE HAS NEITHER COMPLIED WITH THE NOTICES NOR ATTENDED THE CORRESPONDING DATE OF HEARING. THE RELEVANT PART OF THESE OBSERVATIONS O F THE AO IN THE ASSESSMENT ORDER RECORDING THE NON COMPLIANCE OF NOTICE IS AS UNDER :- DUE TO CHANGE OF INCUMBENT, NOTICES U/S 142(1) IS SUED ALONGWITH DETAILED QUERY LETTER ISSUED TO THE ASSESSEE ON 07. 08.2015, 07.09.2015, 09.10.2015, 26.10.2015 AND 09.11.2015 F IXING DATE FOR HEARING ON 04.09.2015, 07.10.2015, 23.10.2015, 06.1 1.2015 AND 20.11.2015 RESPECTIVELY NONE ATTENDED. THUS IT IS CLEAR THAT THE AO ISSUED FIRST NOTICE UN DER SECTION 142(1) ON 07.08.2015 ALONG WITH DETAILED QUERY LETTER AND WHEN THERE WAS NON-COMPLIANCE, HE HAS ISSUED THE SAME NOTICE ON THE SUBSEQUENT DATES AS MENTIONE D AND HENCE THE SUBSEQUENT FOUR NOTICES ISSUED BY THE AO ARE NOTHING BUT REMIN DERS OF THE FIRST NOTICE SEEKING 5 ITA NOS. 1231, 1232, 1233, 1234 & 1235/JP/2018. M/S. XOTIC TRAVEL & FOREX PVT. LTD., JAIPUR. THE SAME DETAILS/INFORMATION FROM THE ASSESSEE. IT IS NOT THE CASE OF THE AO THAT HE ISSUED 5 NOTICES FOR SEEKING DIFFERENT INFORMATION OR DETAILS BUT THE NOTICES WERE ISSUED REPEATEDLY BECAUSE OF NON COMPLIANCE OF EARL IER NOTICE. THE DELHI BENCHES OF THE TRIBUNAL IN CASE OF SMT. REKHA RANI VS. DCIT (S UPRA) WHILE CONSIDERING AN IDENTICAL ISSUE HAS HELD IN PARA 5 AS UNDER :- 5. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED DR AND HAVE PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). WE FIND THAT THERE WAS NO REASONABLE CAUSE ON THE PART OF THE ASSESSEE FOR NO T APPEARING ON THE DIFFERENT DATES OF HEARING BEFORE THE ASSESSING OFFICER IN RE SPONSE TO NOTICE ISSUED UNDER SECTION 143(2) OF THE ACT. HOWEVER, WE FIND THAT TH E DEFAULT IS SAME AND, THEREFORE, PENALTY OF `10,000/- COULD BE IMPOSED FOR THE FIRST DEFAULT MADE BY THE ASSESSEE IN THIS REGARD. THE PENALTY UNDER SECTION 271(1)(B) CO ULD NOT BE IMPOSED FOR EACH AND EVERY NOTICE ISSUED UNDER SECTION 143(2), WHICH REM AINED NOT COMPLIED WITH ON THE PART OF THE ASSESSEE. THE PROVISION OF SECTION 271( 1)(B) IS OF DETERRENT NATURE AND NOT FOR EARNING REVENUE. ANY OTHER VIEW TAKEN SHALL LEAD TO THE IMPOSITION OF PENALTY FOR ANY NUMBER OF TIMES (WITHOUT LIMITS) FOR THE SA ME DEFAULT OF NOT APPEARING IN RESPONSE TO THE NOTICE UNDER SECTION 143(2) OF THE ACT. THIS DOES NOT SEEM TO BE THE INTENTION OF THE LEGISLATURE IN ENACTING THE PROVIS IONS OF SECTION 271(1)(B) OF THE ACT. IN CASE OF FAILURE OF THE ASSESSEE TO COMPLY WITH T HE NOTICE UNDER SECTION 143(2) OF THE ACT, THE REMEDY WITH THE ASSESSING OFFICER LIES WITH FRAMING OF BEST JUDGEMENT ASSESSMENT UNDER THE PROVISIONS OF SECTION 144 OF THE ACT AND NOT TO IMPOSE PENALTY UNDER SECTION 271(1)(B) OF THE ACT AGAIN AN D AGAIN. IN THIS VIEW OF THE MATTER, WE RESTRICT THE PENALTY LEVIED UNDER SECTIO N 271(1)(B) OF THE ACT TO THE FIRST DEFAULT OF THE ASSESSEE IN NOT COMPLYING WITH THE N OTICE UNDER SECTION 143(2) OF THE ACT. ACCORDINGLY, THE PENALTY IMPOSED IS RESTRICTED TO `10,000/- AS AGAINST `50,000/- CONFIRMED BY THE LEARNED CIT(A). THE GROUNDS OF APP EAL OF THE ASSESSEE ARE THUS PARTLY ALLOWED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WHEN THE AO HAS SOUGHT THE INFORMATION AS IN THE QUERY LETTER ATTACHED TO THE NOTICE UNDER SECTION 142(1) DATED 07.08.2015 AND SAME WAS REPEATED IN THE SUBSEQUENT OCCASIONS, THEN IT WILL 6 ITA NOS. 1231, 1232, 1233, 1234 & 1235/JP/2018. M/S. XOTIC TRAVEL & FOREX PVT. LTD., JAIPUR. CONSTITUTE ONLY ONE DEFAULT AND NOT FIVE DEFAULTS A S THE INFORMATION SOUGHT BY THE AO IS THE SAME AND NON COMPLIANCE BY THE ASSESSEE TO F URNISH THE SAID INFORMATION WOULD AMOUNT TO ONE DEFAULT. ACCORDINGLY, FOLLOWIN G THE ORDER OF THE DELHI BENCHES OF THE TRIBUNAL IN CASE OF SMT. REKHA RANI VS. DCIT (SUPRA), IT WILL CONSTITUTE ONLY ONE DEFAULT, HENCE, THE PENALTY LEVIED BY THE AO FO R FIVE DEFAULTS IS RESTRICTED TO ONE DEFAULT AND THE BALANCE AMOUNT OF RS. 40,000/- IS D ELETED. 6. AS REGARDS THE OTHER PLEAS RAISED BY THE ASSESSE E, IT IS MANIFEST FROM THE RECORD THAT THE AO HAS CLEARLY MENTIONED IN THE ASS ESSMENT ORDER THE DEFAULT/NON- COMPLIANCE TO THE NOTICE ISSUED UNDER SECTION 142(1 ) AND FURTHER IN REPLY TO SHOW CAUSE NOTICE, THE ASSESSEE HAS NOT TAKEN THIS PLEA THAT IT HAS NOT RECEIVED THE NOTICE ISSUED UNDER SECTION 142(1). AS REGARDS THE REASON ABLE AND BONAFIDE EXPLANATION, ONCE THE AO HAS SENT THE NOTICE FIVE TIMES WHICH ME ANS 1 ST NOTICE AND 4 REMINDERS AND ALL OF THESE NOTICES REMAINED NON-COMPLIED BY T HE ASSESSEE, THEN THIS PLEA OF BONAFIDE AND REASONABLE EXPLANATION CANNOT BE ACCEP TED. 7. IN THE RESULT, THE APPEAL IN ITA NO. 1231/JP/201 8 IS DISMISSED AND ITA NOS. 1232, 1233, 1234 & 1235/JP/2018 ARE ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 10/10/20 19. SD/- ( FOT; IKY JKWO (VIJAY PAL RAO) U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 10/10/2019. DAS/ 7 ITA NOS. 1231, 1232, 1233, 1234 & 1235/JP/2018. M/S. XOTIC TRAVEL & FOREX PVT. LTD., JAIPUR. VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. XOTIC TRAVEL & FOREX PVT. LT D., JAIPUR. 2. THE RESPONDENT THE ITO WARD 2(4), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 1231-1235/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR