M/s. PCB Consultants Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 1295/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7886 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 13-04-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 06-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN GOTRU
• Keywords: Bonafide belief
• Section: 142(1); 148

Judgement Text

ITA NO. 1295/DEL/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 1295/DEL/2014 A.Y. : 2004-05 M/S PCB CONSULTANTS PVT. LTD., 301, DAKHA CHAMBER, 2068/38, NAI WALA, KAROL BAGH, NEW DELHI 5 (PAN: AAACP8493K) VS ACIT, CENTRAL CIRCLE - 23, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SH. SHRAVAN GOTRU, SR. DR DATE OF HEARING: 13.04.2016 DATE OF ORDER : 03-05-2016 ORDER PER H.S. SIDHU : JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 20.11.2013 PASSED BY THE LD. CIT(A)-XII, NEW DELHI FOR ASSTT. YEAR 2004-05 ON THE FOLLOWING GROUNDS:- 1. LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE AO HAS ERRED IN LEVYING PENALTY U/S. 271(1)(B) OF RS. 20,000/- ON ILLEGAL AND UNTENABLE GROUNDS AND THE C IT(A)-XII ITA NO. 1295/DEL/2014 2 HAS ERRED IN SUSTAINING THE SAME ON UNTENABLE AND ILLEGAL GROUNDS. HENCE, THE PENALTY, AS SUCH, MAY BE QUASHE D. 2. IT IS PRAYED THAT APPELLANT ASSESSEE MAY BE PERMIT TED TO ADD, AMEND, DELETE OR SUBSTITUTE ANY GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 2. IN THIS CASE ASSESSING OFFICER NOTED THAT FOR A SSESSMENT YEAR 2004-05, ASSESSEE FAILED TO COMPLY WITH THE TWO NOTICES ISS UED U/S. 142(1) OF THE I.T. ACT. BY THE ASSESSING OFFICER ON 19.8.2011 AND 13.10.2 011 RESPECTIVELY. AO FURTHER NOTED THAT ASSESSEE HAS ALSO FAILED TO COMPLY WITH THE SHOW CAUSE NOTICES ISSUED FOR THE PENALTY PROCEEDINGS. HENCE, THE ASS ESSING OFFICER IMPOSED PENALTY OF 20,000/- (RS. 10,000/- FOR EACH OF 2 NO N-COMPLIANCES I.E. ON 30.8.2011 AND 13.10.2011 RESPECTIVELY) VIDE ORDER DATED 25.6.2012 PASSED U/S. 271(1)(B) OF THE I.T. ACT, 1961. 3. AGAINST THE AFORESAID PENALTY ORDER, ASSESSEE A PPEALED BEFORE THE LD. COMMISSIONER OF INCOME TAX (A), WHO VIDE IMPUGNED O RDER DATE 20.11.2013 CONFIRMED THE LEVY OF PENALTY OF RS. 20,000/-. 4. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 5. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR HIS A UTHORIZED REPRESENTATIVE ITA NO. 1295/DEL/2014 3 APPEARED TO PROSECUTE THE MATTER IN DISPUTE, NOR FI LED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIEW THE FACTS AND CIRCUM STANCES OF THE PRESENT CASE AND THE ISSUE INVOLVED IN THE PRESENT APPEAL, WE AR E OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND A GAIN TO THE ASSESSEE, THEREFORE, WE ARE DECIDING THE PRESENT APPEAL EXPA RTE QUA ASSESSEE, AFTER HEARING THE LD. DR AND PERUSING THE RECORDS. 6. LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE LD. DR IN LIGHT OF THE MATERIA L PRODUCED BEFORE US. WE FIND THAT IN THIS CASE THE PENALTY OF RS. 20,000 /- HAS BEEN IMPOSED ON ACCOUNT OF NON-COMPLIANCE BY THE ASSESSEE OF TWO NOTICES ISSUED IN CONNECTION WITH ASSESSMENT YEAR 2004-05. WE FIND THAT ASSESSE E DURING THE APPELLATE PROCEEDINGS HAS SUBMITTED AS UNDER:- THAT THE INITIAL NOTICE ISSUED BY THE AO U/S. 148 WAS NEVER SERVED ON THE ASSESSEE AND NOTICE ISSUED LATER ON U/S. 142 COULD NOT BE MET BY THE ASSESSEE AS THE PRINCIPAL OFFICER OF THE COMPANY, SHRI PREM BATRA WAS SUFFERING FROM CANCER AND WAS NOT IN A POSITION TO PREPARE DETAIL AND SUBMIT IT BEFORE THE AO. IN FACT , MR. PREM CHAND BATRA WAS THE KEY MAN IN THE COMPANY AND WA S LOOKING AFTER ALL THE FINANCIAL, TAXATION AND ACCOUNTING M ATTERS OF THE COMPANY. IN FACT, THE DIRECTOR OF THE COMPANY WAS SO MUCH UPSET ITA NO. 1295/DEL/2014 4 BECAUSE OF DIAGNOSIS OF THE CANCER THAT THEY COULD NOT APPEAR AND EVEN COME AND DISCUSS THE ISSUE WITH THE AO. IN FA CT THE COUNSELLOR APPEAR IN ONE OF THE HEARING ALSO CONVEYED THIS F ACT TO THE AO ORALLY. THE DOCUMENTS RELATING TO SUFFERING OF CA NCER OF MR. PREM CHAND BATRA AND AFFIDAVIT BY DIRECTOR OF THE COMPAN Y IN THIS REGARD ARE ATTACHED HEREWITH. HENCE, IN VIEW OF THE ABOVE CIRCUMSTANCES, YOUR HONOR IS PRAYED THAT THE PENALT Y MAY BE DROPPED. 8. WE HAVE HEARD THE LD. DR AND PERUSED THE RECORDS CAREFULLY ESPECIALLY THE IMPUGNED ORDER. KEEPING IN VIEW OF THE AFOR ESAID REASONS MENTIONED BY THE ASSESSEE FOR NON-COMPLIANCE OF THE NOTICES IN D ISPUTE, WE ARE OF THE VIEW THAT THE REASONS FOR NON-COMPLIANCE OF NOTICES SEEM S TO BE GENUINE AND JUSTIFIED. HENCE, THE ASSESSEES CONDUCT WAS NOT CONTUMACIOUS TO WARRANT LEVY OF PENALTY. THEREFORE, ON THE FACTS AND CIRCUMSTANCES OF THE CA SE LEVY OF PENALTY OF RS. 20,000/- IS LIABLE TO BE DELETED. 9. IN THIS REGARD, WE PLACE RELIANCE OF THE HONBLE APEX COURT DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26, WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A S TATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS, AND PENALTY WILL N OT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACT ED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED M ERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORI TY TO BE EXERCISED JUDICIALLY AND ITA NO. 1295/DEL/2014 5 ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCE S. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE TH E PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNIC AL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FR OM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. 10. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENT, WE DELETE THE LEVY OF PENALTY OF RS. 20,000/- AND QUASH THE O RDERS OF THE AUTHORITIES BELOW. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/05/2016. SD/- SD/- [ [[ [PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI] ]] ] [ [[ [H.S. H.S. H.S. H.S. SIDHU SIDHU SIDHU SIDHU] ]] ] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 03/05/2016 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES