SHRI KRISHNA GUPTA, Nagpur V. A,C.I.T CENT CIR. 2(3), Nagpur

ITA 13/NAG/2017

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88704 (ITAT-NAGPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 16-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Salary income; Bonafide belief; Reasonable cause; Non compliance
• Section: 273B; 143(3); 142(1); 153A; 144

Judgement Text

1 ITA NOS. 13 TO 18/NAG/2017. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) SR. NO. I.T.A. NO. ASSTT. YEAR . 1. 13/NAG/2017 2004 - 05. 2. 14/NAG/2017 2005 - 06. 3. 15/NAG/2017 2006 - 07. 4. 16/NAG/2017 2007 - 08. 5. 17/NAG/2017 2008 - 09. 6. 18/NAG/2017 2009 - 10. SHRI KRISHNA GUPTA, ASSTT. COMMISSIONER OF INCOME - TAX, NAGPUR. VS. CENTRAL CIRCLE - 2(3), NAGPUR. PAN AJRPG2059F. APPELLANT. RESPONDENT. APP ELLANT BY : SHRI RAJESH LOYA. RESPONDENT BY : SHRI A.R. NINAWE. DATE OF HEARING : 17 - 01 - 2017 DATE OF PRONOUNCEMENT : 18 TH JANUARY, 2017. O R D E R. T HESE ARE APPEALS BY THE ASSESSEE DIRECTED AGAINST COMMON ORDER OF LEARNED CIT(APPEALS) - 3, NAGPUR FOR ASSESSMENT YEAR S 2004 - 05 TO 2009 - 10, DATED 0 7/12/2016. THE COMMON ISSUE RAISED READS AS UNDER THAT THE LEARNED CIT(APPEALS) - III ERRED IN LAW AND ON FACTS IN SUSTAINING THE PENALTY OF RS. 10,000 / - U/S 271(1)(B) OF THE INCOME TAX ACT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ACTION OF THE LEARNED AUTHORITIES IS ILLEGAL AND OTHERWISE ALSO IMPROPER AND UNJUSTIFIE D. 2. I N THIS CASE THE A SSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)B OF 2 ITA NOS. 13 TO 18/NAG/2017. RS.10,000 / - EACH FOR SIX DEFAULTS IN COMPLYING WITH NOTICES U/S 142 (1), FOR EACH OF THE ASSESSMENT YEARS. 3. AGAINST ABOVE ORDER ASSESSEE APPEA L ED BEFORE THE LEARNED CIT(APP EALS) . LE ARNED CIT (APPEALS) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE. LE ARNED CIT(APPEALS) DELETED THE PENALTY OF EACH YEAR FROM RS.60,000 / - TO RS.10,000 / - . THE L EARNED CIT(APPEALS) HELD AS UNDER : 10. THE AO HAS ALSO STATED IN EACH OF THE ASSESSMENT O RDER THAT THE ASSESSEES AUTHORISED REPRESENTATIVES SHRI VIJAY LOYA, ACCOUNTANT AND SHRI RAJESH LOYA CHARTERED ACCOUNTANTS, ATTENDED ON VARIOUS DATES AS PER THE ORDER SHEET AND FURNISHED THE DETAILS/EXPLANATIONS AND REQUIRED PARTICULARS WITH REFERENCE TO REGULAR BOOKS OF ACCOUNTS. THE ASSESSEE DERIVES INCOME FROM SALARY, BUSINESS & PROFESSION, SPECULATION BUSINESS, INCOME FROM STCG & INCOME FROM OTHER SOURCES. 11. IT APPEARS FROM THE ASSESSMENT ORDERS AND THE ORDERS OF PENALTY U/S 271(1)(B) THAT THE ASSES SEE DID NOT COMPLY THE NOTICES U/S 142(1) ISSUED BY THE AO ALONGWITH QUESTIONNAIRE, HOWEVER, THERE WERE SUBMISSIONS BY THE ASSESSEE DURING THE PROCEEDINGS THROUGH HIS AUTHORIZED REPRESENTATIVES AS NOTED BY THE AO IN THE ASSESSMENT ORDER. 12. AFTER CONSIDER ING THE FACTS OF THE CASE, ASSESSEES ARGUMENTS AND THE JUDGEMENTS RELIED UPON BY THE ASSESSEE, IT IS HELD THAT THE ASSESSEE DOES DESERVE SOME RELIEF IN THE PENALTY LEVIED BY THE AO U/S 271(1)(B) OF THE INCOME TAX ACT. PENALTY LEVIED BY THE AO OF RS.60,000 / - FOR EACH OF THE YEARS IS REDUCED TO RS.10,000/ - FOR EACH OF THE ASSESSMENT YEARS INVOLVED IN THE PRESENT APPEAL. 13. IN THE RESULT, THE AO IS DIRECTED TO RESTRICT THE PENALTY TO RS.10,000/ - FOR EACH OF THE ASSESSMENT YEARS 2004 - 05 TO 2009 - 10. GROUND NO. 2 RAISED BY THE ASSESSEE IN EACH OF THE APPEALS IS PARTLY ALLOWED. GROUND NO. 1 & 3 ARE NOT PRESSED BY THE ASSESSEE, HENCE DISMISSED. 4. A GAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. THE SUBMISSIONS OF THE LEARNED COUNSEL OF THE ASSESSEE IS SUMMARISED AS UNDER : 3 ITA NOS. 13 TO 18/NAG/2017. (1) THE AO LEVIED PENALTY OF RS.60,000/ - FOR NON COMPLIANCE OF SIX NOTICES AS UNDER : (1) THE AO LEVIED PENALTY OF RS.60,000/ - FOR NON COMPLIANCE OF SIX NOTICES AS UNDE R: - 02 - 02 - 2011, 22 - 06 - 2011, 05 - 08 - 2011, 12 - 08 - 2011, 24 - 10 - 2011 AND 28 - 11 - 2011. (2) SHOW CAUSE NOTICE U/S 271(1)(B) DATED 28 - 07 - 2011 AND 28 - 12 - 2011 WERE ISSUED FOR NON COMPLIANCE OF NOTICE U/S 142(1) DATED 02 - 02 - 2011. THUS THERE WAS NO SHOW CAUSE NOTICE FO R OTHER DATES. (3) THE REASONABLE CAUSE FOR NON COMPLIANCE OF NOTICE DATED 2 - 2 - 2011 WAS DULY EXPLAINED TO THE AO AS WELL AS TO THE LEARNED CIT(A). COMMON ANNEXURE OF 64 PAGES WAS ISSUED FOR 11 ASSESSEES VIDE NOTICE DATED 2 - 2 - 2011 BY WHICH AO ASKED TO EXP LAIN THE SEIZED DOCUMENT ON OR BEFORE 18 - 2 - 2011. HOWEVER, THE INSPECTION WAS GIVEN IN JULY, 2011. THUS THE COMPLIANCE COULD NOT BE MADE ON THE HEARING DATE. (4) THE LEARNED CIT(A) ALLOWED THE APPEAL PARTLY AND CONFIRMED PENALTY OF RS.10,000/ - . HOWEVER FAIL ED TO PROVIDE THE BASIS TO CONFIRM THE PENALTY OF RS.10,000/ - . (5) THE ASSESSMENT IS MADE U/S 143(3) R.W.S. 153A THEREFORE THE PENALTY U/S 271(1)(B) CANNOT BE LEVIED. (6) THE HONBLE ITAT, ON SIMILAR FACTS HAS ALLOWED THE APPEAL OF ASSESSEE GROUP IN THE CA SE OF GUPA LEASING AND FINANCE LTD. 334 TO 339/NAG/2015 FOR ASSTT. YEAR 2004 - 05 TO 2009 - 10 DATED 22 ND JANUARY, 2016. 6. P ER C ONTRA LEARNED D EPARTMENTAL R EPRESENTATIVE RELIED UPON THE ORDERS OF THE LEARNED CIT(APPEALS) 7. I FIND THAT IN IDENTICAL SITUATION THIS T RIBUNAL IN THE ASSESSEE GROUP CASE IN THE CASE OF G UPTA LEAS ING AND F INANCE LTD IN ITA NOS. 334 TO 339 /NAG/2015 VIDE ORDER DATED 22/ 0 1/2016, HAS DELETED SIMI LAR PENALTY BY HOLDING AS UNDER : 4 ITA NOS. 13 TO 18/NAG/2017. 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. IT TRANSPIRES THAT THE AO HAD ISSUED NOTICE DATED 02 - 02 - 2011 ASKING FOR A REPLY TO 64 PAGE ANNEXURES AND ATTEND ON 18 - 02 - 2011. THIS ANNEXURE WAS NOT ASSESSEES SPECIFIC NOR ANY ASSESSMEN T YEAR WAS MENTIONED. IT IS ALSO UNDISPUTED THAT THE RELEVANT MATERIALS WHICH WERE REQUIRED FOR PROPER REPLY AND COMPLIANCE WERE SEIZED BY THE DEPARTMENT. THE ASSESSEE WAS GIVEN ACCESS TO THE SAME IN JULY, 2011. I FURTHER NOTE THAT ASSESSMENT IN THIS CASE WAS FRAMED BY THE AO U/S 143(3) OF THE I.T. ACT AND NOT U/S 144 OF THE I.T. ACT. THERE IS NO ADVERSE INFERENCE DRAWN BY THE AO DUE TO ANY NON COMPLIANCE OR NON SUBMISSION OF DETAILS BY THE ASSESSEE. IN THESE CIRCUMSTANCES, IN MY CONSIDERED OPINION, THE FAC TS NARRATED ABOVE ARE SUFFICIENT FOR THE PROPOSITION THAT THERE WAS REASONABLE CAUSE FOR THE DEFAULT ON THE PART OF THE ASSESSEE MITIGATING THE RIGOUR OF PENALTY AS ENVISAGED U/S 273B OF THE I.T. ACT. FOR THIS PROPOSITION I ALSO REFER ON ANOTHER CIT(APPEA LS) ORDERS IN THE CASE OF ANOTHER GROUP MEMBERS, IN WHICH THE LEARNED CIT(APPEALS) VIDE ORDER IN APPEAL NO.CIT(A) - III/180 TO 185/2012 - 13 AND IN APPEAL NO. CIT(A) - III238 TO 241/2012 - 13 DATED 07 - 08 - 2014, ON SIMILAR FACTS, HAS DELETED THE LEVY OF PENALTY FOR NON COMPLIANCE U/S 271(1)(B). 7. I FURTHER REFER TO THE FOLLOWING OBSERVATIONS IN ITA NOS. 4792 - 4796/DEL/2013 AND OTHERS IN THE CASE OF SHIV VANI PETRO SERVICES PVT. LTD. AND OTHERS WHEREIN THE ITAT DELHI BENCH - G WHILE DELETING THE PENALTY U/S 271(1)(B) HAS CONCLUDED AS UNDER : 9. FURTHERMORE, WE NOTE THAT IS ALL THE ASSESSMENT YEARS IN THESE CASES ASSESSMENT ORDERS WERE PASSED UNDER SECTION 153A READ WITH SECTION 143(3) OF THE I.T. ACT AND NOT UNDER SECTION 144 OF THE I.T. ACT. IN SUCH CIRCUMSTANCES, WE AGREE WITH THE LD. COUNSEL OF THE ASSESSEE THAT THE ASSESSEE MADE THE COMPLIANCE IN THE ASSESSMENT PROCEEDINGS AND AS SUCH THERE COULD BE NO REASON TO COME TO THE CONCLUSION THAT DEFAULT WAS DELIBERATE OR WILFUL. 10. IN THIS REGARD LD. COUNSEL FURTHER REFERRED TO THE DECISION OF THIS TRIBUNAL IN AKHIL BHARTIYAQ SHIKSHAK SANGH BHAWAN TRUST VS. ASSISTANT DIRECTOR OF INCOME TAX, (2008) 115 TTJ (DEL . ) 419. IN THIS CASE IT WAS HELD THAT ASSESSMENT HAVE BEEN MADE UNDER SECTI ON 143(3) AND NOT UNDER SECTION 144 OF THE IT ACT. IT MEANS THAT SUBSEQUENT COMPLIANCE IN THE ASSESSMENT PROCEEDINGS WAS CONSIDERED AS GOOD COMPLIANCE AND THE DEFAULTS COMMITTED EARLIER WERE IGNORED BYTHE AO . . HENCE, THE PENALTY U/S. 271(L)(B) COULD NOT BE LEVIED. 11 . WE FURTHER F I ND THAT ASSESSEE ' S CONDUCT IN THIS CASE CANNOT BE 5 ITA NOS. 13 TO 18/NAG/2017. TERMED AS CONTUMACIOUS SO AS TO WARRANT LEVY OF PENALTY . IN THIS REGARD, WE REFER TO THE DECISION OF THE HON'BLE APEX COURT RENDERE D BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26. IN THIS CASE IT WAS HELD THAT THAT ' AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI - CRIMINAL PROCEEDINGS , AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY 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 AUTHORITY TO BE . EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MI NIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE O FFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 11 12. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENTS, WE SET ASIDE THE ORDERS OF THE LD. CIT(A) AND DELETE THE LEVY OF PENALTY OF RS.10,000/ - IN EACH CASE. 8. I FIND T HAT THE ABOVE EXPOSITION DULY APPLIES TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY IN MY CONSIDERED OPINION, THE PENALTY OF RS.10,000/ - U/S 271(1)(B) LEVIED FOR EACH OF THE YEAR IN THESE CASES IS NOT SUSTAINABLE. 9. SINCE I HAVE DELETED THE LEVY OF PENALT Y ON ACCOUNT OF THERE BEING A REASONABLE CAUSE AS PER THE FACTS OF THE CASE, I AM NOT DEALING WITH THE ISSUE CANVASSED BY THE LEARNED COUNSEL OF THE ASSESSEE THAT THERE WAS NO INCRIMINATING SEIZED MATERIAL FOUND DURING THE SEARCH AND HENCE THE NOTICE WAS B AD AB INITIO. ACCORDINGLY I SET ASIDE THE ORDERS OF THE LEARNED CIT(APPEALS) AND ALLOW ASSESSEES APPEALS. 6 ITA NOS. 13 TO 18/NAG/2017. 8. SINCE FACTS ARE IDENTICAL I HOLD THAT THERE WAS REASONABLE CAUSE SUFFICIENT TO MITIGATE THE RIGOURS OF PENALTY IN THIS CASE. ACCORDINGLY I S ET ASIDE THE ORDER OF L EARNED CIT(APPEALS) AND DELET E THE PENALTY. 9. IN THE RESULT THESE APPEALS BY THE ASSESSEE STAND ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF JANUARY., 2017. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 18 TH JANUARY, 2017. COPY FORWARDED TO : 1. SHRI KRISHNA GUPTA, C/O M/S LOYA BAGRI & CO., GANDHIBAG, NAGPUR - 440 002. 2. A .C.I.T., CENTRAL CIRCLE - 2(3), NAGPUR. 3. C.I.T. - (CENTRAL), NAGPUR. 4. CIT(APPEALS), - 3, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.