DRESSWALA FASHIONS P.LTD, MUMBAI V. ITO 4(1)(4), MUMBAI

ITA 1311/MUM/2013

• Counselvise Citation: 131119914 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 1997-1998
• Appeal Filed On: 15-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH MEENA
• Assessee Lawyers: SAMEER G DALAL
• Keywords: Non compliance
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D , MUMBAI BEFORE SHRI P.M. JAGTAP , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 1311/M/2013 ASSESSMENT YEAR: 1997 - 1998 M/S. DRESSWALA FASHIONS PVT. LTD. 95, SHANTI NIKETAN, MARINE D RIVE, MUMBAI 400 002. PAN: AADCD 0607 L VS. ITO 4(1)(4), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SAMEER G. DALAL, A.R. REVENUE BY : SHRI OMP RAKASH MEENA, D.R. DATE OF HEARING : 12.05 .201 4 DATE OF PRONOUNCEMENT : 12.05.2014 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREI NAFTER REFERRED TO AS CIT(A)] DATED 17.12.12. 2. THE ASSESSEE HAS AGITATED THE CONFIRMATION OF PENALTY OF RS.10,000/ - BY THE LD. CIT(A) LEVIED UNDER SECTION 271(1)(B) OF THE INCOME TAX ACT (HEREINAFTER REFERRED TO AS THE ACT). DURING THE ASSESSMENT PRO CEEDINGS THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) ISSUED NOTICES THREE TIMES I.E. DATED 25.03.98, 09.09.98 & 26.10.98 REQUIRING THE ASSESSEE TO FILE RETURN OF INCOME WITHIN 15 DAYS OF THE RECEIPT OF THE NOTICES. HOWEVER, THE ASSESSEE COMP ANY FAILED TO COMPLY WITH THE STATUTORY NOTICES. THE AO THEREFORE ITA NO. 1311/M/2013 M/S. DRESSWALA FASHIONS PVT. LTD . 2 IMPOSED PENALTY OF RS.30,000/ - I.E. RS.10,000/ - FOR NON COMPLIANCE OF EACH OF THE NOTICES UNDER SECTION 142(1) OF THE ACT. 3. IN THE FIRST APPEAL, IT WAS SUBMITTED BEFORE THE LD. CIT(A) T HAT FROM THE YEAR 1996 ONWARDS THE ASSESSEE COMPANY HAD STARTED SUFFERING HUGE LOSSES DUE TO WHICH THE VARIOUS MOVABLE AND IMMOVABLE PROPERTIES OF THE ASSESSEE COMPANY AND ITS DIRECTORS WERE ATTACHED BY THE BANK DUE TO NON PAYMENT OF THE LOAN AMOUNTS. THE COMPANY WAS FORCED TO DISCONTINUE ITS BUSINESS IN THE YEAR 1996 ITSELF. THE ASSESSEE COMPANY WAS NOT HAVING A PROPER STAFF TO LOOK AFTER THE DAY TO DAY AFFAIRS OF THE BUSINESS. DUE TO THE COMPLETE CLOSURE OF THE BUSINESS THE ASSESSEE COMPANY WAS NOT ABL E TO PROPERLY REPRESENT ITS MATTER BEFORE THE AO. UNDER THESE CIRCUMSTANCES THE NOTICES ISSUED BY THE AO UNDER SECTION 142(1) COULD NOT BE RESPONDED TO IN TIME. HOWEVER, THE ASSESSEE VIDE LETTER DATED 15.12.08 HAD FILED THE NECESSARY DETAILS AND EXPLANAT IONS. THE LD. CIT(A) , AFTER CONSIDERATION OF THE MATTER , DELETED THE PENALTY IN RESPECT OF TWO NOTICES I.E. DATED 25.03.98 & 26.10.98. HOWEVER, HE CONFIRMED THE PENALTY IN RELATION TO THE NOTICE ISSUED ON 09.09.98 HOLDING THAT THE SUBMISSIONS OFFERED BY THE ASSESSEE WERE NOT CONVINCING REGARDING THE SAID NOTICE DATED 09.09.98. 4. A PERUSAL OF THE ORDER REVEALS THAT THE ASSESSEE HAD OFFERED COMMON EXPLANATION IN RESPECT OF ALL THE NOTICES. THE LD. CIT(A) HAS NOT MENTIONED IN HIS ORDER AS TO WHY THE EXP LANATION OFFERED BY THE ASSESSEE IN RELATION TO NOTICE DATED 09.09.98 WAS NOT ACCEPTABLE WHEREAS HE HAS ACCEPTED THE EXPLANATION IN RELATION TO NOTICES DATED 25.03.98 & 26.10.98. THE ASSESSEE HAS OFFERED THE EXPLANATION THAT ITS BUSINESS WAS CLOSED DOWN A ND THERE WAS NO STAFF OR OTHER EMPLOYEE TO LOOK INTO THE BUSINESS AFFAIRS OF THE ASSESSEE. THE NON COMPLIANCE OF THE STATUTORY NOTICES ISSUED BY THE AO WAS NOT INTENTIONAL. THE EXPLANATION OFFERED BY THE ASSESSEE SEEMS TO BE QUITE JUSTIFIED AND THE PENAL TY CONFIRMED ITA NO. 1311/M/2013 M/S. DRESSWALA FASHIONS PVT. LTD . 3 BY THE LD. CIT(A), IN OUR VIEW, IS NOT SUSTAINABLE AND THE SAME IS ACCORDINGLY HEREBY ORDERED TO BE DELETED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.05. 201 4 . SD/ - SD/ - ( P.M. J AGTAP ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12.05.2014 * KISHORE , SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.