SRINIVAS V. SIRIGERI, MUMBAI V. ACIT 21(3) (OLD JURISDICTION), MUMBAI

ITA 1333/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0103 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 24-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Reasonable cause; Revised return
• Section: 147; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI G S PANNU, ACCOUNTANT MEMBER & SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 1333/MUM/2017 ASSESSMENT YEAR : 2006 2007 SHRI SRINIVAS V SIRIGERI 297, TARDO ROAD, WILLE MANSION, 1 ST FLOOR, OPP BANK OF INDIA, NANA CHOWK MUMBAI 400 007 PAN AAEPS3211P VS ASSISTANT CIT 2 6 (3) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJKUMAR SINGH RESPONDENT BY : SHRI V JUSTIN DATE OF HEARING : 23 . 08 .2017 DATE OF PRONOUNCEMENT : 31 .0 8 .2017 O R D E R PER PAWAN SINGH, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE U/S. 253 OF THE I T A CT, IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-38, MUMBAI, DATED 29.11.201 6 FOR A Y 2006-07. THE GRIEVANCE OF THE ASSESSEE IS THE CONFIRMATION OF PE NALTY OF ` 10,000/- LEVIED U/S. 271(1)(B) BY THE ASSESSING OFFICER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSM ENT FOR THE IMPUGNED ASSESSMENT YEAR WAS COMPLETED ON 11.12.2008 U/S. 14 3(3) OF THE ACT. SUBSEQUENTLY, THE CASE WAS RE-OPENED U/S. 147 AND N OTICE U/S. 148, DATED 23.03.2013, WAS ISSUED. IN RESPONSE TO THE SAID NO TICE, THE ASSESSEE FILED A ITA NO.1333/MUM/2017 SHRI SRINIVAS V SIRIGERI 2 LETTER DATED 02.04.2014, REQUESTING THE ASSESSING O FFICER TO TREAT THE REVISED RETURN FILED ON 01.05.2007 AS BEEN FILED IN RESPONS E TO THE NOTICE ISSUED U/S. 148. DURING THE RE-ASSESSMENT PROCEEDINGS, THE ASS ESSEE DID NOT RESPOND TO THE ASSESSING OFFICER ON FOUR OCCASIONS I.E. 12.08. 2013, 17.09.2013, 26.09.2013 & 22.10.2013. THE ASSESSING OFFICER ISS UED NOTICE U/S. 274 R.W.S. 271(1)(B) ON 25.10.2013. THE ASSESSEE CONTESTED TH E NOTICE BY FILING REPLY DATED 21.04.2014 STATING THAT THE ACCOUNTANT EMPLOY ED WITH HIM HAS NOT INFORMED HIM ABOUT THE DATES OF HEARING. HIS ACCOU NTANT WAS NOT SATISFIED WITH HIS PAY AND PERKS AND WAS DEMANDING RAISE IN T HE SALARY, WHICH WAS WITHHELD BY THE ASSESSEE. THIS FACT CAME TO THE NO TICE OF THE ASSESSEE ONLY AFTER COMPLETION OF ASSESSMENT U/S. 144 R.W.S. 147. THE REPLY OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER HOLDING THAT THE ACCOUNTANT OF THE ASSESSEE APPEARED DURING THE ORIG INAL ASSESSMENT COMPLETED U/S.143(3) AND, HENCE, THERE WAS NO REASO N IN NOT ATTENDING THE RE-ASSESSMENT PROCEEDINGS BY THE SAME ACCOUNTANT. THE ASSESSING OFFICER LEVIED PENALTY OF ` 10,000/- VIDE ORDER DATED 25.04.2014 U/S. 271(1)(B ) OF THE ACT. ON APPEAL, THE CIT(A) SUSTAINED THE PENALTY AN D HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 3. BEFORE US, THE LEARNED AR OF THE ASSESSEE VEHEME NTLY ARGUED THAT THE ACCOUNTANT NEITHER APPEARED BEFORE THE ASSESSING OF FICER IN THE RE- ASSESSMENT PROCEEDINGS NOR INFORMED HIM ABOUT THE N OTICE ISSUED BY THE ITA NO.1333/MUM/2017 SHRI SRINIVAS V SIRIGERI 3 ASSESSING OFFICER. IT WAS ARGUED THAT THERE WAS NO FAULT ON THE PART OF THE ASSESSEE AS THE ACCOUNTANT INTENTIONALLY AND DELIBE RATED HAD NOT INFORMED HIM ABOUT THE NOTICES ISSUED BY THE ASSESSING OFFIC ER IN THE RE-ASSESSMENT PROCEEDINGS, WHICH RESULTED IN COMPLETION OF THE AS SESSMENT U/S. 144 R.W.S. 147. IT WAS ARGUED THAT THE ASSESSEE IS A LAW ABID ING CITIZEN AND NEVER AVOID ANY NOTICES ISSUED BY THE INCOME-TAX AUTHORITIES. IN SUPPORT TO THE CONTENTIONS, THE LEARNED AR RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF OR ISSA 83 ITR 0026. 4. ON THE OTHER HAND, THE LEARNED DR FOR THE REVENU E CONTENDED THAT THE ASSESSEE NEITHER APPEARED BEFORE THE ASSESSING OFFI CER NOR REPLIED TO THE NOTICES ISSUED BY THE ASSESSING OFFICER AS THE ASSE SSEE WAS FULLY AWARE THAT HE DID HAVE ANY EVIDENCE /EXPLANATION TO PRODUCE DU RING THE RE-ASSESSMENT PROCEEDINGS. THE ASSESSEE DID NOT COMPLY WITH THE NOTICES AS COMPLIANCE MAY LEAD TO MORE INVESTIGATION OR MORE POINTS TO BE EXPLAINED WHEREAS NON- COMPLIANCE WOULD LEAD TO LEVY OF PENALTY U/S. 271(1 )(B) OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERU SED THE MATERIAL AVAILABLE ON RECORD ALONG WITH THE ORDERS OF THE AU THORITIES BELOW. WE HAVE SEEN THAT THE ASSESSING OFFICER PASSED THE RE-ASSES SMENT ORDER U/S. 144 R.W.S. 147 ON 25.10.2013. THE ASSESSING OFFICER IS SUED NOTICE FOR INITIATING PENALTY U/S. 274 R.W.S. 271(1)(B) VIDE NOTICE DATED 25.10.2013. THE ASSESSEE FILED ITS LETTER DATED 21.04.2014 EXPLAINING THE CI RCUMSTANCES RELATING TO NON- ITA NO.1333/MUM/2017 SHRI SRINIVAS V SIRIGERI 4 COMPLIANCE OF NOTICES ISSUED FOR 12.08.2013, 17.09. 2013, 26.09.2013 & 22.10.2013. HOWEVER, THE REPLY OF THE ASSESSEE AS NOT ACCEPTED BY THE ASSESSING OFFICER HOLDING THAT NON-COMPLIANCE OF ST ATUTORY NOTICES DUE TO NON COOPERATION OF ACCOUNTANT CANNOT BE ACCEPTED AS A REASONABLE CAUSE. THE ASSESSING OFFICER FURTHER CONCLUDED THAT IT WAS THE RESPONSIBILITY OF THE ASSESSEE TO ENSURE THAT THE COMPLIANCE WAS MADE BEF ORE THE AUTHORITIES CONCERNED. THE CIT(A) CONFIRMED THE PENALTY ON SIM ILAR LINES. THE LEARNED CIT(A) WHILE CONFIRMING THE PENALTY OBSERVED THAT S OMETIMES COMPLIANCE IS MORE DETRIMENTAL THAN NON-COMPLIANCE BECAUSE COMPLI ANCE CAN LEAD TO MORE INVESTIGATION OR MORE POINTS TO BE EXPLAINED WHEREA S NON-COMPLIANCE LEAD TO MERE PENALTY U/S. 271(1)(B) AND EX-PARTE DECISION O N THE BASIS OF AVAILABLE MATERIAL. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATI ON ON THE REPLY DATED 21.04.2014 FILED BY THE ASSESSEE BEFORE THE ASSESSI NG OFFICER IN RESPONSE TO NOTICE U/S. 274 R.W.S. 271(1)(B) OF THE ACT. THE C ONTENTION OF THE ASSESSEE THROUGHOUT THE PROCEEDINGS AS WELL AS BEFORE US IS THAT THE ACCOUNTANT EMPLOYED WITH THE ASSESSEE WAS NOT SATISFIED WITH H IS PAY AND PERK AND WAS DEMANDING A RAISE IN HIS SALARY, WHICH WAS WITHHELD BY THE ASSESSEE FOR SOME TIME. THE ACCOUNTANT OF THE ASSESSEE HAD DELIBERAT ELY KEPT THE ASSESSEE IN DARK. IN OUR VIEW, THE REPLY OF THE ASSESSEE WAS R EASONABLE AND BONA FIDE ABOUT THE NON-COMPLIANCE OF NOTICE. WE FURTHER NOT ED THAT THE ASSESSING OFFICER WHILE IMPOSING THE PENALTY HAS NOT RECORDED HIS SATISFACTION THAT THE NON-COMPLIANCE WAS INTENTIONAL OR DELIBERATE. THE ASSESSING OFFICER HAS ITA NO.1333/MUM/2017 SHRI SRINIVAS V SIRIGERI 5 SIMPLY REJECTED THE REPLY OF THE ASSESSEE. THE HON BLE APEX COURT IN THE CASE OF HINDUSTAN STELL LTD. VS. STATE OF ORISSA (SUPRA) HELD THAT THE AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTO RY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDING, AND PENALTY WILL NOT O RDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFI ANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONS CIOUS DISREGARD OF ITS OBLIGATION. THE COURT FURTHER HELD THAT PENALTY WIL L NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. CONSIDERING THE FACTS OF THE PRESENT CASE AND THE DECISION OF THE HONBLE SUPREME COURT, WE FIND THAT THE ASSESSEE HAS EXPLAINED SUFFICIENTLY IN HIS REPLY BEFORE THE ASSE SSING OFFICER ABOUT THE REASONS FOR NON-COMPLIANCE OF NOTICES. HENCE, IN O UR CONSIDERED OPINION, THE PENALTY LEVIED BY THE ASSESSING OFFICER IS NOT JUST IFIABLE. THUS, THE ORDER OF THE ASSESSING OFFICER LEVYING PENALTY U/S. 271(1)(B ) IS SET ASIDE 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DAY OF AUGUST, 2017. SD/- SD/- (G S PANNU) (PAWAN S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 31 ST AUGUST, 2017 SA ITA NO.1333/MUM/2017 SHRI SRINIVAS V SIRIGERI 6 COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, E BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI