SHEETAL JAIN, MUMBAI V. ADDL CIT RG 19(1), MUMBAI

ITA 1391/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48411 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 31-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANT LAL
• Assessee Lawyers: SUBHASH CHHAJED
• Keywords: Principle of natural justice; Non compliance
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI P.M. JAGTAP (AM) AND SMT. ASHA VIJAYAR AGHAVAN (JM) ITA NO. 1391/MUM/2010 ASSESSMENT YEAR- 2006-07 SMT. SHEETAL JAIN, 12, DEEPMALA BLDG., 3 RD FLOOR, KHAR (W), MUMBAI-400 052 PAN-ACJPJ 2863K VS. THE ACIT, RANGE 19(1), MUMBAI PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400 012 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SUBHASH CHHAJED RESPONDENT BY: SHRI HEMANT LAL O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 25.11.2009 PASSED BY THE LD. CIT(A)- 30 FOR T HE ASSESSMENT YEAR 2006-07. 2 THE FACTS IN BRIEF OF THE CASE ARE THAT THE ASSES SING OFFICER WHILE ASSESSING THE CASE OF SMT. REKHA R. JAIN HAD ISSUED SUMMONS TO THE LENDERS (I.E. THE WITNESS) TO ATTEND PERSONALLY BEF ORE HIM AND TO PRODUCE ORIGINAL PASS BOOK AND COPY OF RETURN OF INCOME IN ORDER TO VERIFY THE GENUINENESS OF LOANS GIVEN BY THEM TO THE ASSESSEE VIZ: SMT. REKHA R. JAIN FOR A.Y. 2006-07. HOWEVER, THE ITO 19(1)(2), M UMBAI FOUND THAT THE WITNESS I.E. THE APPELLANT ATTENDED BEFORE HIM BUT REFUSED TO SIGN THE STATEMENT . THIS BEING SO, THE AO I.E. ITO-19 (1)(2 ) INTIMATED THIS FACT TO THE ADDL. CIT RANGE 19(I), MUMBAI AND RECOMMENDED T HAT PENALTY PROCEEDINGS U/S.272A(1)(5) MAY BE INITIATED AGAINST THE VIDE HIS LETTER ITA NO. 1391/M/2010 2 NO. ITO-19(1)(2) NON COMPLIANCE OF SUMMONS/2008-09 DATED 19.01.2009. 3. THE ADDL. CIT RANGE 19(1), MUMBAI INITIATED PENA LTY PROCEEDINGS AGAINST THE APPELLANT VIDE LETTER NO. ADDL. CIT 19( 1)/PENALTY/2009-10 DATED 22.06.2009 AS THE APPELLANT HAD CONTRAVENED T HE PROVISIONS OF SECTION 131 OF I.T. ACT, 1961. AFTER WAS ASKED TO S HOW CAUSE ALONG WITH RELEVANT EVIDENCE AS TO WHY THE PENALTY SHOULD NOT BE LEVIED U/S. 272A(1)(B) OF I.T. ACT, 1961. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE ADDL. CIT RANGE 19(1), MUMBAI IMPOSED PENALTY O F RS.10,000/- U/S.272A(1)(B) OF THE ACT BY HOLDING AS UNDER: AFTER EXAMINING THE FACTS AND CIRCUMSTANCES AS EM ERGING FROM THE REPORT OF THE ASSESSING OFFICER, IT IS SEE N THAT SMT. SHEETAL JAIN REFUSED TO SIGN THE STATEMENT, LEFT THE INCOME -TAX OFFICE WITHOUT SEEKING PERMISSION OF THE ASSESSING OFFICER AND THE A.R. WAS ALSO NOT ABLE TO PRODUCE HER DESPITE BEING SPECIFICALLY ASKED FOR BY THE A.O. THE WITNESS HAS FAILED TO BRING ON RECORD ANY EVIDENCE EXCEPT THE SELF-SERVING AFFIDAVIT TO PROVE THAT SHE DID NO T REFUSE TO SIGN THE STATEMENT RECORDED BEFORE THE ASSESSING OFFICER WHE REAS THE REPORT OF THE ASSESSING OFFICER CLEARLY SHOWS THAT HER STATEMENT RECORDED BEFORE THE AO WAS PREJUDICIAL TO THE INTERESTS OF T HE ASSESS MRS. REKHA B. JAIN WHO WAS HER RELATIVE. SHE HAD INTERES T IN REFUSING TO SIGN THE STATEMENT. BESIDES, THE CONDUCT OF THE ASS ESSEE AND WITNESSES IN SUBSEQUENT HEARINGS ALSO PERPETUATED T HE NON- COMPLIANCE AND NON-COOPERATION TO ESTABLISH THE TRU TH. BESIDES, IT IS NOT CLEAR WHY THE AFFIDAVIT OF THE WITNESS FILED BE FORE ME HAS BEEN EXECUTED ON 19.12.2008 WHEN THERE WAS NO REQUIREMEN T TO FILE AN AFFIDAVIT FROM ANY OF THE AUTHORITY. BESIDES HAVING PREPARED THIS AFFIDAVIT, IT IS NOT CLEAR WHY THE SAME HAS NOT BEE N SUBMITTED TO ANY AUTHORITY SUPERIOR TO ITO 19(1)-2 WHO COULD HAVE TA KEN REMEDIAL ACTION IN THE MATTER. BESIDES NO OTHER INSTANCE OF THIS TYPE WHEREIN ITO 19(1)-2 HAD INTIATED NON ATTENDANCE BY THE ASSE SSEE OR C.A. AFTER CALLING HIM HAS COME TO MY NOTICE IN LAST TWO YEARS. ALL THESE FACTS AND CIRCUMSTANCES CAST DOUBT ON THE GENUINENESS OF CONTENTS OF AFFIDAVIT. HENCE, I AM I NCLINED TO AGREE WITH THE VERSION OF THE A.O., I AM SATISFIED THAT T HE WITNESS SMT. SHEETAL JAIN HAD REFUSED TO SIGN STATEMENT BEFORE ITO 19(1)-2 TO ITA NO. 1391/M/2010 3 GIVE EVIDENCE. HENCE, PENALTY OF RS .10,000/- IS IMPOSED FOR THE DEFAULT COMMITTED U/S.272A(1)(B). ISSUE DEMAND NOTI CE. 4. IN APPEAL BEFORE THE LEARNED CIT(A), THE APPELLA NT RELIED ON THE AFFIDAVIT FILED BEFORE THE ASSESSING OFFICER AND CO NTENTED THAT THE ASSESSEE HAS NOT COMMITTED ANY DEFAULT WITHIN THE M EANING OF SECTION 272A(1)(B) OF I.T. ACT, 1961. THE RELEVANT REPLY OF THE ASSESSEE IS REPRODUCED BELOW:- . YOUR APPELLANT REFERS AND RELIES UPON THE EXPLAN ATION FILED BY THE ASSESSEES REPRESENTATIVE AS REPRODUCED BY T HE LEARNED ADDL. CIT ON FIRST PAGE OF THE PENALTY ORDER. DESPITE THE AFFIDAVIT BEING ON THE RECORD THE REPORT CALLED FOR BY THE LEARNED ADD L. CIT FROM ASSESSING OFFICERS STATES THAT THE DOES NOT MENTIO N THAT A REQUEST OF ADJOURNMENT WAS MADE BEFORE THE UNDERSIGNED. THIS IS FACTUALLY INCORRECT FOR THE FAT THAT THE AFFIDAVIT AT PARA 4 CLEARLY MENTIONS THAT ASSESSEES ORAL REQUEST FOR THE ADJOU RNMENT OF THE PROCEEDINGS WAS FLATLY REFUSED BY ITO 19(1)-2. THE FINDING BY THE LEARNED ADDL. CIT AT PARA 6 OF THE PENALTY ORDER TH AT. THE ASSESSEE SHEETAL JAIN FAILED TO COMPLY WITH THE SUM MONS BY NOT REFUSING TO SING HER STATEMENT IS GROSSLY ERRON EOUS, TOTALLY MISCONCEPTED AND HIGHLY UNJUSTIFIED VIOLATING ALL T HE PRINCIPLES OF NATURAL JUSTICE. FURTHER YOUR APPELLANT FAILED TO U NDERSTAND THAT WHERE IS THE QUESTION OF COMMUNICATIONS TO AUTHORIZ ED REPRESENTATIVE AND ASKING HIM TO PRODUCE THE WITNES S WHEN THE APPELLANT WAS AO'S WITNESS TO BE EXAMINED ON OATH, IT IS THE ASSESSING OFFICER WHO HAS TO ENFORCE THE ATTENDANCE OF HIS WITNESS AND THE ASSESSEE IN WHOSE CASE APPELLANTS EVIDENCE IS SOUGHT IS UNDER NO OBLIGATION UNDER THE LAW TO PRODUCE THE SA ME BEFORE THE ASSESSING OFFICER. THE LEARNED ADDL.CIT GROSSLY FAI LED TO ESTABLISH THE DELIBERATE AND CONSCIOUS DEFIANCE OF THE LAW BY YOUR APPELLANT BEFORE IMPOSING THE PENALTY U/S. 272A(1)(B) OF THE IT ACT. 1961. 5. IN ADDITION TO THE ABOVE, THE ASSESSEE HAS ALSO STATED THAT SHE WAS NOT PROVIDED WITH THE COPY OF THE REPORT OF THE ITO BASED ON WHICH THE ADDL. CIT HAD PASSED THE PENALTY ORDER. THE ASSESSE E FURTHER RELIED ON THE JUDGEMENT OF HON. SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA 83 ITR 26 WHEREIN IT WAS HELD T HAT PENALTY WILL NOT MERELY BE IMPOSED BECAUSE IT IS LAWFUL TO DO SO BUT IT WILL BE LEVIED ONLY ITA NO. 1391/M/2010 4 IN THE CASES WHERE THERE IS DELIBERATE DEFIANCE OF LAW OR CONTUMACIOUS OR DISHONEST CONDUCT OR CONSCIOUS DISREGARD OF STATUTO RY OBLIGATION. THE APPELLANT ACCORDINGLY PRAYED THAT THE ORDER IMPOSIN G PENALTY OF RS.10,000/- U/S.272A(1)(B) BY THE ADDL. CIT ON THE RECOMMENDATIONS OF THE AO MAY BE QUASHED, OR DELETED IN TOTO. 6. THE LD. CIT(A) HELD AS FOLLOWS: I HAVE CAREFULLY PERUSED THE IMPUGNED PENALTY ORDE R OF THE ADDL. CIT RG.19(1), MUMBAI, SUBMISSIONS OF THE APPE LLANT AND ALSO THE FACTS OF THE CASE. LOOKING TO THE FACTS OF THE CASE, IT EMERGES THAT THE APPELLANT IN HER CAPACITY AS A WITNESS IN THE A SSESSMENT PROCEEDINGS OF SMT. REKHA R. JAIN HAD FAILED TO COM PLY WITH THE SUMMONS ISSUED U/S.131 OF I.T. ACT INASMUCH AS SHE REFUSED TO SIGN HER STATEMENT AND LEFT THE CABIN OF ITO ON THE PRET EXT OF CONSULTING HER FAMILY MEMBERS STANDING OUTSIDE AND DID NOT TUR N UP AGAIN. THE ADDL. CIT, RG. 19(1), MUMBAI BEFORE LEVYING PENALTY HAD CALLED FOR FACTUAL REPORT FROM THE A.O. I.E. ITO-19(1)-2, MUMB AI WHO SUBMITTED HIS REPORT VIDE LETTER DATED 29.06.2009. IN HIS REP ORT, THE ITO HAS CATEGORICALLY MENTIONED THAT WHEN A COMPUTER PRINT OUT OF HER STATEMENT WAS GIVEN TO HER FOR SIGNING THE STATEMEN T, SHE REQUESTED THAT SHE BE ALLOWED TO CONSULT WITH HER OTHER FAMIL Y MEMBERS. SHE LEFT THE CABIN OF THE ITO WITHOUT SIGNING STATEMENT AND DID NOT TURN UP AGAIN. THE ITO HAS ALSO MENTIONED THAT NO REQUES T WHATSOEVER FOR ADJOURNMENT WAS MADE BY THE APPELLANT BEFORE HI M. THE ABOVE REPORT OF THE ITO WAS DULY CONSIDERED BY THE ADDL. CIT RANGE 19(1) BEFORE PASSING THE IMPUGNED PENALTY ORDER. I AGREE WITH THE ADDL. CIT THAT THE WITNESS HAS FAILED TO BRING ON R ECORD ANY EVIDENCE EXCEPT A SELF-SERVING AFFIDAVIT TO PROVE THAT SHE D ID NOT REFUSE TO SIGN THE STATEMENT WHEREAS THE REPORT OF THE ITO CLEARLY SHOWS THAT HER STATEMENT RECORDED BEFORE THE AO WAS PREJUDICIAL TO THE INTEREST OF THE ASSESSEE VIZ. MRS. REKHA R. JAIN WHO WAS HER RE LATIVE. THEREFORE, SHE HAD INTEREST IN REFUSING TO SIGN THE STATEMENT. BESIDES, THE CONDUCT OF THE APPELLANT IN SUBSEQUENT HEARINGS ALSO PERPETUATED NON-COMPLIANCE AND NON-COOPERATION TO E STABLISH THE TRUTH. THE ONLY EVIDENCE RELIED UPON BY THE APPELLA NT IN HER FAVOUR IS A UNILATERAL DECLARATION IN THE FORM OF AN AFFIDAVI T WHICH IS A SELF SERVING EVIDENCE. THE APPELLANT HAS FAILED TO PRODU CE ANY CIRCUMSTANTIAL EVIDENCE BEFORE THE ADDL. CIT RG. 19 (1) OR BEFORE ME WHICH WILL G TO PROVE THAT THE APPELLANT HAD MADE A REQUEST FOR ADJOURNMENT AT THE TIME OF RECORDING OF HER STATEME NT ON 18.12.2008 AND WHICH WAS NOT GRANTED BY THE ITO. THE APPELLANT HAS NOT BEEN ABLE TO CONTROVERT THE OBSERVATIONS OF THE ITO THAT THE APPELLANT LEFT ITA NO. 1391/M/2010 5 THE CABIN OF THE ITO ON THE PRETEXT OF CONSULTING H ER FAMILY MEMBERS AND DID NOT TURN UP FOR COMPLETING THE RECORDING OF HER STATEMENT. SHE HAS ALSO NOT BEEN ABLE TO CONTROVERT THE STATEM ENT OF THE AO THAT SHE DID NOT SIGN THE STATEMENT DELIBERATELY. ANOTHE R IMPORTANT POINT IN THIS CONNECTION WHICH NEEDS TO BE HIGHLIGHTED IS THAT THE ADDL. CIT IN THE PENALTY ORDER HAS MENTIONED THAT ON 22.12.20 08, THE AUTHORISED REPRESENTATIVE OF THE APPELLANT SHRI B.L . PARMAR WAS AGAIN REQUESTED BY THE ITO-19(1)(2), MUMBAI TO PROD UCE THE LOAN PARTIES FOR EXAMINATION ON OATH ON 26.12.2008 BUT T HE AO REPORTED THAT NO-ONE ATTENDED ON THE SAID DATE. EVEN THE RAT IO LAID DOWN IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISS A 83 ITR 26 RELIED UPON BY THE APPELLANT ARE DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. I, THEREFORE, CONFIRM THE PENALTY OF RS.10,000/- IMPOSED BY THE ADDL. CIT RANGE 19(1) U/S.272A(1)(B) OF I.T. ACT, 1961. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED . 7. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), ASSESS EE IS IN APPEAL BEFORE US AND REITERATED THE SUBMISSIONS MADE BEFOR E THE LOWER AUTHORITIES. 8. THE LD. COUNSEL FOR THE ASSESSEE SHRI SUBHASH CH HAJED POINTED OUT THAT THE ITO HAD CALLED NEARLY 14 WITNESSES AT THE SAME TIME AND ALL OF THEM WERE MADE TO WAIT BEFORE THE ROOM OF THE IT O FOR A VERY LONG PERIOD. HE ALSO CONTENDED THAT THE ASSESSEE WAS IN TERROGATED FROM 4 P.M. TO 6 P.M. IT WAS ONLY AFTER 6 P.M. REQUEST WAS MADE TO THE ITO TO ADJOURN THE MATTER FOR THE NEXT DAY AS SHE HAD TO A TTEND TO SOME DOMESTIC WORK. HE SUBMITTED THAT THE TREATMENT MET ED OUT BY THE ITO WAS INCONSIDERATE. 9. THE LD. COUNSEL FOR THE ASSESSEE ALSO PRODUCED B EFORE US THE REMAND REPORT DT. 5.5.2010 WHICH READS AS FOLLOWS: DURING THE COURSE OF REMAND PROCEEDINGS, SUMMONS U /S. 131 OF THE I.T. ACT 1961 WERE ISSUED TO THE ALL LOAN PA RTIES WHOM THE LOAN CONFIRMATIONS WERE FILED BY THE ASSESSEE D URING THE ASSESSMENT PROCEEDING AS WELL AS APPELLATE PROCEEDI NGS. AS DIRECTED BY YOUR HONOR, I HAVE EXAMINED AND RECORDED THE STATEMENT IN RESPONSE TO NOTICE U/S. 131 OF THE I.T . ACT OF ALL THE LOAN CREDITORS. ALL LOAN PARTIES HAVE FILED TH E COPY OF AFFIDAVIT, COPY OF I.T. RETURN, BALANCE SHEET, COMP UTATION OF ITA NO. 1391/M/2010 6 INCOME AND COPY OF BANK PASS BOOK FOR THE F.Y. 2005 -06 IN SUPPORT OF THEIR CLAIM OF LOAN. THESE LOAN CREDITO RS HAVE GIVEN THE LOAN TO THE ASSESSEE BY THE CROSSED CHEQUE DURI NG F.Y. 2005-06 AND SAME HAS BEEN VERIFIED FROM THEIR BALAN CE SHEET AS ON 31.3.2006. THEREFORE THE GENUINENESS AND CREDITWORTHINESS OF LOAN CREDITORS HAVE BEEN VERIFI ED. 10. FURTHER THE REMAND REPORT STATES AS FOLLOWS: THE ABOVE MENTIONED PARTIES WHO HAVE GIVEN THE LO AN TO THE ASSESSEE, THEIR STATEMENT HAVE BEEN RECORDED U/S. 131 OF THE I.T. ACT AND ALSO VERIFIED COPY OF I.T. RETURN, BAL ANCE SHEET, CAPITAL A/C, COMPUTATION OF INCOME AND BANK PASS BO OK FOR THE F.Y. 2005-06 (A.Y. 2006-07.) 11. WE FIND THE NAME OF THE ASSESSEE IN THE LIST OF LOAN CREDITORS. IN OUR OPINION, THE ASSESSEE HAS LATER ON DURING THE R EMAND PROCEEDINGS COMPLIED WITH THE REQUEST OF THE AUTHORITY TO ATTEN D AND RECORD THE STATEMENT U/S. 131 OF THE I.T. ACT. WE ARE INCLINED TO CANCEL THE PENALTY FOR NON APPEARANCE AS THE ASSESSEE HAS SUBSEQUENTLY APPEARED IF NOT AT AN EARLIER OCCASION, THEREBY ESTABLISHING THE FACT THAT SHE DID NOT DELIBERATELY DISREGARD STATUTORY OBLIGATION. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 13 TH DAY OF APRIL, 2011 SD/- SD/- (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 13THAPRIL, 2011 RJ ITA NO. 1391/M/2010 7 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 1391/M/2010 8 DATE INITIALS 1 DRAFT DICTATED ON: 11 . 0 4 .201 1 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 11 .0 4 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10 . DATE OF DISPATCH OF ORDER: _________ ______