M/s. Patel Developers, Nani Daman V. The Income Tax Officer, Vapi Ward-4, Nani Daman

ITA 1471/AHD/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3647 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 31-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 17-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: RASESH SHAH
• Keywords: Non compliance
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI S.K. YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NOS: 1471 &1472/AHD/2013 (ASSESSMENT YEAR: 2006-07) M/S. PATEL DEVELOPERS GHELWAD FALIA, NANI DAMAN-396210 V/S INCOME TAX OFFICER, VAPI WARD-4, DAMAN (APPELLANT) (RESPONDENT) PAN: AACFP9428R APPELLANT BY : SHRI RASESH SHAH, AR RESPONDENT BY : SHRI NARENDRA SINGH, SR. D.R . ( )/ ORDER DATE OF HEARING : 31-05-2016 DATE OF PRONOUNCEMENT : 01 -06-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THESE TWO APPEALS BY THE ASSESSEE ARE PREFERRED AGA INST TWO SEPARATE ORDERS OF THE LD. CIT(A), VALSAD DATED 30.12.2012 P ERTAINING TO A.Y. 2006-07. ITA NOS. 147 1 & 1472/AHD/2013 . A.Y. 2006-07 2 2. ITA NO. 1471/AHD/2013 IS AGAINST THE LEVY OF PENALT Y U/S. 271(1)(B) OF THE ACT AMOUNTING TO RS. 50,000/- AND ITA NO. 1472/ AHD/2013 IS AGAINST THE LEVY OF PENALTY U/S. 271(1)(C) OF THE A CT AMOUNTING TO RS. 2,67,800/-. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE . ITA NO. 1471/AHD/2013 FOR A.Y. 2006-07 3. THE A.O. HAS LEVIED THE PENALTY FOR NON COMPLIANCE OF THE NOTICES U/S. 142(1) DATED 27.08.2009, 29.09.2009, 22.07.2010, 13 .10.2010 AND 07.12.2010. THE A.O. HAS LEVIED PENALTY OF RS. 10,0 00/- FOR EACH DEFAULT AMOUNTING TO RS. 50,000/-. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE CAREFU LLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE OBSERVATIONS O F THE CO-ORDINATE BENCH, DELHI IN THE CASE OF SMT. REKHA RANI IN ITA NO. 6131/DEL/2013 DATED 06.05.2015 ARE RELEVANT AND READ AS UNDER:- THE PENALTY UNDER SECTION 271(1)(B) COULD NOT BE I MPOSED FOR EACH AND EVERY NOTICE ISSUED UNDER SECTION 143(2), WHICH REM AINED NOT COMPLIED WITH ON THE PART OF THE ASSESSEE. THE PROVISION OF SECTION 271(1)(B) IS OF DETERRENT NATURE AND NOT FOR EARNING REVENUE. ANY O THER VIEW TAKEN SHALL LEAD TO THE IMPOSITION OF PENALTY FOR ANY NUMBER OF TIMES (WITHOUT LIMITS) FOR THE SAME DEFAULT OF NOT APPEARING IN RESPONSE TO TH E NOTICE UNDER SECTION 143(2). THIS DOES NOT SEEM TO BE THE INTENTION OF T HE LEGISLATURE IN ENACTING THE PROVISIONS OF SECTION 271(1)(B). IN CA SE OF FAILURE OF THE ASSESSEE TO COMPLY WITH THE NOTICE UNDER SECTION 14 3(2) THE REMEDY WITH THE ASSESSING OFFICER LIES WITH FRAMING OF 'BEST JU DGMENT ASSESSMENT' UNDER THE PROVISIONS OF SECTION 144 AND NOT TO IMPO SE PENALTY UNDER SECTION 271(1)(B) AGAIN AND AGAIN. IN THIS VIEW OF THE MATTER, THE PENALTY ITA NOS. 147 1 & 1472/AHD/2013 . A.Y. 2006-07 3 LEVIED UNDER SECTION 271(1)(B) IS TO BE RESTRICTED TO THE FIRST DEFAULT OF THE ASSESSEE IN NOT COMPLYING WITH THE NOTICE ISSUED UN DER SECTION 143(2). 5. THE FACTS OF THE CASE IN HAND ARE IDENTICAL, THEREF ORE, RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDINATE BENCH (SU PRA), WE DIRECT THE A.O. TO RESTRICT THE PENALTY SO LEVIED AT RS. 10,00 0/-. ASSESSEE WILL GET A RELIEF OF RS. 50,000/-. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 1472/AHD/2013 FOR A.Y. 2006-07 7. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSES SMENT ORDER MADE U/S. 144 R.W.S. 147 OF THE ACT DATED 24.12.2010. TH E RELEVANT PART OF THE ASSESSMENT ORDER READ AS UNDER:- (5) DURING THE COURSE OF ASSESSMENT PROCEEDINGS I N THE CASE OF M/S. PATEL BUILDERS FOR A.Y. 2006-07, IT WAS NOTICED FRO M THE BALANCE SHEET OF M/S. PATEL BUILDERS THAT THE ASSESSEE FIRM HAS OUTS TANDING LIABILITY OF RS.9,95,373/- ON ACCOUNT OF UNSECURED LOAN TOWARDS THE ASSESSEE AND THE ASSESSEE HAS GIVEN CONFIRMATIONS OF RS.9,95,373/- I N FAVOUR OF M/S. PATEL BUILDERS DURING THE COURSE OF ASSESSMENT PROCEEDING S FOR A.Y. 2006-07. NOW ON VERIFICATION OF RETURN OF INCOME FOR A.Y. 20 06-07 OF THE ASSESSEE, IT WAS SEEN THAT THERE WAS A ENTRY OF RS.2,00,000/- ON LY ON ACCOUNT OF UNSECURED LOAN IN THE NAME OF PATEL BUILDERS IN THE BALANCE SHEET OF THE ASSESSEE. IT WAS HELD THAT THE ASSESSEE HAS GIVEN E XCESS CONFIRMATION OF RS.7,95,373/- OUT OF UNACCOUNTED SOURCE OF INCOME W HICH IS NOT DISCLOSED IN HIS BOOKS OF ACCOUNTS. THE ASSESSEE WAS SHOW CAU SED VIDE THIS OFFICE LETTER DTD.07.12.2010 AS TO WHY RS.7,95,373/- SHOUL D NOT BE ADDED TO YOUR TOTAL INCOME. ITA NOS. 147 1 & 1472/AHD/2013 . A.Y. 2006-07 4 8. THE ASSESSMENT WAS COMPLETED BY MAKING AN ADDITION OF RS. 7,95,373/- BEING LOAN GIVEN BY THE ASSESSEE FROM UN DISCLOSED SOURCES. PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE INITIATED. NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. 9. DURING THE COURSE OF THE PENALTY PROCEEDING S, THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN WHY PENALTY SHOULD NOT BE LE VIED ON EXCESS CONFIRMATION OF RS. 7,95,373/-. ON RECEIVING NO PLA USIBLE REPLY, THE A.O PROCEEDED BY LEVYING PENALTY OF RS. 2,67,800/-. 10. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE CAREFU LLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. 12. AS MENTIONED ELSEWHERE IN THE CASE OF M/S. PATEL BU ILDERS, THE A.O FOUND THAT IT IS SHOWING UNSECURED LOAN FROM TH E ASSESSEE AT RS. 9,95,373/- WHEREAS THE ASSESSEE HAS CONFIRMED OF HA VING GIVEN RS. 2 LACS ONLY. WE FAIL TO UNDERSTAND HOW THE ASSESSEE I S RESPONSIBLE FOR THE AMOUNT SHOWN BY M/S. PATEL BUILDERS IN ITS BALA NCE SHEET IN THE NAME OF THE ASSESSEE. THE ASSESSEE IS ONLY RESPONSI BLE FOR THE ENTRIES MADE IN ITS OWN BOOKS OF ACCOUNTS AND NOT IN THE BO OKS OF ACCOUNTS OF THIRD PARTIES. 13. WITH THE ABOVE FACTUAL MATRIX, WE DO NOT FIND ANY R EASON FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. WE, THER EFORE, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO D ELETE THE PENALTY OF RS. 2,67,800/-. ITA NOS. 147 1 & 1472/AHD/2013 . A.Y. 2006-07 5 14. APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 01 - 06 - 20 16. SD/- SD/- (S.K. YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD