Baishnab Charan Senapati, Bhubaneswar V. ITO, Bhubaneswar

ITA 194/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65135 (ITAT-CUTTACK)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 25-09-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 16-03-2012
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: J M PATTNAIK
• Keywords: Opportunity of being heard; Principle of natural justice; Reasonable cause
• Section: 273B; 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 194/CTK/2012 / ASSESSMENT YEAR 2002 - 03 BAISHNAB CHARAN SENAPATI, PLOT NO.64, SAHID NAGAR,BHUBANESWAR OPAN: AKZPS 6648 D - - - VERSUS - INCOME - TAX OFFICER, WARD 193) , BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI J.M.PATTNAIK, AR / FOR THE RESPONDENT: / SHRI S.C.MOHANTY, DR / DATE OF HEARING: 25.09.2012 / DATE OF PRONOUNCEMENT: 28.09.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THIS APPEAL BY THE ASSESSEE IS ON THE SOLITARY ISSUE ON CONFIRMATION OF PENALTY LEVIED BY THE ASSESSING OFFICER UNDER THE PROVISIO NS OF SECTION 271(1)(B) OF THE I.T.ACT,1961 AMOUNTING TO 10,000 FOR THE ASSESSMENT YEAR 2002 - 03, RAISING THE FOLLOWING GROUNDS. 1 . THAT, THE PENALTY ORDER U/S 271 (1)(B) OF THE INCOME TAX ACT MADE BY THE LD. A.O. ON DTD. 21/05/2010 IS UNREASONABLE, WITHOUT APPLICATION OF FAIR MIND, CONTRARY TO FACTS AND LAW, ARBITRARY AND WITHOUT FOLLOWING PRINCIPLES OF NATURAL JUSTICE AND WITHOUT AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE 2. THAT, THE LD. A.O. HAS ERRED IN FACT AND IN LAW TO IMP OSE PENALTY U/S. 271(1)(B) OF RS. 10,000/ - WHICH IS UNREASONABLE, WITHOUT APPLICATION OF FAIR MIND, WITHOUT ANY BASIS, CONTRARY TO FACTS & LAW, ARBITRARY, WITHOUT JURISDICTION AND WITHOUT FOLLOWING PRINCIPLES OF I.T.A.NO. 194/CTK/2012 2 NATURAL JUSTICE AND WITHOUT AFFORDING REASON ABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. THAT, THE LD. A.O. HAS ERRED IN FAC T AND IN LAW TO IMPOSE PENALTY U /S. 271 (1)(B) OF 10,000 WITHOUT ANY PROPER AND VALID SERVICE OF NOTICES U/S. 148, 143(2) AND 142(1) OF I.T. A CT DURING ASSESSMENT PROC EEDINGS U /S. 144 BY NOT FOLLOWING PROVISIONS OF LAWS FOR SERVICE UNDER CODE OF CIVIL PROCEDURE, 1908 AND GENERAL CLAUSES ACT. 1897 AND UNDER SEC. 282 OF INCOME TAX ACT, 1961. 4. THAT, THE LD. A.O. HAS ERRED IN FACT AND IN LAW TO IMPOSE PENALT Y U/S. 271(1)( B) OF 10,000 WITHOUT CONSIDERING PROVISIONS OF SEC. 273B OF REASONABLE CAUSE OF FAILURE DUE TO INVALID AND IMPROPER SERVICE OF NOTICE U/S. 271(1)(B) DTD.5/6TH APRIL 2010 WHICH HAS BEEN DULY COMPLIED BY ASSESSEE ON DTD. 07/04/2010. 5. THAT, THE LD. A.O. H AS ERRED IN FACT AND IN LAW TO IMPOSE PENALTY U/S. 271(1)(B) OF 10,000 WITHOUT CONSIDERING THE ASSESSEES COMPLIANCE ON DTD. 07/04/2010 IN RESPECT TO NOTICE U/S. 271(1)(B) DTD.5/6TH APRIL 2010 WHICH IS ARBITRARY , WITHOUT JURISDICTION AND WITHOUT FOLLOWI NG PRINCIPLES OF NATURAL JUSTICE AND WITHOUT AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 2. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS SUBMITTED THE BRIEF FACTS THAT THE APPELLANT IS 82 YEARS OLD, A SENIOR CITIZEN, DERIVING INCOME FROM PENSION, HOUSE PROPERTY AND FROM OTHER SOURCES AND. HE SUBMITTED HIS RETURN FOR THE ASSESSMENT YEAR 2002 - 03 ON A TOTAL INCOME OF 1,54,900. THERE WAS A SEARCH CONDUCTED BY THE CBI IN THE RESIDENTIAL PREMISES OF THE APPELLANT ON DT.02.02.2005 BASING ON WHICH THE RE - ASSESSMENT PROCEEDING WAS INITIATED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEARS 2000 - 01, 2001 - 02, 2002 - 03, 2004 - 0 5 AND 2005 - 06. IN ALL THE ASSESSMENT YEARS, ORDERS OF ASSESSMENT WERE PASSED BY THE ASSESSING OFFICER U /S.144 OF THE I.T.ACT AND SO ALSO CONSEQUENTIAL ORDER OF PENALTY U/S.271(1)(C) AND 271(1)(B). THE PENALTY ORDERS WERE P ASSED AS NECESSARY NOTICES I.T.A.NO. 194/CTK/2012 3 U /S. 14 8 OF THE I T ACT AS WELL AS NOTICE U /S 142(1) OF THE I T ACT WERE NOT RECEIVED BY THE ASSESSEE. THE ASSESSING OFFICER MADE ATTEMPT FOR SERVICE OF THE NOTICE S THROUGH NOTICE SERVER. BUT NOTICE SERVER COULD NOT BE ABLE TO SERVE THE NOTICE AS THE ASSESSEE COU LD NOT BE AVAILABLE IN HIS RESIDENCE . THEREAFTER, THE ASSESSING OFFICER SENT THE INSPECTOR OF INCOME - TAX TO S ERVE THE NOTICE, WHO MADE AFFIXTURE SERVICE OF THE SAID NOTICE ON THE GROUND THAT THE ASSESSEE WAS NOT AVAILABLE . THE AFFIXTURE HAD BEEN MADE IN ON E WITNESS AS REVELED FROM THE ORDER OF ASSESSME NT. BUT, THE STATEMENT OF THAT WITNESS HAS NOT RECORDED BY THE SAID INSPECTOR OF INCOME - TAX WHILE SUBMITTING HIS REPORT TO THE ASSESSING OFFICER. NO WHERE IT HAS BEEN MENTIONED IN THE REPORT OF THE INSPECTOR O F INCOME - TAX THAT THE WITNESS WHO WAS PRESENT HAS STATED THAT THE APPELLANT AVOIDED TO RECEIVE NOTICE BEING PRESENT IN HIS HOUSE. THEREAFTER THE ASSESSING OFFICER COMPLETED THE ASSESSMENT OF U /S 144 OF THE I.T. ACT AND SIMULTANEOUSLY IMPOSE D PENALTY U/S. S ECTION 271(1)(B) OF THE I.T. ACT AMOUNTING TO RS.10 ,000/ - FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON THE VERY GROUND THE ASSESSEE KNOWINGLY AVOIDED TO RECEIVE NOTICES. 2.1. AGGRIEVED WITH THE ASSESSMENT ORDER AS WELL AS THE PENALTY ORDER, THE ASSESSE E APPEALED BEFORE THE COMMISSIONER OF INCOME - TAX (APPEALS), WHO WITHOUT DISPOSING THE QUANTUM APPEAL FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, FIRST DISPOSED THE PENALTY APPEAL ALTHOUGH THE SAME ISSUE REGARDING DISPUTE OF NOT SERVICE OF NOTICE WAS ALSO ONE OF THE GROUND IN THE QUANTUM APPEAL WHICH WAS SEN T TO THE ASSESSING OFFICER IN REMAND PROCEEDING BEING THE ASSESSMENT PROCEEDING COMPLETED U/S.144 . THE LEARNED CIT(A) CONFIRMED THE LEVY OF IMPUGNED PENALTY U/S. SECTION 271(1)(B). THE LEARNED AR OF THE ASSESSEE ARGUED THAT THE LEARNED CIT(A) HURRIEDLY DISPOSED OFF THE PENALTY ORDER WHICH IS ARBITRARY IN NATURE AND THERE IS NO EVIDENCE AT ALL SO FAR MENS REA OF THE APPELLANT NOT TO RECEIVE THE NOTICES ARE I.T.A.NO. 194/CTK/2012 4 CONCERNED. HE FURTHER SUBMITTED THAT T HE EXPLANATI ON GIVEN BY THE ASSESSEE AT THE TIME OF HEARING OF APPEAL CLEARLY DISCLOSES THE ASSESSEE HAVING NO INTENTION AT ALL NOT TO RECEIVE THE NOTICES BUT OWING TO HIS ILLNESS AS WELL AS OLD AGE HE HAS USUALLY STAYED WITH HIS DAUGHTER AND SON IN OUTSIDE STATE OF O RISSA FOR WHICH HE COULD NOT ABLE TO RECEIVE THE NOTICES . HE RELIED ON THE DECISION OF ITAT, CHANDIGARH BENCH IN THE CA S E OF MAC SUN LIGHTING INDUSTRIES V. ITO IN ITA NO.117,112 TO 11 6 & 148/CHD/2011 DT.8.4.2011 (COPY FURNISHED). IN VIEW OF THE ABOVE, HE P RAYED TO CANCEL THE PENALTY SO LEVIED U/S.271(1)(B). 3. THE LEARNED DR OPPOSED THE CONTENTION OF THE LEARNED AR OF THE ASSESSEE WHO HAS RELIED ON THE DECISION OF THE ITAT, CHANDIGARH BENCH IN THE CASE OF MAC SUN LIGHTING INDUSTRIES (SUPRA) , WHO ON THE ISS UE OF LEVY OF PENALTY U/S.271(1)(B) HAVE HELD THAT ASSESSMENT ORDER HAVING BEEN PASSED EXPARTE WHEN SERVICE OF NOTICE FOR LEVY OF PENALTY U/S.271(1(B) COULD NOT BE HELD AS A COROLLARY FOR CONFIRMING THE SAME BY THE CIT(A). THERE IS NO PROVISION IN THE INCO ME - TAX ACT WHICH DEBARS FOR LEVY OF PENALTY FOR NON - RESPON S E TO THE NOTICE IRRESPECTIVE OF THE FACT THAT THE ASSESSMENT HAVING BEEN MADE U/S.144. THEREFORE, THE LEARNED CIT(A) RIGHTLY CONFIRMED THE PENALTY BY HOLDING THAT IRRESPECTIVE OF THE VARIOUS METHOD S ADOPTED BY THE DEPARTMENT TO SERVE THE NOTICES, THE NOTICES WERE NOT COMPLIED WITH BY THE ASSESSEE. HE PRAYED THAT THE PENALTY SO LEVIED BE CONFIRMED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ASSESSMENT U/S.144 ITSELF INDICATES THAT THE ASSESSING OFFICER W AS TO RESORT TO BEST JUDGMENT UNDER THE PROVISIONS OF SECTION 144 WHEN THE ALLEGED NON - COMPLIANCE RESULTING IN INVOKING THE PROVISIONS FOR LEVY OF PENALTY U/S.271(1)(B). IN OTHER WORDS, THE NOTICE INITIATING TH E PENALTY PROCEEDINGS WERE BEFORE THE FINALIZATION OF THE ASSESSMENT ORDER U/S.144. THIS CLEARLY INDICATES THAT THE I.T.A.NO. 194/CTK/2012 5 ASSESSING OFFICER MADE A BEST JUDGMENT WHICH WAS APPEALED AGAINST BEFORE THE FIRST APPELLATE AUTHORITY. THE LEARNED CIT(A) THEREFORE ERRED I N CONSIDERING THE CASE OF THE ASSESSEE APPELLANT BEFORE HIM ON THE QUANTUM APPEAL FILED WHEN HE CHOSE TO CONFIRM THE PENALTY SO LEVIED WHICH BECOMES THE CRUX OF THE ISSUE AS REASON FOR NOT COOPERATING OR COMPLYING TO THE NOTICES BEFORE THE ASSESSING OFFICE R. IN OTHER WORDS, LEVY OF PENALTY U/S.271(1)(B) IS NOT AN AUTOMATIC PROCEDURE LEADING TO ASSESSMENT U/S.144. FOR THIS VERY REASON, WE RESTORE THE ISSUE TO THE FILE OF THE LEARNED CIT(A) INSOFAR AS AFTER APPRECIATING THE REASONS ON THE QUANTUM APPEAL BY TH E ASSESSEE APPELLANT BEFORE IT WITHOUT REACHING TO THE CONCLUSION ESTABLISHED BONAFIDE THAT THE ASSESSEE BEING A SENIOR RETIRED GOVERNMENT OFFICER WAS PREVENTED WITH SUFFICIENT CAUSE NOT TO BE SUBJECTED TO LEVY OF PENALTY U/S.271(1)(B) INSOFAR AS THE ASSESSEE WAS HAVING SUFFIC IENT CAUSE NOT TO RESPOND AS VARIOUS NOTICES WERE ADMITTEDLY SERVED BY WAY OF AFFIXTURE INDICATING NOTICE U/S.147/148 AS WELL. THE NUMEROUS NOTICES THEREFORE, CONFUSED THE ASSESSEE WHICH LEAD TO TOTAL ABSENCE MAY BE CONSIDERED IN THE LIGHT OF THE FACTS BRO UGHT ON RECORD AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER. ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 28.09.2012 ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 194/CTK/2012 6 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : BAISHNAB CHARAN SENAPATI, PLOT NO.64, SAHID NAGAR,BHUBANESWAR 2 / THE RESPONDENT: INCOME - TAX OFFICER, WARD 193), BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX X VII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 27.09.2012 .. 2. DATE ON WHICH THE TYPED D RAFT IS PLACED BEFORE THE DICTATING MEMBER 27.09.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHIC H THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..