T Ramkrishna Rao, Koraput V. ITO, Jeypore

ITA 200/CTK/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52424 (ITAT-CUTTACK)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 19-10-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 18-04-2011
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: D K SETH
• Keywords: Principle of natural justice; Ignorance of law
• Section: 147; 144; 142(1)

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 200,201,202,224,225 AND 226/CTK/2011 (ASSESSMENT YEAR S 2004 - 05, 2005 - 06 AND 2006 - 07) T.RAMKRISHNA RAO, PROP. K.K.WINES, MA IN ROAD,KORAPUT 764 020 PAN: AABNHT 7579 Q VERSUS INCOME - TAX OFFICER , WEARD 2, JEYPORE. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI D.K.SETH, AR FOR THE RESPONDENT SHRI S.C.MOHANTY, DR DATE OF HEARING : 19.10.2011 DATE OF PRONO UNCEMENT : 09.11.2011 ORDER PER BENCH : ITAS NO.200, 201 AND 202/CTK/2011 ARE FILED BY THE ASSESSEE FOR THE AYS 2004 - 05, 2005 - 06 AND 2006 - 07 HAVING BEEN AGGRIEVED BY THE ASSESSMENTS MADE BY THE DEPARTMENTAL AUTHORITIES, WHEREAS ITAS NO.224, 225 AND 226/CTK/2011 ARE FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE PENALTY LEVIED BY THE DEPARTMENTAL AUTHORITIES UNDER DIFFERENT PROVISIONS OF THE INCOME - TAX ACT,1961 FOR THE ABOVE AYS. 2. BOTH THE PARTIES WERE HEARD REGARDING ALL THE APPEALS FILED BY THE ASSESSEE A ND THEIR LEGAL IMPLICATIONS. 3. IN ITAS NO.200,201 AND 202/CTK/2011 APART FROM RAISING OTHER GROUNDS ON MERIT, A COMMON GROUND IN ALL THE APPEALS HAS BEEN RAISED BY THE ASSESSEE REGARDING THE ASSESSMENTS COMPLETED U/S.144 OF THE INCOME - TAX ACT,1961 BY TH E DEPARTMENTAL AUTHORITIES AND IN ITAS NO.224,225 AND 226/CTK/2011 THE ASSESSEE HAS DISPUTED THE LEVY OF PENALTY UNDER VARIOUS PROVISIONS OF THE INCOME - TAX ACT,1961 FOR THE AYS UNDER APPEAL. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF RIVAL SUBMISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ASSESSMENT FOR THE ASSESSMENT YEAR 2006 - 07 ARE THAT THE ASSESSEE IS RUNNING A WINE SHOP IN THE NAME AND STYLE ITA NO.200,201,202,224,225 AND 226/CTK/2011 2 OF M/S.R.K.WINES AT K ORAPUT AND NANDPUR IN THE STATUS OF HUF AND FILED RE TURN FOR THE A Y 2006 - 07 ON 30.10.2006 ALONG WITH AUDIT REPORT IN FORMS NO.3CB AND 3CD DISCLOSING TOTAL INCOME OF 3,14,280. THE SAID RETURN WAS ORIGINALLY PROCESSED U/S.1 4 3(1) BY ISSUING INTIMATION ON 19.12.2006 ACCEPTING THE RETURN FILED BY THE ASSESSEE RESULTING IN REFUND OF 94,360 AS EXCESS TAX PAID. ON VERIFICATION OF THE RETURN AND ITS ANNEXURES, IT WAS NOTICED BY THE DEPARTMENT THAT THE ASSESSEE HAS DISCLOSED TOTAL PURCHASE OF 1,06,10,108 IN THE TRADING ACCOUNT WHEREAS ON VERIFICATION OF TCS CERTIFICATES IN FORM NO.27D ANNEXED TO THE RETURN, THE TOTAL PURCHASES COMES TO 1,10,34,908. HENCE, THE DIFFERENCE OF 4,24,800 IN THE PURCHASES WAS TAKEN AS SUPPRESSED TURNOVER AND SCRUTINY ASSESSMENT WAS STARTED BY INVOKING S E CTI O N 147 OF THE INCOME - TAX ACT,1961 FOR ALL THE AYS UNDER CONSIDERATION. THE ASSESSEE THOUGH RECEIVED THE NOTICES ISSUED BY THE DEPARTMENT U/S.14 7, HAS NOT GIVEN ANY REPLY TO THE DEPARTMENT. HE HAS ALSO NOT COMPLIED WITH THE NOTICES ISSUED U/S.143(3)AND 142(1) OF THE INCOME - TAX ACT,1961 AND THE ASSESSEE HAS NOT RESPONDED TO SEVERAL NOTICES FOR HEARING ISSUED BY THE DEPARTMENT AND PRODUCTION OF RECO RDS ETC. HENCE THE ASSESSING OFFICER HAS ULTIMATELY INVOKED SECTION 144 OF THE INCOME - TAX ACT,1961 AGAINST THE ASSESSEE AND PASSED THE ASSESSMENT ORDERS FOR ALL THE AYS UNDER CONSIDERATION. BESIDES THAT THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDIN GS UNDER DIFFERENT PROVISIONS FOR ALL THE THREE AYS AGAINST THE ASSESSEE. AGGRIEVED BY THE ASSESSMENT ORDERS AS WELL AS THE PENALTY ORDERS, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND IS UNSUCCESSFUL AND HENCE, THE PRESENT APPEALS ARE FILED BY THE AS SESSEE BEFORE THE TRIBUNAL. 5. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE HAS VEHEMENTLY ARGUED AGAINST THE ACT OF INVOKING SECTION 144 OF THE ACT AGAINST THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE BEING UNAWARE OF THE ITA NO.200,201,202,224,225 AND 226/CTK/2011 3 CONSEQUENCE OF TH E NOTICES ISSUED BY THE DEPARTMENT AND VARIOUS STEPS TAKEN BY IT FOR NOT PARTICIPATING IN THE ASSESSMENT AND THE NON - PARTICIPATION IN THE SAID PROCEEDINGS WAS NOT INTENTIONAL OR DELIBERATE. THEREFORE, THE ASSESSING OFFICER HAS INVOKED THE PROVISIONS OF SE CTION 144 OF THE ACT AND MADE THE ASSESSMENT ORDERS AS WELL AS PENALTY ORDERS IN QUESTION. HE SUBMITTED THAT THIS IS A FIT CASE WHERE THE ADDITION MADE BY THE DEPARTMENTAL AUTHORITIES ARE UNSUSTAINABLE BUT FOR THE WANT OF EVIDENCE. THE ASSESSEE COULD NOT P ARTICIPATE IN THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER BECAUSE HE IS AN INNOCENT, ILLITERATE PERSON HAVING NOT KNOWN OF THE CONSEQUENCE OF NON - COMPLIANCE TO THE NOTICES RECEIVED FROM THE DEPARTMENT. THEREFORE, HE CLAIMED A LENIENT VIEW TO BE TAKEN AGAINST THE ASSESSEE AND REQUESTED FOR ONE MORE AND FINAL CHANCE TO THE ASSESSEE TO APPEAR BEFORE THE ASSESSING OFFICER WITH ALL THE RECORDS SUPPORTING HIS CONTENTIONS BEFORE THE ASSESSING OFFICER. AS CAN BE SEEN FROM THE ASSESSMENT ORDER, IT IS CLE AR THAT THE ADDITIONS/DISALLOWANCE ARE MADE BY THE ASSESSING OFFICER IN DIFFERENT YEARS ARE BASED ON THE ASPECT OF NON - FURNISHING OF REQUIRED EVIDENCES AND DOCUMENTS. THEREFORE, HE SOUGHT FOR SETTING ASIDE THE IMPUGNED ORDERS OF THE DEPARTMENTAL AUTHORITIE S AND RESTORING THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ASSESSMENT. 6. CONTRARY TO THIS, THE LEARNED DR HAS VEHEMENTLY ARGUED SUPPORTING THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES AND SOUGHT FOR UPHOLDING THE SAME CONTENDING INTER ALIA THAT IGNORANCE OF LAW IS NO EXCUSE AND THE ASSESSEE HAVING FAILED TO RESPOND TO ANY OF THE NOTICES ISSUED BY THE DEPARTMENT, THE ASSESSMENT ORDERS PASSED U/S.144 OF THE ACT CANNOT BE FAULTED WITH. THE ASSESSMENT ORDERS HAVE BEEN PASSED BY THE ASSESSIN G OFFICER FOR NON - PRODUCTION OF NECESSARY EVIDENCES AS REQUIRED BY THE ASSESSING OFFICER. THEREFORE, IF A CHANCE IS GIVEN TO THE ASSESSEE THERE IS ITA NO.200,201,202,224,225 AND 226/CTK/2011 4 EVERY POSSIBILITY OF CREATING EVIDENCES BY THE ASSESSEE. THEREFORE, HE SOUGHT FOR DISMISSAL OF THE APPEALS OF THE ASSESSEE BY UPHOLDING THE IMPUGNED ORDERS OF THE DEPARTMENTAL AUTHORITIES. HE FURTHER CONTENDED THAT THE PENALTY ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES ARE DUE TO GROSS NEGLIGENCE SHOWN BY T HE ASSESSEE IN NOT RESPONDING THE NOTICES GIVEN BY THE DEPARTMENT AND THEREFORE, IT DESERVED TO BE LEVIED WITH PENALTY AND THEREFORE, NO LENIENT VIEW CAN BE TAKEN AGAINST SUCH A LETHARG ETIC PERSON. 7. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL IN THE LIGHT OF RIVAL SUBMISSIONS OF BOTH THE PARTIES AS WELL AS THE IMPUGNED ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES IT IS FOUND THAT THE INFORMATION FURNISHED BY THE SUPERINTENDENT OF POLICE, EXCISE DEPARTMENT ON THE ADVANCE LICENSE FEES PAID BY THE ASSESSEE DURING THE YEARS UNDER CON SIDERATION AND THE BALANCE SHEET OF THE PROPRIETARY CONCERN OF THE ASSESSEE ARE THE MATERIAL BASIS FOR INVOKING SCRUTINY PROCEEDINGS AGAINST THE ASSESSEE. HOWEVER, UNDISPUTEDLY THE STATE OF ORISSA IS A BACKWARD STATE AS RECOGNIZED BY THE UNION OF INDIA CON SISTING MOSTLY BY ILLITERATE PEOPLE THOUGH CARRYING DIFFERENT KINDS OF TRADE ARE UNAWARE OF THE IMPLICATIONS OF VARIOUS LAWS PREVAILING AND APPLICABLE TO THEM. THE ASSESSEE IS UNABLE TO RESPOND TO THE NOTICES GIVEN BY THE DEPARTMENT AND IT LED TO INVOCATIO N OF SECTION 144 OF THE INCOME - TAX ACT ,1961 AGAINST THE ASSESSEE FOR COMPLETING THE ASSESSMENTS IN QUESTION APART FROM LEVY OF PENALTY UNDER DIFFERENT PROVISIONS OF THE INCOME - TAX ACT,1961. THEREFORE, TAKING INTO CONSIDERATION THE ILLITERACY PREVAILING IN THE STATE AND THE BACKWARDNESS OF THE STATE, WE ARE OF THE CONSIDERED VIEW THAT ALL THE ASSESSMENT HAVING BEEN DONE BY INVOKING SECTION 144 OF THE INCOME - TAX ACT,1961 , THIS IS A FIT CASE TO BE RESTORED TO THE ASSESSING OFFICER FOR DE NOVO ASSESSMENT STRI CTLY FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE FOR ALL THE THREE AYS UNDER CONSIDERATION. THEREFORE , ITA NO.200,201,202,224,225 AND 226/CTK/2011 5 ASSESSMENT ORDERS FOR ALL THE THREE YEARS UNDER CONSIDERATION ARE HEREBY SET ASIDE BY RESTORING THE SAME TO THE ASSESSING OFFICER FOR DE NOVO CONSIDERATI ON AND PASSING NECESSARY CONSEQUENTIAL ORDERS OFCOURSE STRICTLY FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. WITH THIS DIRECTION THE IMPUGNED ASSESSMENTS FOR ALL THE THREE YEARS ARE HERE BY RESTORED TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSEE IS ALS O DIRECTED TO COOPERATE WITH THE ASSESSING OFFICER FOR EARLY DISPOSAL OF DE NOVO ASSESSMENTS BY FURNISHING THE REQUIRED DOCUMENTS AND INFORMATIONS, AS REQUIRED BY THE ASSESSING OFFICER. 8. SO FAR AS THE PENALTY APPEALS ARE CONCERNED, THEY ARE IN CONSEQUEN CE OF THE ASSESSMENT ORDERS PASSED U/S.144 ON THE GROUND OF NON - FURNISHING OF INFORMATION REQUIRED UNDER VARIOUS NOTICES ISSUED BY THE ASSESSING OFFICER AND NON - APPEARANCE IN RESPONSE TO THE NOTICES ISSUED BY THE ASSESSING OFFICER. THE LEARNED AR OF THE AS SESSEE HAS VEHEMENTLY ARGUED CONTENDING INTERALIA THAT THE ASSESSEE THOUGH CARRYING ON BUSINESS IN WINE UNDER LICENSE ISSUED BY THE STATE GOVERNMENT IS UNAWARE OF THE IMPLICATIONS OF NOT COMPLYING TO THE NOTICES ISSUED BY THE DEPARTMENT. PEOPLE IN ORISSA I N MAJORITY ARE ILLITERATE AND STATE OF ORISSA IS BACKWARD STATE AS RECOGNIZED BY THE UNION GOVERNMENT OF INDIA. PENALTY PROCEEDING S BEING HARSH IN NATURE THEY ARE TO BE APPLIED ONLY ON HARDCORE CASE S BUT NOT IN STRAY MAT T ER S SUCH AS IN THE CASE OF THE ASSE SSEE. THEREFORE, HE SOUGHT FOR CANCELLATION OF THE PENALTIES IMPOSED AGAINST THE ASSESSEE IN CONSEQUEN CE OF THE ORDERS PASSED BY THE ASSESSING OFFICER U/S.144 OF THE INCOME - TAX ACT,1961. 9 . CONTRARY TO THIS, THE LEARNED DR VEHEMENTLY OPPOSED THE CONTENT ION OF THE LEARNED AR OF THE ASSESSEE CONTENDING INTER ALIA THAT THE PENALTIES LEVIED AGAINST THE ASSESSEE ARE FOR THE REASONS INCLUDING THE NON - COMPLIANCE OF NOTICES, NON - APPEARANCE BEFORE THE ASSESSING OFFICER AND NON - F URNISHING OF INFORMATION REQUIRED B Y THE ASSESSING OFFICER. IF THE VIOLATIONS OF ASSESSEE ARE ITA NO.200,201,202,224,225 AND 226/CTK/2011 6 LENIENT LY VIEW ED UNDER THESE ASPECTS, IT IS VERY DIFFICULT FOR THE DEPARTMENT TO IMPLEMENT THE ACT. HENCE, HE SOUGHT FOR UPHOLDING THE PENALTY ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES BY DISMI SSING THE APPEALS OF THE ASSESSEE. 9. ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND ANALYZING THE PENALTY ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES AGAINST THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT SINCE WE HAVE SET A SIDE THE ASSESSMENTS MADE U/S.144 TO THE ASSESSING OFFICER ACCEPTING THE ASSESSEES IGNORANCE OF CONSEQUENCE FOR NOT RESPONDING TO THE NOTICES ISSUED BY THE DEPARTMENT, WE HEREBY SET ASIDE THE IMPUGNED PENALT IES LEVIED BY THE DEPARTMENT BY ALLOWING THE APP EALS OF THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER IS AT LIBERTY TO IMPOSE PENALTY IF HE FOUND ANY CONTRAVENTION COMMITTED BY THE ASSESSEE IN THE SECOND INNING DURING THE DE NOVO PROCEEDINGS STRICTLY FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. 10. IN TH E RESULT, ITAS NO.200, 201 AND 202/CTK/2011 ARE ALLOWED FOR STATISTICAL PURPOSE, WHEREAS ITAS NO. 224,225 AND 226/CTK/2011 ARE ALLOWED. S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 9 TH NOVEMBER, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: T.RAMKRISHNA RAO, PROP. K.K.WINES, MAIN ROAD,KORAPUT 764 020 2. THE RESPONDENT: INCOME - TAX OFFICER , WEARD 2, JEYPOR E. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.