M/s. Nikita Multitrade Pvt. Ltd., Mumbai V. THE DCIT-CENTRAL (I), Bhopal

ITA 216/IND/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2254 (ITAT-INDORE)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 10-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Keywords: Reasonable cause; Non compliance
• Section: 143(3); 142(1)

Judgement Text

BRIJESH SHARMA & OTHERS ITA NO.175/IND/2017 PAGE 1 OF 9 , , IN THE INCOME TAX APPELLATE TRIB UNAL INDORE BENCH, INDORE BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER .../ I.T.A. NOS. 175 TO 181/IND/2017 / ASSESSMENT YEARS: 2007-08 TO 2013-14 SHRI BRAJENDRA SHARMA JABUA PAN ASQPS1215H :: / APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CENTRAL(I), BHOPAL :: ! / RESPONDENT .../ I.T.A. NOS. 182 TO 188/IND/2017 / ASSESSMENT YEARS: 2007-08 TO 2013-14 SHRI RAJENDRA SINGH NAYAK MEGHNAGAR PAN ADDPN9696F :: / APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CENTRAL(I), BHOPAL :: ! / RESPONDENT .../ I.T.A. NOS. 189 TO 195/IND/2017 / ASSESSMENT YEARS: 2007-08 TO 2013-14 ORCHID BIOTECH PVT. LTD. ROORKI PAN AAOCO07302C :: / APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CENTRAL(I), BHOPAL :: ! / RESPONDENT BRIJESH SHARMA & OTHERS ITA NO.175/IND/2017 PAGE 2 OF 9 .../ I.T.A. NOS. 196 TO 202/IND/2017 / ASSESSMENT YEARS: 2007-08 TO 2013-14 M/S S.R. FORMULATION INDIA PVT. LTD. BHOPAL PAN AAPCS0102H :: / APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CENTRAL(I), BHOPAL :: ! / RESPONDENT .../ I.T.A. NOS. 212 TO 218/IND/2017 / ASSESSMENT YEARS: 2007-08 TO 2013-14 NIKITA MULTITRADE PVT. LTD. MUMBAI PAN AACCN-7334F :: / APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CENTRAL(I), BHOPAL :: ! / RESPONDENT '# $ % & / ASSESSEE BY SHRI PANKAJ SHAH '( $ % & / REVENUE BY SHRI MOHD. JAVED ) * $ #+ DATE OF HEARING 1.5 .2017 ,-./ $ #+ DATE OF PRONOUNCEMENT 0 4 . 5 .2017 / O R D E R PER BENCH THESE APPEALS ARE FILED BY THE ABOVE-CAPTIONED ASSE SSEES AGAINST DIFFERENT ORDERS OF LD. COMMISSIONER OF INC OME TAX (APPEALS)-2, BHOPAL, [HEREINAFTER REFERRED TO AS TH E CIT (A)] ALL DATED BRIJESH SHARMA & OTHERS ITA NO.175/IND/2017 PAGE 3 OF 9 19.10.2016. THESE APPEALS PERTAIN TO ASSESSMENT YEA RS 2007-08 TO 2013-14 AS AGAINST APPEALS DECIDED IN RESPECT OF DI FFERENT PENALTY ORDERS PASSED U/S. 271(1)(B) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT) BY THE DCIT, CENTRAL-1, BHOPAL [HEREINAFTER REFERRED TO AS THE AO]. SINCE IN ALL T HESE APPEALS, COMMON GROUND OF APPEAL IS INVOLVED, WE PROCEED TO DECIDE THESE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ALL THESE APPEALS, THE SOLE ISSUE INVOLVED IS THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(B) OF THE I.T. ACT IN THE CASES OF ALL THESE ASSESSEES. 3. SINCE THE FACTS OF THE CASE INVOLVED IN ALL THE SE APPEALS ARE IDENTICAL EXCEPT DATES, AS A MODEL, WE WOULD LIKE T O STATE THE FACTS OBTAINING IN THE CASE OF SHRI BRAJENDRA SHARM A; ITA NOS. 175 TO 181/IND/2017. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE SEARCH IN THE CASE OF THE ASSESSEE AND GROUP HAD TAKEN PLACE ON 20.6.2012. AFTER THAT NOTICES WERE ISSUED BY THE AO U/S 142(1) OF THE ACT DATED 23.9.2014 FIXING THE DATE OF HEARI NG FOR 8.10.2014 TO SUBMIT THE REQUIRED INFORMATION/DOCUME NTS AS BRIJESH SHARMA & OTHERS ITA NO.175/IND/2017 PAGE 4 OF 9 PER THE QUESTIONNAIRE ALONGWITH THE BOOKS OF ACCOUN TS. IT WAS SPECIFICALLY MENTIONED IN THE NOTICE THAT FAILURE T O COMPLY WITH THE NOTICE WOULD LEAD TO IMPOSITION OF PENALTY U/S 271(1)(B) FOR RS. 10,000/-. HOWEVER, IT WAS SEEN THAT ON THE DATE FIXED FOR HEARING I.E. ON 20.10.2014 NO SUBMISSIONS WERE FILE D WITH REGARD TO THE NOTICE/QUESTIONNAIRE U/S 142(1) OF TH E ACT. THEREFORE, SHOW CAUSE NOTICE FOR PENALTY WAS ISSUED BY THE AO TO THE ASSESSEE ON 09.12.2014 AS TO WHY PENALTY SHO ULD NOT BE LEVIED U/S 271(1)(B) OF THE ACT FOR NON COMPLIANCE TO NOTICE U/S 142(1) DATED 23.09.2014. THE DATE OF HEARING WAS FI XED FOR 15.12.2015. HOWEVER, ON 15.12.014 THE ASSESSEE REQU ESTED FOR ADJOURNMENT OF 8 DAYS AND SUBMITTED THAT THE REPLY WILL BE FILED ON 20.12.2014 BUT NO REPLY WAS FILED TILL 20.1.2015 . NO REASON/EXPLANATION WAS GIVEN BY THE ASSESSEE FOR NO N- COMPLIANCE ON THE SAID DATE. THEREFORE, THE AO LEVI ED PENALTY U/S 271(1)(B) OF THE INCOME-TAX ACT, 1961, FOR RS. 10,000/- ON 20.4.2015 FOR NON COMPLIANCE TO NOTICES U/S 142(1) DATED 3.9.2014 FOR EACH ASSESSMENT YEAR FROM 2007-08 TO 2 013-14. BRIJESH SHARMA & OTHERS ITA NO.175/IND/2017 PAGE 5 OF 9 5. THE LD. CIT(A) DISMISSED THE APPEAL HOLDING THAT THE EXPLANATION OF THE ASSESSEE THAT DR. SUDHEER SHARMA , MANAGING PERSON, LOOKING AFTER WAS IN POLICE/JUDICI AL CUSTODY SINCE JULY, 2014 IS NOT ACCEPTABLE AS NO SUCH EXPLA NATION WAS FILED BEFORE THE ASSESSING OFFICER. HENCE, ABSENCE OF DR. SUDHEER SHARMA CANNOT BE HELD SUFFICIENT REASONABLE CAUSE. 6. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEES SUBMITTED THAT IN ALL THESE APPEALS, THE FACTS AND THE ISSUE INVOLVED ARE IDENTICAL AND, THEREFORE, HE WILL BE A RGUING THE FACTS IN THE CASE OF SHRI BRIJENDRA SHARMA. THE LEA RNED AR SUBMITTED THAT DR. SUDHEER SHARMA, WHO WAS A DIRECT OR IN THE THREE COMPANIES I.E. ORCHID BIOTECH, S.R. FORMULATI ONS AND NIKITA MULTITRADE WAS A KEY PERSON AND WAS AWARE OF ALL TRANSACTIONS ALSO IN RESPECT OF BRIJENDRA SHARMA AN D RAJENDRA SINGH WHO WERE PART OF THE GROUP. HE FURTHER SUBMIT TED THAT THE NON-APPEARANCE WAS DUE TO THE FACT THAT DR. SUD HEER SHARMA WAS IN POLICE CUSTOTY SINCE JULY, 2014 TO JU NE, 2016 AND THUS COULD NOT TAKE COGNIZANCE OF THE HEARINGS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTRED THAT SI NCE THE NON- BRIJESH SHARMA & OTHERS ITA NO.175/IND/2017 PAGE 6 OF 9 APPEARANCE WAS PREVENTED BY REASONABLE CAUSE BEING IN POLICE CUSTODY, NO PENALTY UNDER SECTION 271(1)(B) OF THE ACT WAS CALLED FOR AND THE AUTHORITIES BELOW WERE NOT JUSTI FIED IN LEVYING AND CONFIRMING THE SAME. THE LEARNED COUNSEL FOR TH E ASSESSEE SUBMITTED THAT IT IS HELD BY THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF AKHIL BHARTIYA PRATHMIK SHMSHAK SANGH B HAWAN TRUST VS. ASSISTANT DIRECTOR OF INCOME TAX; (2008) 115 TTJ 419(DEL) THAT WHERE THE ASSESSEE HAD NOT COMPLIED W ITH NOTICE U/S 142(1) BUT ASSESSMENT ORDER WAS PASSED U/S 143( 3) AND NOT U/S 144, THAT MEANT THAT SUBSEQUENT COMPLIANCE IN ASSESSMENT PROCEEDINGS WAS CONSIDERED AS GOOD COMPL IANCE AND DEFAULTS COMMITTED EARLIER WERE IGNORED BE ASSE SSING OFFICER AND THEREFORE, LEVY OF PENALTY U/S 271(1)(B ) WAS NOT JUSTIFIED. THE LEARNED COUNSEL FURTHER STATED THAT VERY RECENTLY, THIS BENCH OF TRIBUNAL IN THE CASES OF HE MANT KUMAR SONI AND OTHERS IN ITA NOS. 1361 TO 1367/IND/2016, ETC. VIDE ITS ORDER DATED 16.1.2017 HAS DELETED THE PENALTIE S ON THE ABSOLUTE IDENTICAL FACTS. BRIJESH SHARMA & OTHERS ITA NO.175/IND/2017 PAGE 7 OF 9 7 . ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND CITED SOME DECISIONS OF THE TRIBUNALS. 8. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT DR. SUDHEER SHARMA, WHO WAS A DIRECTOR IN THE THREE COM PANIES I.E. ORCHID BIOTECH, S.R. FORMULATIONS AND NIKITA M ULTITRADE, WAS THE KEY PERSON AND WAS AWARE OF ALL TRANSACTION S ALSO IN RESPECT OF BRIJENDRA SHARMA AND RAJENDRA SINGH WHO WERE PART OF THE GROUP. WE FURTHER FIND THAT THE NON-APPEARAN CE OF THE ASSESSEE WAS DUE TO THE FACT THAT DR. SUDHEER SHARM A WAS IN POLICE CUSTODY SINCE JULY, 2014 TO JUNE, 2016 AND T HUS COULD NOT TAKE COGNIZANCE OF THE HEARINGS. WE ARE OF THE VIEW THAT THE NON-APPEARANCE OF THE ASSESSEE WAS PREVENTED BY REA SONABLE CAUSE, AS THE KEY PERSON OF THE GROUP WAS IN POLICE CUSTODY DURING THE PERIOD UNDER CONSIDERATION AND AS SUCH N O PENALTY UNDER SECTION 271(1)(B) OF THE ACT WAS CALLED. HOWE VER, AN IDENTICAL ISSUE HAD COME UP BEFORE THIS BENCH OF THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 16.1 .2017 IN THE CASES OF SHRI HEMANT KUMAR SONI, ITA NOS. 13 61 TO BRIJESH SHARMA & OTHERS ITA NO.175/IND/2017 PAGE 8 OF 9 1367/IND/2016, AND OTHERS, HAS HELD AS UNDER :- 7. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THE ASSESSMENT ORDERS IN ALL THESE GROUP APPEALS THAT T HE ASSESSMENTS HAVE BEEN COMPLETED U/ S 143(3) OF THE IT. ACT. WE FIND THAT THE ASSESSING OFFICER HAS LEVIED PENALTY 271(1)(B) FOR NON-APPEARANCE ON 15.10.2015. AS PER LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, THE ASSE SSEES' COUNSEL APPEARED AND STATED CATEGORICALLY THAT HE APPEARED FOR SEEKING TIME. THE COUNSEL REGULARLY AT TENDED THE PROCEEDINGS AND THE ASSESSMENTS HAVE BEEN FRAME D U/ S 143(3) AND NOT U/S 144. WE FIND THAT THIS WAS THE FIRST NOTICE FOR COMPLIANCE AND SINCE THE VOLUMINOUS RECO RDS AND PAPERS WERE REQUIRED TO BE SCRUTINIZED AND INDIVIDU ALLY IN EACH CASE, THE APPROPRIATE REPLIES WERE TO BE FILED , THE ASSESSEE PRAYED FOR THE TIME TO SUBMIT THE REPLY AN D ULTIMATELY SUBMITTED ALL THE NECESSARY REPLIES AND COOPERATED WITH THE DEPARTMENT. WE ARE OF THE VIEW THAT ASSESSEES HAD REASONABLE CAUSE FOR NON-APPEARANCE O N THAT DAY. THEREFORE, THERE IS NO JUSTIFICATION FOR LEVYING THE PENALTY U/S271(1)(B) OF THE ACT. SECONDLY, IN THIS MATTER, THE ASSESSMENTS HAVE BEEN COMPLETED U/S 143(3) OF THE ACT, THEREFORE, NO PENALTY CAN BE LEVIED IF THE ASS ESSMENTS HAVE BEEN COMPLETED U/S 143(3) AND THERE IS SUBSEQU ENT COMPLIANCES IN THE ASSESSMENT PROCEEDINGS WAS CONSIDERED AS GOOD COMPLIANCES AND DEFAULT COMMITTE D EARLIER WERE IGNORED. THEREFORE, PENALTY U/S 271(1)(B) WAS DELETED BY VARIOUS TRIBUNALS. IN THE CASE OF AKHIL BHARTIYA PARTHMIK SHMSHAK SANGH BHAWAN TRUST VS. ADIT (2008) 115 TTJ 419 (DEL), IT WAS HELD THAT WHERE THE ASSES SEE HAD NOT COMPLIED WITH NOTICE U/S142(1) BUT ASSESSME NT ORDER WAS PASSED U/S143(3) AND NOT U/S 144, THAT ME ANT THAT SUBSEQUENT COMPLIANCE IN ASSESSMENT PROCEEDING S WAS CONSIDERED AS GOOD COMPLIANCE AND DEFAULTS COMMITTED EARLIER WERE IGNORED BY THE ASSESSING OFF ICER, THEREFORE, LEVY OF PENALTY U/S271(1)(B) OF THE ACT WAS NOT JUSTIFIED. THE CASE LAWS CITED BY LD. DEPARTMENTAL REPRESENTATIVE ARE DISTINGUISHABLE ON FACTS, HENCE, INAPPLICABLE TO THIS CASE. WE ALSO NOTED THAT IN TH E VINIT CHOUHAN GROUP CASES, AN ORDER IS PASSED IN A GROUP IN I.T.A.NOS. 1061 TO 1181/IND/2016 DATED 23.11.2016, IN WHICH SIMILAR SET OF FACTS THE PENALTY LEVIED U/S 2 71(1)(B) WAS SET ASIDE. THEREFORE, RESPECTFULLY FOLLOWING TH E SAID ORDER AND FACTS, WE SET ASIDE THE ORDERS OF THE REV ENUE BRIJESH SHARMA & OTHERS ITA NO.175/IND/2017 PAGE 9 OF 9 AUTHORITIES AND DELETE THE LEVY OF PENALTY U/S 271( 1)(B) OF THE ACT IN ALL THESE APPEALS. 9. WE, THEREFORE, FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(B) OF THE ACT IN ALL THESE CASES. 10. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE STAND ALLOWED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 04 TH MAY, 2017. SD/- SD/- ( & + ( (C.M. GARG) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER MAY 4, 2017 DN/