Manjudevi Sethia, Ahmedabad V. The Income tax Officer,Ward-11(4), Ahmedabad

ITA 2342/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85787 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 12-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 15-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Reasonable cause; Non compliance
• Section: 273B; 143(3); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER ITA NO S.2342 / AHD/201 1 A. Y S . 200 8 - 0 9 MANJUDEVI SETHIA, 6, NEW CLOTH MARKET, OUTSIDE RAIPUR GATE, AHMED ABAD. PAN: AJZPS 5600A VS ITO WARD - 11(4) AHMEDABAD. (APPELLANT) (RESPONDENT) ITA NOS.2343/AHD/2011 A.Y S.2008 - 09 SHRI SANJAY KUMAR SETHIA, 6, NEW CLOTH MARKET, OUTSIDE RAIPUR GATE, AHMEDABAD. PAN: ACWPS 4755J VS ITO WARD - 11(4) AHMEDABAD. (APPE LLANT) (RESPONDENT) ITA NOS.2344/AHD/2011 A.Y S.2008 - 09 SHRI MAHENDRA KUMAR KANODIA, 2, D.C. CLOTH MARKET SARANGPUR, AHMEDABAD. PAN: AABHM 3612H VS ITO WARD - 11(4) AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI M.K. SINGH , SR.D.R. . ASSESSEE(S) BY : NONE / DATE OF HEARING : 12 / 0 3 /201 5 / DATE OF PRONOUNCEMENT: 20 / 0 3 /201 5 I TA NO S . 2342, 2343, 2344 /AHD /201 1 MANJUDEVI SETHIA, SHRI SANJAY KUMAR SETHIA & SHRI MAHENDRA KUMAR KANODIA FOR A.Y S . 200 8 - 0 9 - 2 - / O R D E R PER: MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER ALL THESE THREE APPEALS OF THREE DIFFERENT APPELLANTS HAVE BEEN FILE D AGAINST THE SEPARATE ORDERS OF LEARNED CIT(A) - XVI, AHMEDABAD IDENTICALLY DATED 12 TH AUGUST, 2011. THE APPELLANT HAS CHALLENGED THE CONFIRMATION OF PENALTY LEVIED U/S.271(1)(B) OF IT ACT OF RS.20,000/ - IN EACH CASE. ALL THE APPELLANTS HAVE RAISED IDENTICA LLY WORDED GROUNDS AS REPRODUCED BELOW: 1. THE ORDER WAS PASSED BY THE ID. AO U/S 143(3) AND AS WAS HELD BY ITAT DELHI BRANCH IN THE CASE OF AKHIL BHARTIYA PRATHMIK SIKSHA BHAWAN TRUST VS. ASST, DIRECTOR OF INCOME TAX (115 TTJ (DELHI) 491) AND ALSO RELIED BY ITAT AHMEDABAD BRANCH IN THE CASE OF SWARNABEN M KHANNA AND OTHER CASES, IF THE ASSESSMENT ORDER IS PASSED U/S 143(3) AND NOT U/S 144 THEN NON COMPLIANCE IS DEEMED TO HAVE BEEN WAIVED. 2. THE ORDER WAS PASSED U/S. 143(3) ON THE BASIS OF REQUIRED DETAI LS SUBMITTED DURING ASSESSMENT PROCEEDING FROM TIME TO TIME. THIS SHOWS THAT THERE WAS NO INTENTION OF NON COMPLIANCE AND HAS HELD BY THE AHMEDABAD BRANCH OF ITAT IN THE CASE OF SWARNABEN M. KHANNA, IT SHOULD NOT BE INFERRED THAT THERE WAS A DEFAULT WHICH COULD INVITE PENALTY U/S.271(1)(B). 3. THE AO HAS NOT EXERCISED HIS DISCRETION JUDICIALLY. AS HELD IN THE CASE OF M P LAXMAN VS. AGRL ITO (1986) 157 ITR 1, 9 (KARN). THE DISCRETION OF PENALTY IS TO BE EXERCISED JUDICIALLY AND NOT MECHANICALLY AND WITH A DUE REGARDS TO ALL THE FACTS. IT IS NOT MANDATORY THAT PENALTY MUST BE IMPOSED IN EVERY CASE. THE WORD USED IN THE SECTION IS, 'MAY DIRECT' AND THE AO SHOULD ACT JUDICIALLY (CIT VS. BANGOL IRON GALVANIZING WORKS, (1987) 165. 2. AN ASSESSMENT WAS MADE U/S.143(3) RESPECTIVELY ON 15.12.2010, 19.11.2010 AND 26.11.2010. IT WAS NOTED BY THE AO THAT NOTICES U/S.142(1) WERE ISSUED ON TWO DATES BUT REMAINED UNATTENDED. THE DATES OF NON COMPLIANCE ON THOSE TWO OCCASIONS WERE DULY MENTIONED IN THE IMPUGNED ASSESS MENT ORDERS. THEREAFTER, WHILE LEVYING THE PENALTY U/S.271(1)(B) VIDE THREE SEPARATE ORDERS OF DATED 12.10.2010, THE AO HAS HELD THAT THERE WAS NO REASONABLE CAUSE EXPLAINED FOR NOT ATTENDING THE I TA NO S . 2342, 2343, 2344 /AHD /201 1 MANJUDEVI SETHIA, SHRI SANJAY KUMAR SETHIA & SHRI MAHENDRA KUMAR KANODIA FOR A.Y S . 200 8 - 0 9 - 3 - PROCEEDINGS ON THOSE TWO DATES; THEREFORE, FOR EACH DEFAULT A PENALTY OF RS.10,000/ - WAS IMPOSED ON ALL THE THREE APPELLANTS. 3. ON THE DATE OF HEARING, NO ONE HAS APPEARED FROM THE SIDE OF THE APPELLANTS. HOWEVER, CONSIDERING THE SMALLNESS OF THE ISSUE, WE HAVE DECIDED TO PROCEED EX - PARTE QUA THE ASSESSEE. FROM T HE SIDE OF THE REVENUE - DEPARTMENT, LEARNED SR.D.R., MR. NIMESH YADAV APPEARED AND SUPPORTED THE ACTION OF THE AO. HE HAS ALSO ARGUED THAT SUCH TYPE OF PENALTY IS INTRODUCED IN THE ACT FOR THE PURPOSE TO ENSURE THE ATTENDANCE OF THE TAX PAYERS BEFORE THE TA X AUTHORITIES. 13. HAVING HEARD THE SUBMISSIONS AND AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT IN A SITUATION WHEN FINALLY AN ASSESSMENT ORDER WAS MADE U/S.143(3) OF IT ACT. THE ASSESSEE SHOULD NOT B E HELD TOTALLY AN IRRESPONSIBLE TAX PAYER. FROM THE BODY OF THE ASSESSMENT ORDER, WE HAVE NOTED THAT LEARNED A.R. OF THE ASSESSEE HAD APPEARED AND ALSO AGREED FOR SOME OF THE PROPOSED ADDITION. BECAUSE OF THE REASON THAT THE IMPUGNED ASSESSMENT ORDERS WERE PASSED U/S.143(3) AND NOT AN EX - PARTE ORDER U/S.144 OF IT ACT, THE ITAT DELHI BENCH IN THE CASE OF AKHIL BHARTIYA PRATHMIK SHIKSHA BHAWAN TRUST, 115 TTJ 491 (DEL.) HAS GRANTED RELIEF TO THE ASSESSEE. BUT SIDE BY SIDE, WE ARE ALSO OF THE OPINION THAT A M E S SAGE SHOULD BE CONVEYED TO THE TAX PAYERS THAT THE NOTICE OF THE REVENUE DEPARTMENT SHOULD BE ATTENDED PROMPTLY. ON THIS ASPECT, WE HAVE TAKEN A VIEW RECENTLY IN THE CASE OF KANUBHAI PATEL VS. ACIT, CENTRAL CIRCLE - 3, SURAT BEARING ITA NO S.2951, 2952, 2953, 2954, 2955 & 2956/AHD/2011 ORDER DATED 20 .03.2015 WHEREIN HELD AS UNDER: I TA NO S . 2342, 2343, 2344 /AHD /201 1 MANJUDEVI SETHIA, SHRI SANJAY KUMAR SETHIA & SHRI MAHENDRA KUMAR KANODIA FOR A.Y S . 200 8 - 0 9 - 4 - 4. WE HAVE ALSO PERUSED THE ORDER OF LEARNED CIT(A) IN WHICH THE ASSESSEE HAS PLACED ON RECORD THE SUMMARY OF EVENTS. IN THE SAID SUMMARY, THE ASSESSEE HAS TRIED TO EXPLAIN THE DATE - WISE COMPLIANCE MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS THUS PLEADED THAT THE ASSESSEE HAS REQUESTED TO GRANT AN ADJOURNMENT UPTIL THE FINALIZATION OF TIME BARRING ASSESSMENTS. SO THE ARGUMENT WAS THAT THE CHARTERED ACCOUNTANT, LEGAL REPRESENTATIVE OF THE ASSESSEE, WAS PREOCCUPIED WITH THE TIME BARRING ASSESSMENT UPTO DECEMBER, 2009; THEREFORE, TIME WAS SOUGHT; HENCE, IT WAS WRONG ON THE PART OF THE REVENUE DEPARTMENT TO ALLEGE THAT THERE WAS NO REASONA BLE CAUSE FOR SEEKING ADJOURNMENT. RATHER, FROM THE SIDE OF THE REVENUE - DEPARTMENT, LEARNED SR.D.R. HAS PLEADED THAT THE ASSESSEE WAS A HABITUAL DEFAULTER THEN THE AO HAD NO OPTION BUT TO LEVY PENALTY. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCE S AS DISCUSSED HEREINABOVE, WE ARE OF THE CONSCIENTIOUS VIEW THAT A TAX PAYER SHOULD PAY RESPECT TO THE SHOW CAUSE NOTICE ISSUED BY THE REVENUE DEPARTMENT BY PROMPTLY COMPLYING THE SAME. IF THERE IS A NEGLIGENCE OR NON COMPLIANCE THEN THE PROVISION OF PENA L ACTION HAS ALSO BEEN SUBSCRIBED IN THE ACT. SUCH TYPE OF PENALTY IS IN THE NATURE OF DETERRENCE TO CONVEY MESSAGE THAT THE NOTICES OF THE REVENUE DEPARTMENT SHOULD BE SERIOUSLY COMPLIED WITH. BUT SIDE BY SIDE THERE IS A PROVISION OF SECTION 273B OF IT AC T WHICH SAYS THAT NO SUCH PENALTY IS IMPOSABLE ON THE ASSESSEE ON FAILURE REFERRED TO IN THE SAID PROVISIONS IF PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE. IN THE PRESENT CASE, ALTHOUGH THE ASSESSEE HAS TRIED TO DEMONSTRATE THAT THERE WA S A REASONABLE CAUSE BUT WE ARE OF THE VIEW THAT THE LEGAL REPRESENTATIVE OF THE ASSESSEE SHOULD HAVE MANAGED HIS AFFAIRS IN SUCH MANNER THAT ALL THE LEGAL MATTERS HANDLED BY HIM SHOULD BE ATTENDED EFFICIENTLY. THEREFORE, WE HEREBY HOLD THAT INSTEAD OF DEL ETING THE ENTIRE PENALTY BY TAKING THE SHELTER OF THE PROVISIONS OF SECTION 273B OF IT ACT IT IS JUSTIFIABLE TO REDUCE THE FINE IMPOSED OF RS.10,000/ - TO RS.5,000/ - EACH YEAR. RESULTANTLY, PART RELIEF IS GRANTED FOR ALL THE YEARS INVOLVED. WE ORDER ACCORDI NGLY. 13.1 RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, WE HAVE THEREFORE HOLD THAT IT SHALL BE JUSTIFIABLE TO REDUCE THE PENALTY TO RS.5,000/ - IN EACH CASE. GROUNDS RAISED ARE PARTLY ALLOWED. 14. IN THE RESULT, ALL THE APPEALS OF THE ASS ESSEE ARE PARTLY ALLOWED. SD/ - SD/ - ( ANIL CHATURVEDI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 20 / 0 3 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . S I TA NO S . 2342, 2343, 2344 /AHD /201 1 MANJUDEVI SETHIA, SHRI SANJAY KUMAR SETHIA & SHRI MAHENDRA KUMAR KANODIA FOR A.Y S . 200 8 - 0 9 - 5 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD