Shri Varghese Joseph Pottakerry, Ahmedabad V. The Income tax Officer,Ward-6(2), Ahmedabad

ITA 2422/AHD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2092 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-03-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 31-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: S N DIVATIA
• Keywords: Ignorance of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE SHRI G. C. GUPTA, VP AND SHRI A. MOHAN ALAN KAMONY, AM) ITA NO.2422/AHD/2012: A. Y.: 2005-06 SHRI VARGHESE JOSEPH POTTAKERRY, PROP. OF METAL INDIA TRADE LINK, A/42, LAVKUSH TOWER, NR. UDGAM SCHOOL, THALTEJ, DRIVE IN ROAD, AHMEDABAD 380 054 VS THE INCOME TAX OFFICER, WARD 6 (2) , AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. N. DIVATIA, AR RESPONDENT BY SHRI RAHUL KUMAR, SR. DR DATE OF HEARING: 05-03-2013 DATE OF PRONOUNCEMENT: 10-05-2013 O R D E R PER A. MOHAN ALANKAMONY: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED CIT( A)-XXI, AHMEDABAD DATED 07-09-2012, FOR THE ASSESSMENT YEAR 2005-06 I N APPEAL NO. CIT(A)-XXI/326/11-12 PASSED U/S 250 READ WITH SECTI ON 272A (2) (J) OF THE INCOME TAX ACT. 2. THE ASSESSEE HAS RAISED FOUR GROUNDS IN ITS APPE AL, HOWEVER, THE CRUX OF THE ISSUE IS THAT THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) AS WELL AS THAT OF THE LEARNED AO I N LEVYING / CONFIRMING PENALTY U/S 272A (2) (J) OF THE ACT. ITA NO.2422/AHD/2012 (AY 2005-06) SHRI VARGHESE JOSEPH POTTAKERRY VS ITO-W-6(2), AHME DABD 2 3. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUS INESS OF TRADING IN METAL SCRAPS FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ON 20-10-2005 DECLARING INCOME AT RS.5,72,6 60/-. INITIALLY, THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT, THEREAF TER, THE CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S 143 (3) OF THE ON 28-10-2012. SUBSEQUENTLY, IT WAS NOTICED BY THE LEARNED JCIT, TDS RANGE THAT THE ASSESSEE HAD FAILED TO SUBMIT THE DE CLARATION SPECIFIED U/S 206C (1A) OF THE ACT AND, THEREFORE, THE LEARNE D JCIT, TDS RANGE ISSUED A SHOW-CAUSE NOTICE TO THE ASSESSEE ON 08-08 -2011 AND 24-08-2011. THOUGH THE ASSESSEE HAD FILED HIS SUBMI SSIONS BEFORE THE LEARNED AO ON 18-08-2011 AND 24-08-2011, WHEREIN HE ADMITTED THAT HE HAD COLLECTED THE REQUISITE FORM 27C CERTIFICATES, BUT HAD FAILED TO SUBMIT THE SAME BEFORE THE LEARNED CCIT/CIT WITHIN THE DUE DATE, BUT HAD SUBMITTED THE SAME BEFORE THE INCOME TAX OFFICE R ON 05-10-2010. HOWEVER, THE LEARNED JCIT, TDS RANGE INVOKED THE PE NAL PROVISIONS OF SECTION 272A (2) (J) OF THE ACT AND LEVIED PENALTY OF RS.2,73,400/-. 4. WHEN THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A), THE LEARNED CIT(A) CONFIRMED THE ORDER OF THE LEARN ED JCIT, TDS RANGE WITH THE FOLLOWING OBSERVATIONS:- 3.4 I HAVE PERUSED THE ORDER OF THE JCIT, TDS, RAN GE, AHMEDABAD AND SUBMISSIONS MADE BY THE APPELLANT IN THIS REGARD AL ONG WITH THE MATERIAL AVAILABLE. IN THE INSTANT CASE, IT IS AN ADMITTED F AT THAT THE REQUIRED FORMS NO.27C WERE NOT SUBMITTED BEFORE THE CCIT/CITS OFF ICE. THE APPELLANTS CONTENTION THAT SUCH FORMS WERE BEFORE THE INCOME-T AX OFFICER VIDE HIS SUBMISSION DATED 05.10.2010 IS NOT SUPPORTED BY ANY EVIDENCE. THE APPELLANT HAS ALSO AGREED THAT HE WAS UNDER THE BONAFIDE BELI EF THAT SUCH FORMS SHALL BE SUBMITTED AS AND WHEN CALLED FOR BY THE INCOME-T AX AUTHORITIES. I AM NOT INCLINED TO AGREE WITH THE CONTENTION OF THE APPELL ANT AS IT IS WELL LAID DOWN IN LAW THAT IGNORANCE OF LAW IS NOT AN EXCUSE. THE APP ELLANT IS EXPECTED TO BE AWARE OF TAX LAWS PREVAILING AND APPLICABLE I HIS C ASE. IN MY OPINION, THUS, THERE EXISTS NO BONAFIDE CAUSE FOR DELETION OF PENA LTY. THE ORDER OF THE JCIT, ITA NO.2422/AHD/2012 (AY 2005-06) SHRI VARGHESE JOSEPH POTTAKERRY VS ITO-W-6(2), AHME DABD 3 TDS, RANGE, AHMEDABAD IMPOSING A PENALTY OF RS.2,73 ,200/- IS HEREBY CONFIRMED. 5. THE LEARNED AR ARGUED BEFORE US THAT IT WAS MERE LY A TECHNICAL DEFECT AND THERE WAS NO LOSS OF REVENUE TO THE DEPA RTMENT. THE LEARNED AR FURTHER REITERATING HIS SUBMISSIONS BEFORE THE L EARNED CIT(A) AND RELYING ON THE DECISION OF THE CASE CIT VS STATE BA NK OF PATIALIA REPORTED IN 277 ITR 315 PRAYED THAT THE PENALTY LEV IED BY THE AO WHICH WAS FURTHER CONFIRMED BY THE CIT(A) MAY BE DELETED. THE LEARNED DR RELIED ON THE ORDERS OF THE REVENUE AND ARGUED IN S UPPORT OF THE SAME. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS ON RECORD. IT IS APPARENT FROM THE FACTS THAT THE ASSESSEE HAD DULY COLLECTED THE REQUISITE FORM 27C CERTIFICATES FROM THE PURCHASERS AND SUBMITTED THE SAME BEFORE THE INCOME TAX OFFICE R ON 5-10-2011. THIS FACT IS NOT DISPUTED BY THE REVENUE. FURTHER T HE ASSESSEE HAD EXPLAINED THE REASONS FOR THE DELAY IN FILING THE C ERTIFICATES BEFORE THE REVENUE BY STATING THAT THE FORMS WERE MISPLACED DU RING THE SHIFTING PROCESS OF HIS OFFICE PREMISES AND THE SAME IS NOT DOUBTED. THUS, FROM THE FACTS, IT IS APPARENT THAT THE ASSESSEE HAD REA SONABLE CAUSE FOR DELAY IN FILING THE FORMS. FURTHER, THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE CASE OF CIT VS STATE BANK OF PATIALA CITED BY THE ASSESSEE, SUPRA. THE RELEVANT PORTION OF THE SAID DECISION IS REPRODUCED HEREIN BELOW:- PENALTY PROCEEDINGS HAD BEEN INITIATED BY THE ASSE SSING OFFICER FOR DELAY IN FURNISHING THE DECLARATIONS IN FORM NO.15H FURNISHE D BY VARIOUS DEPOSITORS WITHIN THE TIME STIPULATED UNDER SECTION 197A (1A) OF THE ACT. THE TRIBUNAL HAS FOUND THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT ANY TAX AT SOURCE UNDER SECTION 194A OF THE ACT AS NONE OF THE CASES, INTER EST PAYABLE EXCEEDED RS.10,000 AND, THUS EVEN FORM NO.15H WAS NOT REQUIR ED TO BE FILED. THE TRIBUNAL ALSO NOTICED THAT EVEN THE DEPARTMENTAL RE PRESENTATIVE ADMITTED THAT THERE WAS NO LOSS OF REVENUE INVOLVED IN THE MATTER . THE TRIBUNAL, THEREFORE, ITA NO.2422/AHD/2012 (AY 2005-06) SHRI VARGHESE JOSEPH POTTAKERRY VS ITO-W-6(2), AHME DABD 4 HELD THAT SINCE THE ASSESSEE WAS NEITHER REQUIRED T O DEDUCT TAX AT SOURCE NOR ANY LOSS OF REVENUE HAD OCCURRED ON THIS ACCOUNT, T HE DEFAULT COMMITTED BY THE ASSESSEE IN NOT FILING FORM NO.15H RECEIVED BY IT FROM VARIOUS DEPOSITORS WITHIN THE STIPULATED PERIOD, WAS ONLY OF TECHNICAL NATURE FOR WHICH NO PENALTY UNDER SECTION 272A (2) (F) OF THE ACT WAS LEVIABLE. IN SUPPORT OF ITS CONCLUSIONS, THE TRIBUNAL PLACED RELIANCE ON THE JU DGMENT OF THE SUPREME COURT IN HINDUSTAN STEEL LTD. VS STATE OF ORISSA [1 972] 83 ITR 26. HAVING PERUSED THE ORDER OF THE TRIBUNAL, WE ARE SA TISFIED THAT IN THE LIGHT OF THE FACTUAL POSITION STATED BY THE TRIBUNAL, NO CAS E FOR INTERFERENCE IS MADE OUT. IT IS CLEAR THAT THE DEFAULT IN THE PRESENT CA SE IS MERELY OF TECHNICAL OR VENIAL IN NATURE AND THE FOLLOWING OBSERVATIONS OF THE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LD VS STATE OF ORISSA [1972 ] 83 ITR 26 CLEARLY APPLY: AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED, EITHER ACTED DELI BERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOS ED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVA NT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPET ENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WH EN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 7. FROM OUR AFORESAID DISCUSSIONS AND FOLLOWING THE ORDER OF THE HONBLE PUNJAB AND HARYANA HIGH COURT SUPRA, WE HE REBY DELETE THE PENALTY LEVIED BY THE LEARNED AO U/S 272A (2) (J) O F THE ACT FOR RS.2,73,400/- WHICH WAS FURTHER CONFIRMED BY THE LE ARNED CIT(A). 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10-05-2013. SD/- SD/- (G. C. GUPTA) VICE PRESIDENT (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/- -- - ITA NO.2422/AHD/2012 (AY 2005-06) SHRI VARGHESE JOSEPH POTTAKERRY VS ITO-W-6(2), AHME DABD 5 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: DIRECT ON COMPUTER 01-05-13 / 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 01-05-13 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. 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 WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: