Mohandas P.K., Kanhandad V. ITO, Kollam

ITA 243/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61422 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 28-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 05-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Section: 263; 271B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 243/COCH/2010 ASSESSMENT YEAR :2006-07 MOHANDAS P.K., PROP. NEW VINAYAKA MOVIE, KANHANGAD. [PAN: ASVPM 0383N] THE INCOME TAX OFFICER, WARD-1, KASARAGOD. (ASSESSEE-APPELLANT) (REVENUE - RESPONDENT) ASSESSEE BY SHRI ARUN RAJ S., ADV. REVENUE BY SHRI S.R.SENAPATI, SR. DR DATE OF HEARING 28/03/2012 DATE OF PRONOUNCEMENT 19/04/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 15-02-2010 PASSED BY LD. CIT, KANNUR U/S 263 OF THE ACT AND IT RELATE S TO THE ASSESSMENT YEAR 2006-07. THE ASSESSEE IS CHALLENGING THE VALIDITY OF INITIATION OF REVISION PROCEEDINGS BY LD CIT. 2. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSING OFFICER ISSUED PENALTY NOTICE U/S 271B OF THE ACT FOR BELATED FILI NG OF AUDIT REPORT REQUIRED TO BE FILED U/S 44AB OF THE ACT. THE ASSESSEE EXPLAINED THE DE LAY WAS CAUSED AS HIS PART TIME ACCOUNTANT WAS HAVING PRACTICAL PROBLEMS IN FINALIZ ING THE ACCOUNTS. THE AO DROPPED THE PENALTY PROCEEDING WITH A NOTE IN HIS RECORD. HE DID NOT PASS A SPEAKING ORDER. 3. THE ADDL. CIT REPORTED TO THE LD. CIT BY STATING THAT THE AO HAS DROPPED THE PENALTY PROCEEDING WITHOUT MAKING ANY ENQUIRY AND T HE SAID ACTION OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. THEREAFTER, THE LD CIT INITIATED THE REVISION PROCEEDINGS U/S 263 OF THE ACT. AFTER HEARING THE ASSESSEE, HE DIRECTED THE ITA NO.243/COCH/ 2010 2 AO TO DECIDE THE PENALTY PROCEEDING INITIATED U/S 2 71B OF THE ACT BY PASSING A SPEAKING ORDER, AFTER HEARING THE ASSESSEE. AGGRIEVED BY TH E ORDER OF LD CIT, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REVISION PROCEEDINGS U/S 263 OF THE ACT CAN BE INITIATED ON THE BASIS OF HIS EXAMIN ATION OF RECORD. FOR THIS PROPOSITION, HE RELIED UPON THE DECISION OF CO-ORDINATE BENCH OF CO CHIN IN THE CASE OF CANNANORE CO-OP HOSPITAL SOCIETY LTD. VS. ACIT IN ITA. NOS. 441 TO 461/COCH/2009. HE FURTHER SUBMITTED THAT THE LD CIT HAS INITIATED THE REVISIO N PROCEEDINGS IN THE INSTANT CASE ON THE REPORT OF THE ADDL. CIT, WHICH IS NOT CORRECT IN AC CORDANCE WITH THE PROVISIONS OF SEC. 263 AND HENCE THE IMPUGNED ORDER IS LIABLE TO BE QU ASHED. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE AO HAS DROPPED THE PENALTY PROCE EDING WITHOUT CONDUCTING ANY ENQUIRIES AND THAT TOO BY NOT PASSING SPEAKING ORDE R. HENCE THE LD CIT WAS RIGHT IN INVOKING SEC. 263 OF THE ACT TO INITIATE REVISION P ROCEEDINGS. WITH REGARD TO THE REPORT SENT BY THE ADDL. CIT TO THE LD CIT, THE LD DEPARTM ENTAL REPRESENTATIVE THAT IT IS A ROUTING ADMINISTRATIVE EXERCISE, WHICH CANNOT BE FO UND FAULT WITH, AS THE LD CIT HAS APPLIED HIS MIND IN THE INSTANT CASE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREF ULLY PERUSED THE RECORD. IN THE INSTANT CASE, THE ADDL CIT HAS BROUGHT TO THE NOTICE OF THE ADMINISTRATIVE COMMISSIONER ABOUT THE DEFECTS IN THE ACTION OF THE AO IN DROPPING THE PENALTY PROCEEDING INITIATED U/S 271B OF THE ACT. IN THE SYSTEM OF ADMINISTRATION OF INC OME TAX OR FOR THAT MATER IN ANY ORGANISATION, THE LOWER AUTHORITIES USUALLY SEND RE PORTS TO THE HIGHER AUTHORITIES FOR THEIR CONSIDERATION AND IN OUR VIEW, IT IS QUIET NATURAL AND NO ILLEGALITY CAN BE ATTACHED TO IT. IT IS PERTINENT TO NOTE THAT THE DELHI BENCH OF ITAT H AS EXPRESSED SIMILAR VIEW IN THE CASE OF APOLLO TYRES LTD CS. ACIT REPORTED IN 65 ITD 263 . HOWEVER, IF THE LD CIT, WITHOUT APPLICATION OF HIS MIND AND EXAMINATION OF RECORD, INITIATES PROCEEDING U/S 263 OF THE ACT, THEN IT MAY BE A CASE CALLING FOR INTERFERENCE IN THE ACTION OF LD CIT. IN THE INSTANT CASE, THOUGH THE LD CIT MAKES A REFERENCE OF REPORT SENT BY THE ADDL. CIT, THE ORDER CLEARLY BRINGS OUT THE FACTS AND THE DEFECTS WHICH HAS RENDERED THE DROPPING OF PENALTY PROCEEDINGS TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN THE CASE OF TOYOTA MOTOR CORPORATION VS. CIT (2008)(306 ITR 52) , THE HONBLE SUPREME COURT HAS ITA NO.243/COCH/ 2010 3 UPHELD THE ORDER OF THE HIGH COURT IN DIRECTING THE AO TO PASS A REASONED ORDER. WE NOTICE THAT THE DIRECTION GIVEN BY THE LD CIT IN TH E INSTANT CASE IS ALSO TO PASS A SPEAKING ORDER. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY I N HIS ORDER. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. PRONOUNCED ACCORDINGL Y ON 19-04-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.B.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 19 TH APRIL, 2012 GJ COPY TO: 1. MOHANDAS P.K., PROP. NEW VINAYAKA MOVIE, KANHANG AD. 2THE INCOME-TAX OFFICER, WARD-1, KASARAGOD. 3. THE COMMISSIONER OF INCOME-TAX, KANNUR. 4. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 5. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T. COCHIN ITA NO.243/COCH/ 2010 4 ITA NO.243/COCH/ 2010 5 ITA NO.243/COCH/ 2010 6