ORIGIN MARKETING P.LT, MUMBAI V. ITO 9(2)(4),

ITA 25/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100560 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UDAYA BHASKAR JAKKE
• Keywords: Reasonable cause; Non compliance
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.25/MUM/2013 ASSESSMENT YEAR: 2009-10 M/S. ORIGIN MARKETING PVT. LTD. 121, RAJ RATAN INDUSTRIAL ESTATE, LIBERTY GARDEN, NEXT TO AMERICAN SPRING, MALAD (E), MUMBAI-400 0064 PAN:AAACO3634K VS. ITO 9(2)(4) MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI UDAYA BHASKAR JAKKE DATE OF HEARING : 16.07.2015 DATE OF PRONOUNCEMENT : 07.08.2015 O R D E R PER D. KARUNAKARA RAO, AM: THE PRESENT APPEAL PREFERRED BY THE ASSESSEE IS DIR ECTED AGAINST THE IMPUGNED ORDER 31.10.2012 PASSED BY CIT(A)-20, MUMB AI THEREBY CONFIRMING THE PENALTY OF ` . 10,000/- LEVIED BY THE ASSESSING OFFICER (AO) VIDE ORDER DATED 04.11.2011 U/S. 271(1)(B) OF THE I NCOME-TAX ACT, 1961 2 ITA NO.25/M/ 2013 M/S ORIGIN MARKETING P. LTD. (HEREINAFTER THE ACT) FOR ASSESSMENT YEAR(AY) 2009- 10. THE GROUNDS RAISED BY THE APPELLANT READ AS FOLLOWS: 1. THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY U /S. 271 (1) (B) OF RS. 10,000 LEVIED BY AO. THE LD. CIT(A) FAILED TO APPRECIATE THAT THERE WAS REASONABLE CAUSE HENCE NO CASE OF PENALTY AS PROVIDED IN SECTION 273 B. THE LD. CIT(A) FAILED TO APPRECIATE THAT DETAILS / EXPLANATION WERE COMPLIED 3 TIMES (COPIES OF LETTERS ARE ENCLOSED) W ITH MANY DETAILS AROUND 20 POINTS HENCE NOT A CASE OF NON COMPLIANCE . THE LD. CIT(A) FAILED TO APPRECIATE THAT EARLIER YE ARS ASSESSMENT ORDERS WERE PASSED UNDER SCRUTINY U/S. 143 (3) (3) WITHOUT ANY SUCH PENALTIES WHICH SHOW THAT APPELLANT IS NOT A HABITUAL DEFAULT ER. THE LD. CIT(A) FAILED TO APPRECIATE THAT APPELLANT ALWAYS REQUIRES SUFFICIENT TIME FOR TAKING OUT DETAIL, COMPILATION & SUBMISSIONS. HENCE IF FEW DETAILS HAVE REMAINED OF IT CANNOT BE GROUND FO R PENALTY. THE LD. CIT(A) FAILED TO APPRECIATE THAT STATUTORY PROVISION FOR LEVY OF PENALTY IS NOT FOR MERE TECHNICAL NON-COMPLIANCE BU T FOR ACTUAL OR HABITUAL DEFAULTER 2. THE BRIEF FACTS OF THE CASE ARE THAT THE AO HAD ISSUED A NOTICE U/S. 142(1) OF THE ACT TO THE APPELLANT ON 27.06.2011 AS KING IT TO FILE DETAILS ON 07.07.2011. IN RESPONSE TO THE NOTICE, FULL COMP LIANCE WAS NOT MADE AND INCOMPLETE DETAILS WERE SUBMITTED AND ADJOURNMEN T WAS SOUGHT FOR COMPLIANCE. ACCORDINGLY, THE CASE WAS ADJOURNED AND EVEN AFTER ON 11.08.2011, THE ASSESSEE HAD NOT FILED THE COMPLETE DETAILS. HENCE, A SHOW CAUSE NOTICE/LETTER DATED 19.10.2011 WAS SERVE D UPON THE ASSESSEE CALLING FOR EXPLANATION AS TO WHY PENALTY WAS NOT LEVIABLE UPON IT U/S. 271(1)(B) OF THE ACT. THE ASSESSEE HAD NEIT HER SUBMITTED ANY EXPLANATION NOR FULL DETAILS. IN THESE CIRCUMSTANCE S, AO HELD THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE. HENCE, THE A O LEVIED PENALTY OF ` . 10,000/- U/S. 271(1)(B) OF THE ACT. AGGRIEVED BY TH E SAID ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE SAI D ORDERS WERE ALSO 3 ITA NO.25/M/ 2013 M/S ORIGIN MARKETING P. LTD. CONFIRMED BY THE CIT(A) THEREBY DISMISSING THE APPE AL FILED BY THE ASSESSEE WHILE HOLDING THAT THE ASSESSEE HAS NOT CO -OPERATED AND THERE IS NON-COMPLIANCE ON THE PART OF THE ASSESSEE. MORE OVER, THE CIT(A) HAS ALSO MENTIONED THAT EVEN THE ASSESSEE DID NOT BOTHE R TO SUBMIT ANY EXPLANATION IN THIS REGARD. THEREFORE, IN SUCH SCEN ARIO AND CIRCUMSTANCES, THE CIT(A) HELD THAT THE AO WAS PERF ECTLY RIGHT IN LEVY OF PENALTY U/S. 271(1)(B) OF THE INCOME-TAX ACT. BEFORE ITAT 3. DURING THE PROCEEDINGS BEFORE US, LD. AR SUBMITT ED THAT THE ORDER DATED 04.11.2011 PASSED BY AO AND THE IMPUGNED ORDE R OF CIT(A) ARE REQUIRED TO BE SET ASIDE, AS THERE IS REFERENCE IN THE ORDER OF ASSESSMENT ITSELF THAT THE ASSESSEE SUBMITTED SOME DETAILS IF NOT ALL. IN THIS REGARD, THE LD. COUNSEL BROUGHT OUR ATTENTI ON TO THE REPLIES DATED 11.07.2011 (SIX ITEMS) AND 11.08.2011 (EIGHT ITEMS) . HOWEVER, THE AO EVEN AFTER RECEIVING THE INCOMPLETE DETAILS HAD COM E TO THE CONCLUSION THAT ASSESSEE HAS DELIBERATELY NOT COMPLIED WITH TH E NOTICES AND THEREFORE, AS PER AO THIS CASE WARRANTS LEVY OF PEN ALTY. ONE OF THE IMPORTANT FACTS WAS ALSO MENTIONED THAT THE ENTIRE ADDITIONS IMPOSED/LEVIED BY THE AO VIDE ITS ORDER DATED 08.12 .2011 WERE ALSO DELETED BY THE CIT(A) VIDE ORDER DATED 13.11.2011, WHEREIN THE CIT(A) OBSERVED AS PAGE 5 AS UNDER: SINCE ASSESSING OFFICER HAS ADMITTED THE GENUINENE SS OF CLAIM OF IMPORT DUTY OF RS. 11,55,880/-, DEPB PURCHASES OF R S. 2,14,480/-, PROPER TDS ON PAYMENT MADE TO M/S. TNT (INDIA) PVT. LTD. OF RS. 8,70,184/-, HENCE DISALLOWANCE OF THESE GENUINE EXP ENDITURES ARE HEREBY DELETED. 4 ITA NO.25/M/ 2013 M/S ORIGIN MARKETING P. LTD. 4. THE LD. DR FOR THE REVENUE RELIED UPON THE ORDER S OF THE AO AS WELL AS THE CIT(A) AND SUBMITTED THAT BOTH ORDERS DO NOT WARRANT ANY INTERFERENCE. 5. WE HAVE HEARD THE LD. COUNSEL FOR THE ASSESSEE A S WELL AS DR REPRESENTING THE REVENUE AND AFTER MINUTELY PERUSIN G OF THE RECORD AS WELL AS ORDERS OF REVENUE AS WELL AS PAPER BOOK (PB ) FILED BY LD AR, WE FIND THAT THE ASSESSEE HAD SUBMITTED THEIR REPLIES TWO TIMES I.E. ON 11.07.2011 (SIX ITEMS) AND ALSO ANOTHER REPLY DATED 11.08.2011 (EIGHT ITEMS). WE FIND, IN PRINCIPLE, THAT THE ASSESSEE RE SPONDED TO THE SAID NOTICES ISSUED BY THE AO AND SUBMITTED DETAILS, IF NOT ALL THE DETAILS. IN ADDITION, THE ASSESSEE ALSO SUBMITTED THAT THE SHOW CAUSE NOTICE ISSUED BY AO COULD NOT BE REPLIED ON ACCOUNT OF BONAFIDE M ISTAKE ON THEIR PART AS LD. AR COULD NOT FILE THE SAME WITHIN TIME EVENT UALLY THE ASSESSEE TRIED TO SUBMIT THE DETAILS IN THE FIRST WEEK OF DE CEMBER TO AO. THE SAME WERE NOT ENTERTAINED BY THE AO BY GIVING REASO NS THAT THE ORDER WAS ALREADY PASSED ON 08.11.201. BUT, ON THE CONTRA RY, THE ASSESSMENT ORDER DATED 30.12.2011 WAS NOT DELIVERED TO THE ASS ESSEE TILL 08.11.2011. 6. NOW DEALING WITH THE LEGALITY OF IMPOSITION OF P ENALTY, IT IS THE REQUIREMENT OF LAW THAT THE LEVY OF PENALTY IS NOT AUTOMATIC. THE ABSENCE OF REASONABLE CAUSE IS NECESSARY ELEMENT. E VEN SECTION 271(1)(B) OF THE INCOME-TAX ACT MANDATES LEVY OF PE NALTY FOR INTER ALIA NOT COMPLYING WITH THE NOTICE ISSUED U/S. 142(1) OR 142(3) AND SECTION 273(B) OF THE INCOME-TAX ACT PROVIDES THAT INTER ALIA PENALTY U/S. 271(1)(B) NEED NOT BE IMPOSED IF IT IS PROVED THAT THERE WAS A REASONABLE CAUSE FOR THE SAID PERIOD OF THE ASSESSE E TO COMPLY WITH THE 5 ITA NO.25/M/ 2013 M/S ORIGIN MARKETING P. LTD. PROVISIONS OF SECTION 271(1)(B) OF THE ACT WHICH RE ADS AS UNDER: SUCH PERSON SHALL PAY BY WAY OF PENALTY MAY 271 (1) IF THE [ASSESSING] OFFICER OR THE COMMISSIONER (APPEALS)] [OR THE COMMISSIONER] I N THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON- (B) HAS FAILED TO COMPLY WITH A NOTICE [ UNDER SUB- SECTION (2) OF SECTION 115WD OR UNDER SUB-SECTION (2) OF SECTION 115WE OR] UNDER SU B-SECTION (1) OF SECTION 142 OR SUB-SECTION (2) OF SECTION 143 [ OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB- SECTION (2A) OF SECTION 142], OR HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY,- [(II) IN THE CASES REFERRED TO IN CLAUSE (B), [ IN ADDITION TO TAX, IF ANY, PAYABLE] BY HIM, [A SUM OF TEN THOUSAND RUPEES] FOR EACH SUCH F AILURE;] HERE, THE WORD MAY ATTAINS SIGNIFICANCE AND IT IS LEFT ON THE DISCRETION OF PERSON ISSUING NOTICE TO JUDGE AS TO WHETHER THER E WAS A REASONABLE CAUSE FOR THE FAILURE ON THE PART OF THE ASSESSEE O R ASSESSEE ACTED DELIBERATELY IN DEFIANCE OF LAW OR CONTINUOUS DISRE GARD OF ITS OBLIGATION. MOREOVER, THE PENALTY CANNOT BE IMPOSED ONLY BECAUS E IS LAWFUL TO DO SO, AS HELD BY THEIR LORDSHIP IN CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (1972) 83 ITR 26 (SC). THE AFOREMENTIONED RA TIO IS APPLICABLE TO THE FACTS OF THE PRESENT CASE. MOREOVER, THE ADDITI ONS MADE BY AO WERE ALSO DELETED BY CIT(A) WHICH SHOWS THAT ASSESSEE HA S NOT DELIBERATELY ACTED IN DEFIANCE OF LAW. THEREFORE, KEEPING IN VIE W THE AFOREMENTIONED FACTS AND CIRCUMSTANCES AND THE LEGAL PROPOSITION D ISCUSSED ABOVE, THE IMPUGNED ORDER DATED 31.10.2012 IS REQUIRED TO BE R EVERSED. ACCORDINGLY, THE GROUNDS RAISED IN THE APPEAL ARE A LLOWED. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF AUGUST, 2015. 6 ITA NO.25/M/ 2013 M/S ORIGIN MARKETING P. LTD. SD/- SD/- (AMIT SHUKLA) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 07.08.2015 SHARWAN P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR C BENCH BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.