Ram Kumar Dhiman, Delhi V. AO Ward-26(4), New Delhi

ITA 2707/DEL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0513 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 27-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Reasonable cause
• Section: 68; 142(1); 143(2); 271B; 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” BENCH: NEW DELHI BEFORE SHRI RAMA KANTA PANDA, ACCOUNTANT MEMBER AND SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA Nos. 2706, 2707 & 2708/Del/2019 [Assessment Year: 2014-15& 2015-16 Ram Kumar Dhiman, B-145, Opp. Nehru Place, Kalka Ji, New Delhi-110019 PAN- AIEPD2121R Vs Income-tax Officer, Ward-26(4), New Delhi. APPELLANT RESPONDENT Appellant by None Respondent by Sh.Harpal Singh Kharb, Sr. DR Date of hearing 06.01.2022 Date of pronouncement 06.01.2022 O R D E R PER N. K. CHOUDHRY, JM: These appeals have been preferred by the Assesseeagainst the orders dated 06.02.2019 and 30.1.2019 passed by the learned Commissioner of Income-tax (Appeals)-27, New Delhi and learned Commissioner of Income-tax (Appeals)-30, New Delhi(hereinafter called as the “ld. Commissioner”), for the assessment years 2014-15 & 2015-16, wherein the penalties imposed by the Assessing Officer u/s 271B and 271(1)(b) of the Income-tax Act, 1961 (in short “the Act”) have been confirmed by the learned Commissioner. 2 ITA No. 2706, 2707 & 2708/Del/2019 Ram Kumar Dhiman Vs. AO 2. At the time of hearing of appeals, no one appeared on behalf of the Assessee and even no adjournment application has been filed. From the record it reveals that various notices for the dates of hearing have been issued to the Assessee, however, none served and returned by the postal department with the remark “left”. Hence, we are constrained to decide these appeals as ex parte. ITA no. 2706/Del/2019 (u/s 271B for A.Y. 2014-15) : 3. In this case return of income for the assessment year 2014-15 was e-filed on 14 th March 2016 by declaring an income of Rs. 2,19,900/- by the Assessee and thereafter the assessment was completed by determining the income at Rs. 84,65,42,912/- u/s 143(3) of the Act. During the assessment proceedings the penalty proceeding u/s 271B of the Act was also initiated for failure to get accounts audited by the Assessee. Consequently, show cause notice dated 14 th June 2017 was issued to the Assessee for giving an opportunity of being heard, against which the Assessee replied to the Assessing Officer through e-mail. After considering the reply of the Assessee, penalty of Rs. 1,50,000/- was imposed u/s 271B of the Act, against which the Assessee preferred first appeal before the learned Commissioner, who vide impugned order dated 6.2.2019 confirmed 3 ITA No. 2706, 2707 & 2708/Del/2019 Ram Kumar Dhiman Vs. AO the penalty by dismissing the appeal of the Assessee by concluding as under : “3. The hearing notice was sent through speed post but, the same was returned back by the postal authority with the remarks "left". However the same was again sent through e-mail. In response, the appellant filed written submission through e-mail. The appellant has submitted as under: As per the assessment order on Para No. 10.1., which is reproduced below: "The assessee has provided the statement of profit & loss for derivative for trading account in respect of client code 1379071 maintained with HDFC Securities ltd. for the transaction in Code No.05. On the perusal of the same, it has been revealed that sale transaction amounting of Rs. 1,43,91,407/- has^ been seen over there, on which profit of rs.3,54,641.16/- has been shown which has not been shown in the income tax return as well as books of account.: Further, the sale transaction as per ITS under code no. 05 is Rs. 1,81,86,100/- on which SIT of Rs.1,818/- has been paid. On the basis of the same, a difference of Rs.37,94,693/- has been arisen which remained as unexplained. Since, the source of transaction amounting of Rs.37,94,693/- remained unexplained. Accordingly, the same is hereby added back u/s 68 r.w.s. 115BBE of the Income Tax Act, 1961. The Ld. AO herself has explained that the sale transaction are amounting to Rs.1,81,86,100/- and there is a profit of Rs.3,54,641/- only. In Para No. 10.2 of the assessment order, which is reproduced below: "However, on the basis of information received from M/s Religare Securities Ltd. in respect of derivative segment with whom client code RD3848 was maintained during the year under consideration, revealed that upto sale value of Rs.12,36,62,759.5/-, the loss on which has been shown as Rs.98,695.99/- whereas the sale value mentioned in the ITNS details is Rs.15,68,89,212.75/- and security transaction tax of Rs.15,688.95/- was paid on the same during the year under consideration, which clearly depicts that there is a difference of Rs.3,32,26,453/- on which no clarification has been provided by the assessee. Since, the source of transaction amounting of Rs.3,32,26,453/- remained unexplained. Accordingly, the same is hereby 4 ITA No. 2706, 2707 & 2708/Del/2019 Ram Kumar Dhiman Vs. AO added back u/s 68 r.w.s. I15BBE of the Income Tax Act, 1961." The Ld. AO has explained that under the client code RD- 3848 there is a loss of Rs. 98,695.99/-. The copy of assessment order is enclosed as per Annexure. “In the derivative transaction, under the provision of Section 44AB only the profit/loss is considered for the turnover. Therefore, the total turnover from the profit/loss of the transaction does not cover u/s 44AB for tax audit report. Therefore, the provisions u/s 27IB are not applicable to the appellant. It is, therefore, to say imposition of penalty amounting to Rs. 1,50,000/- u/s 27IB for the violation of provisions u/s 44AB with regards is incorrect and liable to be deleted." The appellant has primarily taken the plea that in derivative transactions, under the provisions of section 44AB only the profit/loss is considered for turnover, therefore, provision u/s 271B are not applicable to the appellant. The same plea was taken by the appellant during the penalty proceedings u/s 271B before the AO. I have gone through the provision of section 44AB which have been reproduced by the AO in the penalty order also. There is no separate provision to consider only profit/loss as turnover in derivative transactions under section 44AB including the proviso or explanation. In these circumstances, the plea of the appellant cannot be accepted. As the turnover of the appellant is more than the prescribed limit in section 44AB, the appellant was required to get his accounts audited. As the appellant has not got his accounts audited, the AO has rightly levied penalty u/s 271B for violation of provision of section 44AB. Therefore, the penalty levied by the AO of Rs. 1,50,000/- u/s 271B is confirmed and the appeal of the appellant is dismissed.” 4. We have heard the learned DR, who supported the orders passed by the authorities below and submitted that the order under challenge does not suffer from any perversity, impropriety and/or illegality. We observe that the Assessee before the authorities below 5 ITA No. 2706, 2707 & 2708/Del/2019 Ram Kumar Dhiman Vs. AO has taken the plea that in derivative transactions under the provisions of Section 44AB, only the profit/loss is to be considered for turnover, therefore, provisions of section 271B are not applicable to the case of the Assessee. The said plea of the Assessee was duly considered by Ld. Commissioner while holding that there is no separate provision to consider only profit/loss as turnover in derivative transactions under section 44AB including the proviso or explanation and therefore in these circumstances, the plea of the appellant cannot be accepted. As the turnover of the appellant is more than the prescribed limit in section 44AB, the appellant was required to get his accounts audited and the Assessing Officer has rightly levied the penalty u/s 271B for violation of provisions of section 44AB. 5. We have given thoughtful consideration to the orders passed by the authorities below and do not find any reason to controvert the finding given by the ld. Commissioner against the claim of the Assessee. Hence, the order under challenge is affirmed and the appeal of the Assessee is dismissed. 6 ITA No. 2706, 2707 & 2708/Del/2019 Ram Kumar Dhiman Vs. AO ITA 2708/Del/2019 (A.Y. 2014-15) & ITA 2707/Del/2019 (AY 2015-16): 6. Both the appeals have common facts, therefore, for the sake of brevity are disposed of by this common order. For reference, the facts in ITA no. 2708/del/2019 shall be taken into consideration and result of the same shall apply mutatis mutandis to ITA no. 2707/Del/2019. 7. In this case, notice u/s 143(2) of the Act was issued on 26.7.2016 by fixing the case for hearing on 4.8.2016 by the Assessing Officer, in response to which learned AR of the Assessee submitted only power of attorney on 15.9.2016. Thereafter notice u/s 142(1) of the Act was issued on 21.9.2016 to the Assessee to attend the office of the Assessing Officer 31.10.2016, however, on the said date the Assessee neither appeared nor filed any reply. Thereafter after another notice u/s 142(1) of the Act was also issued on 4.10.2016 by fixing the case for hearing on 13.10.2016, however, on the said date as well the Assessee neither appeared nor filed any application for adjournment etc. Therefore, for non-compliance of the notices issued, penalty proceedings has been initiated by issuing a notice u/s 271(1)(b) of the Act on 4.11.2016 by fixing the case on 9.11.2016. That notice also remained un-complied by the Assessee. Therefore, it was opined by the Assessing Officer that the Assessee has nothing to say for non- 7 ITA No. 2706, 2707 & 2708/Del/2019 Ram Kumar Dhiman Vs. AO compliance of statutory notice i.e. there is no reasonable and sufficient cause for the failure on the part of the Assessee to comply the notices and, therefore, it stands established that the Assessee has committed default u/s 271(1)(b) of the Act for which the penalty is leviable. Finally the Assessing Officer imposed the penalty of Rs. 10,000/- u/s 271(1)(b) of the Act for the Assessee’s default. 8. The Assessee being aggrieved challenged the imposition of penalty before the learned Commissioner. However, the Assessee did not appear before the learned Commissioner as well, but chose to file reply through e-mail, which was taken into consideration by the ld. Commissioner and ultimately the ld. Commissioner confirmed the penalty levied by the Assessing Officer by holding as under: “4. It is observed from the assessment order that the appellant was issued a notice u/s 142(1) by the AO on 21.09.2016 to attend the office on 3.10.2016. However, neither anybody appeared nor any adjournment was filed. Another notice u/s 142(1) was issued by the AO on 4.10.2016 fixing the case for 13.10.2016. On this date also, neither anybody appeared nor any adjournment was filed. The AO issued penalty notice u/s 271(l)(b) dated 4.11.2016 to attend on 9.11.2016, which was also neither replied nor attended by anybody. During the course of appellate proceedings, the appellant has mentioned that it had no malafide intention regarding submission of details for assessment and the time given by the AO was less to submit all the information. In this regard, it is submitted that there is no requirement of malafide intention on the part of the appellant for levy of penalty u/s 271(l)(b). Regarding the reasonable cause, the appellant could have attended and asked for adjournment or more time from 8 ITA No. 2706, 2707 & 2708/Del/2019 Ram Kumar Dhiman Vs. AO the AO to complete the details. This plea of the appellant without approaching the AO in response to two notices u/s 142(1) issued from time to time, is not acceptable as reasonable cause. The appellant did not have courtesy even to respond to these statutory notices, which is a legal obligation caused on him. In these facts and circumstances, I do not find there was any plausible reasonable cause for non responding of these two notices. Accordingly, the plea of the appellant is rejected and the penalty of Rs.10,000/- levied by the AO u/s 271(l)(b) is hereby confirmed.” 9. Against the impugned order, the Assessee is in appeal before us. 10. We have heard the learned DR, who supported the orders passed by the authorities below and specifically submitted that the order under challenge does not suffer from any perversity, impropriety and/or illegality, hence, no interference is necessitated. We observe from the assessment order and the impugned order that in the instant case notices dated 21.9.2016 and 4.10.2016 u/s 142(1) of the Act have been issued to the Assessee by the Assessing Officer, however, the same remained un-complied. Thereafter, the Assessing Officer issued the penalty notice dated 4.11.2016 u/s 271(1)(b) of the Act, which also remained un-complied and, therefore, the penalty of Rs. 10,000/- was imposed by the Assessing Officer. Before the ld. Commissioner it was claimed by the Assessee that the Assessee has no mala fide intention regarding non-submissions of details for assessment and the time given by the Assessing Officer was less to 9 ITA No. 2706, 2707 & 2708/Del/2019 Ram Kumar Dhiman Vs. AO submit all the information and even there is no requirement of mala fide intention on the part of the appellant for levy of penalty u/s 271(1)(b). The learned Commissioner though considered the explanation of the Assessee, however, did not get impressed and rejected the claim of the Assessee by holding that regarding reasonable cause the appellant should have attended and asked for adjournment or more time from the Assessing Officer to complete the details. The plea of the Assessee without approaching the Assessing Officer in response to two notices u/s 142(1) issued from time to time is not acceptable as a reasonable cause. 12. We have given thoughtful consideration to the peculiar facts and circumstances of the case and are of the considered view that as the Assessee has failed to comply with the statutory notices, which is a legal obligation and even otherwise failed to bring on record any plausible reasonable cause for non-responding to the notices, therefore, the authorities below have rightly imposed the penalty and hence the impugned order does not require any interference. Consequently the appeal filed by the Assessee stands dismissed. 10 ITA No. 2706, 2707 & 2708/Del/2019 Ram Kumar Dhiman Vs. AO 13. In view of the order passed in ITA no. 2708/Del/2019, ITA no. 2707/Del/2019 also stands dismissed. 14. In result, all the Assessee’s appeals under consideration stands dismissed. Order pronounced in the open court on 06/01/2022. -Sd/- -Sd/- (R. K. PANDA) (N. K. CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI