SHRI SHRI KHUSHIRAM KUNDNANI, RAIPUR (CG) V. THE DY. COMMISSIONER OF INCOME TAX,CENTRAL CIRCLE, RAIPUR (CG)

ITA 284/BIL/2016

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7948 (ITAT-RAIPUR)
• Duration Of Justice: 5 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 01-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRAFULLA PENDSE
• Keywords: Loose papers; Principle of natural justice; Audi alteram partem
• Section: 143(3); 142(1); 153A; 250; 274; 143(2); 44AB

Judgement Text

ITAT-Raipur Page 1 of 12 आयकर अपीलीय न्यायाधिकरण न्यायपीठ रायपुर में। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR (Through Virtual Court at Pune) BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI JAMLAPPA D. BATTULL, ACCOUNTANT MEMBER आयकर अपील सं. / ITA Nos. 278 to 284/RPR/2016 धििाारण वर्ा / Assessment Years : 2006-2007 to 2012-2013 Khushiram Kundnani, E-2, Maruti Business Park, G.E. Road, Raipur (C.G) PAN : AEVPK 3467 J .......अपीलार्थी / Appellant बिाम / V/s Dy. Commissioner of Income Tax Central Circle, Central Revenue Building, Civil Lines, Raipur (C.G) ......प्रत्यर्थी / Respondent Appearances Assessee by : Shri Prafulla Pendse Revenue by : Shri P. K. Mishra सुनवाई की तारीख / Date of conclusive Hearing : 04/02/2022 घोषणा की तारीख / Date of Pronouncement : 25/02/2022 आदेश / ORDER PER BENCH; Against the order of Commissioner of Income Tax–Appeals(33), Delhi [for short “CIT(A)”] dt 14/06/2016 passed u/s 250 of the Income-tax Act, 1961 [for short “the Act”], which stemmed out of a penalty order of Dy Commissioner of Income Tax- Central Circle, Raipur [for short “DCIT”] dt 27/01/2014 passed u/s 271(1)(b) of the Act, the appellant assessee filed this appeal before Income Tax Appellate Tribunal [for short “the Tribunal”] u/s 253. ITA Nos. 278 to 284/RPR/2016 AY – 2006-2007 to 2012-2013 ITAT- Raipur Page 2 of 12 2. The lone issue under these bunch of seven appeals relates to levy of penalty u/s 271(1)(b) for a solitary instance of non-compliance and non-appearance against the consolidated notice issued for the seven assessment years [for short “AY”] comprising from AY 2006-2007 to 2012-2013. 3. Since the facts and circumstance of the case in all these seven appeals are identical and with the agreement of both the parties to appeals, the matter is heard together for a consolidated disposal. 4. Before furthering the matter on facts for adjudication, it is necessary to reproduce grounds impugned by the appellant assessee in ITA No 278/RPR/2016 are as under; “1. That the order of Ld. CIT(A) is bad in law as well as on facts.” “2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in sustaining the penalty u/s 271(1)(b) at ₹10,000/- for AY 2006-2007.” “3. That any other relief/deduction, which the Hon’ble Court may deem fit be granted to your appellant.” “4. That the appellant craves leave, to urge, add, amend, alter, enlarge, modify, substitute, delete any of the Ground of Grounds and to adduce fresh evidence at the time of the hearing the appeal.” “5. That suitable cost be allowed to your appellant.” (Emphasis supplied) 5. As noticeable from the records, the facts of the case succinctly are; 5.1 The assessee is an individual and proprietor of M/s R. S. Finance, M/s R. S. Automobiles which were primarily engaged in agency business for vehicle finance and beside a director of R. S. Dreamland Pvt Ltd which was engaged in real-estate business. A search & seizure operation was conducted on the business ITA Nos. 278 to 284/RPR/2016 AY – 2006-2007 to 2012-2013 ITAT- Raipur Page 3 of 12 premises of the assessee on 21-22/03/2012 pursuant to which books of accounts, documents, loose papers were seized and finally assessment were completed u/s 153A r.w.s. 143(3) of the Act for the AY 2006-2007 to AY 2011- 2012 and u/s 143(3) for the AY 2012-2013. 5.2 A failure on the part of assessee to reply to the questionnaire dt 08/10/2013 issued u/s 142(1) of the Act, triggered the issuance of show cause notice [for short “SCN”] dt 31/01/2014 u/s 274 r.w.s. 271 of the Act, which eventually culminated into levy of penalty u/s 271(1)(b) of the Act @ ₹10,000/- for each of the seven assessment years, thus total penalty summed up to ₹70,000/-. The appeals to first appellate authority did not bring any relief to the assessee and consequently the assessee is before the Tribunal seeking the relief from the hardship caused beside claiming cost. 6. The counsel for the assessee, admitting the delay in furnishing the requisite details / returns as sought by the Ld AO through notice u/s 142(1) of the Act, pleaded before the bench that, since the appellant has endly complied with the subject matter of penalty during the course of assessment proceedings itself, the penalty imposed and confirmed by the Ld CIT(A) may please be deleted and in support relied upon certain case laws. The Ld DR on the other hand arguing vehemently supported the action of the Ld AO, appointing the intentional delay in compliance of notice on the part of assessee, which is evident from the date of filing of returns which were made at very flag end of assessment deadlines. ITA Nos. 278 to 284/RPR/2016 AY – 2006-2007 to 2012-2013 ITAT- Raipur Page 4 of 12 7. After hearing to the rival contention of both the parties; perused material placed on record and duly considered the facts of the case in the light of legal position. 8. Going through the records, it has been fettering out that, 8.1 Consequent to search & seizure action, the original assessment were carried out u/s 153A r.w.s. 143(3) for first six of seven assessment year and u/s 143(3) for the AY 2012-2013. 8.2 During the course assessment proceedings, subsequent to assuming the jurisdiction u/s 153A a consolidated questionnaire dt 08/10/2013 for seven assessment years was issued to the appellant calling upon the details set therein. 8.3 In the absence of reply forthcoming, a first SCN u/s 274 r.w.s. 171 of the Act dt 17/01/2014 was issued for the AY 2006-2007 initiating the penalty proceedings u/s 271(1)(b), in reply thereto the appellant vide letter dt 24/01/2014 made a written request for dropping such penalty proceeding for the reasons stated therein, the reproduction of relevant para 2 to 4 thereof is noteworthy for adjudication; “1. . . . . ” “2. In this regard, I wish to submit that the return of income for the for AY 2006-2007 to 2012-2013 are under finalisation and will be filed next week positively.” “3. It may kindly be noted that the delay in filing the return was not intentional. Although copy of some of the seized material was made available to me earlier and while remaining copies of loose papers was provided to me ITA Nos. 278 to 284/RPR/2016 AY – 2006-2007 to 2012-2013 ITAT- Raipur Page 5 of 12 only in the month of August, 2013. The seized material requires detailed scrutiny, first at our level and then by our chartered accountant who were busy in finalising of tax audit reports u/s 44AB of the Income Tax Act, 1961 under the newly introduced procedure of e-filing of tax audit reports which was due to be filed by 31 st October, 2013. You would definitely appreciate that without scrutiny of the entire seized material filing of returns not possible. Therefore, I respectfully submit that there was bona-fide reason for delay in filing the return.” “4. Without prejudice to the above, I wish to state that I have very recently engaged Shri P.G. Pendse Advocate and CA Prafulla Pendse to look after my search cases and file income tax return u/s 153A of the Income Tax Act, 1961. Accordingly, they also required some time to peruse the entire seized material in order to file my returns u/s 153A of the Income Tax Act, 1961. I further wish to state that returns of Income for said assessment are being finalised I am also in the process of arranging sum that is likely to be paid as self-assessment tax.” 8.4 Thereafter, the jurisdiction AO issued a consolidate SCN dt 31/01/2014 u/s 274 r.w.s. 271 to show cause as to why an order imposing penalty should not be passed u/s 271(1)(b) for seven assessment year from 2006-2007 to 2012- 2013. Alleging the non-co-operative attitude of the assessee in-spite of service of statutory notices and repeated reminders, the penalty was imposed by a consolidate order. 8.5 Ld CIT(A) seeing eye to eye, confirmed the views and action of Ld AO perfunctorily. ITA Nos. 278 to 284/RPR/2016 AY – 2006-2007 to 2012-2013 ITAT- Raipur Page 6 of 12 9. At this suture, it is of utmost importance to lay the chronological happening of events in the present case, such as; 9.1 A consolidate SCN u/s 274 r.w.s. 271 was issued on 31/01/2017 calling upon the assessee to appear on or before 10/02/2014. 9.2 A consolidated order of penalty u/s 271(1)(b) was passed on 27/01/2014. 9.3 The returns of income for first six assessment year commencing from AY 2006-2007 to 2011-2012 were filed on 20/03/2014 and the return of income for AY 2012-2013 was filed on 22/03/2014. 9.4 The a consolidate order of assessment for a & b above was passed on 28/03/2014. 10. For the purpose of adjudication, the penal provisions of section 271(1)(b) of the Act shall be necessary to reproduce hereinafter for the ready reference as; “Failure to furnish returns, comply with notices, concealment of income etc. 271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person— (a) [***] (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 sub-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 (c) ..... (d) ..... he may direct that such person shall pay by way of penalty,— (i) [***] (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 failure ; (iii) ..... ITA Nos. 278 to 284/RPR/2016 AY – 2006-2007 to 2012-2013 ITAT- Raipur Page 7 of 12 11. In the light of above, the fundamental questions before the bench to dealt with are, 11.1 Whether an order of penalty passed without adhering to the principle of “Audi alteram partem” is tenable in law? 11.2 Most critical thing to be examined as to whether a penalty yet leviable u/s 271(1)(b) where the compliance of SCN is made by the assessee much before the completion of assessment including re-assessment proceedings? 11.3 And most importantly whether failure to comply with single consolidated notice issued for multiple assessment year attracts multiple penalties? 12. During the course of hearing, on a query from the bench, the appellant submitting that, the legal ground can be taken at any stage in view of the Hon'ble Supreme Court judgment in the case of NTPC Vs CIT reported at 229 ITR 383 (SC) because this additional ground goes to the root of the matter as clearly transpired from the proceedings before the lower authorities with complete facts already on record. The Ld DR candidly conceded that, it is well settled law laid by the Hon’ble Apex Court in the NTPC case (supra) that the legal ground can be taken at any stage if no new facts are required to be introduced and ground is based upon the documents and facts already on record and in the instant case is not denied by the Ld DR, hence, we are inclined to allow the appellant to raise the additional ground, consequently the legal ground raised stands allowed. ITA Nos. 278 to 284/RPR/2016 AY – 2006-2007 to 2012-2013 ITAT- Raipur Page 8 of 12 13. In dealing with first question, we respect that, the “Audi alteram partem”, commonly known as the Principle of Natural Justice, is a Latin Phrase meaning "listen to the other side" or "let the other side be heard as well". It is the well accepted principle that no person should be judged without a fair hearing in which each party is given the opportunity to respond to the evidence against them. The doctrine of Audi Alteram partem has may basic essentials, of which three commonly applied in tax litigation are; Firstly, a person against whom an order is required to be passed or whose rights are likely to be affected adversely must be granted an opportunity of being heard. Secondly, the authority concerned should provide a fair and transparent procedure. And lastly, the authority concerned must apply its mind and dispose of the matter by a reasoned or speaking order. Thus, the essential ingredients of the Rule of “Audi Alteram Partem” applicable to tax litigation can be summarised as; (1) Issuance of Notice (2) Opportunity to Present the Case (3) Opportunity to Rebut Adverse Opportunity. [for short “NOR”] 14. The emphasis is being made here that the principles of Natural Justice are not discretionary but required to be implemented mandatorily. The Hon’ble Supreme Court has observed that the principles of natural justice are those rules which have been laid down by courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, Quasi– judicial and administrative authority while making an order affecting those rights, as these rules are intended to prevent such authority from doing injustice. Considering the landmark judgement reported in AIR 1978 SC 597 in the case of Maneka Gandhi Vs UOI rendered by the Hon’ble Supreme Court, the Tribunal makes a note that “the ITA Nos. 278 to 284/RPR/2016 AY – 2006-2007 to 2012-2013 ITAT- Raipur Page 9 of 12 principle of Audi alteram partem is the basic concept of natural justice. The expression “Audi alteram partem” implies that a person must be given an opportunity to defend himself, and principle is a sine qua non of every civilized society. The right to notice, right to present case and evidence, right to rebut adverse evidence, right to cross- examination, right to legal representation, disclosure of evidence to party, report of inquiry to be shown to the other party and reasoned decisions or speaking orders.” The Hon’ble Supreme Court has laid down that rule of fair hearing is necessary before passing any order, the opportunity of being heard should be real, reasonable and effective and same should not be for namesake, it should not be a paper opportunity. The doctrine of natural justice is a facet of fair play in action and no person shall be saddled with a liability without being heard. 15. In the above context, we find infirmity with the impugned order of penalty passed by Ld AO u/s 271(1)(b) on the following reasons; 15.1 Left out the SCN in cold, the disputed penalty order was passed by the Ld AO much before the expiry of time allowed to comply with the SCN issued, which is clearly in violation of principle of natural justice of being head and shall discretely be liable to be quashed. We hold accordingly and answer the first question laid in para 11.1 negatively. 15.2 The language employed in section 271(1)(b) undoubtedly shows that, the penal provision so far as the compliance with respect to notices issued 142(1) and 143(2) are concern, is attracted only when there is total failure on the part of assessee and the assessment or re-assessment are completed in the absence of compliance sought, as it uses the word “failed” unlike for notice / ITA Nos. 278 to 284/RPR/2016 AY – 2006-2007 to 2012-2013 ITAT- Raipur Page 10 of 12 direction issued u/s 142(2). The term “failed” is general word neither defined in the Act nor finds a place in General Clauses Act 1987 [for short “General Cause”], in the event the meaning thereof can only be understood as it stands in general parlance or common parlance in accordance with its usage by many people in ordinary conversation. The word “failed” is past and past participle of the word “fail” originating from a Latin word “fallire” and as per oxford dictionary word “failed” means as under; a. not achieving its end or not lasting, b. having not succeeded, c. unsuccessful in doing or carrying out something etc. Thus, in our considered opinion, the plain and literal interpretation of provision of section 271(1)(b) suggests its applicability only where there is complete failure on the part of assessee to comply with the subject matter of notice and does not in any way suggest the delayed compliance before the finalisation of assessment or re-assessment proceedings . Now, coming to the facts of the case, assessee could not be held to have failed to comply with the SCN in question, since before passing the impugned order of penalty, the assessee complied with the notice based on which the assessment including re-assessment were culminated, hence by no stretch of imagination assessee can be held liable for the failure and made liable for 271(1)(b). We hold accordingly and answer second question laid at para 11.2 negatively. ITA Nos. 278 to 284/RPR/2016 AY – 2006-2007 to 2012-2013 ITAT- Raipur Page 11 of 12 16. While it shall be academic to deal with third and last question laid in para 11.3 hereof, however we have considered the same without expressing any opinion in the tabulated format as our answer thereto; 17. Since the grounds challenged by the appellant assessee in remaining six appeals namely ITA No 279 to 284/RPR/2016 are identical, we dispense with the reproduction thereof to avoid the duplication and the adjudication drawn herein 278/RPR/2016, shall mutatis-mutandis apply to ITA No 279 to 284/RPR/2016. 18. Resultantly, the appeal of the appellant assessee is allowed in above terms, with no order as to cost. Order pronounced on this Friday, 25 th day of February, 2022. -S/d- -S/d- RAVISH SOOD JAMLAPPA D. BATTULL JUDICIAL MEMBER ACCOUNTANT MEMBER रायपुर / RAIPUR ; दिनाांक / Dated : 25 th February, 2022 Sr P rovision P e rmu tation A sstt( s) No tic e( s) C o mp lianc e befo r e C ulminatio n o f A sstt o r r e-asstt No n-C o mp lianc e till C ulminatio n o f A sstt o r r e-asstt 1 Single Single No Penalty Leviable Penalty Leviable Per Asstt 2 Single Multiple No Penalty Leviable Penalty Leviable Per Asstt 3 Multiple Consolidated & Single No Penalty Leviable Single Penalty Leviable 4 Multiple Consolidated but multiple No Penalty Leviable Penalty Leviable Per Asstt 5 Multiple Multiple No Penalty Leviable Penalty Leviable Per Asstt 115WD(2) or 115WE(2) or 142(1) or 143(2) A ITA Nos. 278 to 284/RPR/2016 AY – 2006-2007 to 2012-2013 ITAT- Raipur Page 12 of 12 आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT (Appeals), Raipur (C.G) 4. The Pr. CIT, Raipur (C.G) 5. दवभागीय प्रदतदनदि, आयकर अपीलीय न्यायादिकरण, रायपुर बेंच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गार्डफ़ाइल / Guard File. आिेशानुसार / BY ORDER, // True Copy //दनजीसदचव / Private Secretary आयकर अपीलीय न्यायादिकरण, रायपुर बेंच, रायपुर / ITAT, Raipur Sr Event Occurrence Date Attributes 1 Draft dictated on 08/02/2022 Sr.PS/PS 2 Draft placed before author 09/02/2022 Sr.PS/PS 3 Draft proposed and placed before the second Member 10/02/2022 Ld JM 4 Draft discussed/approved by second Member 17/02/2022 Ld JM 5 Approved draft comes to the Sr. PS/PS 17/02/2022 Sr.PS/PS 6 Kept for pronouncement on 25/02/2022 Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the Asstt Registrar 11 Date of dispatch of order