ALPHA GENERAL LEASING & FINANCE LTD, MUMBAI V. ITO WD 9(1)-1, MUMBAI

ITA 2875/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62416 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 12-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Keywords: Reasonable cause; Non compliance

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI D.MANMOHAN (VP), JM AND SHRI RAJENDRA SINGH, A.M. ITA NO. : 2875/MUM/2011 ASSESSMENT YEAR : 2006-07 ALPHA GENERAL LEASING & FINANCE LTD. 11, PALM CREST, 191/192 ST. PAUL ROAD BANDRA(W) MUMBAI-400 050. PAN NO: AAACA 3338 A VS. INCOME TAX OFFICER WARD 9(1)-1 MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAMEER DALAL RESPONDENT BY : SHRI P.K.B. MENON DATE OF HEARING : 9.5.2012 DATE OF PRONOUNCEMENT : 16.5.2012 O R D E R PER RAJENDRA SINGH, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 5.1.2011 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07. TH E ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING LEVY OF PEN ALTY UNDER SECTION 271(1)(B) OF THE INCOME TAX ACT. 2. THE FACTS IN BRIEF ARE THAT THE AO DURING THE ASSESSM ENT PROCEEDINGS HAD ISSUED SEVERAL NOTICES UNDER SECTION 142(1 ) FIXING THE HEARING OF THE CASE ON 29.1.2008, 4.8.2008, 13.10.200 8, 26.11.2008 AND 3.10.2008. THERE WAS HOWEVER NO COMPLIANCE BY THE ASSESSEE TO ITA NO. 2875/M/11 A.Y.06-07 2 ANY OF THE NOTICES. THE AO THEREFORE, INITIATED PENAL TY PROCEEDINGS UNDER SECTION 271(1)(B) FOR NON COMPLIANCE AND LEVIED P ENALTY OF RS.10,000/- HOLDING THAT THE DEFAULT OF THE ASSESSEE WAS DELIBERATE. THE ASSESSEE DISPUTED THE DECISION OF AO AND SUBMITTED BEFO RE CIT(A) THAT NON COMPLIANCE TO THE NOTICES ISSUED BY AO WAS DUE TO REASONS BEYOND CONTROL AND NOT DELIBERATE. IT WAS EXPLAINED THAT TAXATION AND ACCOUNTING MATTERS WERE LOOKED AFTER BY M/S. B.M. JHAVE RI & CO. A PROPRIETARY CONCERN OF SHRI B.M. ZAVERI, CHARTERED ACC OUNTANT AND AFTER HIS DEMISE, THE TAXATION MATTERS WERE BEING LOOK ED AFTER BY SHRI DINESH GALA WHO WAS THE ASSISTANT OF SHRI JHAVERI. IT W AS FURTHER SUBMITTED THAT SHRI GALA IS A DIABETIC PERSON WHO HAD T O BE HOSPITALIZED DUE TO SEVERE DIABETES AND HIGH BLOOD PRE SSURE PROBLEM AND AFTER BEING DISCHARGED FROM THE HOSPITAL, HE WAS A DVISED THREE MONTHS BED REST BY HIS DOCTOR. IT WAS UNDER THESE CIRCUMSTA NCES THAT THE ASSESSEE COULD NOT COMPLY. CIT(A) HOWEVER DID NOT ACCE PT THE EXPLANATION GIVEN AND OBSERVED THAT CIRCUMSTANCES WERE NO T SUCH AS TO NOT COMPLY WITH THE NOTICE AND THAT THE ASSESSEE COULD HAVE SENT WRITTEN SUBMISSION. HE, THEREFORE, CONFIRMED THE LEVY OF PENALTY AGGRIEVED BY WHICH ASSESSEE IS IN APPEAL BEFORE THE TRIBU NAL. 3. BEFORE US, THE LD. AR SUBMITTED THAT THERE WAS A R EASONABLE CAUSE FOR NON COMPLIANCE OF NOTICE AS THE PERSON LOOKING A FTER TAXATION MATTERS WAS ILL AND HAD BEEN ADVISED BED REST FOR THREE MONTHS DURING THE RELEVANT PERIOD. IT WAS ALSO SUBMITTED THAT DURI NG THE APPELLATE PROCEEDINGS IN RELATION TO QUANTUM APPEAL, CIT(A) WAS SATISFIED THAT THERE WAS REASONABLE CAUSE FOR NON COMPLIANCE AND ACCORDIN GLY REMANDED THE MATTER TO THE AO AND AO IN THE REMAND PROCEEDINGS DATED 1.4.2010 HAD ALSO ACKNOWLEDGED THAT CIT(A) HAD REMANDED THE MATTER AS ASSESSEES REPRESENTATIVE WAS PREVENTED BY SUFFICIE NT CAUSE ITA NO. 2875/M/11 A.Y.06-07 3 FROM APPEARING BEFORE THE AO. THEREFORE, LEVY OF P ENALTY WAS NOT JUSTIFIED. LD. DEPARTMENTAL REPRESENTATIVE ON THE OTH ER HAND SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND ARGUED T HAT LIBERAL APPROACH IN PENALTY MATTERS WOULD ONLY ENCOURAGE NON CO MPLIANCE FROM TAX PAYERS. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING LEVY OF PENALTY UNDER SECTION 271(1)(B) FOR NON COMPLIANCE TO THE STATUTORY NO TICES. THERE IS NO DISPUTE THAT THE ASSESSEE HAD MADE NO COMPLIANCE TO THE SEVERAL NOTICES ISSUED BY AO. HOWEVER, PENALTY CAN NOT BE LEVIED IN EACH AND EVERY CASE OF DEFAULT. EACH CASE IS REQUIRED TO BE EXAMI NED TO FIND OUT IF THERE WAS ANY REASONABLE CAUSE FOR NON COMPLIANCE AND IN SUCH CASES WHERE THERE IS REASONABLE CAUSE PENALTY CAN NOT BE LE VIED. IN THE PRESENT CASE, THE ASSESSEE EXPLAINED THE CAUSE AS ILLNESS O F THE PERSON WHO LOOKS AFTER TAXATION MATTER, WHO WAS ADVISED BED REST. THIS EXPLANATION OF THE ASSESSEE HAS NOT BEEN FOUND TO BE UNTRUE. THEREFORE, IN OUR VIEW, ILLNESS OF THE PERSON LOOKING AFTER TAXATION MATTERS DOES CONSTITUTE REASONABLE CAUSE FOR NON COMPLIANCE. WE ALSO NOTE THAT CIT(A) HIMSELF IN THE QUANTUM APPEAL PROCEE DINGS ACKNOWLEDGED THE FACT THAT THERE WAS REASONABLE CAUSE FOR NON COMPLIANCE AND ON THAT GROUND HAD REMANDED THE MATTER BACK TO AO FOR FRESH EXAMINATION. THEREFORE HAVING ACKNOWLEDGED THAT THERE WAS REASONABLE CAUSE FOR NON COMPLIANCE, UPHOLDING OF PENALT Y BY CIT(A) IS NOT JUSTIFIED. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND IT A FIT CASE FOR LEVY OF PENALTY UNDE R SECTION 271(1)(B). WE ACCORDINGLY SET ASIDE THE ORDER OF CIT(A) AND DELETE THE PENALTY LEVIED. ITA NO. 2875/M/11 A.Y.06-07 4 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.05.2012 SD/- SD/- (D. MANMOHAN ) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 16.05.2012. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.