M/s. J.P. Petroleum, Mehsana V. The Income tax Officer,Patan Ward-4, Mehsana

ITA 3093/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6163 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 19-11-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Assessee Lawyers: VIVEK N CHAVDA
• Keywords: Reasonable cause; Non compliance
• Section: 143(3); 143(2); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. K. GARODIA , AM) ITA NO.3093/AHD/2009 A.Y .: 2006-07 M/S. J. P. PETROLEUM, 473/2, KADI CHATRAL HIGHWAY ROAD, KUNDAL, KADI, MEHSANA DIST. VS THE INCOME TAX OFFICER, PATAN WARD- 4, MEHSANA PA NO. AAEFJ 5907D (APPELLANT) (RESPONDENT) ITA NO.3094/AHD/2009 A.Y .: 2006-07 THE AGRICULTURAL PRODUCE MARKET COMMITTEE, KADI, MEHSANA VS THE INCOME TAX OFFICER, PATAN WARD- 4, MEHSANA PA NO. 6357 J (APPELLANT) (RESPONDENT) APPELLANT BY SHRI VIVEK N. CHAVDA, AR RESPONDENT BY SHRI S. K. MEENA, SR. DR O R D E R PER BHAVNESH SAINI: BOTH THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF THE LE ARNED CIT(A), GANDHINAGAR DATED 14-09-2009 AND 31-08-2009 FOR THE ASSESSMENT YEAR 2006-07, CONFIRMING THE LEVY OF PENALTY U/S 2 71 (1) (B) OF THE IT ACT OF RS.30,000/- EACH FOR THREE DEFAULTS. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. ITA NO.3093 TO 3094/AHD/2009 M/S. J. P. PETROLEUM VS ITO PATAN WARD-4,MEHSABNA THE AGRICULTURAL PRODUCE MARKET COMMITTEE VS ITO, P ATAN WARD 4, MEHSANA 2 3. BRIEFLY, THE FACTS IN THE CASE OF M/S. J. P. PET ROLEUM ARE THAT THE AO LEVIED PENALTY FOR NON-COMPLIANCE OF STATUTORY N OTICES ON FOUR OCCASIONS. THE AO GAVE SHOW CAUSE NOTICE TO THE ASS ESSEE BEFORE LEVY OF THE PENALTY BUT THE SAME WAS ALSO NOT COMPL IED WITH AND NO REPLY WAS FILED AT PENALTY STAGE ALSO. PENALTY OF R S.40,000/- WAS ACCORDINGLY LEVIED. IT WAS SUBMITTED BEFORE THE LEA RNED CIT(A) THAT THERE WAS SUFFICIENT CAUSE FOR NON-COMPLIANCE OF TH E NOTICES. IT WAS EXPLAINED THAT FOR THE NOTICE DATED 18-5-2007, IT W AS FIRST NOTICE TO ACQUIRE JURISDICTION, NOTICE DATED 15-01-2008 WAS A LONG QUESTIONNAIRE ISSUED BUT SHORT TIME OF TEN DAYS WAS GIVEN, FOR THE NOTICE DATED 9-06-2008 NO REPLY WAS FILED AND LASTL Y FOR THE NOTICE DATED 25-07-2008 IT IS EXPLAINED THAT AGAIN LONG QU ESTIONNAIRE WAS ISSUED AND SHORT TIME OF SIX DAYS WAS GIVEN. IT WAS FURTHER EXPLAINED THAT ULTIMATELY THE ASSESSEE ATTENDED THE PROCEEDIN GS LATER ON. ASSESSMENT ORDER U/S 143 (3) OF THE IT ACT WAS PASS ED. THEREFORE, THERE WAS NO MALA FIDE INTENTION ON THE PART OF THE ASSESSEE. THEREFORE, PENALTY MAY BE CANCELED. THE LEARNED CIT (A) ACCEPTED THE REPLY OF THE ASSESSEE THAT NOTICE DATED 25-07-2 008 WAS COMPLIED WITH BY THE ASSESSEE. FOR REST OF THE THREE NOTICES , THE LEARNED CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BECAU SE EVEN IF IT WAS A FIRST NOTICE IT SHOULD HAVE BEEN ATTENDED BY THE ASSESSEE AND THERE WAS NO REASONABLE CAUSE IN NOT ATTENDING THE REMAIN ING NOTICES EVEN IF LONG QUESTIONNAIRE WAS ISSUED AND SHORT TIME WAS GIVEN. THE LEARNED CIT(A) ACCORDINGLY CONFIRMED THE PENALTY FO R THREE DEFAULTS AND DISMISSED THE APPEAL OF THE ASSESSEE FOR NON-CO MPLIANCE OF THE THREE NOTICES. ITA NO.3093 TO 3094/AHD/2009 M/S. J. P. PETROLEUM VS ITO PATAN WARD-4,MEHSABNA THE AGRICULTURAL PRODUCE MARKET COMMITTEE VS ITO, P ATAN WARD 4, MEHSANA 3 3.1 IN THE CASE OF THE AGRICULTURAL PRODUCE MARKET COMMITTEE, SIMILARLY THERE WERE FOUR NON COMPLIANCES OF STATUT ORY NOTICES. THE ASSESSEE FILED VAGUE AND GENERAL REPLY AT THE PENAL TY STAGE, THEREFORE, FURTHER SHOW CAUSE NOTICE DATED 23-02-20 09 WAS ISSUED SEEKING THE EXPLANATION OF THE ASSESSEE WHICH WAS A LSO NOT COMPILED WITH BY THE ASSESSEE AND EVEN NO REPLY WAS FILED. T HE AO, THEREFORE, IMPOSED PENALTY OF RS.40,000/-. IT WAS SUBMITTED BE FORE THE LEARNED CIT(A) THAT THE NOTICE DATED 10-12-2007 WAS A NOTIC E TO ACQUIRE JURISDICTION AND ACCOUNTANT LEFT THE JOB, THEREFORE , IT WAS NOT COMPILED. THE NOTICE DATED 9-06-2008 WAS NOT COMPLIED WITH BE CAUSE THE CHARTERED ACCOUNTANT WAS SICK FOR 20 DAYS. THE NOTI CE DATED 23-7-2008 WAS NOT COMPLIED WITH BECAUSE OF THE WORK LOAD OF TAX AUDIT. FOR THE NOTICE DATED 4-08-2008, THE LEARNED CIT(A) NOTED THAT THE SAID NOTICE WAS ATTENDED AND COMPLIED WITH. FOR ALL THE ABOVE THREE NOTICES, THE LEARNED CIT(A) CONFIRMED THE PEN ALTY HOLDING THAT NO REASONABLE CAUSE EXPLAINED AND FURTHER NOT A SIN GLE PIECE OF PAPER OR EVIDENCE HAS BEEN FILED BEFORE HIM TO SUPP ORT THE EXPLANATION AND EVEN THE SHOW CAUSE NOTICE OF PENAL TY WAS ALSO NOT COMPLIED WITH. PENALTY WAS, THEREFORE, CONFIRMED F OR THE THREE NOTICES FOR NON-ATTENDING THE PROCEEDINGS ON 27-12- 2007, 30-6-2008 AND 4-08-2008. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE ASSESSEE HAS REASONABLE CAUSE FOR FAILURE TO CO MPLY WITH THE NOTICES ON THREE DATES EACH IN BOTH THE CASES AND S UBMITTED THAT SINCE NOTICES WERE COMPLIED WITH LATER ON AND ASSES SMENT WAS ITA NO.3093 TO 3094/AHD/2009 M/S. J. P. PETROLEUM VS ITO PATAN WARD-4,MEHSABNA THE AGRICULTURAL PRODUCE MARKET COMMITTEE VS ITO, P ATAN WARD 4, MEHSANA 4 FRAMED U/S 143(3) OF THE IT ACT, THEREFORE, PENALTY SHOULD NOT BE IMPOSED. HE HAS RELIED UPON THE ORDER OF ITAT DELHI BENCH IN THE CASE OF AKHIL BHARTIYA PRATHAMIK SHIKSHAK SANGH BHA WAN TRUST VS ADIT, 5 DTR 429 IN WHICH IT WAS HELD THAT ASSESSMENT HAVING BEEN MADE UNDER SECTION 143(3) AND NOT UNDER SECTION 144, IT MEANS THAT SUBSEQUENT COMPLIANCE IN THE ASSESSMENT PROCEEDINGS WAS CONSIDERED AS GOOD COMPLIANCE AND T HE DEFAULTS COMMITTED EARLIER WERE IGNORED BY THE AO H ENCE PENALTY UNDER SECTION 271 (1) (B) COULD NOT BE LEVI ED. 5. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE D ID NOT COMPLY WITH ANY OF THE STATUTORY NOTICES AND EVEN THE SHOW CAUSE NOTICE ISSUED BEFORE LEVY OF THE PENALTY WAS ALSO NOT COMP LIED WITH. THEREFORE, CONDUCT OF THE ASSESSEE SHOWS THAT STATU TORY NOTICES WERE DELIBERATELY NOT COMPLIED WITH. THEREFORE, PENALTY WAS RIGHTLY CONFIRMED BY THE LEARNED CIT(A). 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IN THE CAS E OF M/S. J.P. PETROLEUM THE ASSESSEE GAVE EXPLANATION THAT FIRST NOTICE WAS ISSUED TO ACQUIRE JURISDICTION TO MAKE ASSESSMENT AND FURT HER NOTICES WERE ISSUED WITH LONG QUESTIONNAIRE BUT SHORT TIME WAS G IVEN AND NO FURTHER REPLY WAS FILED. IN THE CASE OF THE AGRICUL TURAL PRODUCE MARKET COMMITTEE IT WAS SIMILARLY EXPLAINED THAT THE FIRST NOTICE WAS ISSUED TO ACQUIRE JURISDICTION TO MAKE SCRUTINY ASSESSMENT AND THE ACCOUNTANT LEFT THE JOB. FOR FURTHER NOTICES, EITHE R THE CHARTERED ACCOUNTANT WAS ILL OR HE WAS BUSY IN TAX AUDIT, THE REFORE, NOTICES HAVE ITA NO.3093 TO 3094/AHD/2009 M/S. J. P. PETROLEUM VS ITO PATAN WARD-4,MEHSABNA THE AGRICULTURAL PRODUCE MARKET COMMITTEE VS ITO, P ATAN WARD 4, MEHSANA 5 NOT BEEN COMPLIED WITH. BEFORE PROCEEDING FURTHER, WE MAY NOTE THAT IN THE CASE OF M/S. J. P. PETROLEUM, THE ASSESSEE D ID NOT COMPLY WITH SHOW CAUSE NOTICE ISSUED BEFORE LEVY OF THE PENALTY AND NO EXPLANATION HAS BEEN GIVEN AS TO WHY THERE WAS NON- COMPLIANCE ON THE PART OF THE ASSESSEE. SIMILARLY, IN THE CASE OF THE AGRICULTURAL PRODUCE MARKET COMMITTEE THE ASSESSEE INITIALLY GAV E GENERAL REPLY AND WHEN FURTHER SHOW CAUSE NOTICES WERE ISSUED TO EXPLAIN NON- COMPLIANCE OF THE NOTICES FOR LEVY OF THE PENALTY, THE ASSESSEE DID NOT COMPLY WITH THE NOTICES AND DID NOT APPEAR BEFORE T HE AO AND NO EXPLANATION WAS FILED AS TO WHY STATUTORY NOTICES W ERE NOT COMPLIED WITH. THESE FACTS WOULD CLEARLY INDICATE THAT THE A SSESSEE NOT ONLY AT THE ASSESSMENT STAGE BUT AT THE PENALTY STAGE ALSO DID NOT COMPLY WITH THE STATUTORY NOTICES AND EVEN NO REPLY WAS FI LED INCOMPLIANCE TO THE SHOW CAUSE NOTICE ISSUED BEFORE LEVY OF THE PEN ALTY. THE HONBLE M. P. HIGH COURT IN THE CASE OF VIMAL GINNING AND P RESSING FACTORY VS CIT, 279 ITR 100 AND IN THE CASE OF RUKMINI BAI VS CIT, 276 ITR 650 HELD THAT THE EXPLANATION COULD BE SAME AS THAT GIVEN BEFORE THE AO AND IF THAT HAD BEEN SO, IT WOULD HAVE HAD T O BE LOOKED INTO IN THE PENALTY PROCEEDINGS BUT WHEN NO EXPLANA TION WAS FILED, IT COULD NOT BE TAKEN INTO CONSIDERATION . IF THE ASSESSEE FAILS TO EXPLAIN THE ISSUE AT THE PENALTY STAGE, LE VY OF PENALTY IS JUSTIFIED. WE MAY FURTHER NOTE THAT THE REPLY OF THE ASSESSEE BEFORE THE LEARNED CIT(A) WAS ALSO NOT SUBSTANTIATED THROU GH EVIDENCES AND WOULD ALSO NOT DISCLOSE ANY REASONABLE CAUSE FOR FA ILURE TO ATTEND THE PROCEEDINGS BEFORE THE AO. THE ASSESSEE DID NOT ATT END THE FIRST NOTICE BECAUSE IT WAS NOTICE TO ACQUIRE JURISDICTIO N OR THAT THE ITA NO.3093 TO 3094/AHD/2009 M/S. J. P. PETROLEUM VS ITO PATAN WARD-4,MEHSABNA THE AGRICULTURAL PRODUCE MARKET COMMITTEE VS ITO, P ATAN WARD 4, MEHSANA 6 ACCOUNTANT LEFT THE JOB. IT IS NO GROUND TO DISOBEY THE STATUTORY NOTICE U/S 143(2) OF THE IT ACT BECAUSE THE ASSESSEE SHALL HAVE TO PRODUCE MATERIAL AND DOCUMENTS IN SUPPORT OF RETURN OF INCO ME ON ISSUE OF SUCH NOTICES. FURTHER NOTICES WERE NOT COMPLIED WIT H BY THE ASSESSEE BECAUSE SHORT TIME WAS GIVEN FOR COMPLIANCE OF LONG QUESTIONNAIRE. IF NO SUFFICIENT TIME WAS GIVEN TO COMPLY WITH THE LON G QUESTIONNAIRE, THE ASSESSEE SHALL HAVE TO MAKE REQUEST TO THE AO T O EXTEND THE PERIOD OF COMPLIANCE. HOWEVER, NO STEP HAS BEEN TAK EN IN THIS REGARD ALSO. FURTHER, FOR ILLNESS OF THE CHARTERED ACCOUNT ANT OR HE IS BUSY IN TAX AUDIT, NO EVIDENCE WAS FILED BEFORE THE LEARNED CIT(A). THESE FACTS WOULD SHOW THAT IN BOTH THE CASES, THE ASSESS EE DELIBERATELY DID NOT COMPLY WITH STATUTORY NOTICES AND THERE WAS NO REASONABLE CAUSE FOR FAILURE TO COMPLY WITH THE NOTICES. IN THE CASE OF M/S. J. P. PETROLEUM, ADDITION WAS MADE ON ACCOUNT OF LOW GROS S PROFIT BECAUSE THE DETAILS FURNISHED BY THE ASSESSEE WERE NOT SUFF ICIENT TO CONVINCE THE AO TO ACCEPT THE RETURN OF INCOME. EVEN, AFTER APPEAL EFFECT OF LEARNED CIT(A), PART ADDITION IS MAINTAINED AS PER ORDER OF THE AO FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE. IN T HE CASE OF THE AGRICULTURAL PRODUCE MARKET COMMITTEE THE AO NOTED THAT THE ASSESSEE HAS NEITHER FURNISHED ANY ANNEXURE TO THE AUDIT REPORT NOR ANY PROOF RELATING TO PAYMENT OF PF AND GRATUITY ON VARIOUS DATES. IN THE ABSENCE OF ANY MATERIAL, ADDITION WAS MADE ON A CCOUNT OF PROVIDENT AND GRATUITY. NO PROOF OF PAYMENT WAS FIL ED BEFORE THE AO. THE LEARNED COUNSEL FOR THE ASSESSEE FILED COPY OF THE ORDER OF ITAT AHMEDABAD BENCH FOR THE SAME ASSESSMENT YEAR DATED 13-06-2011 IN ITA NO.3438/AHD/2009 WHEREBY THE APPEAL OF THE ASSESSEE HAS BEEN ITA NO.3093 TO 3094/AHD/2009 M/S. J. P. PETROLEUM VS ITO PATAN WARD-4,MEHSABNA THE AGRICULTURAL PRODUCE MARKET COMMITTEE VS ITO, P ATAN WARD 4, MEHSANA 7 DISMISSED. IT IS THUS CLEAR THAT EVEN AT THE ASSESS MENT STAGE, THE ASSESSEE FAILED TO FILE REQUIRED DETAILS BEFORE THE AO FOR COMPLETION OF THE ASSESSMENT. IN VIEW OF THESE FACTS, IT IS CLEAR THAT AT EVERY STAGE OF THE ASSESSMENT OR THE PENALTY PROCEEDINGS, THE C ONDUCT OF THE ASSESSEE REMAINED NON-COOPERATIVE AND NO PROPER DET AIL WAS FILED AND EVEN NO PROPER EXPLANATION WAS GIVEN TO THE AO FOR FAILURE TO COMPLY WITH THE STATUTORY NOTICES. IN THE BACKGROUN D OF THESE FACTS, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED F OR IN THE ORDER OF THE LEARNED CIT(A). THE DECISION OF ITAT DELHI BENCH IN THE CASE OF AKHIL BHARTIYA PRATHAMIK SHIKSHAK SANGH BHAWAN TRUST VS A DIT, 5 DTR 429 IS, THEREFORE, CLEARLY DISTINGUISHABLE FROM THE FACTS OF THESE CASES, BECAUSE NOTHING IS CLEAR IN THE ORDER WHETHE R ADDITIONS WERE FURTHER MADE EVEN IF THE ORDER WAS PASSED U/S 143(3 ) OF THE IT ACT. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21-07-2011 SD/- SD/- (A. K. GARODIA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 21-07-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD