Alok Kumar Agarwal, New Delhi V. JCIT, New Delhi

ITA 315/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4310 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 21-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANOOSHA KHURANA
• Keywords: Bonafide belief
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER I.T.A NO. 315/DEL/10 ASSTT. YEAR : 2006-07 ALOK KUMAR AGARWAL, 56, SFS FLATS ASHOK VIHAR, PHASE-IV, NEW DELHI 110 052 PAN AAJPA1283A VS. JCIT RANGE-19, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SANDEEP SAPRA, ADVOCATE RESPONDENT BY: MS. ANOOSHA KHURANA, SR. DR ORDER PER RAJPAL YADAV : JM THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 15.10.2009 PASSED FOR ASSTT. YEAR 2006 -07. THE SOLITARY GRIEVANCE OF ASSESSEE IS THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF ` 10,000/- IMPOSED BY THE AO U/S 271 (1)(B) OF THE I NCOME TAX ACT 1961. 2. LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE BY THE ITA NO. 315 /DEL/10 ASSTT. YEAR 2006-07 2 ORDER OF ITAT PASSED IN ITA 316/D/2010 IN THE CASE OF ANKIT AGARWAL WHO IS A FAMILY MEMBER OF THE ASSESSEE. SHRI ANKIT AGARWAL AND THE ASSESSEE BOTH ARE RESIDING AT 56 SFS, DDA FLATS, AS HOK VIHAR, DELHI. THE PENALTY HAS BEEN IMPOSED BY THE AO ON THE GROUN D THAT HE FAILED TO APPEAR IN RESPONSE TO THE NOTICES ISSUED BY HIM. TH E CHARTERED ACCOUNTANT WHO HAS CONDUCTED THE PROCEEDING BEFORE THE AO HAS GIVEN A CERTIFICATE DEMONSTRATING THE FACTS THAT ASSESSEE HAS NOT COMMITTED ANY DEFAULT IN APPEARING BEFORE THE AO. THE ASSESSE E HAS FILED ADJOURNMENT APPLICATION BEFORE THE AO. LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT PROCEEDING IN THE CASE OF ASSESSE E AS WELL AS IN THE CASE OF ANKIT AGARWAL WERE TAKEN UP ON THE SAME DAT E OF HEARING, A SIMILAR CERTIFICATE HAS BEEN GIVEN BY SHRI ASHUTOSH AGARWAL, CHARTERED ACCOUNTANT. TRIBUNAL HAS REPRODUCED THAT CERTIFICAT E. HE RELIED UPON THE TRIBUNALS ORDER. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES BELOW. 3. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT THERE IS NO DIS PARITY ON FACTS. PROCEEDING WERE TAKEN BY THE AO SIMULTANEOUSLY IN T HE CASE OF ANKIT AGARWAL AS WELL AS IN THE CASE OF ASSESSEE. SIMILAR TYPE OF DEFAULTS WERE STATED BY THE AO AND AN IDENTICAL EXPLANATION WAS O FFERED BY THE ITA NO. 315 /DEL/10 ASSTT. YEAR 2006-07 3 ASSESSEE. ORDER OF THE TRIBUNAL IN THE CASE OF ANKI T AGARWAL READ AS UNDER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 15.10.20 09 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF IN COME TAX (APPEALS) IS NOT CORRECT IN CONFIRMING THE PENALTY OF ` 10,000/- IMPOSED U/S. 271(1)(B) OF THE I.T. ACT, 1961. 3. IN THIS CASE ASSESSEE FILED ITS RETURN OF INCO ME FOR ASSESSMENT YEAR 2006-07. THE SAME WAS SELECTED FOR SCRUTINY. IN T HE PENALTY ORDER IT IS WRITTEN THAT NOTICES WAS SERVED ON 9.8.2007, REQUIR ING HIM TO PRODUCE CERTAIN DETAILS BEFORE THE ACIT, NEW DELHI ON 10.9.2007. HOWEVER, HE FAILED TO APPEAR OR SUBMIT AN APPLICATION FOR ADJOURNMENT. T HEN IT IS NOTED IN THE PENALTY ORDER THAT NOTICE U/S 132(2) WAS SENT ASKIN G THE ASSESSEE TO APPEAR ON 13.10.2007. ASSESSEE FAILED TO APPEAR AND SUB MIT ANY APPLICATION FOR ADJOURNMENT. HE WAS THEN ISSUED NOTICE U/S 143(2 ) DATED 5.11.2007 ASKING HIM TO APPEAR ON 14.11.2007. THE ASSESSEE FAILED TO COMPLY. THE ASSESSEE WAS ISSUED NOTICE OF INITIATION OF PENALTY PROCEEDI NGS U/S 271. ASSESSEE APPEARED AND REQUESTED FOR FURTHER TIME TILL 10.12 .2007, TO SUBMIT HIS EXPLANATION. HOWEVER, NO COMPLIANCE MADE ON 10.12. 2007. IN THE ABOVE BACKGROUND PENALTY WAS IMPOSED OF ` 10,000/- U/S 27 1(1)(B) FOR ASSESSEES FAILURE TO COMPLY WITH THE NOTICE U/S 143(2) DATED 5.11.2007. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOM E TAX (APPEALS) CONFIRMED THE PENALTY. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 6. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE A SSESSING OFFICER IS NOT CORRECT IN LEVYING THE PENALTY FOR NON COMPLIA NCE. IN THIS REGARD HE SUBMITTED A CERTIFICATE FROM THE ASSESSEES CONSULT ANT WHICH READS AS UNDER:- CERTIFICATE THIS IS TO CERTIFY AND CONFIRM THAT I, ASHUTOSH A GGARWAL, S/O SHRI SUSHIL KUMAR AGGARWAL, R/O 34-A, MANSAROVER APARTME NT, SECTOR-61, NOIDA UP 201301 AM PRACTICISING AS A CHARTERED ACCO UNTANT AS PARTNER UNDER THE NAME AND STYLE OF M/S ALOK AND COMPANY. 2. I HAD BEEN ENGAGED BY SHRI ANKIT AGGARWAL TO CO NDUCT HIS INCOME TAX CASE FOR THE ASSESSMENT YEAR 2006-07 BEF ORE THE ASSESSING OFFICER U/S 143(2) OF IT ACT. 3. I HAVE GONE THROUGH THE PENALTY ORDER DATED 11.1 2.2007 PASSED U/S 271(1)(B) OF IT ACT IN THE CASE OF SHRI ANKIT A GGARWAL FOR THE ITA NO. 315 /DEL/10 ASSTT. YEAR 2006-07 4 ASSESSMENT YEAR 2006-07 AND VARIOUS OBSERVATIONS OF THE ASSESSING OFFICER ARE FACTUALLY INCORRECT: A) ..IN THIS REGARD HE WAS SERVED A NOTICE U/S 14 2(1) DATED 9.8.2007, REQUIRING HIM TO PRODUCE CERTAIN DETAILS BEFORE THE ACIT 19(1) ON 10.9.20078. HE, HOWEVER, FAILED TO APPEAR OR SUBMIT AN APPLICATION FOR ADJOURNMENT. THE OBSERVATIONS ARE FACTUALLY INCORRECT AS ADJOURN MENT APPLICATION DATED 21.9.2007 WAS DULY FILED AND THE CASE WAS ADJ OURNED TO 3.10.2007, COPY PLACED AT PAGE 4 OF THE PAPER BOOK. B) HE WAS THEN ISSUED A NOTICE U/S 143(2) ASKING H IM TO APPEAR BEFORE THE UNDERSIGNED ON 30.10.2007. THE ASSESSEE FAILED TO APPEAR OR SUBMIT AN APPLICATION FOR ADJOURNMENT. THE OBSERVATION ARE ALSO FACTUALLY INCORRECT AS I H AD VISITED THE INCOME TAX OFFICE ON 30.10.2007. HOWEVER, AS THE ASSESSI NG OFFICER WAS NOT IN HIS ROOM, I CONTACTED THE STAFF OF THE ASSESSIN G OFFICER AND WAS INFORMED THAT THERE WAS NOTHING TO WORRY AS AFORES AID NOTICE U/S 143(2) WAS A PRELIMINARY NOTICE AND THE CASE WOULD ACTUALL Y BE TAKEN UP NEXT YEAR AS PRESENTLY THE ASSESSING OFFICER IS BUSY I S FINALIZING THE ASSESSMENTS FOR THE ASSESSMENT YEAR 2005-06 WHICH H AVE TO BE COMPLETED BY 31.12.2007. C) HE WAS THEN ISSUED ANOTHER NOTICE U/S 143(2) DA TED 5.11.2007 ASKING HIM TO APPEAR ON 14.11.2007. THE ASSESSEE A GAIN FAILED TO APPEAR OR SUBMIT AN APPLICATION FOR ADJOURNMENT. SUCH OBSERVATIONS ARE ALSO FACTUALLY INCORRECT AS I MET THE ASSESSING OFFICER PERSONALLY ON 14.11.2007 AND WAS INFORMED BY HIM THAT A DETAILED QUESTIONNAIRE WOULD BE ISSUED SHORTLY AND COMPLIANCE OF THE SAME SHOULD BE MADE. 4. COPY OF ASSESSMENT ORDER DATED 29.12.2008 PASSED U/S 143(3) IN THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONS IDERATION A PAGE 5-6 OF THE PAPER BOOK FROM WHICH IT IS EVIDENT THAT THE ASSESSMENT WAS COMPLETED ON RETURNED INCOME. DATE: 27.12.2010 (ASHUTOSH AGGRWAL) CHARTERED ACCOUNTANT 7. IN THE LIGHT OF THE ABOVE, ASSESSEES COUNSEL P LEADED THAT PENALTY IN PENALTY IN THIS REGARD MAY BE DELETED. HE FURTHE R CLAIMED THAT ASSESSMENT U/S 143(3) HAS BEEN DONE IN THIS CASE ON THE RETURN ED INCOME ONLY. 7.1 LD. DEPARTMENTAL REPRESENTATIVE ON THE OTH ER HAND RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7.2 WE HAVE HEARD BOTH THE COUNSEL AND PERUS ED THE RECORDS. IN OUR ITA NO. 315 /DEL/10 ASSTT. YEAR 2006-07 5 CONSIDERED OPINION, IN LIGHT OF THE SUBMISSIONS MA DE BY THE ASSESSEES CONSULTANT, SOME OF THE OBSERVATIONS BY THE ASSESSI NG OFFICER ARE NOT FACTUALLY CORRECT AND FURTHER IT IS TO BE BORNE IN MIND THAT ASSESSMENT WAS MADE ON THE RETURNED INCOME. IN OUR CONSIDERED OPI NION, PENALTY U/S 271(1)(B) IS NOT LEVIABLE IN THIS CASE. 8. IN THIS REGARD, WE PLACE RELIANCE FROM THE APEX COURT DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LOR DSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 W HEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A S TATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIB ERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPO SED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVA NT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPET ENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WH EN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHER E THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 9. IN THE BACKGROUND OF THE AFORESAID DISCUSSION A ND PRECEDENT, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELE TE THE PENALTY. 4. TAKING INTO CONSIDERATION THE SIMILARITY OF THE FACTS AND CIRCUMSTANCES AND THE ORDER OF THE TRIBUNAL, WE AL LOW THE APPEAL OF ASSESSEE AND DELETE THE PENALTY. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH APRIL, 2011. SD/- SD/- [G.E.VEERABHADRAPPA] [RAJPAL YADAV] VICE PRESIDENT JUDICIAL MEMBER DATED: 19.4.2011 VEENA ITA NO. 315 /DEL/10 ASSTT. YEAR 2006-07 6 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BEN CHES