Zunzubhai P.Patel, Surat V. The ACIT.,Circle-3, Surat

ITA 3194/AHD/2009

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6435 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 27-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI RAJ KUMAR
• Keywords: Principle of natural justice; Reasonable cause; Non compliance
• Section: 273B; 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI T K SHARMA,JM & SHRI A N PAHUJA,AM ITA NO.3194/AHD/2009 (ASSESSMENT YEAR:-2006-07) SHRI ZUNZABHAI P PATEL, 7, GREEN HOUSE, KAILASHNAGAR, SURAT V/S ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-2, ROOM NO. 110,AAYKAR BHAVAN, SURAT PAN: AFFPP 0199 F [APPELLANT] [RESPONDENT] ASSESSEE BY :- NONE (WRITTEN SUBMISSIONS) REVENUE BY:- SHRI JAI RAJ KUMAR, DR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE, AGAINST AN ORDER DAT ED 24-09-2009 OF THE LD. CIT(APPEALS)-II, SURAT, FOR T HE ASSESSMENT YEAR 2006-07, RAISES THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT (A)-II, SURAT, HAS ERRED IN SUSTAINING THE PENA LTY OF 10000/- U/S 271(1)(B) OF THE ACT . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE PENALTY DESERVES TO BE DELETED, HENCE, IT IS PRAYED TO YOUR HONOUR TO DO THE JUSTICE AND DELETE THE PENALTY ON THE GROUND OF NATURAL JUSTICE. 3. YOUR APPELLANT RESERVES HIS RIGHT TO ADD, AMEN D, ALTER AND/ OR WITHDRAW ANY GROUND OF APPEAL AT THE TIME OF HEARING OF THE APPEAL . 2 NONE APPEARED BEFORE US ON BEHALF OF THE ASSESSEE AND INSTEAD WRITTEN SUBMISSIONS HAVE BEEN FILED. CONSID ERING THE NATURE OF ISSUE INVOLVED , WE, THEREFORE, DECIDED TO DISPO SE OF THE APPEAL IN THE LIGHT OF THESE WRITTEN SUBMISSIONS AFTER HEARIN G THE LEARNED DEPARTMENTAL REPRESENTATIVE. 3 ADVERTING TO GROUND NO.1 IN THE APPEAL, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.12,50,852/- FILED ON 28-03-2007 BY THE ASSESSEE AFTER BEING PRO CESSED U/S 143(1) OF THE INCOME-TAX ACT,1961[HEREINAFTER REFER RED TO AS THE 2 ITA NO.3194/AHD/2009 2 ACT], WAS SELECTED FOR SCRUTINY WITH THE SERVICE O F A NOTICE U/S 143(2) OF THE ACT ISSUED ON 27-09-07.NONE RESPONDED TO THE SAID NOTICE. THE NOTICE DATED 21-07-08 ISSUED U/S 143(2) AND 142(1) OF THE ACT ALONG WITH A DETAILED QUESTIONNAIRE ALSO WA S NOT COMPLIED WITH. ACCORDINGLY, THE AO ISSUED A NOTICE U/S 271 (1)(B) OF THE ACT 06.10. 2008 ASKING THE ASSESSEE AS TO WHY PENALTY U/S 271( 1)(B) SHOULD NOT BE LEVIED FOR THE NON COMPLIANCE OF THE AFORESAID NOTICES. AG AIN NO RESPONSE NOR ANY WRITTEN SUBMISSIONS WERE FILED. IN THESE CIRCUMSTAN CES, THE AO IMPOSED A PENALTY OF RS.10,000/- U/S. 271(1)(B) OF THE ACT 4 ON APPEAL, THE LEARNED CIT(A) UPHELD THE LEVY OF PENALTY IN THE FOLLOWING TERMS:- 4. IN HIS WRITTEN SUBMISSION, THE AR HAS CONTENDED THAT WITH REGARD TO THE FIRST NOTICE DATED 27-09-2007, THE THEN AR OF T HE ASSESSEE SNRI KIRANBHAI SHALL HAD ATTENDED THE HEARING BUT NO REM ARK WAS PUT ON THE ORDER SHEET. HOWEVER, AT THE TIME OF THE SECOND NOT ICE, THE SERVICES OF SHRI KIRANBHAI SHAH WAS TERMINATED DUE TO SOME DISPUTE A ND SINCE NO NEW REPRESENTATIVE WAS APPOINTED, NO ONE ATTENDED ON BE HALF OF THE ASSESSEE. WITH REGARD TO THE THIRD NOTICE, THE AR HAS SUBMITT ED THAT DURING THE RELEVANT PERIOD, THE ASSESSEE, WHO IS MORE THAN 70 YEARS OF AGE, WAS HOSPITALIZED, DUE TO WHICH HE COULD NOT: CONVEY THE NOTICE TO THE NEW AR, SHRI PRADEEP SINGHI. IF IS THE CONTENTION OF THE AR THAT THERE WAS NO MALAFIDE INTENTION ON THE PART OF THE ASSESSEE TO N OT TO COMPLY WITH THE NOTICES. IT HAS THUS BEEN REQUESTED THAT THE PENALT Y BE DELETED . 5. I HAVE CAREFULLY CONSIDERED THE MATTER. I DO NOT FIND ANY MERIT IN THE SUBMISSION OF THE ASSESSEE AS RECORDED IN THE 'STAT EMENT OF FACTS, REPEATED OPPORTUNITIES HAD BEEN PROVIDED TO THE ASS ESSEE VIDE NOTICES DATED 27-09-2007, 21-07-2008 AND 06-10-2008 YET, TH ERE WAS NO COMPLIANCE ON PART OF THE ASSESSEE OR HIS AR. AS RE GARDS THE NOTICE DATED 27-09-2007, VIDE WHICH THE HEARING WAS FIXED ON 11- 10-2007, THE CONTENTION THAT THE AR HAD MET THE AO AND NO REMARK WAS PUT ON THE ORDER SHEET, IS NOT SUPPORTED BY ANY EVIDENCE. THER E WAS NO COMPLIANCE TO ANY OF THE NOTICES. NEITHER DID ANYONE APPEAR NO R WAS ANY SUBMISSION FURNISHED. THERE WAS NO RESPONSE EITHER TO THE NOTI CES OR TO THE SHOW- CAUSE NOTICE ISSUED BY THE AO. WHAT HAS BEEN STATED IN THE 'STATEMENT OF FACTS IS VERY VAGUE AND UNSUBSTANTIATED, SUCH REPE ATED NON-COMPLIANCE CLEARLY CONSTITUTED DEFAULT U/S 271(L)(B) OF THE AC T, AND CONSEQUENTLY, THE AO WAS FULLY JUSTIFIED IN LEVYING THE PENALTY OF RS .10,000/-, WHICH IS CONFIRMED. 3 ITA NO.3194/AHD/2009 3 5 THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A).IN HIS WRITTEN SUBMI SSIONS, THE ASSESSEE POINTED OUT THE FOLLOWING DETAILS OF NOTIC ES ISSUED AND COMPLIANCES:- SR. NO. NOTICE ISSUED U/S DATE OF NOTICE DATE OF HEARING APPELLANTS PLEA 1 143(2) 27-09-07 11-10-07 NOTICE RECEIVED INTIMATI NG THAT THE CASE IS SELECTED FOR SCRUTINY AND FIXING HEARING ON 11-10-2007. SRI KIRANBHAI SHAH, AR OF THE APPELLANT, ATTENDED THE HEARING. HE HAD BEEN INFORMED THAT THIS WAS FORMAL NOTICE FOR HEARING. HOWEVER, NO ATTENDANCE WAS RECORDED, SINCE THE AO WAS BUSY IN OTHER TIME BARRING ASSESSMENT. 2 142(1) 21-07-08 05-08-08 ERSTWHILE CA, SHRI KIRAN BHAI SHAH, WHO WAS HANDLING APPELLANTS TAX MATTER, HAS LEFT AND THE APPELLANT WAS IN SEARCH OF NEW COUNSEL FOR MAKING COMPLIANCE DEMANDED BY THE IT DEPARTMENT, HENCE NOT ABLE TO ATTEND. 3 SHOW CAUSE NOTICE FOR PENALTY U/S 271(1)(B) OF THE IT ACT 06-10-08 13 -10-08 DUE TO ILL HEALTH, THE APPELLANT, WHO IS HAVING AGE OF MORE THAN 70 YEARS, WAS HOSPITALIZED AND NOT ABLE TO CONVEY THE NOTICE TO HIS NEW REPRESENTATIVE SHRI PRADEEP KUMAR SINGHI. IN THE LIGHT OF THESE DETAILS, WHILE RELYING UPO N DECISIONS IN THE CASE OF SWARNABEN M KHANNA & OTHERS VS. DCIT [2010] 132 TTJ (AHD) (UO) 1 AND AKHIL BHARTIYA PRATHMIK SHIKSHAK S ANGH BHAWAN TRUST VS. ASSISTANT DIRECTOR OF INCOME-TAX,115 TTJ 419 (DEL), THE ASSESSEE SUBMITTED THAT THE COMPLETE DETAILS HAVIN G BEEN SUBMITTED BEFORE THE AO DURING THE ASSESSMENT PROCE EDINGS, PENALTY SHOULD BE CANCELLED. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE IMPUGNED ORDER . 6. WE HAVE HEARD THE LEARNED DR AND GONE THROUGH TH E FACTS OF THE CASE AS ALSO THE AFORESAID DECISIONS OF THE ITA T. SECTION 271(1)(B) READ WITH SEC. 273B OF THE ACT LAYS DOWN THAT IF THE AO OR THE CIT(A) OR THE CIT, IN THE COURSE OF ANY PROCEED ING UNDER THIS ACT, IS SATISFIED THAT ANY PERSON HAS WITHOUT REASO NABLE CAUSE FAILED 4 ITA NO.3194/AHD/2009 4 TO COMPLY WITH NOTICE UNDER SUB-SECTION (1) OF SECT ION 142 OR SUBSECTION (2) OF SEC. 143 OF THE ACT, HE MAY DIREC T THAT SUCH PERSON SHALL PAY PENALTY OF RS. 10,000/- FOR EACH SUCH FAI LURE. THE WORDINGS OF THESE SECTIONS ARE EXPLICIT THAT A PERSON WHO HA S FAILED TO COMPLY WITH THE NOTICE MUST SHOW REASONABLE CAUSE. THE ONU S IS UPON THE ASSESSEE. ONUS MAY NOT BE VERY HEAVY AS IT IS UPON THE PROSECUTION IN A CRIMINAL CASE. THE QUESTION OF ONUS MAY BE DEC IDED UPON PROBABILITY BUT IT IS FOR THE ASSESSEE TO SHOW THAT THERE IS REASONABLE CAUSE. HONBLE PATNA HIGH COURT IN CIT VS. STANDARD MERCANTILE CO.,160 ITR 613 HELD THAT THE ABSENCE OF MENSREA OR FAILURE OF THE REVENUE TO ESTABLISH MENSREA, ARE ENTIRELY IRRELEVA NT IN PENALTY PROCEEDINGS U/S 271(1)(B) OF THE ACT. IN THE CASE U NDER CONSIDERATION, WE FIND THAT THE LD. CIT(A) UPHELD T HE LEVY OF PENALTY FOR DEFAULT IN COMPLYING WITH NOTICES ISSUED ON 27 .9.2007 & 21.7.2008 ON THE GROUND THAT THERE WAS NO REASONABL E CAUSE. THE ASSESSEE EXPLAINED BEFORE THE LD. CIT(A) THAT FIRST NOTICE ISSUED ON 27.9.2007 INTIMATED THAT THE CASE WAS SELECTED FOR SCRUTINY. SRI KIRANBHAI SHAH , AR OF THE APPELLANT, ATTENDED THE HEARING. HE HAD B EEN INFORMED THAT THIS WAS FORMAL NOTICE FOR HEARING AND THE AO DID NOT MARK H IS ATTENDANCE. THE LD. CIT(A) DID NOT VERIFY THESE SUBMISSIONS NOR CALLED FOR ANY REPORT FROM THE AO . EVEN OTHERWISE, THE AO DID NOT PURSUE THIS NOTICE SINCE SECOND NOTICE OF HEARING WAS ISSUED ALMOST ONE YEAR THEREAFTER. AS REGARDS SECO ND NOTICE DATED 21.7.2008 , THE ASSESSEE SUBMITTED THAT THE ASSESSE WAS IN SEAR CH OF NEW COUNSEL ,EARLIER HAVING LEFT. FOR NOT RESPONDING TO SHOW CAUSE NOT ICE, THE ASSESSEE PLEADED THAT HE BEING SEVENTY YEARS OLD WAS HOSPITALIZED AND CO ULD NOT ATTEND THE HEARING . THE LD. CIT(A) REJECTED THESE CONTENTIONS BEING VAG UE AND UNSUBSTANTIATED . HOWEVER, WE FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 12.12.2008 AND ALL THE RELEVANT DETAILS WERE SUBMITTED BY SHRI PRAKASH KAPOORIA,CA, REPRESENTATI VE OF THE ASSESSEE. NO DEFAULT WHATSOEVER HAS BEEN MENTIONED IN THE ASSESS MENT ORDER NOR ANY ADDITION HAS BEEN MADE FOR WANT OF ANY DETAILS. IN AKHIL BHA RTIYA PRATHMIK SHIKSHAK SANGH BHAWAN TRUST(SUPRA) , A CO-ORDINATE BENCH, IN TER ALIA, CONCLUDED THAT IF ASSESSMENT ORDER IS PASSED UNDER S. 143(3) AND NOT UNDER S. 5 ITA NO.3194/AHD/2009 5 144 OF THE ACT ,THEN NON-COMPLIANCE IS DEEMED TO HA VE BEEN WAIVED. ACCORDINGLY, PENALTY IMPOSED U/S 271(1)(B) WAS CANC ELLED. FOLLOWING THIS DECISION, ANOTHER CO-ORDINATE BENCH IN SWARNAB EN M KHANNA & OTHERS(SUPRA) ALSO CANCELLED THE PENALTY LEVIED U/S 271(1)(B) OF THE ACT. IN THE INSTANT CASE ALSO THE ASSESSMENT HAS BE EN COMPLETED U/S 143(3) AND NOT U/S 144 OF THE ACT AND NONE OF T HE ADDITION IS ATTRIBUTED TO ANY DEFAULT ON THE PART OF THE ASSESS EE IN SUBMITTING THE DETAILS. RATHER AS ALREADY STATED , ALL THE DET AILS HAVE BEEN FILED ON BEHALF OF THE ASSESSE AND THEREAFTER, ASSESSMEN T COMPLETED. IN THESE CIRCUMSTANCES, FOLLOWING THE VIEW TAKEN BY TH E CO-ORDINATE BENCHES IN THE AFORESAID TWO DECISIONS, PENALTY LEV IED U/S 271(1)(B) OF THE ACT IS CANCELLED. CONSEQUENTLY, GROUND NO.1 IN THE APPEAL IS ALLOWED. 7. GROUND NO.2 BEING GENERAL IN NATURE, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDITIONAL GROUND HA VING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO. 3 IN THE APPEAL, ACCORDINGLY, THESE GROUNDS ARE DISMISSED. 8. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 31-05-2011 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 31-05-2011 COPY OF THE ORDER FORWARDED TO: 1. SHRI ZUNZABHAI P PATEL, 7, GREEN HOUSE, KAILASHN AGAR, SURAT 2. ACIT, CIRCLE-2, SURAT 3. CIT CONCERNED 4. CIT(A)-II, SURAT 5. DR, ITAT, BENCH-A, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD