Mittal & Co. , Kaithal V. DCIT, Central Circle, Karnal

ITA 321/DEL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4859 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 11-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Non compliance
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDEN T & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NOS. 319 TO 322/DEL/2018 ASSESSMENT YEARS: 2008-09 TO 2011-12 MITTAL & CO., SHOP NO. 43-C, NEW GRAIN MARKET, KAITHAL 136 027 DISTRICT KAITHAL (HARYANA) PAN NO. AABFM9880H VS DCIT CENTRAL CIRCLE KARNAL ASSESSEE BY SH. VINOD KUMAR BINDAL, CA MS. RINKI SHARMA REVENUE BY SH. ATIQ AHMAD, SR. DR ORDER PER BENCH ALL THESE APPEALS ARE FILED BY THE ASSESSEE AND EMA NATE FROM THE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, GURGAON. SINCE THE PARTIES AND THE GROUNDS RAISED IN ALL THESE APPEALS ARE COM MON AND IDENTICAL, WE DEEM IT JUST AND CONVENIENT TO DISPOSE THEM OF BY W AY OF THIS COMMON ORDER, TAKING THE COMMON FACTS INTO CONSIDERATION. 2. BRIEF FACTS OF THE CASE ARE THAT PURSUANT TO THE SEARCH AND SEIZURE OPERATION THAT WAS CARRIED OUT IN THE BUSINESS/OFFI CE AND RESIDENTIAL PREMISES OF THE ASSESSEE GROUP OF CASES INCLUDING THE ASSESS EE, NOTICE U/S 153(1) OF THE INCOME TAX ACT, 1961 (THE ACT) WAS ISSUED, BUT IN VAIN. SO ALSO THE DATE OF HEARING 27.07.2018 DATE OF PRONOUNCEMENT 01.08.2018 2 SUCCESSIVE NOTICES U/S 142(1) OF THE ACT WERE ALSO NOT COMPLIED WITH RESULTING IN THE ORDER U/S 271F OF THE ACT LEVYING A FINE. F URTHER, FOR NON COMPLIANCE WITH THE NOTICE U/S 142(1)/143(2) OF THE ACT ISSUED FOR SEVERAL TIMES, NOTICE U/S 271(1)(B) WAS ALSO ISSUED MORE THAN ONE TIME BUT WA S IGNORED BY THE ASSESSEE WITHOUT ENTERING APPEARANCE EITHER IN PERSON OR THR OUGH AUTHORIZED REPRESENTATIVE, AND THERE WAS NO EXPLANATION AS TO WHY A PENALTY OF RS. 10,000/- SHALL NOT BE LEVIED FOR SUCH FAILURE. IN THE CIRCUMSTANCES, DUE TO THE NON COOPERATION OF THE ASSESSEE, DEEMING IT TO BE A FIT CASE, THE LD. ASSESSING OFFICER LEVIED A PENALTY OF RS. 10,000/- U/S 271(1) (B) OF THE ACT. 3. WHEN THE ASSESSEE PREFERRED APPEALS AGAINST THE LEVY OF PENALTY, TO THE LD. CIT(A), LD. CIT(A) CONFIRMED THE PENALTY AND DI SMISSED THE APPEALS. HENCE, THE ASSESSEE PREFERRED THESE APPEALS AGGRIEVED BY T HE ORDERS BY THE AUTHORITIES BELOW. 4. THE MAIN PLANK OF ARGUMENT OF THE LD. AR IS THAT NO STATUTORY NOTICE U/S 274(1) OF THE ACT WAS ISSUED PRIOR TO THE LEVY OF P ENALTY AND THE ASSESSEE IS DENIED THE OPPORTUNITY OF BEING HEARD. HE SUBMITS THAT FOR WANT OF COMPLIANCE WITH THIS STATUTORY REQUIREMENT AND VIOLATION OF TH E PRINCIPLES OF NATURAL JUSTICE ALSO, THE LEVY OF PENALTY IS BAD. TAKING FURTHER T HIS ARGUMENT LD. AR FURTHER SUBMITTED THAT THE PROPOSAL TO INITIATE THE PENALTY PROCEEDINGS CANNOT BE EQUATED TO THE RECORDING OF SATISFACTION ON THE FAI LURE OF THE ASSESSEE, AS SUCH, THE PENALTY CANNOT BE SUSTAINED. FOR THIS PROPOSIT ION HE PLACED RELIANCE ON THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. M/S MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 AND THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. M/S SSAS EMERALD MEADOWS, DISMISSING THE SLP AGAINST THE DECISION OF THE HONBLE KARNATAKA H IGH COURT FOLLOWING THE MANUNATHA CASE (SUPRA). 5. PER CONTRA, LD. DR PLACED RELIANCE ON THE DECISI ONS OF THE AUTHORITIES BELOW AND CONTENDED THAT INSOFAR AS THE FACT OF NON COOPERATION FROM THE ASSESSEE TO PROCEED WITH THE MATTER BEFORE THE LD. AO STANDS UNDISPUTED AND 3 UN-REBUTTED, IT IS NOT OPENED FOR THE ASSESSEE TO C ONTEND THAT THE LEVY OF PENALTY IS BAD UNDER LAW. 6. WE HAVE GONE THROUGH THE RECORD, IN THE LIGHT OF THE SUBMISSIONS ON EITHER SIDE AND THE CASE LAW SUBMITTED BY THE ASSES SEE. IT IS NOT THE CASE OF THE REVENUE THAT ANY NOTICE U/S 274(1) OF THE ACT WAS E VER ISSUED TO THE ASSESSEE OR THAT THE ASSESSEE WAS HEARD BEFORE THE LEVY OF P ENALTY. ISSUANCE OF NOTICE U/S 274(1) OF THE ACT IS A JURISDICTIONAL ISSUE, AN D NON ISSUANCE THEREOF VITIATES THE ASSUMPTION OF JURISDICTION BY THE LD. AO TO LEV Y THE PENALTY U/S 271(1)(B) OF THE ACT. WE ARE IN AGREEMENT WITH THE LD. AR THAT MERE PROPOSAL TO INITIATE PENALTY PROCEEDINGS IS NOT EQUIVALENT TO RECORDING THE REQUISITE SATISFACTION ON THE FAILURE OF THE ASSESSEE TO COMPLY WITH THE NOTI CES U/S 143(2)/142(1) OF THE ACT. FOR NON RECORDING OF ANY SATISFACTION AND FOR NOT AFFORDING ANY OPPORTUNITY TO THE ASSESSEE AFTER ISSUING OF NOTICE U/S 274 READ WITH SECTION 271(1) OF THE ACT VITIATES THE PROCEEDINGS AND WE A RE UNABLE TO AGREE WITH THE LD. DR THAT THE ORDERS OF THE AUTHORITIES BELOW ARE JUSTIFIABLE. WITH THIS VIEW OF THE MATTER, WE FIND MERITS IN THE ARGUMENT OF THE L D. AR AND HOLD THAT THE LEVY OF PENALTY CANNOT BE SUSTAINED. 7. FOR THE REASONS RECORDED IN THE PRECEDING PARAGR APHS, WE ARE OF THE CONSIDERED OPINION THAT THE PENALTY PROCEEDINGS HAV E TO BE QUASHED AND ACCORDINGLY, THEY ARE QUASHED. GROUNDS OF APPEAL A RE ALLOWED IN ALL THESE APPEALS. 8. IN THE RESULT, ALL THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST AUGUST, 2018 SD/- SD/- (G.D. AGRAWAL) (K. NARASIMH A CHARY) PRESIDENT JUDICIAL MEMBER DATED: 01.08.2018 *KAVITA 4 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 27.7.18 DRAFT PLACED BEFORE AUTHOR 27.7.18 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 01.8.18 KEPT FOR PRONOUNCEMENT ON 01.8.18 DATE OF UPLOADING ORDER ON THE WEBSITE 01.8.18 FILE SENT TO THE BENCH CLERK 01.8.18 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.