I.T.O.(T.D.S.) WARD 2(3), Chandrapur V. SHRI SANMATIKUMAR J JAIN, Nagpur

ITA 354/NAG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1322 (ITAT-NAGPUR)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 29-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Reasonable cause; Competent authority
• Section: 273B; 54

Judgement Text

1 ITA NOS.354 & 355/NAG/2015 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO S . 3 54 & 355 /NAG/201 5 ASSESSMENT YEAR S : 20 13 - 14 & 2014 - 15. THE INCOME - TAX OFFICER, SHRI SANMATIKUMAR J. JAIN, (TDS), WARD - 2(3), NAGPUR. VS. NAGPUR. PAN AASPJ3968L. APP ELLANT. RESPONDENT. APPELLANT BY : SHRI A.R. NINAWE. RESPONDENT BY : S HRI MAHAVIR ATAL. DATE OF HEARING : 10 - 10 - 2016 DATE OF PRONOUNCEMENT : 13 T H OCT., 2016 O R D E R. THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 21 - 10 - 2015 AND PERTAIN TO ASSESSMENT YEARS 2013 - 14 AND 2014 - 15. THE COMMON GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING PENALTY U/S 272(2)(J) OF THE IT ACT OF RS.34,10,500/ - AND RS.3,61,900/ - LEVIED FOR THE A.Y. 2013 - 14 & 2014 - 15 RESPECTIVELY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A) ERRED IN CONSIDERING THE UNSUBSTANTIATED CLAIMS OF THE ASSESSEE THAT HE WAS IGNORANT OF LAW WITHOUT APPRECIATING THAT THE ASSESSEE MADE VOLUMINOUS REPRESENTATIONS ON VARIOUS LEGAL ISSUES IN THE APPELLATE PROCEEDINGS THEREBY RENDERING SUCH CLAIM INCORRE CT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN HOLDING THAT THERE IS A REASONABLE CAUSE FOR THE DEFAULT WHEREAS THE ASSESSEE COULD NOT MAKE OUT A REASONABLE CAUSE FOR THE SAID DEFAULT BY SUBSTANTIATING THE CLAIMS WITH ANY COG ENT EVIDENCE/. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT(A) ERRED IN NOT APPRECIATING THAT EVENTHOUGH THE ASSESSEE COLLECTED FORM NO. 2 ITA NOS.354 & 355/NAG/2015 27C AS PER PROVISIONS OF LAW, THROUGH NEGLIGENCE HE DID NOT DEPOSIT THE SAME WITH THE PRESCRIBED AUTHOR ITY WHICH IS A DEFAULT OF ACTING IN CONSCIOUS DISREGARD OF HIS LEGAL OBLIGATIONS AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. (1972) 83 ITR. 2. BRIEF FACTS OF THE CASE ARE THAT IT WAS NOTED BY THE AO THAT SPOT VERIFICATION WAS C ONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 29 - 08 - 2013 AND DURING THE SAID SPOT VERIFICATION IT WAS NOTICED THAT THE ASSESSEE DEDUCTOR WAS NOT COLLECTING THE TAX ON SALE OF COAL IN VIEW OF HIM HAVING COLLECTED FORM NO. 27C. THE AO FURTHER NOTED TH AT THE ASSESSEE DEDUCTOR HAD NOT SUBMITTED THE SAID FORM NO. 27C TO THE CCIT / CIT AS PER PROVISION OF RULE 37C OF THE I.T. RULES, 1962. THE AO CAME TO THE CONCLUSION THAT THE PENALTY U/S 272A(2)(I) OF THE I.T. ACT WAS IMPOSABLE ON THE ASSESSEE IN VIEW OF THE FACTS OF THE CASE AND HE THEREFORE IMPOSED THE PENALTY OF RS.34,10,500/ - AND RS.3,61,900/ - FOR ASSESSMENT YEARS 2013 - 14 AND 2014 - 15. 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) OBSERVED AS UNDER : 8. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION OF THE APPELLANT. I FIND SUBSTANTIAL FORCE IN THE SUBMISSIONS MADE. A SPOT VERIFICATION WAS CONDUCTED BY THE TDS WING OF THE DEPARTMENT AT THE BUSINESS PREMISES OF THE APPELLANT ON 29 - 08 - 2013 AND DURIN G THE COURSE OF THE SAME IT WAS NOTED THAT THE APPELLANT ON 29 - 08 - 2013 AND DURING THE COURSE OF THE SAME IT WAS NOTED THAT THE APPELLANT HAD NOT MADE ANY TCS IN VIEW OF THE FACT THAT THE BUYER OF GOODS HAD FURNISHED DECLARATIONS IN FORM NO. 27C. THE PENALT Y HAS BEEN IMPOSED IN VIEW OF THE FACT THAT THE APPELLANT HAS NOT SUBMITTED THE SAID FORM NO. 27C CERTIFICATES RECEIVED FROM THE BUYERS TO THE CCIT / CIT WITHIN THE STIPULATED TIME. THERE IS MERIT IN THE ARGUMENT OF THE APPELLANT THAT THE PROVISION OF COLL ECTING TAX AT SOURCE ON SALE OF COAL WAS A NEW PROVISION WHICH CAME INTO EFFECT ON 01 - 07 - 2012 AND THE ASSESSMENT YEAR UNDER CONSIDERATION [VIZ. AYS 2013 - 14 AND 2014 - 15] WERE THE ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE NEW ENACTMENT. BEFORE THE SAID AM ENDMENT IN FINANCE ACT, 2012 THERE WAS NO PROVISION IN THE I.T. ACT REQUIRING THE APPELLANT TO COLLECT THE TAX AT SOURCE WHILE SELLING COAL. THUS THERE IS MERIT IN THE CONTENTION OF THE APPELLANT THAT SINCE THE SAID INSERTION OF NEW PROVISION CAME INTO EFF ECT ON 01 - 07 - 2012, THE APPELLANT DID NOT IMMEDIATELY BECOME AWARE OF ALL ASPECTS OF THE NEW PROVISION AND CONSEQUENTLY THE SAID CERTIFICATES NCOULD NOT BE SUBMITTED BEFORE THE SPECIFIED AUTHORITY WITHIN THE STIPULATED TIME. 3 ITA NOS.354 & 355/NAG/2015 IT CANNOT BE IGNORED THAT THE A PPELLANT THAT IS A RESIDENT OF CHANDRAPUR DISTRICT WHICH IS A BACKWARD AREA AND THE IMMEDIATELY AVAILABILITY OF INFORMATION/KNOWLEDGE AND THE RELATED PRACTICES IN RESPECT OF NEW PROVISIONS DOES NOT BECOME IMMEDIATELY AVAILABLE. THUS IS IS EVIDENT THAT THER E DID EXIST A REASONABLE CAUSE WHEN THE APPELLANT STATES THAT CHANDRAPUR IS S SMALL TOWN AND THAT HE WAS NOT AWARE OF THE STATUTORY REQUIREMENT OF SUBMISSION OF THE SAID FORM NO. 27C TO THE CCIT / CIT WITHIN THE STIPULATED TIME. 9. IT IS ALSO IMPORTANT TO NOTE THAT ONCE THE SPOT VERIFICATION WAS CONDUCTED AT THE BUSINESS PREMISES OF THE APPELLANT AND IT WAS BROUGHT TO THE NOTICE OF THE APPELLANT THAT THE CERTIFICATES SHOULD HAVE BEEN SUBMITTED TO THE CIT, THE APPELLANT SOON THEREAFTER SUBMITTED ALL THE FOR M NOS. 27C TO THE O/C. CIT(TDS) ON 21 ST OCTOBER, 2013. IT IS AN ACCEPTED FACT THAT ALL THE FORM NOS. 27C WERE IN POSSESSION OF THE APPELLANT AT THE TIME OF SURVEY. IT IS ALSO A FACT THAT THE SAID FORMS WERE DULY SUBMITTED BY THE APPELLANT BEFORE VARIOUS AU THORITIES WHEN HE CAME TO KNOW OF THE STATUTORY REQUIREMENT THAT THE SAID FORMS SHOULD BE SUBMITTED TO INCOME TAX AUTHORITIES. PERUSAL OF THE RECORDS SHOWS THAT THE APPELLANT SUBMITTED THE SAID FORM NOS. 27C TO THE O/C. CIT(TDS) ON 21 ST OCTOBER, 2013 AND T WICE BEFORE THE ITO, TDS WARD 2(3), CHANDRAPUR ON 25 TH NOV EMBER, 2013 AND 18 TH DECEMBER, 2013. THUS THE APPELLANT, BEFORE THE IMPOSITION OF THIS PENALTY ORDER, HAD SUBMITTED THE SAID FORMS NOS. 27C TO THE TAX AUTHORITIES. 10. ALSO, FROM THE FACTS OF THE CASE I IS EVIDENT THAT THE SAID DEFAULT OF THE APPELLANT IS NEITHER DELIBERATE NOR INTENTIONAL. NO MALAFIDE INTENTION IS CONTAINED THEREIN AS THE APPELLANT DID NOT DERIVE ANY BENEFIT WHATSOEVER BY COLLECTING THE SAID FORM NO. 27 AND NOT FILING THE SAME BE FORE THE COMPETENT AUTHORITY BEFORE THE STIPULATED DATE. THERE IS ADEQUATE JUDICIAL AUTHORITY WHEREIN IT HAS BEEN HELD THAT, IN SUCH CIRCUMSTANCES, PENALTY IS NOT IMPOSABLE. 4. LEARNED CIT(APPEALS) FURTHER PLACED RELIANCE UPON SEVERAL CASE LAWS AND CONCLU DED AS UNDER : TAKING INTO CONSIDERATION THE FACTS OF THE CASE AS WELL AS THE ABOVE LEGAL PRONOUNCEMENTS IT IS EVIDENT THAT THE DELAY IN FILING THE SAID FORM NO. 27C CERTIFICATES BEFORE THE DUE DATE, EVEN IF CATEGORISED AS NEGLIGENCE ON PART OF THE APPEL LANT, IT CAN ONLY BE CONSIDERED AS A TECHNICAL OR VENIAL BREACH OF LAW FO WHICH PENALTY CANNOT BE LEVIED AUTOMATICALLY. IN THE CASE UNDER CONSIDERATION IT IS IMPORTANT TO NOTE THAT THE APPELLANT IS OPERATING OUT OF THE SMALL TOWN OF CHANDRAPUR WHICH IS BAC KWARD AREA OF 4 ITA NOS.354 & 355/NAG/2015 MAHARASHTRA AND THE APPELLANT CANNOT BE SUBJECT TO PENALTY BECAUSE HE WAS NOT IMMEDIATELY AWARE OF THE NEW PROVISIONS OF LAW WHICH HAS BEEN INSERTED INTO THE STATUTE FROM 01 - 07 - 2012 ONLY. THE REQUIREMENT OF SUBMITTING THE SAID FORM NO. 27C CE RTIFICATES TO THE CCIT/CIT WAS A NEW ONE FOR THE APPELLANT AND THIS BEING THE FIRST YEAR OF SUBMITTING THE SAID FORMS, THE APPELLANT CANNOT BE VISITED WITH THE SAID HUGE PENALTY FOR THE SAID DEFAULT WHICH IS BASICALLY TECHNICAL IN NATURE DULY SUPPORTED BY REASONABLE CAUSE. IT IS IMPORTANT TO NOTE THAT THE LD. AO HAS NOT BEEN ABLE TO MAKE OUT A CASE THAT THERE WAS A MALAFIDE INTENTION AT THE END OF THE APPELLANT FOR NOT SUBMITTING THE SAID FORMS AND IT CAN BE SAFELY CONCLUDED THAT THE DEFAULT IS NEITHER DEL IBERATE NOR INTENTIONAL AS THE APPELLANT COULD NOT HAVE DERIVED ANY BENEFIT WHATSOEVER BY NOT FILING THE SAID FORM NO. 27C IN TIME [THOUGH THE SAME WERE IN HIS POSSESSION]. IN ORDER TO DETERMINE THE EXISTENCE OR ABSENCE OF ANY GUILTY INTENTION ON THE PART OF THE ASSESSEE, ONE WILL HAVE TO CONSIDER ALL THE SURROUNDING FACTS AND CIRCUMSTANCES. IT WILL HAVE TO BE EXAMINED AS TO WHETHER BY COMMITTING ANY DEFAULT OF NON - COMPLIANCE WITH A STATUTORY PROVISION OF LAW, THE ASSESSEE HAS DERIVED ANY BENEFIT, GAIN OR A DVANTAGE OR WHETHER BY SUCH A DEFAULT OR NON - COMPLIANCE THE ASSESSEE HAS DEFRAUDED THE REVENUE OR HAS CAUSED ANY LOSS TO THE REVENUE. THESE ARE SOME OF THE FACTORS WHICH WILL HAVE TO BE SERIOUSLY CONSIDERED BEFORE CONSIDERING THE FACT AS TO WHETHER THE IG NORANCE ON THE PART OF THE ASSESSEE CAN CONSTITUTE A VALID EXCUSE OR A REASONABLE CAUSE FOR THE PURPOSES OF SECTION 273B IN RELATION TO THE ALLEGED DEFAULT SPECIFIED IN SECTION 272A(2)(I). IN THE PRESENT CASE, THE ASSESSEE HAS NOT DERIVED ANY GAIN, BENEFIT OR ADVANTAGE BY DELAYED SUBMISSION OF THE SAID FORMS. THE REVENUE HAS ALSO NOT SUFFERED ANY LOSS. THE LD. AO HAS BROUGHT NO MATERIAL ON RECORD TO PROVE THAT THE ASSESSEE HAD DELAYED THE FURNISHING OF THE COPY OF THE FORMS WITH ANY ULTERIOR MOTIVE. IN SUCH CIRCUMSTANCES, I AM OF THE VIEW THAT THE DELAY OF SUBMITTING THE SAID FORM NO. 27C IS SUPPORTED BY THE REASOSNABLE CAUSE AND HENCE PENALTY IMPOSED BY THE LD. AO OF RS.34,10,500/ - AND RS.3,61,900/ - FOR A.YRS. 2013 - 14 AND 2014 - 15 ARE HEREBY CANCELLED. 5. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE THE ITAT. 6. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. I FIND THAT SECTION 272A(2)(J) PROVIDES FOR PENALTY, IF A PERSON FAILS TO DELIVER OR CAUSE TO BE DELIVERED IN DUE TIME A COPY OF DE CLARATION REFERRED TO IN SUB - SECTION (1A) OF SECTION 206C. 7. SECTION 206C PROVIDES FOR COLLECTION OF TAX AT SOURCE WHEN THE ASSESSEE 5 ITA NOS.354 & 355/NAG/2015 SALES CERTAIN SPECIFIED GOODS. SECTION 206C(1A) PROVIDES EXCEPTION TO THIS PROVISION AS UNDER : NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (1), NO COLLECTION OF TAX SHALL BE MADE IN THE CASE OF A BUYER, WHO IS RESIDENT IN INDIA, IF SUCH BUYER FURNISHES TO THE PERSON RESPONSIBLE FOR COLLECTING TAX, A DECLARATION IN WRITING IN DUPLICATE IN THE PRESCRIBED FORM AND VERIF IED IN THE PRESCRIBED MANNER TO THE EFFECT THAT THE GOODS REFERRED TO IN COLUMN (2) OF THE AFORESAID TABLE ARE TO BE UTILISED FOR THE PURPOSES OF MANUFACTURING, PROCESSING OR PRODUCING ARTICLES OR THINGS [OR FOR THE PURPOSES OF GENERATION OF POWER] AND NOT FOR TRADING PURPOSES. THE ABOVE DECLARATION HAS TO BE IN FORM NO. 27C . 8. NOW IT IS THE REVENUES CASE THAT FORMS NO. 27C WERE NOT SUBMITTED IN DUE TIME. AS AGAINST THE ABOVE IT IS THE ASSESSEES CONTENTION THAT THE CONCERNED AM ENDMENT TO THE ACT HAD COME DURING THE FINANCIAL YEAR AND THE ASSESSEE WAS IGNORANT OF THE PROVISION OF THE ACT. THAT THE ASSESSEE HAD D ULY OBTAINED FORM NO. 27C. THAT THE ASSESSEE HAD FURNISHED THE SAME TO THE ITO BEFORE PENALTY WAS LEVIED. NOW IN THE BAC KGROUND OF AFORESAID SUBMISSIONS I FIND THAT IT IS UNDISPUTED FACT THAT FORM NO. 27 C CERTIFICATES HAVE BEEN DULY OBTAINED. NO LIABILITY FOR COLLECTION OF TAX AT SOURCE FASTENED ON THE ASSESSEE IN VIEW OF FORM NO. 27C CERTIFICATES THE VERACITY OF WHICH HA S NO T BEEN DISPUTED BY THE REVENUE. IT IS ALSO UNDISPUTED THAT THE CONCERNED AMENDMENT/PROVISION OF ACT WAS INTRODUCED DURING THE SAID ASSESSMENT YEAR. IN THESE CIRCUMSTANCES THE ASSESSEES PLEA THAT THE ASSESSEE WAS IGNORANT OF THE PROVISIONS AND WHEN HE CAME TO KNOW THE SAME BEFORE THE LEVY OF PENALTY, HE HAS DULY SUBMITTED FORM NO. 27C CERTIFICATES TO THE INCOME - TAX OFFICER. IN SUCH A SITUATION, IN MY CONSIDERED OPINION, THE DEFAULT IS ONLY A TECHNICAL OR VENIAL BREACH AND THE ASSESSEES CONDUCT CANNOT BE SAID TO CONTUMACIOUS SO AS TO WARRANT LEVY OF PENALTY. THE DECISION OF THE LARGER BENCH OF HONBLE APEX COURT COMPRISING OF T HREE OF THEIR LORDSHIPS IN HINDUSTAN STEEL LTD. 83 ITR 26 FULLY APPLIES TO THE FACTS OF THIS CASE. I MAY GAINFULLY REFER TO THE EXPOSITION AS UNDER : 6 ITA NOS.354 & 355/NAG/2015 AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI - CRIMINAL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY 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 IMPOSED FOR FAILURE TO P ERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED , THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUS TIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. ACCORDINGLY I DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). HENCE I UPHOLD THE SAME. 9. IN THE RESULT, THESE APPEALS FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF OCT., 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 13 TH OCT. , 2016. 7 ITA NOS.354 & 355/NAG/2015 COPY FORWARDED TO : 1. SHRI SANMATIKUMAR JAIN, 283, ABDEO LANE, MAHAL, NAGPUR - 440002. 2. I.T.O., (TDS), WARD - 2(3), NAGPUR. 3. C.I.T. - (TDS) , NAGPUR. 4. CIT(APPEALS), - II , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGIS TRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.