Ms. Aarti Chadha & Pooja Chadha, both in their capacity as member of the Non-Existent HUF, New Delhi V. ACIT, New Delhi

ITA 3545/DEL/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69659 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 03-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: B K DHINGRA
• Keywords: Business expenditure; Search and seizure; Document seized; Principle of natural justice; Reasonable cause; Documents seized
• Section: 273B; 142(1); 153A; 132; 144

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI S. V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 3540/DEL/2013 (ASSESSMENT YEAR: 2003 - 04) ITA NO. 3541/DEL/2013 (ASSESSMENT YEAR: 2004 - 05) ITA NO. 3542/DEL/2013 (ASSESSMENT YEAR: 2005 - 06) ITA NO. 3543/DEL/2013 (ASSESSMENT YEAR: 2006 - 07) ITA NO. 3544/DEL/2013 (ASSESSMENT YEAR: 2007 - 08) ITA NO. 3545/DEL/2013 (ASSESSMENT YEAR: 2008 - 09) ITA NO. 3546/DEL/2013 (ASSESSMENT YEAR: 2009 - 10) AARTI CHADHA & POO JA CHADHA, BOTH IN THEIR CAPACITY AS MEMBER S OF THE NON - EXISTENT HUF KNOWN AS M/S. MOHAN LAL & SONS (HUF), PROP. M/S. MOHAN LAL & SONS (FIRM) THROUGH KARTA LATE SH. MOHAN LAL CHADHA 23,10 A, MOTI NAGAR, NEW DELHI PAN AAACE2853Q VS. A CIT CENTRAL CIRCLE - 2 1 , JANDEWALAN, NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B. K. DHINGRA, CA RESPONDENT BY: SMT. Y. KAKKAR, DR O R D E R PER BENCH THESE APPEALS ARE DIRECTED AGAINST THE PENALTY CONFIRMED BY THE LD CIT(A) - II NEW DELHI UNDER SECTION 271(1)(B) OF THE INCOME TAX ACT 1961 (HEREIN AFTER THE ACT) DATED 30.04.2013 FOR ASSESSMENT YEAR 2003 - 04 UP TO 2009 - 10. 2. THE SAID PENALTY WAS IMPOSED BY THE ASSESSING OFFICER AS THE ASSESSEE FAILED TO COMPLY WITH THE NOTICE SENT U/S 142(1) OF THE INCOME TAX ACT (HEREINAFTER THE ACT) DATED 13.12.2010 . THE EVENT WHICH LED TO THE PENALTY WAS THAT NEITHER THE ASSESSEE NOR PAGE NO. 2 THEIR LEGAL COUNSEL TURN ED UP ON 20.12.2010, WHICH WAS THE DA Y FIXED BY THE ASSESSING OFFICER BY HIS NOTICE U/S 142(1) OF THE ACT, FOR HEARING ; THE ASSESSING OFFICER PROCEEDED EX - PARTE AND THEREAFTER PASSED THE ASSESSMENT ORDER ON 30.12.2010. THEREAFTER, BEFORE IMPOSING THE IMPUGNED PENALTY, A SHOW CAUSE NOTICE WAS ISSUED BY ASSESSING OFFICER VIDE LETTER DATED 20.09.2011, THE ASSESSEE REPLIED TO THE SHOW - CAUSE NOTICE, VIDE LETTER DATED 06.06.2011, INTER - ALIA, STATED THAT AFTER THE DEATH OF MOHAL LAL CHADHA, KARTA OF MOHAN LAL & SONS HUF, PROPRIETOR OF THE FIRM MOHAN LAL & SONS, NO LONGER EXISTED AND SINCE NO MALE MEMBER WAS ALIVE; AND THAT NEITHER A A RTI CHADHA NOR POOJA CHADHA HAD ANY KNOWLEDGE ABOUT THE EXISTENCE OF THE HUF AND ITS WORKINGS; AND THAT PENALTY PROCEEDINGS MAY BE DROPPED SINCE THEY ARE FACING VARIOUS FINANCIAL PROBLEMS AND THEREFORE WAS UNABLE TO APPEAR BEFORE THE ASSESSING OFFICER. ASSESSING OFFICER DISSATISFIED WITH THE SAID REPLY OF THE ASSESSEE, REJECTED THE EXPLANATION TENDERED BY THE ASSESSEE AND THE ASSESSING OFFICER WAS OF THE OPINION THAT , NON - COMPLIANCE OF THE STATUTORY NOTICE W AS A DELIBERATE ACT OF THE ASSESSEE AND RULED THAT THE ASSESSEE WAS IN DEFAULT AND LIA BLE FOR PENALTY U/S 271(1)(B) READ WITH SECTION 274 OF THE ACT AND IMPOSE D A PENALTY OF RS. 10,000/ - FOR EACH ASSESSMENT YEAR S FROM 2003 - 04 TO 2009 - 10 . 3. AGGRIEVED BY THE IMPOSITION OF PENALTY, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A) ON THE GROUND OF VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND ON THE GROUND THAT THE PENALTY CAN BE IMPOSED ONLY ON ACTUAL OR HABITUAL DEFAULTERS AND COULD NOT BE IMPOSED FOR MERE TECHNICAL NON - COMPLIANCE. 4. BEFORE THE LD CIT(A) WRITTEN SUBM ISSION WAS FILED BY POOJA CHADHA ON 25.04.2013 AND IN THAT SUBMISSION IT WAS SUBMITTED THAT TO THE NOTICE DATED 22.11.2010 ISSUED BY THE ASSESSING OFFICER U/S 153C OF THE ACT , THEY REPLIED ON 13.12.2010 AND IT WAS STATED IN THEIR SAID REPLY THAT THEIR GR ANDFATHER, MOHAN LAL CHADHA HAD EXPIRED ON 23.04.2009; THAT THERE WAS NO SURVIVING MALE MEMBER IN THE IR FAMILY AND HENCE THERE WAS NO HUF IN EXISTENCE; AND THAT BOTH OF THEM (POOJA CHADHA AND AARTI CHADHA) WERE WORKING AT A SHOWROOM ON SALARIES OF RS. 7,00 0/ - TO RS. 8,000/ - PER MONTH; AND THAT THEY ARE UNABLE TO PROVIDE ANY INFORMATION IN THE MATTER BECAUSE THEY HAVE NO KNOWLEDGE OF BUSINESS; AND THAT THEY NEVER PARTICIPATED IN THE BUSINESS OF HUF NOR GAINED ANYTHING FROM IT. AND IT WAS FURTHER CLAIMED THAT THERE WAS NO WILLFUL DEFAULT ON PAGE NO. 3 THE PART OF THE ASSESSEE , IN NON - COMPLIANCE OF THE NOTICE U/S 142(1)DATED 13.12.2010. OBJECTION WAS ALSO RAISED ON THE GROUNDS THAT THE NOTICE U/S 142(1) DATED 13.12.2010 WAS NOT SERVED PROPERLY ON THE ASSESSEE , AS IT WAS SERVED BY AFFIXTURE ON THE PREMISES NO. 23/10A, MOTI NAGAR, NEW DELHI. 5. LD CIT(A) DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND WAS OF THE OPINION THAT ONCE THE ASSESSEE REPLIED BY LETTER DATED 13.12.2010 IN RESPONSE TO THE NOTICE U/S 153C ISSUED BY THE ASSESSING OFFICER ON 22.11.2010, IT IS CLEAR THAT THEY WERE PUT ON NOTICE BY THE ASSESSING OFFICER ABOUT THE PENDING ASSESSMENT PROCEEDINGS AND THEIR LIABILITY TO PRESENT THEMSELVES OR CAUSE TO PRODUCE SUCH EVIDENCES AND MATERIAL BEFORE THE ASSESSING OFFICER ARISES. THE LD CIT( A ) ALSO DID NOT ACCEPT THE PLEA OF THE ASSESSEE THAT THEY WERE IGNORANT OF THE BUSINESS ON THE GROUND THAT MERE CLAIM OF IGNORANCE OF BUSINESS WAS NOT A VALID EXCUSE TO DISASSOCIATE THEMSELVES FROM THEIR STATUTORY AND LEGAL OBLIGATIONS. 6. LD CIT(A) ALSO DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE THAT THE NOTICE U/S 142(1) WAS NOT VALID BECAUSE IT HAD BEEN SERVED AT THE FIRST INSTANCE ITSELF BY AFFIXTURE, WAS ALSO REJECTED ON THE GROUND THAT THE SAID NOTICE WAS NOT THE FIRST NOTICE TO BE SERVED BY AFFIXTURE AND SINCE THE NOTICE U/S 153C HAD BEEN ISSUED EARLIER AND THE ASSESSEE HAD RESPONDED TO THE SAME THE CIT(A) REJECTED THAT CONTENTION. ACCO RDING TO HIM BOTH AARTI CHADHA AND POOJA CHADHA WERE AWARE ABOUT THE 153C PROCEEDINGS SINCE THEY HAD RESPONDED TO THAT NOTICE, AND THEREAFTER VOLUNTARILY CHOSE TO REMAIN SILENT AND IGNORE D THE NOTICE U/S 142(1) THAT REQUIRED THEM TO PRESENT THEMSELVES AND OR PRODUCE THE REQUISITE DETAILS TO ENABLE THE ASSESSING OFFICER TO DETERMINE THE TOTAL INCOME OF THE FIRM MOHAN LAL & SONS. ON THE SAID FACTS AND CIRCUMSTANCES THE LD CIT(A) WAS OF THE OPINION THAT THERE WAS NO VIOLATION OF THE PRINCIPLE S OF NATURAL JUSTICE AND CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND DISMISSED THE APPEAL PREFERRED BY THE ASSESSEE. 7. AGGRIEVED BY THE SAID ORDER OF THE LD CIT(A) THE ASSESSEE HAS FILED THIS APPEAL AND ASSAILED THE CONFIRMATION OF PENALTY IMPOSED BY THE ASSESSING OFFICER. PAGE NO. 4 8. THE LD AR HIGHLIGHTED THE FACT THAT THE ASSESSEE S ARE TWO YOUNG WOMEN AND THEY WERE AGED ONLY AROUND 18 YEARS AND 17 YEARS OLD , WHEN SEARCH AND SEIZURE WAS CONDUCTED ON 20.10.2008 AT THE PREMISES OF ANOTHER ASSESSEE (S HRI B. K. DIHINGRA, SMT. POONAM DHINGRA & M/S. MADHUSUDA BUILDCON PVT LTD ) AND THEIR GRAND FATHER LATE MOHANLAL CHA DHA, KARTHA OF HUF WAS AGED ABOUT 89 YEARS AT THAT POINT OF TIME AND HE ALSO DIED BEFORE RECEIPT OF NOTICE IN THE YEAR 2010. IT WAS CONTENDED THAT THE YOUNG GIRLS WERE OF THE BONA FIDE BELIEF THAT ONLY WITH TWO SURVIVING WOMEN IN HUF, THAT COULD NOT CONSTITUTE A HUF AND THE ASSESSEE IN THEIR LETTER DATED 13.12.2010 ALSO HAVE EXPRESSED THE SAME CONTENTION THAT SINCE THEIR GRANDFATHER HAS ALSO EXPIRED ON 23.04.2009 AND THERE WERE NO OTHER MALE DESCENDENTS IN THE LINEAGE , BOTH THE YOUNG GIRLS COULD NOT CONSTITUTE A HUF IN THE EYES OF LAW AND ALSO THEY STATED THAT THEY HAVE NO INFORMATION ABOUT THE BUSINESS AND THE Y ARE NOW WORKING IN A MALL FOR A MEAGER SALARY OF RS. 7,000/ - TO RS. 8,000/ - PER MONTH. THE LD AR ALSO POINTED OUT THAT ASSESSEES FATHER PASSED AWAY IN THE YEAR 2007 AND MOTHER OF THE ASSESSEE ALSO DIED IN THE YEAR 2008. THE LD AR ALSO POINTED OUT THAT ALONG WITH THE NOTICE U/S 142(1) OF THE ACT DATED 13.12.2010 , A DETAILED QUESTIONNAIRE ASKING OF BUSINESS ACTIVITIES FROM ASSESSMENT YEAR 2003 - 0 4 ONWARDS WERE SOUGHT FROM THE ASSESSEE S WHO HAD NO IDEA OF THE BUSINESS AND THAT TOO THEY WERE BOUND TO REPLY B EFORE HEARING FIXED ON 20.12.2010. SO IT IS THE CONTENTION OF THE LD AR THAT IT WAS HUMANLY IMPOSSIBLE FOR THE ASSESSEE TO DIG OUT ALL THE DOCUMENTS OF THE BUSINESS RIGHT FROM 2003 - 04 TO 2008 - 09 WHICH THEY WERE IGNORANT OF AND SINCE IT WAS AN IMPOSSIBLE TA SK TO DO SO AND IT WAS EQUALLY DIFFICULT TO REPLY THE DETAILED QUESTIONNAIRE AND COLLECT THE DOCUMENTS TO SUBSTANTIATE THE SAME WITHIN SHORT SPAN OF 7 DAYS WAS NOT POSSIBLE AND THIS REASON ALONE CONSTITUTES REASONABLE CAUSE FOR NOT ATTEND ING THE PROCEEDING S . 09. THE LD A R ALSO SUBMITTED THAT THE ASSESSMENT ORDER WAS AN EX PARTE ORD ER AND THE ASSESSEE HAS FILED A QUANTUM APPEAL BEFORE THE LD CIT(A) AND DOCUMENTS NUMBERING MORE THAN TWO THOUSAND ( 2000 ) PAGES HAVE BEEN FILED BEFORE THE LD CIT(A) AND HE CONTENDED THAT 7 DAYS TIME WAS TOO LITTLE A TIME TO COLLECT ALL THE SUPPORTING DOCUMENTS TO ANSWER THE DETAILED QUESTIO NNAIRE U/S 143(1), WHICH WAS AFFIXED ON 13.12.2010 AT THE ASSESSEES RESIDENCE . THEREFORE, IT WAS PLEADED THAT IN THE PAGE NO. 5 SAID FACTS AND CIRCUMSTANCES IT WOULD BE A TRAVESTY OF JUSTICE IF PENALTY IS CONFIRMED AND THEREFORE THE PENALTY SHOULD BE SET ASIDE, SINCE THERE WAS REASONABLE CAUSE FOR THE ASSESSEES NOT ATTENDING THE PROCEEDING IN RESPONSE TO THE NOTICE U/S 142(1) OF THE ACT . 10. ON THE OTHER HAND LD DR, CONTENDED THAT IT WAS A FACT THAT THE ASSESSEE HAD FILED AN APPEAL BEFORE THE LD CIT(A) WITHIN 7 DAYS AFTER THE ASSESSMENT ORDER WAS PASSED ON 30.12.2010 . SO, ACCORDING TO LD DR, THE ASSESSEE CANNOT TO BE SAID TO BE IGNORANT NOR THEY WERE NOT AWARE OF THE LEGAL CONSEQUENCE OF NOT APPEARING BEFORE THE ASSESSING OFFICER , WHEN NOTICE WAS SERVED ON 13.12.2010. THEREFORE, ACCORDING TO THE DR, THE ASSESSEE DELIBERATELY CHOSE NOT TO ATTEND BEFORE THE ASSESSING OFFICER ON 20.12.2010 AND NOW CANNOT PLEAD LACK OF OPPORTUNITY OR THAT THE TIME GRANTED TO THEM BY THE AO WAS LESS TO ANSWER THE QUESTIONNAIRE . 11 . THE LD D R ALSO POINTED OUT THAT FROM THE PERUSAL OF THE ASSESSMENT ORDERS IT IS EVIDENT THAT ASSESSEE HAD RECEIVED THE NOTICE U/S 153C DATED 08 . 09.2010 AND THE ASSESSEES COUNSEL FILED A LETTER DATED 12.10.2010 AT THE OFFICE OF ASSESSING OFFICER ON 13.10.2010 , SO ACCORDI NG TO THE LD DR , THE ASSESSEE HAD ENGAGED THE SERVICE OF COUNSEL IN OCTOBER 2010 ITSELF AND NOW IT CANNOT BE CONTENDED THAT THEY DID NOT GET ENOUGH TIME OR THEY WERE OF BONA - FIDE BELIEF THAT HUF WAS NOT EXISTING ON THE DAY WHEN THE PROCEEDINGS/NOTICE WAS BROUGHT TO THE NOTICE OF THE ASSESSEE, U/S 142(1) OF THE ACT. ACCORDING TO THE LD DR, THE ASSESSEES DID NOT CO - OPERATE AND DELIBERATELY DID NOT PARTICIPATE IN THE ASSESSMENT PROCEEDINGS AND THEREFORE ASSESSING OFFICER RIGHTLY IMPOSED THE PENALTY AND T HE LD CIT(A) CONFIRMED THE SAME . 12 . LD DR ALSO BROUGHT TO OUR NOTICE THAT THE QUANTUM APPEAL IS PENDING B E F O R E T H E L D C I T ( A ) AND ANY ADVERSE OBSERVATIONS/ COMMENTS / DECISION MAY A FFECT THE OUTCOME OF THE SAID QUANTUM APPEAL PREFERRED BY THE ASSESSEE IN THE VERY SAME CASE AGAINST THEM AND ALSO LD DR BROUGHT TO OUR NOTICE THE GROUNDS RAISED BY THE ASSESSEE IN THE SAID QUANTUM APPEAL . FOR CONVENIENCE THE SAME IS REPRODUCED . THE GROUNDS ARE AS FOLLOWS: 1. THAT THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED TO IGNORE THE FACT THAT THE ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER APPEAL WE'RE NOT PAGE NO. 6 PENDING ON THE DATE OF RECORDING OF SATISFACTION U/S 153C OF THE INCOME TAX ACT AND ACCORDINGLY THESE PROCEEDINGS DI D NOT ABATE IN PROCEEDINGS U/S 153C OF THE INCOME TAX ACT AND THE ASSESSMENT BEING BAD IN LAW DESERVES TO BE QUASHED. 2. THAT THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED TO IGNORE THE FACT THAT ASSESSMENT U/S 153C OF THE INCOME TAX ACT BE RESTRICTED T O ASSESSMENT IN RESPECT OF SEIZED DOCUMENTS AND IN ABSENCE OF ANY SEIZED DOCUMENTS IN THE CASE OF APPELLANT FOR THE YEAR UNDER ASSESSMENT, THE ASSESSMENT FRAMED U/S 153C OF THE INCOME TAX ACT IS BAD IN LAW AND DESERVES TO BE QUASHED. 3. THAT THE LEARNED A SSESSING OFFICER WAS NOT JUSTIFIED TO MAKE ASSESSMENT IN RESPECT OF INCOME OF MIS MOHAN LAL CHADHA & SONS (HUF) IN THE HANDS OF MS. ARTI CHADHA & MS. PUJA CHADHA SINCE HUF HAD CEASED TO EXIST IN THE ABSENCE OF SH. MOHAN LAL CHADHA, THE EARLIER KARTA AND SH . S.P. CHADHA, THE SON OF KARTA AND THE ASSESSMENT FRAMED IN THE HANDS OF INDIVIDUALS MAY KINDLY BE QUASHED. 4(A) THAT THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED TO FRAME A SSESSMENT U/S 153CI144 OF THE INCOME TAX ACT UNDER THE FACTS AND CIRCUMSTANCES OF THIS CASE TAXABLE INCOME OF RS.7,60,000. (B) THAT THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED TO MAKE EX - PARTY ASSESSMENT U / S 144 BY ISSUING ALLEGED NOTICE DATED 13.12.2010 FIXING THE CASE FOR THE FIRST TIME 20.12.2010 BEING THE FAG END OF THE T IME - BARRING PERIOD UP TO 31.12.2010 WITHOUT ANY REASONABLE CAUSE. (C) THAT THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED TO FRAME THE ASSESSMENT WITHOUT ISSUE OF STATUTORY NOTICE U / S 143(2) OF THE INCOME TAX ACT AND THE ASSESSMENT BEING AGAINST PROVISI ONS OF LAW MAY KINDLY BE QUASHED. (D) THAT THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED TO IGNORE THE PROCEDURE TO BE FOLLOWED FOR AFFIXTURE OF NOTICE AND THE ASSESSMENT FRAMED BY WAY OF ILLEGAL AFFIXTURE OF NOTICE U/S 142(1) OF THE INCOME TAX ACT MAY KINDLY BE QUASHED. (E) THAT THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED TO COMMENCE THE ASSESSMENT PROCEEDINGS BY WAY OF ALLEGED AFFIXTURE OF NOTICE AT THE FIRST INSTANCE WITHOUT MAKING ANY ATTEMPT TO PROPERLY SERVE THE NOTICE, WHICH IS BEING HIGHLY UNUSUAL AND UNNATURAL AND THE ASSESSMENT FRAMED AGAINST PRINCIPLES OF NATURAL JUSTICE MAY KINDLY BE QUASHED. 5. THAT THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED TO MAKE EX - PARTY ASSESSMENT REJECTING THE AUDITED ACCOUNTS ALONG WITH TAX AUDIT REPORT WI THOUT ANY BASIS OR INCRIMINATING DOCUMENT AGAINST THE BUSINESS RESULTS FOR THE YEAR. 6. THAT THE LEARN ED ASSESSING OFFICER WAS NOT JUSTIFIED TO MAKE ADDITION OF RS.2,54,311 IN THE TRADING RESULTS ON ESTIMATED G . P RATE IGNORING THE AUDITED ACCOUNTS AND WITHOUT ANY EVIDENCE OR INCRIMINATING SEIZED DOCUMENTS TO ARRIVE AT SUCH ESTIMATED G.P. RATE AND THE ADDITION MADE MAY KINDLY BE DELETED. 7. THAT THE LEA RNED ASSESSING OFFICER WAS NOT JUSTIFIED TO DISALLOW 100% OF BUSINESS EXPENSES AMOUNTING TO RS 7 ,34,767 DEBITED IN THE AUDITED PAGE NO. 7 ACCOUNTS WITHOUT ANY BASIS, EVIDENCE AND DISALLOWANCE BEING MADE ON ASSUMPTION AND PRESUMPTION MAY KINDLY BE DELETED. 8. THAT THE ASSESSEE CRAVES THE RIGHT TO ADD, AMEND, DELETE OR SUBSTITUTE ANY GROUND OF APPEAL. 9. THAT THE ORDER FRAMED IS AGAINST THE FACTS OF THE CASE AND BAD IN LAW. 13 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE CITATION CITED BY BOTH THE PARTIES. AT THE OUTSET LET US MAKE IT CLEAR THAT WE ARE NOT ADJUDICATING OR MAKING ANY OBSERVATION ON THE LEGALITY OF THE NOTICE SERVED U/S 153(C) AND LEGAL TENABILITY OF THE AFFIXTURE OF NOTICE U/S 142(1). WE ARE NOT EXPRESSING ANY OPINION ON THE MERITS OR LEGAL ISSUES INVOLVED IN THE SAID NOTICES. THE OPINION AND OBSERVATION S GIVEN IN THIS ORDER WILL IN NO WAY AFFECT THE GROUNDS RAISED IN THE QUANTUM APPEAL PROCEE DING WHICH ARE ENUMERATED ABOVE. 14 . WITH THE SAID CAVEAT WE WOULD LIKE TO MAKE IT CLEAR AND CONFINE OURSELVES TO EXAMINE IN THIS MATTER WHETHER THERE WAS REASONABLE CAUSE FOR THE ASSESSEE NOT TO HAVE BEEN PRESENT BEFORE THE ASSESSING OFFICER , AFTER KNOWLEDGE OF NOTICE U/S 142(1) OR NOT. LET US LOOK INTO THE PROVISIONS OF LAW CONCERNING THE SAME. SECTION 271 FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICES , CONCEALMENT OF INCOME, ETC. (1) IF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON - (A) ( OMITTED ) (B) HAS FAILED TO COMPLY WITH A NOTICE UNDER SUB - SECTION (1) OF SECTIO N 142 OR SUB - SECTION (2) OF SECTION 143 OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB - SECTION (2A) OF SECTION 142; OR (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, - (I) ( OMITTED ) (II) IN THE CASES REFERRED TO IN CLAUSE (B), IN ADDITION TO ANY TAX PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN ONE THOUSAND RUPEES BUT WHICH MAY EXTEND TO TWENTY - FIVE THOUSAND RUPEES FOR EACH SUCH FAI LURE; (III) IN THE CASES REFERRED TO IN CLAUSE (C), IN ADDITION TO ANY TAX PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE PAGE NO. 8 AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS I NCOME OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME : EXPLANATION 1 : WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, - (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXP LANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB - SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. SECTION 273B IN THE INCOME - TAX ACT, 1995 273B. PENALTY NOT TO BE IMPOSED IN CERTAIN CASES. - NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISIONS OF CLAUSE (B) OF SUB - SECTION (1) OF SECTION 271, SECTION 271A, SECTION 271AA, SECTION 271B , SECTION 271BA, SECTION 271BB, SECTION 271C, SECTION 271CA, SECTION 271D, SECTION 271E, SECTION 271F, SECTION 271FA, SECTION 271FB,SECTION 271G, CLAUSE (C) OR CLAUSE (D) OF SUB - SECT ION (1) OR SUB - SECTION (2) OF SECTION 272A, SUB - SECTION (1) OF SECTION 272AA OR SECTION 272B OR SUB - SECTION (1) OR SUB - SECTION (1A) OF SECTION 272BB OR SUB - SECTION (1) OF SECTION 272BBB OR CLAUSE (B) OF SUB - SECTION (1) OR CLAUSE (B) OR CLAUSE (C) OF SUB - SE CTION (2) OF SECTION 273, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. 15 . FROM A PERUSAL OF THE ABOVE PROVISIONS, WE CAN UNDERSTAND THAT , NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISION S OF CLAUSE (B) OF SUB - SECTION ( 1 ) OF SECTION 271, NO PENALTY SHALL BE IMPOS ED ON THE PERSON OR THE ASSESSEE AS THE CASE MAY BE , FOR ANY FAILURE RE FERRED TO IN THE SAID PROVISION, IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. SO IT CAN BE UNDERSTOOD THAT PENALTY CANNOT BE IMPOSED , IF THE ASSESSEE IS ABLE TO PROVE THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE OF NOT COMPLYI NG WITH THE NOTICE SERVED ON THEM UNDER SUB - SECTION ( 1 ) OF SECTION 142 OF THE ACT . PAGE NO. 9 16 . THE MEANING OF REASONABLE CAUSE HAS BEEN STATED IN THE CASE OF WODWARD GOVERNOR INDIA P. LTD. VS. CIT AND ORS. (2002) 253 ITR 745 (DELHI) PARA 5 & 6, IS REPRODUCED BEL OW: - WHAT WOULD CONSTITUTE REASONABLE CAUSE CANNOT BE LAID DOWN WITH PRECISION. IT WOULD DEPEND UPON THE FACTUAL BACKGROUND AND THE SCOPE FOR EXTREMELY LIMITED AND UNLESS THE CONCLUSIONS ARE PERVERSE BASED ON CONJECTURES OR SURMISES AND/ OR HAVE BEEN ARRIVED AT WITHOUT CONSIDERATION OF RELEVANT MATERIAL AND/ OR HAVE BEEN ARRIVED AT WITHOUT CONSIDERATION OF NO SCOPE FOR INTERFERENCE. REASONABLE CAUSE, AS APPLIED TO HUMAN ACTION IS THAT WHICH WOULD CONSTRAIN A PERSON OF AVERAGE INTELLIGENCE AND ORDINARY PRUDENCE. THE EXPRESSION REASONABLE IS NOT SUSCEPTIBLE OF A CLEAR AND PRECISE DEFINITION; FOR AN ATTEMPT TO GIVE A SPECIFIC MEANING TO THE WORD NOT SPACE. IT CAN BE DESCRIBED AS RATIONAL ACCORDING TO THE DICTATES OF REASON AND IS NOT EXCESSIVE OR IMMODERATE. THE WORD REASONABLE HAS IN LAW THE PRIMA FACIE MEANING OF REASONABLE WITH REGARD TO THOSE CIRCUMSTANCES OF WHI CH THE ACTOR, CALLED ON TO ACT REASONABLY, KNOWS OR OUGH6T O KNOW (SEE IN RE, A SOLICITOR (1945) KB 368 (CA).REASONABLE CAUSE CAN BE REASONABLY SAID TO BE A CAUSE WHICH PREVENTS A MAN OF AVERAGE INTELLIGENCE AND ORDINARY PRODUCE, ACTING UNDER NORMAL CIRCUM STANCES, WITHOUT NEGLIGENCE OR INACTION OR WANT OF BONA FIDES. 17 . IN THE CASE OF AZADI BACHAO ANDOLAN V. UNION OF INDIA 252 ITR 471 (DELHI), DELHI, THE HONBLE HIGH COURT HELD THAT IS ( REPRODUCED BELOW ) : - SECTION 273B STARTS WITH A NON OBSTANTE CLAUSE A ND PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN SEVERAL PROVISIONS ENUMERATED THEREIN INCLUDING SECTION 271C, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS, IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE A CLAUSE BEGINNING WITH 'NOTWITHSTANDING ANYTHING' IS SOMETIMES APPENDED TO A SECTION IN THE BEGINNING WITH A VIEW TO GIVE THE ENACTING PART OF THE SECTION IN CASE OF CONFLICT AN OVERRIDING EFFECT OVER THE PROVISION OF ACT MENTIONED IN THE NON OBSTANTE CLAUSE (SEE ORIENT PAPER AND INDUSTRIES LTD V STATE OF ORISSA, AIR 1991 SC 672) A NON OBSTANTE CLAUSE MAY BE USED AS A LEGISLATIVE DEVICE, TO MODIFY THE AMBIT OF THE PROVISION OF LAW MENTIONED IN THE NON OBSTANTE CLAUSE, OR TO OVERRIDE IT IN SPECIFIED CIRCUMSTANCES (SEE T R THANDUR V UNION OF INDIA, AIR 1996 SC 1643) THE TRUE EFFECT OF THE NON OBSTANTE CLAUSE IS THAT IN SPITE OF THE PROVISION OR ACT MENTIONED IN THE NON OBSTANTE CLAUSE, THE ENACTMENT FOLLOWING IT WILL HAVE ITS FULL OPERATION OR THAT THE PROVISIONS EMBRACED IN THE NON OBSTANTE CLAUSE WILL NOT BE AN IMPEDIMENT FOR THE OPERATION OF THE ENACTMENT (SEE SMT PARAYANKANDIYAL ERAVATH KANAPRAVAN KALLIANI AMMA V K DEVI, AIR 1996 SC 1963) THEREFOR E, IN ORDER PAGE NO. 10 TO BRING IN APPLICATION OF SECTION 271C IN THE BACKDROP OF SECTION 273B, ABSENCE OF REASONABLE CAUSE, EXISTENCE OF WHICH HAS TO BE ESTABLISHED BY THE ASSESSEE, IS THE SINE QUA NON LEVY OF PENALTY UNDER SECTION 271C IS NOT AUTOMATIC BEFORE LEVYI NG PENALTY, THE CONCERNED OFFICER IS REQUIRED TO FIND OUT THAT EVEN IF THERE WAS ANY FAILURE REFERRED TO IN THE CONCERNED PROVISION THE SAME WAS WITHOUT A REASONABLE CAUSE THE INITIAL BURDEN IS ON THE ASSESSEE TO SHOW THAT THERE EXISTED REASONABLE CAUSE WH ICH WAG THE REASON FOR THE FAILURE REFERRED TO IN THE CONCERNED PROVISION THEREAFTER THE OFFICER DEALING WITH THE MATTER HAS TO CONSIDER WHETHER THE EXPLANATION OFFERED BY THE ASSESSEE OR THE PERSON, AS THE CASE MAY BE, AS REGARDS THE REASON FOR FAILURE, W AS ON ACCOUNT OF REASONABLE CAUSE 'REASONABLE CAUSE' AS APPLIED TO HUMAN ACTION IS THAT WHICH WOULD CONSTRAIN A PERSON OF AVERAGE INTELLIGENCE AND ORDINARY PRUDENCE IT CAN BE DESCRIBED AS PROBABLE CAUSE IT MEANS AN HONEST BELIEF FOUNDED UPON REASONABLE GRO UNDS, OF THE EXISTENCE OF A STATE OF CIRCUMSTANCES, WHICH ASSUMING THEM TO BE TRUE, WOULD REASONABLY LEAD ANY ORDINARILY PRUDENT AND CAUTIOUS MAN, PLACED IN THE POSITION OF THE PERSON CONCERNED, TO COME TO THE CONCLUSION THAT THE SAME WAS THE RIGHT THING T O DO THE CAUSE SHOWN HAS TO BE CONSIDERED AND ONLY IF IT IS FOUND TO BE FRIVOLOUS, WITHOUT SUBSTANCE OR FOUNDATION, THE PRESCRIBED CONSEQUENCES FOLLOW THE ABOVE BEING THE POSITION, THE COMMISSIONER'S NON - CONSIDERATION OF THE PLEA RAISED BY THE ASSESSEE ABO UT THE EXISTENCE OF REASONABLE CAUSE VITIATED THE ORDER ON THAT SCORE, WE FIND THE ORDER PASSED BY THE COMMISSIONER TO BE NON - MAINTAINABLE . 18 . FROM THE ABOVE PROPOSITION OF LAW STATED WE WOULD LIKE TO EXAMINE ON THE FACTS OF THE CASE TO ASCERTAIN WHETHER THE ASSESSEE HAD ANY REASONABLE CAUSE NOT TO HAVE COMPLIED WITH THE SAID NOTICE AT THAT PERIOD OF TIME WHEN NOTICE WAS AFFIXED U/S 142(2) OF THE ACT. 19 . FROM THE PERUSAL OF THE RATIO N CARD OF THE ASSESSEE WHICH WAS ISSUED IN THE YEAR 2005, IT CAN BE NOTED THAT AARTHIS YEAR OF BIRTH IS SHOWN AS 1990, SO HER AGE MIGHT BE IN THE YEAR 2005, ABOUT 15 YEARS, AND HER SISTER POOJAS YEAR OF BIRTH IS SHOWN AS 1991, SO POOJAS AGE MIGHT BE 14 YEARS IN THE YEAR 2005 WHEN THE RATION - CARD WAS ISSUED. SO, FROM A PERUSAL OF THE ASSESSMENT ORDER DATED 30.12.2010, WE FIND THAT WHEN SECTION 153C NOTICE WAS ISSUED VIDE NOTICE DATED 08.09.2010 REQUIRING THE ASSESSEE TO FILE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003 - 04 WITHIN 15 DAYS OF SERVICE OF THE NOTICE THE A SSESSEES WERE AGED 20 YEARS AND 19 YEARS AND IN RESPONSE TO WHICH THE ASSESSEES COUNSEL FILED LETTER DATED 12 TH OCTOBER, 2010 ON 13 TH OCTOBER, 2010 STATING THAT THE ASSESSEE HAS FILED ORIGINAL RETURN FOR THE ASSESSMENT YEAR 2003 - 04 ON 01 ST PAGE NO. 11 AUGUST 2003 DEC LARING AN INCOME OF RS. 57,779/ - ,A COPY OF WHICH WAS ALSO ENCLOSED AND ALSO THE SAID LETTER DISCLOSED THE FACT OF THE DEATH OF MOHANLAL CHADHA KARTA OF HUF AND THE DEATH CERTIFICATE WAS ALSO PLACED ON RECORD. 20 . FROM A PERUSAL OF THE DEATH CERTIFICATES FILE D ON RECORD IT IS UNDERSTOOD THAT SATPAL CHADHA, FATHER OF AARTHI & POOJA, DIED IN THE YEAR 2007, AND USHA CHADHA, MOTHER OF AARATHI & POOJA EXPIRED BEFORE MAY 2008, AND GRANDFATHER MOHAN LAL CHADHA HAS EXPIRED ON 23 RD APRIL 2009 AND ADMITTEDLY NO MALE MEMBERS WERE SURVIVING AFTER THE KARTHAS DEATH. FOR APPRECIATING THE FACTS LET US HAVE A LOOK AT THE TABLE BELOW: NAME BORN AGE WHEN RATION CARD WAS ISSUED IN YEAR 2005 AGE WHEN SECTION 153C NOTICE AND SECTION 142(1) NOTICE WAS AFFIXED 13.12.2010 SHRI MOHAL LAL CHADHA 1920 85 YEARS EXPIRED AT THE AGE OF 89 YRS AN YEAR BEFORE SATPAL CHADHA 1958 47 YRS EXPIRED IN 2007 USHA CHADHA 1963 42 YRS EXPIRED IN MAY 2008 AARTHI 1990 15 YRS 20 YRS POOJA 1991 14 YRS 19 YRS 21. WHEN THE SEARCH & SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT IN THE PREMISES CASES OF ANOTHER ASSESSEE NAMELY B.K. DHINGRA, SMT POONAM DHINGRA M/S. MADHUSUDA BUILDCON PVT. LTD ON OCTOBER 20 TH 2008 AND DURING THE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES AT F - 6/5, VASANT VIHAR, N EW DELHI , CERTAIN DOCUMENTS BELONGING TO THE ASSESSEE WERE SEIZED. ON THE BASIS OF THE SAID DOCUMENTS SO FOUND WHICH BELONGED TO THE ASSESSEE AND SEIZED FROM A PERSON COVERED U/S 132 OF THE ACT , AFTER RECORDING SATISFACTION NOTE, PROCEEDINGS WERE INITIATED U/S 153C REAL WITH SECTION 153A OF THE ACT BY THE LD ASSESSING OFFICER . 22 . FROM THE RECORDS IT IS UNDERSTOOD THAT NOTICE WAS ISSUED ON 22.11.2010 SECTION 153C AND REPLY TO THE SAME WAS RECEIVED IN THE OFFICE OF THE ASSESSING OFFICER THROUGH A COUNSEL ON 13.12.2010 23. FROM THE ABOVE SAID FACTS IT EMERGES THAT COGNIZANCE OF THE ASSESSEES CASE WAS TAKEN ONLY AFTER THE SEARCH DATED 20 TH OCTOBER 2008 CONDUCTED ON ANOTHER PAGE NO. 12 ASSESSEES PREMISES . SO , WHEN THE SEARCH U/S 132 OF THE ACT HAPPENED IN ANOTHER ASSESSEES PREMISES ON 20TH OCTOBER 200 8 , THEN ASSESSEES AGE WAS AS UNDER NAME BORN AGE IN YEAR 2008 SHRI MOHANLAL CHADHA 1920 88 YEARS AARTI 1990 18 YEARS POOJA 1991 17 YEARS 24 . AND IT IS UNDERSTOOD FROM THE ASSESSMENT ORDER THAT THE CASE OF ASSESSEE WAS INITIALLY CENTRALIZED WITH ACIT, CENTRAL CIRCLE - 1 OF U/S 127 OF THE ACT BY COMMISSIONER OF INCOME TAX, - IX, NEW DELHI VIDE ORDER F.NO.CIT - IX/ITO(HA)/127/2009 - 10/2591 DATED 28.10.2 009. 25 . SO AS PER THE DATE IN SEPTEMBER/OCTOBER 2009 WHEN THE ASSESSING OFFICER TOOK OVER THE CASE THE AGE OF ASSESSEE WAS AS UNDER: - NAME BORN AGE IN SEPTEMBER/ OCTOBER 200 9 SHRI MOHAL LAL CHADHA 1920 EXPIRED IN OCTOBER 2009 AARTHI 1990 19 YRS POOJA 1991 18 YRS 26 . THE CASE WAS SUBSEQUENTLY TRANSFERRED TO CENTRAL CIRCLE - 21 BY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - II, NEW DELHI ORDER U/S 127 OF IT ACT, VIDE F. NO. CIT - II/CEMT/2010 - 11 DATED 19.10.2010. 27 . THEREFORE, WHEN THE NOTICE U/S 153C WAS ISSUED ON 08 TH SEPTEMBER 2010 AARATHI AGED 20YEARS AND POOJA AGED 19 YEARS WERE ONLY SURVIVING IN THE HUF . AND ALL THE OTHER MEMBERS OF THE HUF WERE DEAD. AND IT IS A FACT THAT 89 YEARS OLD MOHANLAL CHADHA, THE KARTHA OF HUF, THEIR GRAND FATHER D IED 6 MONTH S AFTER THE SEARCH U/S 132 OF THE ACT WAS CONDUCTED AT THE PREMISES OF ANOTHER ASSESSEE, FROM WHERE CERTAIN DOCUMENTS OF THE ASSESSEE WAS PURPORTEDLY FOUND AND SEIZED AND TRIGGERED THE 153 PROCEEDING . PAGE NO. 13 28 . IT MUST BE KEPT IN MIND ALSO THAT SATPAL CHADHA FATHER OF AARATHI & POOJA DIED IN 2007 AT THE AGE OF 47 YEARS AND MOTHER USHA CHADHA DIED IN THE YEAR 2008 AT THE AGE OF 42 YEARS I.E. ABOUT AN YEAR OR TWO BEFORE THE SEARCH AND SEIZURE CONDUCTED ON THE OTHER ASSESSEES PREMISES. 29 . FROM TH E PERUSAL OF THE ASSESSMENT ORDER DATED 30.12.2010, VIDE PARA 4 THE ASSESSING OFFICER HAS ASKED DETAILED QUESTIONNAIRE ALONG WITH THE NOTICE U/S 142(1) ASKED THE ASSESSEE TO BE PRESENT WITH THE FOLLOWING DOCUMENTS. FOR EASY REFERENCE PARA 4 OF THE ASSESSME NT ORDER IS REPRODUCED BELOW: - 4. A DETAILED QUESTIONNAIRE ALONG WITH NOTICE U/S 142(1) WAS ISSUED REQUIRING THE ASSESSEE TO FURNISH NATURE OF BUSINESS, COPY OF ALL BANK ACCOUNTS, MONTH - WISE PURCHASE AND SALES, DETAILS OF SUNDRY CREDITORS/ DEBTORS WITH CO NFIRMATIONS, DETAILS OF EXPENSES U/S 40A(3), DETAILS OF LOANS AND ADVANCE GIVEN AND TAKEN WITH CONFIRMATIONS, DETAILS OF OPENING AND CLOSING STOCK INVENTORY WITH PURCHASE AND SALES VOUCHERS ALONGWITH STOCK REGISTER, BOOKS OF ACCOUNTS AND EXPENSES VOUCHERS, TO FURNISH CASH FLOW STATEMENT AND COMPARATIVE G.P. RATE AND N.P. RATE, TO PRODUCE COPY OF SALES TAX ORDER, DETAILS OF FOREIGN TRIPS ALONG WITH COPY OF PASSPORT AND ASKED TO EXPLAIN PAGE 97 - 150 OF ANNEXURE A - 29, SEIZED FROM THE PREMISES AT F - 6/5 VASANT VI HAR, NEW DELHI. BUT THE ASSESSEE HAS FAILED TO COMPLY WITH THE TERMS OF THE ABOVE NOTICES, AS SUCH, THE ASSESSMENT PROCEEDINGS ARE DECIDED ON MERITS. 30 . FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, WE CAN SEE THAT THE ASSESSEE AN HUF, HAS LOST 3 OF THEIR 5 MEMBER S AND THAT TOO , ALL THEIR MALE MEMBERS WHEN THE NOTICE WAS SERVED TO THEM U/S 153 C OF THE ACT IN 2009. WE FIND THAT A REPLY TO THE RESPONSE OF THE NOTICE U/S 153 C OF THE ACT WAS FILED IN THE OFFICE OF THE ASSESSING OFFICER ON 13 TH DECEMBER 20 10 BY A LEGAL COUNSEL ON BEHALF OF THE TWO WOMEN AARATHI AND POOJA. IN THE REPLY, THEY SAID ABOUT THE DEATH S IN THE HUF AND ALSO POINTED OUT THAT HUF WAS NOT EXISTING IN THE ABSENCE OF ANY SURVIVING MALE MEMBERS. FROM THE CONTENTS OF THE REPLY AND THE PRES ENCE OF A COUNSEL TO FILE THE SAME, WE FIND CONSIDERABLE FORCE IN THE SUBMISSION OF LD AR, THAT THE YOUNG WOMEN (20 YRS AND 19 YRS) WERE ON A BONA - FIDE BELIEF THAT THERE WAS NO HUF EXISTING AND THEY COULD NOT COLLECT ALL THE DOCUMENTS TO ANSWER THE DETAILE D QUERIES IN 7 DAYS. WE ALSO TAKE NOTE OF THE FACT THAT THE ASSESSEES HAD FILED ABOUT TWO THOUSAND ( 2000 ) PAGES DOCUMENTS TO ADVANCE THEIR CASE BEFORE THE LD CIT(A) IN THE QUANTUM APPEAL, WHICH SHOWS THAT IT COULD NOT HAVE BEEN POSSIBLE FOR THE ASSESSEE TO HAVE ANSWERED THE QUESTIONS PAGE NO. 14 ALONG WITH ALL DOCUMENT S WITHIN 7 DAYS AND ALSO TAKING INTO CONSIDERATION THE FACTS OF THE ASSESSEE WHERE PARENTS DIED WHEN THEY WERE JUST 17 AND 16 YEARS OLD AND SAW THEIR GRANDFATHER DIE WHEN THEY WERE 18 AND 17 YEARS AND NEEDLESS TO SAY THAT THE PLIGHT OF A FAMILY CONSISTING OF 5 MEMBERS TILL YEAR 2007 AND THEN BECOMING 2 IN A SHORT SPAN OF TWO AND HALF YRS AND THAT TOO WHEN ALL THE BREAD WINNERS GONE, WHAT WILL BE THE ME N TAL CONDITION AND HOW DEPRESSED THE TWO YOUNG GIRL S WOULD BE NEED TO BE TAKEN INTO CONSIDERATION, AND WE CANNOT LOSE SIGHT OF THE FACT THAT LAST ONE TO DIE SHRI MOHANLAL CHADHA WAS ABOUT 88 YEARS WHEN THE SEARCH WAS CARRIED OUT AT ANOTHER ASSESSEES PREMISES WHICH TRIGGERED U/S 153C PROCEEDINGS AGAINST THEM. FURTHER THAT USHA CHADHA ALSO DIE D JUST WITHIN 6 MO N THS BEFORE THE SEARCH AND WE CAN INFER THAT MOHALAL CHADHA 88 YEARS OLD C OULD NOT HAVE ANTICIPATED ALL THESE STATUTORY PROCEEDING OF THE REVENUE AND COULD HAVE BRIEFED HIS GRAND DAUGHTER S AT THAT TIME ONLY REGARDING ASSESSMENT YEAR 2003 - 04 TO 2008 - 09 AND THE ENTIRE BUSINESS OPERATION OF THE HUF. THE AO IN HIS ORDER HAS MENTIONED THAT ASSESSEES LIVE IN A RES IDENTIAL COMPLEX AND THEIR HOUSE AND ROOMS ARE SMALL AND THE ASSESSEES ARE WORKING IN A MALL. THE ASSESSEES ALSO HAVE STATED IN THEIR REPLIES THAT THEY ARE WORKING FOR A PALTRY AMOUNT OF RS. 7,000/ - TO RS. 8,000/ - PER MONTH. THIS IS CORROBORATED BY THE ITI S REPORT WHICH WAS REPRODUCED IN THE AOS ORDER IS AS FOLLOWS: - THE ITI OF THIS CIRCLE HAS CONFIRMED THE ABOVE INQUIRIES BY INFORMING THE FOLLOWING: - 1. FIRST FLOOR PREMISES OF THE ASSESSEE REMAINS LOCKED DURING DAY. 2. NEIGHBORS OF THE ASSESSEE STATE D THAT SHRI MOHAN LAL CHADHA HAD EXPIRED AND HE HAD TWO GRAND - DAUGHTERS AARTI CHADHA AND POOJA CHADHA AND THEY ARE WORKING IN SOME MALL. 3. NO BUSINESS ACTIVITY WAS DONE FROM THE PREMISES AS IT WAS A RESIDENTIAL HOUSE. 4. THERE WAS NO SIGN BOARD/ NAME PLATE THE ASSESSEES PREMISES. FURTHER, THERE WAS NO NAME PLATE OF ANY OTHER COMPANY. 5. SIZE OF ROOM WAS VERY SMALL USE OF SHRI CHADHA. THUS, THE PREMISES WAS CLEARLY UNSUITABLE FOR CARRYING OUT THE LARGE NO OF BUSINESS ENTITIES INCLUDING HUGE STOCKS. PAGE NO. 15 31 . IT IS PROBABLE THAT HUF WAS NOT ENGAGED IN ANY BUSINESS ACTIVITY AS STATED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER, TO SUBSTANTIATE THAT, THE ASSESSING OFFICER HAS OBSERVED SMALL BUILDING , NEIGHBOURS SAID NO ACTIVITY ETC IN HIS ORDER. 32 . IF THOSE OBSERVATIONS ARE TAKEN, THAT ITSELF SHOWS THAT EVEN IF SOME ACTIVITIES WHICH ARE NOT ALLOWED BY LAW WAS FOLLOWED BY HUF (MAINLY MALE CO - PAR C NERS) WHETHER WE CAN FASTEN THE PENAL CONSEQUENCE ON THESE YOUNG GIRLS. OUR ANSWER IS AN EMPHATIC NO. 33 . THE REASONING GIVEN BY THE AO TO IMPOSE THE PENALTY WAS THAT REPLY TO THE 153 NOTICE WAS FILED BY THE ASSESSEE THROUGH A LEGAL REPRESENTATIVE, SUGGESTS THAT ASSESSEES WERE VERY WELL AWARE OF THE CONSEQUENCES OF 153 PROCEEDINGS AND THEREAFTER IGNORING 142( 1) NOTICE WAS DELIBERATE AND ON THAT BASIS PENALTY WAS IMPOSED. THIS REASON OF THE AO CANNOT BE COUNTENANCED FOR THE SIMPLE REASON THAT THE ASSESSEE, THE TWO YOUNG GIRL S OF 20 AND 19 YEARS AT THE TIME OF REPLYING ON 13.12.2010, MUST HAVE BEEN UNDER B ONA - FIDE BELIEF THAT HUF DOES NOT EXIST AND THEY MIGHT HAVE BELIEVE D WHAT THEY MIGHT BEEN ADVISED BY THEIR LEGAL REPRESENTATIVE . MOREOVER WHETHER THEY COULD HAVE ANSWERED THE QUESTIONNAIRE AND BROUGHT THE RECORDS TO SUPPORT THE IR STAND WITHIN A SHORT SPAN OF 7 DAYS OR EVEN IF THEY HAD GOT AN ADJOURNMENT IT COULD NOT HAVE GONE BEYOND DECEMBER 31 ST 2010, AS ASSESSING OFFICER COULD NOT HAVE GRANTED SUCH ADJOURNMENT AS ASSESSMENT COULD HAVE BEEN HIT BY LIMITATION AND IT COULD HAVE B E EN TIME BARRED. SO, EVEN IF 10 M ORE DAYS WERE GRANTED ON 20.12.2010 IT COULD HAVE WORKED OUT TO 17 DAYS, STILL WE FEEL THAT 17 DAYS EVEN IF GIVEN TO THE ASSESSEE THEY COULD NOT HAVE ANSWERED THE QUESTIONNAIRE . 34. NOW THE ISSUE THAT ARISES TO BE DECIDED IS WHETHER THE ASSESSEE S WERE PREVENTED BY SUFFICIENT OR REASONABLE CAUS E FROM APPEARING AND PRODUCING ANY EVIDENCE BEFORE THE ASSESSING OFFICER AND WHETHER THE ASSESSEE S GOT SUFFICIENT OPPORTUNITY TO ADDUCE EVIDENCE AND ANSWER THE QUESTIONNAIRE ISSUED TO THEM IN THE INSTANT CASE . 35. FROM THE FACTS STATED ABOVE, WE OBSERVE THAT WITHIN A PERIOD OF 3 YEARS FROM YEAR 2007 ONWARDS THREE UNFORTUNATE DEATHS OCCURRED ONE AFTER THE OTHER AND THAT PAGE NO. 16 TOO CAUSING THE LO SS OF THE BREAD WINNERS OF THE FAMILY , AND THAT DEFINITELY WOULD HAVE CREATED LOTS OF STRESS , STRAIN AND SUFFERING FOR THE TWO YOUNG ASSESSEES WHEN THE STATUTORY NOTICE WAS ISSUED AT THE FAG END , JUST TO SAVE THE MATTER BECOMING TIME - BARRED . FROM THE REPLIES OF THE ASSESSEES IT CAN BE FOUND THAT THE ASSESSEES WERE ON A BONA - FIDE BELIEF THAT SINCE NO MALE CO - PARCENERS WAS ALIVE, THEY WERE UNDER THE IMPRESSION THAT HUF WAS NOT SUB - SISTING; AND IT IS ALSO TO BE NOTED THAT THE ASSESSEE S DID NOT GET ENOUGH TIME TO ANSWER THE DETAILED QUESTIONNAIRE GIVEN TO THEM; THE PRACTIC AL DIF FICULTY OF THE ASSESSEE S TO DIG OUT DOCUMENTS, WHEN THEY HAD PLEADED IGNORANCE OF THE BUSINESS , HAS TO BE TAKEN INTO CONSIDERATION, TO ARRIVE AT A FINDING THAT THESE CIRCUMSTANCES PRECLUDED THEM FROM ATTENDING THE PROCEEDINGS/ PRODUCING EVIDENCE S BEFORE THE ASSESSING OFFICER . THEREFORE WE HOLD THAT THERE WAS REASONABLE CAUSE FOR THE ASSESSEES NOT TO HAVE PARTICIPATED IN THE PROCEEDINGS. IN THE SAID CIRCUMSTANCES WE SET ASIDE THE PENALTY IMPOSED BY ASSESSING OFFICER , WHICH WAS WRONGLY CONFIRMED BY THE CIT( A). 36. IN THE RESULT THE APPEALS FILED BY THE ASSESSEES IS ALLOWED. ORDER P RONOUNCED IN THE OPEN COURT ON 2 0 .12.2013. - S D / - - S D / - ( S. V. MEHROTRA ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 2 0 / 12 /2013 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI