JIGNESH GIRISH BENGARI, MUMBAI V. ITO 22(1)(2), NAVI MUMBAI

ITA 4201/MUM/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3549 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 11-01-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 10-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS LATA SUNDER
• Assessee Lawyers: JIGNESH BENGARI IN PERSON
• Keywords: Reasonable cause
• Section: 273B; 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J, BENC H MUMBAI BEFORE SHRI PRAMOD KUMAR, AM & SHRI PAWAN SIN GH, JM ITA NO.4201/MUM/2 014 (ASSESSMENT YEAR : 2006-07) JIGNESH GIRISHBHAI BENGARI, 101, TANISHQ ANTHIA, CHITRANJAN NAGAR, GHATKOPAR (E), MUMBAI-400077 VS. ITO 22(1)(2), TOWER NO.6, 4 TH FLOOR, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI-400703. PAN/G IR NO.: AFFPB1952C ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI JIGNESH BENGARI (IN PERSON) REVENUE BY : MRS. LATA SUNDER (DR) DATE OF HEARING : 11/01/2016 DATE OF PRONOUNCEMENT: 13/01/2016 O R D E R PER PAWAN SINGH, JM: 1. THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING TH E ORDER OF CORRECTNESS OF ORDER U/S 271(1)(B) FOR LEVYING PENALTY OF RS. 50,000/- W HICH WAS APPROVED BY THE CIT(A)-33, MUMBAI, IN THE IMPUGNED ORDER DATED 21/0 3/2014. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED HIS RETURN OF INCOME ON 17.10.2008 AND THE RETURN OF INCOME WAS SELECTED FO R SCRUTINY. AS PER THE CONTENTS OF ASSESSMENT ORDER A STATUTORY NOTICE U/S 142(1) WAS ISSUED ON 30.06.2008 FOR FIXING THE HEARING ON 15.07.2008 AND NOBODY ATTENDED THE DATE OF HEARING NOR ANY REQUEST FOR ADJOURNMENT. ANOTHER NO TICE U/S 142(1) WAS ISSUED ON 06.08.2008 FOR 21.08.2008 AND NONE APPEARED ON B EHALF OF THE ASSESSEE, AGAIN A NOTICE WAS ISSUED FOR FIXING THE DATE ON 06.10.20 08 AND FINALLY FOR 06.10.2008, AND FINALLY FOR 04.12.2008, BUT THE ASSESSEE NOT AP PEARED AND THUS THE PROCEEDING WAS HELD EX-PARTE U/S 144 AND ASSESSMENT ORDER WAS PASSED ON 15.12.2008, ASSESSING THE TOTAL INCOME OF THE ASSESSEE AS OF RS . 10,26,760/-. 3. THEREAFTER, THE ASSESSEE WAS ISSUED NOTICE U/S 274 R.W.S. 271(B) ON 18.12.2008 TO SHOW CAUSE WITHIN 7 DAYS OF SERVICE OF NOTICE AS TO WHY THE PENALTY BE NOT INFLICTED FOR WHICH NO REPLY WAS FILED , THE NOTI CE WAS ALLEGEDLY SERVED ON 31.12.2008 AND FINAL NOTICE DATED 12.03.2012, FOR LEVYING THE PENALTY WAS SENT, THUS FOR SIX DEFAULTS I.E. FIVE DEFAULTS FOR NOT RE SPONDING THE NOTICE U/S 142(1) AND ONE DEFAULT FOR NOTICE U/S 143(2) PENALTY @ RS. 10,000/- EACH WAS THUS ITA NO. 4201/M/14 2 INFLICTED A PENALTY OF RS. 60,000/-, VIDE ORDER DA TED 28.03.2012 AGAINST WHICH APPEAL WAS FILED BY THE ASSESSEE BEFORE THE CIT(A). 4. THE CIT(A) WHILE DISPOSING OF THE APPEAL OF THE ASS ESSEE RESTRICTED IT ONLY IN RESPECT OF 5 INSTANCES OF NON-COMPLIANCE AND THUS D ELETED RS. 10,000/- OUT OF RS. 60,000/- AND CONFIRMED THE PENALTY OF RS. 50,000/- AND THUS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 31.03.2014, AGAINST WHICH THE PRESENT APPEAL IS FILED BEFORE US. 5. WE HAVE HEARD THE ASSESSEE IN PERSON AND DEPARTMENT AL REPRESENTATIVE (DR) FOR THE REVENUE. THE ASSESSEE HAS ARGUED THAT HAS NOT R ECEIVED ONLY ONE NOTICE AND DURING THE RELEVANT PERIOD THE ASSESSEE WAS SERIOUS LY ILL AND WHEN RECEIVED NOTICE, HE APPEARED ON THAT DATE DURING THE RELEVAN T PERIOD AND WAS NOT IN A POSITION TO ENGAGED THE REPRESENTATIVE. THE ASSESSE E COULD NOT DISCLOSE SUCH DATE BEFORE US, BUT ARGUED THAT HE PERSONALLY APPEARED B EFORE THE ASSESSING OFFICER (AO). 6. THE ASSESSEE FURTHER ARGUED THAT THAT HE IS A SMALL BUSINESSMAN AND LENIENT VIEW WILL BE TAKEN AGAINST HIM AS HE NEVER INTENDED TO D ISOBEY OR DISREGARD WITH THE NOTICE ISSUED BY THE AUTHORITIES BELOW AND FURTHER UNDERTAKE THAT HE WILL NOT MAKE ANY DEFAULT IN RESPONSE TO THE NOTICES OF THE AUTHORITIES BELOW. 7. THE DR OF THE REVENUE ARGUED THAT THE ASSESSEE DOES NOT DESERVE ANY LENIENCY AND THE ORDER PASSED BY THE AUTHORITIES BELOW DOES NOT REQUIRE ANY INTERFERENCE. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS EXPLAINED THA T HE WAS SEEK DURING THE RELEVANT PERIOD AND WAS NOT IN POSITION EITHER TO A TTEND THE PROCEEDING PERSONALLY OR ENGAGE REPRESENTATIVE TO APPEAR BEFORE THE AUTHO RITIES CONCERNED. 9. WE HAVE PERUSED THE SECTION 271(1)(B) OF THE INCOME -TAX ACT AND WE UNDERSTAND THAT ANYTHING CONTAINED IN THE PROVISION OF CLAUSE (B) OF SUB-SECTION (1) OF SECTION 271, NO PENALTY SHALL BE IMPOSED ON THE PER SON OR THE ASSESSEE AS THE CASE MAY BE, FOR ANY FAILURE IF PROVED THAT THERE WAS AN Y REASONABLE CAUSE FOR THE SAID FAILURE. SO IT COULD BE UNDERSTAND THAT PENALTY CAN NOT BE IMPOSED IF ASSESSEE IS ABLE TO PROVE THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE OF NOT COMPLIED WITH THE NOTICE SERVED UPON THEM. ITA NO. 4201/M/14 3 10. THE CO-ORDINATE BENCH OF DELHI TRIBUNAL, IN THE CAS E OF WODWARD GOVERNOR INDIA P. LTD. VS. CIT AND ORS. (2002) 253 ITR 745 ( DELHI) PARA 5 & 6 WHICH ARE REPRODUCED HERE HAS HELD: 'WHAT WOULD CONSTITUTE REASONABLE CAUSE CANNOT BE L AID DOWN WITH PRECISION. IT WOULD DEPEND UPON FACTUAL BACKGROUND AND THE SCOPE FOR EXTREMELY LIMITED AND UNLESS THE CONCLUSIONS ARE PE RVERSE BASED ON CONJECTURES OR SURMISES AND/ OR HAVE BEEN ARRIVED A T WITHOUT CONSIDERATION OF RELEVANT MATERIAL AND/ OR HAVE BEEN ARRIVED AT W ITHOUT CONSIDERATION OF NO SCOPE FOR INTERFERENCE. REASONABLE CAUSE, AS APP LIED TO HUMAN ACTION IS THAT WHICH WOULD CONSTRAIN A PERSON OF AVERAGE INTE LLIGENCE AND ORDINARY PRUDENCE. THE EXPRESSION 'REASONABLE' IS NOT SUSCEP TIBLE OF A CLEAR AND PRECISE DEFINITION; FOR AN ATTEMPT TO GIVE A SPECIF IC MEANING TO THE WORD NOT SPACE. IT CAN BE DESCRIBED AS RATIONAL ACCORDIN G TO THE DICTATES OF REASON AND IS NOT EXCESSIVE OR IMMODERATE. THE WORD 'REASONABLE' HAS IN LAW THE PRIMA FACIE MEANING OF REASONABLE WITH REGA RD TO THOSE CIRCUMSTANCES OF WHICH THE ACTOR, CALLED ON TO ACT REASONABLY, KNOWS OR OUGH6T 0 KNOW (SEE IN RE, A SOLICITOR (1945) KB 368 (CA).REASONABLE CAUSE CAN BE REASONABLY SAID TO BE A CAUSE WHICH PR EVENTS A MAN OF AVERAGE INTELLIGENCE AND ORDINARY PRODUCE, ACTING UNDER NORMAL CIRCUMSTANCES, WITHOUT NEGLIGENCE OR I NACTION OR WANT OF BONA FIDES.' 11. IN THE CASE OF AZADI BACHAO ANDOLAN V. UNION OF IND IA 252 ITR 471 (DELHI), DELHI, THE HON'BLE HIGH COURT HELD: 'SECTION 273B STARTS WITH A NON OBSTANTE CLAUSE AND PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN SEVERAL PROVI SIONS 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 RE ASONABLE CAUSE FOR THE SAID FAILURE A CLAUSE BEGINNING WITH 'NOTWITHSTANDI NG ANYTHING' IS SOMETIMES APPENDED TO A SECTION IN THE BEGINNING WI TH 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 CL AUSE (SEE ORIENT PAPER AND INDUSTRIES LTD V STATE OF ORISSA, AIR 1991 SC 6 72) A NON OBSTANTE CLAUSE MAY BE USED AS A LEGISLATIVE DEVICE, TO MODI FY THE AMBIT OF THE PROVISION OF LAW MENTIONED IN THE NON OBSTANTE CLAU SE, 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 CLAU SE, THE ENACTMENT FOLLOWING IT WILL HAVE ITS FULL OPERATION OR THAT T HE PROVISIONS EMBRACED IN THE NON OBSTANTE CLAUSE WILL NOT BE AN IMPEDIMENT F OR THE OPERATION OF THE ENACTMENT (SEE SMT PARAYANKANDIYAL ERAVATH KANAPRAV AN KALLIANI AMMA V K DEVI, AIR 1996 SC 1963) THEREFORE, IN ORDER TO BRING IN APPLICATION OF SECTION 271 C IN THE BACKDROP OF SECTION 273B, ABSE NCE 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 A UTOMATIC BEFORE LEVYING 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 WHICH WAG THE R EASON FOR THE FAILURE REFERRED TO IN THE CONCERNED PROVISION THEREAFTER T HE 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 R EASON FOR FAILURE, WAS ON ACCOUNT OF REASONABLE CAUSE 'REASONABLE CAUSE' AS A PPLIED TO HUMAN ITA NO. 4201/M/14 4 ACTION IS THAT WHICH WOULD CONSTRAIN A PERSON OF AV ERAGE INTELLIGENCE AND ORDINARY PRUDENCE IT CAN BE DESCRIBED AS PROBABLE C AUSE IT MEANS AN HONEST BELIEF FOUNDED UPON REASONABLE GROUNDS, OF T HE EXISTENCE OF A STATE OF CIRCUMSTANCES, WHICH ASSUMING THEM TO BE TRUE, W OULD REASONABLY LEAD ANY ORDINARILY PRUDENT AND CAUTIOUS MAN, PLACED IN THE POSITION OF THE PERSON CONCERNED, TO COME TO THE CONCLUSION THAT TH E SAME WAS THE RIGHT THING TO DO THE CAUSE SHOWN HAS TO BE CONSIDERED AN D ONLY IF IT IS FOUND TO BE FRIVOLOUS, WITHOUT SUBSTANCE OR FOUNDATION, THE PRESCRIBED CONSEQUENCES FOLLOW THE ABOVE BEING THE POSITION, THE COMMISSIONER'S NO N-CONSIDERATION OF THE PLEA RAISED BY THE ASSESSEE ABOUT THE EXISTENCE O F REASONABLE CAUSE VITIATED THE ORDER ON THAT SCORE, WE FIND THE ORDER PASSED BY THE COMMISSIONER TO BE NON- MAINTAINABLE.? 12. IN THE CASE IN HAND THE ASSESSEE HAS EXPLAINED THE SUFFICIENT CAUSE FOR NOT APPEARING WHEN THE CASE WAS FIXED AS NO NOTICE WAS SERVED UPON HIM EXCEPT FOR ONE OCCASION FOR WHICH HE HAS HONESTLY CONCEDED THA T EXCEPT ON ONE OCCASION THE ASSESSEE HAS NOT APPEARED BEFORE THE AO, NOR COULD SUBMIT ANY DETAIL AS SOUGHT DUE TO HIS ILLNESS AND PLEADED LENIENCY AND UNDERTO OK TO BE VIGILANT IN FUTURE FOR APPEARING BEFORE THE AUTHORITIES CONCERNED. IN VIE W OF THE ABOVE DISCUSSION, THE WE CONSIDER IT APPROPRIATE TO SET ASIDE THE ORDER O F AO AND DELETE THE ENTIRE PENALTY IN THE ORDER DATED- 28.03.2012.. 13. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ACCE PTED AND THE ORDER OF AO DATED 28.03.2012 IS SET-ASIDE. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 13/01/2016. SD/- SD/- (PRAMOD KUMAR) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 13/01/2016 SK, PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY/