M/s Tanvir Finance & Leasing Ltd., New Delhi V. ACIT, New Delhi

ITA 4238/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74313 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 11-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: B K DHINGRA
• Keywords: Opportunity of being heard; Principle of natural justice; Period of limitation; Reasonable cause; Time period of passing order
• Section: 142(1); 144

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H: NEW DELHI BEFORE SHRI J. S REDDY, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 4238/DEL/2013 (ASSESSMENT YEAR: 2009 - 10) TANVIR FINANCE & LEASING LTD., NOW KNOWN AS HARNOOR MARKETING L TD., 602, D - 8, ROSE APARTMENT, WARD NO. 3, MEHRAULI, NEW DELHI PAN AACCT6924B VS. ACIT CENTRAL CIRCLE 21, NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : B.K. DHINGRA, CA RESPONDENT BY: SAMEER SHARMA, SR. DR O R D E R PER A. T. VARKEY , JUDICIAL MEMBER THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - II , NEW DELHI DATED 13 TH MAY, 2013 FOR THE ASSESSMENT YEAR 200 9 - 10 . 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS: - 1. THAT THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, THE LD CIT(APPEALS) HAS FAILED TO APPRECIATE THAT THE ORDER LEVYING PENALTY PASSED BY THE LD ASSESSING OFFICER U/S 271(1)(B) IS ILLEGAL, BAD IN LAW, WITHOUT JURISDICTION, TIME BARRED AND WRONG ON FACTS. 2(A) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, THE LD CIT(APPEALS) HAS FAILED TO APPRECIATE THAT THE NOTICE ISSUED U/S 142(1) DATED 01.11.2010 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2009 - 10 FIXING THE CASE FOR HEARING ON DATED 10.11 .2010, WAS NOT PROPERLY SERVED ON THE APPELLANT COMPANY AS PER THE RELEVANT PROVISIONS OF LAW; HENCE BAD IN LAW AND CONSEQUENTLY, PENALTY PROCEEDINGS WERE WRONGLY INITIATED AND THE PENALTY OF RS. 10,000/ - LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY TH E LD CIT(APPEALS) FOR NOT ATTENDING THE OFFICE OF THE ASSESSING OFFICER ON 10.11.2010 FOR THE ASSESSMENT YEAR 200 9 - 2010, IS ILLEGAL. 2(B) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, THE LD ASSESSING OFFICER HAS ERRED IN LEVY ING AND LD CIT APPEALS HAS ERRED IN CONFIRMING THE PENALTY OF RS. 10,000/ - U/S 271(1)(B) OF THE INCOME TAX ACT, 1961 FOR NON - COMPLIANCE OF NOTICE DATED 07.11.2010 FIXED FOR THE ASSESSMENT YEAR 2009 - 2010. 3. THAT THE LD CIT APPEALS HAS FAILED TO APPRECIATE THAT IMPUGNED PENALTY ORDER PASSED BY THE LD ASSESSING OFFICER LEVYING PENALTY U/S 271(1)(B) PAGE NO. 2 OF THE INCOME TAX ACT, 1961, IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND HUMANITY AND HAS BEEN PASSED WITHOUT AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD. 4. THAT THE LD CIT APPEALS HAS FAILED TO APPRECIATE THAT IMPUGNED PENALTY ORDER PASSED BY THE LD ASSESSING OFFICER LEVYING PENALTY U/S 271(1)(B) OF THE INCOME TAX ACT, 1961 IS AGAINST THE PRINCIPLES OF LAW. 5. THAT THE LD CIT APPEAL HAS FAILED TO APPREC IATE THAT THE STATUTORY PROVISIONS OF SECTION 271(1)(B) OF THE INCOME TAX ACT, 1961, FOR LEVY OF PENALTY IS NOT FOR MERE TECHNICAL NON - COMPLIANCE BUT OR ACTUAL OR HABITUAL DEFAULTERS. 6. THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE AND THE PROVI SIONS OF LAW, THE LD CIT APPEAL HAS ERRED IN SUSTAINING IMPOSITION OF PENALTY OF RS. 10,000/ - U/S 271(1)(B) OF THE INCOME TAX ACT, 1961. 7. THAT THE APPELLANT COMPANY CRAVES THE RIGHT TO AMEND, APPEND, DELETE ANY OR ALL GROUND OF APPEAL. 3 . APROPOS COMMO N GROUND OF CONFIRMATION OF PENALTY OF RS. 10,000/ - U/S 271(1)(B). 4. BRIEF FACTS OF THE CASE IS AS FOLLOWS. A PENALTY OF RS. 10,000/ - WAS IMPOSED BY THE ASSESSING OFFICER SINCE THE ASSESSEE FAILED TO APPEAR BEFORE THE ASSESSING OFFICER ON 10.11.2010 EVEN AFTER RECEIPT OF NOTICE U/S 142(1) DATED 01.11.2010 . FROM A PERUSAL OF THE PENALTY ORDER IT IS NOTICED THAT THE ASSESSEE DID NOT EVEN RESPOND TO THE NOTICE SERVED U/S 271 (1)(B) ISSUED ON 31.12.2010, ASKING THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY SH OULD NOT BE LEVIED FOR ITS FAILURE TO COMPLY WITH THE STATUTORY NOTICE U/S 142(1). THEREAFTER, THE ASSESSING OFFICER ISSUED ANOTHER SHOW CAUSE NOTICE U/S 271(1)(B) ON 06.06.2011, IN RESPONSE TO WHICH THE ASSESSEE FILED A LETTER ON 16.06.2011, CLAIMING THA T NO NOTICE U/S 143(2) HAD BEEN RECEIVED FOR THE ASSESSMENT YEAR 2009 - 10, HENCE HE DID NOT ATTEND THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER REJECTED THE EXPLANATION TENDERED BY THE ASSESSEE AND HELD THAT THE ASSESSEE S NON - APPEARANCE BEFORE HIM TO BE A DELIBERATE DEFAULT ON THE PART OF THE ASSESSEE AND I N THE ABSENCE OF REASONABLE CAUSE FOR THE SAID DEFAULT, HE IMPOSED PENALTY OF RS. 10,000/ - U/S 271(1 )(B) READ WITH SECTION 274. 5 . AGGRIEVED BY THE IMP OSITION OF THE SAID PENALTY OF RS. 10,000/ - TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A), WHO AFTER HEARING THE AR CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER. AGGRIEVED BY THE SAID CONFIRMATION OF THE PENALTY BY THE LD CIT(A) THE ASSESSEE IS BEFORE US. 6 . THE LD AR CONTENDED THA T THERE WAS NO WILLFUL DEFAULT FROM THE PART OF THE ASSESSEE AND STATED THAT THE AR OF THE ASSESSEE HAD IN FACT APPEARED BEFORE THE ASSESSING OFFICER AND SOUGHT AN ADJOURNMENT FOR JANUARY /FEBRUARY 2011 ; AND SINCE THE INSTANT CASE WAS NOT GETTING TIME BARRE D ON 31.12.2010 HE SOUGHT AN PAGE NO. 3 ADJOURNMENT; WHEREAS, THERE WERE SEVERAL CASES OF OTHER ASSESSEES WHICH HE WAS HANDLING GETTING TIME BARRED ON 31.12.2010, SO HE REQUESTED FOR ADJOURNMENT TO JANUARY/ FEBRUARY 2011 AND IT WAS A BONAFIDE REQUEST TO THE ASSESSI NG OFFICER. TO SUPPORT THIS CONTENTION , T HE LD AR TOOK OUR ATTENTION TO THE NOTICES DATED 01.11.2010 U/S 142(1) ISSUED BY THE ASSESSING OFFICER WHICH WAS PERTAINING TO THE ASSESSMENT YEAR 2009 - 10 AND ACCORDING TO HIM, THE QUESTION OF THE SAID ASSESSMENT GE TTING TIME BARRED DOES NOT ARISE ON 31.12.2010. AND MOREOVER , THERE WERE SEVE RAL CASES WHICH WERE BEING HANDLED BY THE ASSESSEES AR GETTING TIME BARRED ON 31.12.2010, SO, THE AR OF THE ASSESSEE REQUESTED FOR AN ADJOURNMENT TO THE ASSESSING OFFICER TO FIX THE INSTANT CASE IN THE MONTH OF JANUARY OR FEBRUARY 2011 ; AND HE BONAFIDELY BELIEVED THAT THE ASSESSING OFFICER WOULD GRANT HIM THE SAID ADJOURNMENT, SINCE THE REQUEST WAS REASONABLE. 7 . IN ORDER TO PROVE HIS SAID CONTENTION, HE DREW OUR ATTENTION TO PA GE NO . 8 OF THE PB, WHICH IS A LETTER DATED 16.11.2010 FROM THE ASSESSEE TO THE ASSESSING OFFICER IN RESPONSE TO THE NOTICE U/S 142(1) DATED 01.11.2010, IN WHICH IT WAS CLEARLY STATED BY THE ASSESSEE THAT HIS AR SHRI H. L. SEKHRI IS PRE - OCCUPIED WITH ABOUT 300 CASES OF THAPAR GROUP (SEARCH MATTER) AND SINCE THE ASSESSEES CASE OF ASSESSMENT YEAR 2009 - 10 ARE NOT GETTING TIME BARRED ON 31.12.2010, HE REQUESTED TO ADJOURN THE CASE TO THE MONTH OF JAN/FEBRUARY 2011. HOWEVER, AS PER THE LD AR THE ASSESSING OFF ICER GAVE A DEAF EAR TO THE SAID REASONABLE REQUEST FOR ADJOURNMENT AND DID NOT BOTHER TO AT LEAST ASCERTAIN WHETHER THE MATTER WAS GETTING TIME BARRED , BUT PROCEEDED WITH THE ASSESSMENT U/S 144 EX PARTE ASSUMING THAT THE CASE WAS GETTING TIME BARRED AND T HE LD AR TOOK OUR ATTENTION TO THE ASSESSMENT ORDER IN WHICH THE OPENING SENTENCE OF THE ASSESSMENT ORDER ITSELF IT IS STATE D THAT SINCE THE CASE IS GETTING TIME BARRED HE HAS NO OTHER ALTERNATIVE BUT TO PROCEED U/S 144 OF THE ACT . THEREFORE ACCORDING TO THE LD AR THE ASSESSING OFFICER IN THIS CASE HAS MIS DIRECTED HIMSELF AND WAS UNDER A WRONG IMPRESSION THAT THE ASSESSMENT PROCEEDINGS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009 - 10 WAS GETTING TIME BARRED ON 31.12.2010 AFTER SERVING THE STATUTORY NOTICES . IN THE SAID BACKGROUND THE LD AR CONTENDS THAT THE ASSESSING OFFICER ERRED IN NOT GRANTING ADJOURNMENT TO THE ASSESSEE AND IT AMOUNT S TO CLEAR VIOLATION OF PRINCIPLE S OF NATURAL JUSTICE AND THEREFORE THERE WAS REASONABLE CAUSE FOR THE AR NOT TO BE PRESENT ON 10.11.2010 BEFORE THE AO ; AND THEREFORE SUBSEQUENT IMPOS ITION OF PENALTY NEED TO BE SET ASIDE. ON THE OTHER HAND THE LD DR CONTENDED THAT THERE WAS NO VIOLATION OF PAGE NO. 4 PRINCIPLE S OF NATURAL JUSTICE BECAUSE THE ASSESSEE DID NOT CARE TO REPRESENT HIMSELF ON 10.11.2010 AND ALSO FAILED TO EVEN RESPOND TO THE SHOW CAUSE ISSUED BEFORE PENALTY PROCEEDINGS WAS INITIATED BY NOTICE DATED 31.12.2012. ONLY VIDE LETTER DATED 1 6.06.2011 THE ASSESSEE FOR THE FIRST TIME RESPONDED TO THE SAID SHOW CAUSE NOTICE. THUS THE LD DR CONTEND ED THAT THE ASSESSEE DELIBERATELY DID NOT APPEAR BEFORE THE ASSESSING OFFICER OR REPRESENT THROUGH AN AUTHORIZED REPRESENTATIVE. THIS ACCORDING TO THE LD DR IS A CLEAR VIOLATION OF LAW AND THE IMPOSITION OF PENALTY IS VALID IN THE EYES OF LAW. 8 . WE HAVE HEA R D THE RIVAL SUBMISSION S AND HAVE PERUSED THE RECORDS. WE FIND THAT THE STATUTORY NOTICE WAS SERVED ON 01.11.2010 FOR THE ASSESSMENT YEAR 2009 - 10, THE ASSESSEE RESPONDED TO THE SAME BY LETTER DATED 16.11.2010 SEEKING ADJOURNMENT OF THE CASE TO JANUARY/ FEBRUARY 2011, STATING THAT THE AR OF THE ASSESSEE WAS PRE - OCCUPIED AND REPRESENTING AROUND 300 CASES WHICH WAS GETTING TIME BARRED ON 31.12.2010 ; AND SINCE THE CASE OF THE ASSESSEE WAS FOR THE ASSESSMENT YEAR 2009 - 10 AND BECAUSE IT WAS NOT GETTI NG TIME BARRED ON 31.12.2010 THE CASE MAY BE ADJOURNED. A PERUSAL OF THE RECORDS REVEALS THAT A SEARCH WAS CONDUCTED IN FINANCIAL YEAR 2008 (I.E. ASSESSMENT YEAR 2009 - 10 ) IN ANOTHER PERSONS PREMISES. THEREAFTER IF ANY INCRIMINATING MATERIAL IS FOUND IN THE SAID SEARCH AGAINST THE ASSESSE E , THE AO AFTER INVOKING SECTION 153 (C) MAY ASSESS/ REASSESS SIX PRECEDING YEAR FROM ASSESSMENT YEAR 2008 - 09 ONWARDS TO ASSESSMENT YEAR 2003 - 04. BUT FOR THE PRESENT CASE I.E. FOR ASSESSMENT YEAR 2009 - 10 , HE HAD TO DO SCRU TINY ASSESSMENT ENVISAGED IN SECTION 143 OF THE ACT . SO WE FIND THAT THE ASSESSING OFFICER ERRED IN CLUBBING THE LIMITATION PERIOD OF PRECEDING SIX YEAR S WITH THE IMPUGNED YEAR. FACT OF THE MATTER WAS THAT THE LIMITATION FOR ASSESSMENT OF THE IMPUGNED YEAR WAS UP TO 31.12.2011. IN THE SAID CIRCUMSTANCE, WE FIND THAT THE PLEA OF THE ASSESSEE TO THE ASSESSING OFFICER TO ADJOURN THE MATTER TO JANUARY OR FEBRUARY 2011 WAS A REASONABLE AND JUSTIFIABLE REQUEST. THE LD ASSESSING OFFICER WAS WRONG IN ASSUMING THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2009 - 10 WAS GETTING TIME BARRED ON 31.12.2010 AND ON THAT MISTAKEN BELIEF HE HAS PROCEED ED TO ESTIMATE THE INCOME OF THE ASSESSEE U/S 144 OF THE ACT . THE SAID REASONING OF THE ASSESSING OFFICER TO HASTILY PASS THE ORD ER U/S 144 ITSELF WAS ON AN ERRONEOUS ASSUMPTION THAT THE ASSESSMENT IS GETTING TIME BARRED. THE LD ARS REQUEST FOR ADJOURNMENT I S ON RECORD AND WE FIND THAT THE REASON GIVEN BY THE ASSESSING OFFICER NOT TO GIVE ADJOURNMENT WA S CLEARLY ON AN ERRONEOUS BAS IS AND MOREOVER, THE AR OF PAGE NO. 5 THE ASSESSEE COULD NOT REPRESENT BEFORE THE ASSESSING OFFICER ON 10.11.2010, SINCE HE WAS PRE - OCCUPIED WITH MATTERS GETTING TIME BARRED , SO WE FIND THERE WAS REASONABLE CAUSE FOR THE ASSESSEE NOT TO HAVE ATTENDED BEFORE THE ASSES SING OFFICER ON 10.11.2010. THEREFORE WE SET ASIDE THE ORDER OF THE LD CIT(A) AND ALLOW THE APPEAL PREFERRED BY THE ASSESSEE. 9 . IN THE RESULT THE APPEAL IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 14 . 03 .2014. - SD/ - - SD/ - ( J. S REDDY) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :14 / 03 / 2014 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESP ONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI