Shri Jwala Prasad Aggarwal, Gurgaon V. Deputy Commissioner of Income-tax, New Delhi

ITA 4392/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5013 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2002-2003
• Appeal Filed On: 07-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N RANA
• Keywords: Search and seizure; Principle of natural justice; Initiation of penalty proceedings; Reasonable cause
• Section: 273B; 153A; 144; 2

Judgement Text

ITA NOS. 4392 , 4393 , 4394 , 4395 , 4396 , 4397 & 4398 / DEL / 2015 ASSESSMENT Y EAR: 2002 - 03 TO 2008 - 09 PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G BENCH NEW DELHI) BEFORE SHRI G.D. AGRAWAL, PRESIDENT & SHRI AMIT SHUKLA , JUDICIAL MEMB E R I N ITA NO S . 4392 , 4393, 4394, 4395, 4396, 4397 & 4398 /DEL/201 5 ASSESSMENT YEAR S : 20 0 2 - 0 3 , 2003 - 04, 2004 - 05, 2005 - 06, 2007 - 08 & 2008 - 09 JWALA PRASAD AGGARWAL, H. NO. 472, BLOCK - C, SUSHANT LOK - 1, GURGAON. VS. D C IT CENTRAL CIRCLE 1 4, NEW DELHI (APPLICANT) (RESPONDENT) (PAN: A CTPA5534C ) ASSESSEE BY: SHRI GAUTAM JAIN, ADVOCATE SHRI PIYUSH KUMAR KAMAL, ADVOCATE REVENUE BY: SH RI S.N. RANA, CIT - DR 22 / 0 8 /201 7 DATE OF PRONOUNCEMENT 2 5 / 0 8 /201 7 ORDER PER BENCH: THE AFORESAIDAPPEAL S HA VE BEEN FILED BY THE ASSESSEE AGAINST COMMON IMPUGNED ORDER DATED 0 8 . 05 .201 5 , PASSED BY THE LD. CIT(APPEALS) - XXVI , NEW DELHI , IN RELATION TO THE PENALTY PROCEEDINGS U/S 271(1)( B ) F OR THE A.Y S . 200 2 - 0 3 TO 2008 - 09 . PAGE 2 OF 10 2. SINCE IN ALL THE APPEALS THE ISSUES INVOLVED ARE SAME ARISING OUT OF THE IDENTICAL SET OF FACTS, THEREFORE, THE SAME WERE BEING HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. 3. THE ASSESSEE IS MAINLY AGGRIEVED BY THE LEVY OF PENALTY OF RS. 20,000/ - U/S 271(1)(B) FOR ALL THE IMPUGNED ASSESSMENT YEARS WHI CH WAS ON ACCOUNT OF FAILURE TO COMPLY WITH THE STATUTORY NOTICES / DATE FIXED FOR HEARING ON 30.11.2012 AND 28.12.2012. 4. THE BRIEF FACTS QUA THE LEVY OF IMPUGNED PENALTY ARE THAT THE ASSESSEE IS AN INDIVIDUAL WORKING WITH THE MDLR GROUP OF COMPANIES AND W AS ALSO DIRECTOR AND SHARE HOLDER IN SOME OF THE GROUP COMPANIES. A SEARCH AND SEIZURE ACTION U/S 132(1) WAS CONDUCTED AT VARIOUS PREMISES OF MDLR GROUP AND ALSO AT THE RESIDENTIAL PREMISES OF THE ASSESSEE IN JANUARY, 2008 . I N PURSUANCE OF SEARCH AND SEIZURE OPERATION , PROCEEDINGS U/S 153A WERE INITIATED IN CASE OF THE ASSESSEE AND ASSESSMENTS HAVE BEEN COMPLETED FOR THE IMPUGNED ASSESSMENT YEARS PASSED U NDER S ECTION 144 READ WITH SECTION 153A. DURING THE COURSE OF THE ASSESSM ENT PROCEEDINGS THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(B) FOR NON - COMPLIANCE OF CERTAIN STATUTORY NOTICESBY THE ASSESSEE AND ACCORDINGLY , SHOW CAUSE NOTICE WAS ISSUED ON 24.6.2013. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE FILED VERY DETAIL EXPLANATION, CHALLENGING THE VALIDITY OF INITIATION OF PENALTY PROCEEDINGS AND EXPLAINING THE REASONABLE CAUSE FOR NON - COMPLIANCE ON THE APPOINTED DAYS. THE SUM AND SUBSTANCE OF ASSESSEE S EXPLANATION IS THAT ; PAGE 3 OF 10 FIRST LY, PENALTY NOTICE U/S 271(1)(B) ITSELF IS VAGUE BECAUSE IT DOES NOT SPECIFY ABOUT ANY NOTICE OR DATE OF COMPLIANCE FOR WHICH THERE WAS FAILURE ON PART OF THE ASSESSEE , THAT IS, IT DOES NOT MENTION ABOUT ANY NOTICE OR ANY DATE OF NON - COMPLIANCE FOR WHICH SUCH PENALTY PROCEEDI NGS HAS BEEN INITIATED ; SECONDLY, THE ASSESSEE HAS ULTIMATELY MADE COMPLIANCE S OF ALL THE NOTICES BY SUBMITTING IT S REPLY ON THE DETAILS AND QUERY ASKED BY THE AO ON THE DAK COUNTER OR THROUGH REGISTERED/SPEED POST; THIRDLY , IT WAS SUBMITTED THAT MORE THAN 303 GROUP ASSESSMENTS WERE CONDUCTED DURING THE SHORT SPAN OF FIVE MONTHS , HENCE IT WAS VERY DIFFICULT TO COMPLY WITH ALL THE NOTICES IN ALL THE CASES AT THE APPOINTED DATES, BUT THE ASSESSEE THOUGH BELATEDLY ON SOME OCCASIO N DULY SUBMITTED ALL THE REPLIES BEFORE THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS OF THE ASSESSEE. L ASTLY, IT WAS SUBMITTED THAT THE MAIN CONTROLLING PERSON , SHRI GOPAL KUMAR GOYAL WHO WAS LOOKING AFTER THE ENTIRE MATTER WAS DETAINED IN JUDICIAL CUSTODY SINCE AUGUST, 2012 AND WAS THERE FOR MORE THAN 2 YEARS. SINCE , SHRI GOPAL KUMAR GOYAL WAS ENTRUSTED WITH ALL THE DECISIONS AND WAS AWARE OF THE TAX MATTERS AND DOCUMENTS ; THEREFORE, THERE WAS DELAY IN COLLECTING INFORMATION AND CONSEQUENTLY MAKING CERTAIN COMPLIANCES. THUS, IT WAS PLEADED THAT THERE WAS A REASONABLE CAUSE FOR DELAY IN SUBMITTING THE REPLIES OR NON - COMPLIANCE ON THE APPOINTED DATE . 5. HOWEVER, THE LD. ASSESSING OFFICER LEVIED THE PENALTY OF RS. 20,000/ - ON TH E GROUND THAT THE ASSESSEE DID NOT ATTEND OFFICES IN PAGE 4 OF 10 RESPONSE TO THE VARIOUS NOTICES ISSUED OR DATE FIXED ON TWO OF THE OCCASIONS. 6 . THE LEARNED CIT(APPEALS) TOO HAS CONFIRMED THE SAID PENALTY AFTER OBSERVING AND HOLDING AS UNDER: - 8.3. NONE OF THE REASONS GIVEN IN THE WRITTEN SUBMISSION, NAMELY, SEARCH OPERATIONS ON THE MDLR GROUP IN JANUARY 2008, DETENTION OF SH RI GOPAL GOYAL, POOR TURN - OUT OF EMPLOYEES AT WORK PLACE, LARGE NUMBER OF PENDENCY OF ASSESSMENTS U/S 153A, AND PREPARATION OF VOLUMINOUS D ETAILS, CONSTITUTE REASONABLE CAUSE THAT PREVENTED THE APPELLANT FROM COMPLYING WITH THE AFOREMENTIONED NOTICES OR FILING LETTERS TO SEEK ADJOURNMENT. SEARCH HAD TAKEN PLACE IN JANUARY 2008, FOLLOWING WHICH 153A PROCEEDINGS WERE INEVITABLE. THE REVISION PETITIONS U/S 264 WERE MOVED BY THE APPELLANT AND THE SUBSEQUENT ASSESSMENTS WERE REQUIRED TO BE COMPLETED BY THE AO BEFORE THE LIMITATION DATE, IN RESPECT OF WHICH ALSO, AS PER THE AO, THE REQUISITE DETAILS WERE NOT BEING FILED. IN CONSIDERING THE MATTER OF PENALTY U/S 271(1) (B), THAT RELATES TO NON - COMPLIANCE TO A STATUTORY NOTICE, ISSUED IN THE CASE OF A SPECIFIC ASSESSEE FOR A PARTICULAR AY REQUIRING ATTENDANCE ON THE STATED DATE, THE PENDENCY OF A LARGE NUMBER OF OTHER CASES OF T HE GROUP IS AN IRRELEVA NT FACT. MOREOVER, THE BURDEN OF PENDENCY OF ASSESSMENTS WAS LARGER FOR THE AO, WHO WAS REQUIRED TO EXAMINE EACH CASE, EXAMINE THE SEIZED MATERIALS, OBTAIN THE EXPLANATION OF EACH ASSESSEE, CARRY OUT NECESSARY VERIFICATIONS, AFFORD OPPORTUNITY TO EACH OF T HEM IN TERMS OF THE PRINCIPLE OF NATURAL JUSTICE, AND THEREAFTER PASS THE ASSESSMENT ORDER BEFORE THE TIME BARRING DATE. THUS, THE REASONS CITED IN THE WRITTEN SUBMISSION ARE REJECTED. 8.4. FILING OF SEVERAL WRIT PETITIONS BEFORE THE HON'BLE HIGH COURT, WH ICH IN TURN REQUIRED SUBSTANTIALPAPERWORK, WAS A PERSONAL AND PRIVATE DECISION OF THE ASSESSEES OF THE GROUP AND CAN HARDLYCONSTITUTE A JUSTIFICATION FOR NON - COMPLIANCE OF THE STATUTORY NOTICES IN THE CASE OF THE APPELLANT. MOREOVER, IF THE PAGE 5 OF 10 'CIRCUMSTANCES' , CITED AS 'REASONABLE CAUSE' FOR NON - COMPLIANCE OF STATUTORY NOTICES, DID NOT COME IN THE WAY OF FILING THE WRIT PETITIONS, THESE COULD NOT POSSIBLY HAVE HINDERED THE PRESENCE OF THE ASSESSEE/AR BEFORE THE AO ON 30.11.2012 AND 28.12.2012. 8.5. AS PER SECT ION 271( 1 )(B) READ WITH SEC TION 273B, THE PENALTY U/S 271(1 )(B) IS VISITED UPON THETAXPAYER WHO HAS FAILED TO COMPLY WITH THE NOTICES MENTIONED THEREIN, FOR EACH DEFAULT UNLESS REASONABLE CAUSE FOR SUCH FAILURE IS PROVEN. IN THE CASE AT HAND, THE APPELLANT HAS MADE ASSERTIONS AND CLAIMS THAT ARE NOT VALID FOR NON - COMPLIANCE OF STATUTORY NOTICES. NO COMPELLING AND REASONABLE CAUSE FOR FAILURE TO COMPLY WITH THE STATUTORY NOTICES HAS BEEN ADVANCED. 8.6. WHILE EXAMINING THE MATTER OF PENALTY U/S 271(L)(B) READ WITH SECTION 274, THE ONLY ASPECT THAT HAS TO BE EXAMINED IS WHETHER THERE WAS ANY REASONABLE CAUSE THAT PREVENTED THE APPELLANT FROM COMPLYING WITH THE STATUTORY NOTICES ISSUED BY THE AO. HERE, THE APPELLANT DID NOT COMPLY WITH THE STATUTORY NOTICES ON 2 DIFFERENT OCCASIONS SPREAD OVER A PERIOD OF 3 MONTHS. THE APPELLANT COULD HAVE ESCAPED FROM THE RIGOURS OF PENALTY, HAD THE STATUTORY NOTICE BEEN ACKNOWLEDGED AND ADJOURNMENT REQUESTED TIMELY. HOWEVER, THE APPELLANT CHOSE TO COMPLETELY IGNORE THE STATUTOR Y NOTICES, AND THEREFORE IN THE ABSENCE OF A REASONABLE CAUSE, BECAME LIABLE FOR PENALTY U/S 271(1)(B). 7 . BEFORE US, THE LD. COUNSEL SUBMITTED THAT IN RESPONSE TO THE SHOW CAUSE NOTICE U/S 271(1)(B), THE ASSESSEE HAS FILED VERY EXHAUSTIVE REPLY BEFORE TH E ASSESSING OFFICER. THE COPY OF WHICH ARE APPEARING AT PAGES 7 TO 13 OF THE PAPER BOOK AND ALSO POINTED OUT THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS VARIOUS SUBMISSIONS WERE FILED WHICH HAVE NOT BEEN PROPERLY CONSIDERED. THE DETAIL OF REPLIES FILED ON VARIOUS CASES INCLUDING THAT OF ASSESSEE SENT THROUGH REGISTERED POST OR DAK HAS BEEN ILLUSTRATED AT PAGES 14 TO PAGE 6 OF 10 16 OF THE PAPER BOOK . APART FROM THAT , HE SUBMITTED THAT IN THE FIRST APPEAL THE RELIEF HAS ALREADY BEEN GRANTED TO THE ASSESSEE AND IN COME HAS BEEN COMPUTED A T NIL AND SUCH APPELLATE ORDER S HAVE ATTAINED FINALITY. THE COPY OF THE ASSESSMENT O RDER S GIVING EFFECT TO THE FIRST APPELLATE ORDER COMPUT ING THE INCOME AT NIL INCOMERIGHT FROM ASSESSMENT YEARS 2002 - 03 TO 2008 - 09 HAS BEEN PLACED IN THE PAPER BOOK. T HUS, HE SUBMITTED THAT NO PENALTY CAN BE LEVIED U/S 271(1)(B) UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE AS THERE WAS A REASONABLE CAUSE FOR DELAY IN FILING OF THE REPL IES . 8 . ON THE OTHER HAND, THE LD. DR STRONGLY RELIED UPON TH E OBSERVATION AND FINDINGS OF THE LEARNED CIT(APPEALS). 9 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER. HERE IN THIS CASE, FIRST OF ALL, ON PERUSAL OF THE PENALTY NOTICE AS APPEARING AT PAGE NO. 6 OF THE PAPER BOOK , I T IS SEEN THAT NOWHERE THE ASSESSING OFFICER HAS MENTIONED ABOUT ANY PARTICULARS OF STATUTORY NOTICE / S FOR WHICH THERE W AS ANY DEFAULT ON PART OF THE ASSESSEE. SHOW CAUSE NOTICES ISSUED FOR INITIATING PENALTY PROCEEDINGS SHOULD BE SPECIFIC AND WITHOUT ANY AMBIGUITY, BECAUSE THE ASSESSEE WHILE GIVING THE EXPLANATION SHOULD BE AWARE OF THE CHARGE FOR WHICH PENALTY IS BEING INITIATED AND CAN GIVE HIS SPECIFIC REBUTT AL. SUCH VAGUE NOTICE IS FATAL TO THE INITIATION OF THE PROCEEDINGS ITSELF. FURTHER F ROM THE PERUSAL OF THE ASSESSMENT ORDER , IT IS GATHERED THAT THE ASSESSEE DID NOT ATTEND THE PROCEEDINGS ON 2 0.11.2012 AND 30.11 .2012. THE ASSESSING OFFICER FURTHER MENTIO N S THAT ON 5.12.2012, SHRI VISHAL MEHTA, AR ALONG WITH OTHER AUTHORIZED PERSONS APPEAR ED BEFORE HIM AND SUBMITTED THAT NON - COMPLIANCE ON THE PART THE ASSESSEE ON THE SAID PAGE 7 OF 10 DATE WERE DUE TO THE FACT THAT GROUP HEAD , SHRI GOPAL KUMAR GOYAL WAS CURRENTLY NOT AVAILABLE AND THE WHOLE FAMILY MEMBERS AND THE GROUP HEAD S WERE ENGAGED IN ONGOING COURT PROCEEDINGS TO GET EARLY RELEASE OF SHRI GOPAL KUMAR GOYAL WHO WAS IN JUDICIAL CUSTODY. THIS CONTENTION RAISED BY THE ASSESSEE BEFORE THE LD. ASSESS ING OFFICER, IN THE COURSE OF THE ASSESSMENT PROCEEDINGS HAVE NOT BEEN ACCEPTED AND HE PROCEEDED TO MAKE THE ASSESSMENT U/S 144 READ WITH SECTION 153A. HOWEVER O N PERUSAL OF VARIOUS REPLIES FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER DURING THE ASSE SSMENT PROCEEDINGS , IT IS SEEN THAT MOST OF THE COMPLIANCES HAVE BEEN MADE THROUGH REPLIES /L ETTERS SENT TO THE ASSESSING OFFICER EITHER BY FILING IN THE DAK OR THROUGH REGISTERED/SPEED POST. THIS IS FURTHER CORROBORATED BY DETAILS OF REPLIES FILED IN VARIO US GROUP CASES AS REFERRED TO BY LD. COUNSEL BEFORE US. OSTENSIBLY T HERE MAY BE A CASE OF DELAY IN COMPLIANCE OR FILING OF REPLIES BEFORE AO AND NOT PERSONALLY APPEARING BEFORE THE ASSESSING OFFICER ON A PARTICULAR DATE , BUT COMPLIANCES IN FORM OF REPLIES DO HAVE BEEN FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS AND ALL THE NECESSARY DETAILS REQUIRED FOR THE PURPOSE OF ASSESSMENT HAS BEEN PROVIDED . WHAT ARE REQUIRED TO BE SEEN WHILE LEVYING PENALTY FOR NON - COMPLIANCE OF STATUTORY NOTICES , IS THE FACTS AND CIRCUMSTANCES FOR NON - APPEAR ANCE O N THE SPECIFIED DATE , THAT IS, WHETHER THERE WAS ANY REASONABLE CAUSE AND THE OVERALL CONDUCT OF THE ASSESSEE . T HE MAIN PLANKS FOR REASONABLE CAUSE PLEADED BY THE ASSESSEE HAS BEEN THAT , FIRSTLY, THE KEY PERSON/GROUP HEAD , SHRI GOPAL KUMAR GOYAL WHO WAS ENTRUSTED WITH INCOME TAX MATTERS AND WAS LOOKING AFTER THE ENTIRE WORKING OF THE GROUP WAS IN JUDICIAL CUSTODY IN SOME CRIMINAL PROCEEDINGS AND THE ENTIRE GROUP AND FAMILY MEMBERS WERE ENGAGED IN ONGOING COURT PROCEEDINGS F OR HIS EARLY RELEASE AND VARIOUS EMPLOYEES WERE LEAVING PAGE 8 OF 10 THE GROUP FURTHER ACCENTUATING THE PROBLEMS ; SECONDLY, MORE THAN 300 GROUP ASSESSMENT S WERE INITIATED IN THE WAKE OF SEARCH PROCEEDINGS WHICH WERE SIMULTANEOUSLY GOING ON , T HEREFORE, IT WAS DIFFICULT TO COMPLY TO THE VARIOUS NOTICES ON SHORT DATE S; LASTLY, IT HAS BEEN STRONGLY PLEADED BEFORE US, THAT THE COMPLIANCE S HAD BEEN MADE THROUGH REPLIES FILED THROUGH DAK OR REGISTERED POST THOUGH BELATE D LY. THESE FACTS HAVE NOT BEEN CONTROVERTED BY THE AO OR CIT (A PPEALS ). ALL THESE FACTS AND CIRCUMSTANCES UNDER ANY PRUDENCE DO CONSTITUTE REASONABLE CAUSE FALLING WITHIN THE SCOPE AND AMBIT OF SECTION 273B AND ACCORDINGLY, WE ARE OF THE CONSIDERED OPINION THAT FAILURE TO COMPLY WITH CERTAIN NOTIC ES ON A PARTICULAR DATE WAS DUE TO REASONABLE CAUSE AS HIGHLIGHTED BY THE ASSESSEE NOT ONLY DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS BUT ALSO BEFORE THE ASSESSING OFFICER AND LEARNED CIT(APPEALS) IN THE IMPUGNED PENALTY PROCEEDINGS AND HENCE PENALTY CANNOT BE LEVIED IN SUCH CIRCUMSTANCES . 10. APART FROM THAT ,ONE IMPORTANT FACT BROUGHT ON RECORD IS THAT, THE DEMAND IN THE QUANTUM PROCEEDINGS HAS BEEN REDUCED TO NIL , AFTER GIVING EFFECT TO THE FIRST APPELLATE ORDER AND THERE HAS BEEN NO SUBSTANT IVE NON - COMPLIANCE EITHER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS OR DURING THE APPELLATE PROCEEDINGS . IN SUCH CIRCUMSTANCES SUCH AN ALLEGED BREACH OR NON - COMPLIANCE IS MERE TECHNICAL AND VENIAL IN NATURE AND THEREFORE, PENALTY SHOULD NOT BE LEVIED FOR SUCH VENIAL BREACH . ACCORDINGLY, THE LEVY OF PENALTY OF RS. 20,000/ - U/S 271(1)(B) FOR ALL THE ASSESSMENT YEARS IS UNSUSTAINABLE FOR THE REASONS GIVEN ABOVE AND IS DIRECTED TO BE DELETED. THUS , GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. PAGE 9 OF 10 1 1. SINCE SIMILAR FACTS ARE PERMEATING THROUGH IN ALL THE ASSESSMENT YEARS, THEREFORE OUR FINDING GIVEN ABOVE WILL APPLY MUTATIS MUTANDIS FOR ALL THE YEARS APPEALED BEFORE US AND ACCORDINGLY PENALTY LEVIED U/S 271(1)(B) ARE DIRECTED TO BE DELETED. 1 2 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER P RONOUNCED IN THE OPEN COURT ON 2 5 . 0 8 .201 7. S D / - S D / - ( G.D. AGRAWAL ) (AMIT SHUKLA) (PRESIDENT) (JUDICIAL MEMBER) DATED: 2 5 . 0 8 .2017 NARENDER COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT (APPEALS) 5) DR: ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED ON 23 .0 8 .2017 DRAFT PLACED BEFORE AUTHOR 24 . 0 8 .2017 PAGE 10 OF 10 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 2 5 . 8 .2017 KEPT FOR PRONOUNCEMENT ON 2 5 . 8 .2017 FILE SENT TO THE BENCH CLERK 2 5 . 8 .2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.