Shri Rajeev Verma, Haryana V. Deputy Commissioner of Income-tax, New Delhi

ITA 4399/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4828 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2017
• 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 S RAMA
• Keywords: Opportunity of being heard; Principle of natural justice; Reasonable cause
• Section: 142(1); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDEN T & SHRI K.N. CHARRY, JUDICIAL MEMBER ITA NOS.-4399 TO 4405/DEL/2015 ( ASSESSMENT YEARS: 2002-03 TO 2008-09) RAJEEV VERMA H.NO. 228/1, NAI ABADI REWARI, HARYANA. AEQPV8121H VS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 14, NEW DELHI. ASSESSEE BY SH. GAUTAM JAIN, ADV. SH. PIYUSH KUMAR KAMAL, ADV. REVENUE BY SH. S.S. RAMA, CIT DR ORDER PER BENCH ALL THESE MATTERS RELATE TO THE SAME ASSESSEE I.E. MR. RAJEEV VERMA IN RESPECT OF THE ASSESSMENT YEARS 2002-03 TO 2008-09, CHALLENGING THE ORDERS DATED 12 TH MAY, 2015 BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXVI, NEW DELH I (FOR SHORT HEREINAFTER CALLED AS THE LD. CIT (A)), WHEREAS T HE LD.CIT (A) CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFI CER U/S 271(1)(B) OF THE INCOME TAX ACT, 1961 (FOR SHORT HE REINAFTER CALLED AS THE ACT). DATE OF HEARING 23.08.2017 DATE OF PRONOUNCEMENT 29.08.2017 2 ITA NOS. 4399 TO 4405/DEL/2015 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL, WORKING AS AN EMPLOYEE IN THE MDLR GROUP OF COMPANI ES AND DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE FAIL ED TO ATTEND THE PROCEEDINGS AS AND WHEN REQUIRED THROUGH DIFFER ENT NOTICES ISSUED BY THE AO, AS SUCH, PROCEEDINGS U/S 271(1)(B ) OF THE ACT WERE INITIATED AND BY WAY OF ORDER DATED 30.05.2014 AO IMPOSED A PENALTY OF RS. 20,000/- FOR EACH OF THE YEARS FROM 2002-03 TO 2008-09. SINCE THE APPEALS PREFERRED BY THE ASSESS EE WERE DISMISSED BY THE LD. CIT (A), THE ASSESSEE IS BEFOR E US IN THESE APPEALS STATING THAT THE LD. CIT (A) FAILED TO APPR ECIATE THAT THE ORDER LEVYING PENALTY WAS BASED ON THE FINDINGS CON TRARY TO THE ORDER OF ASSESSMENT AND THE AUTHORITIES FAILED TO A PPRECIATE THAT THERE WAS A REASONABLE CAUSE ON THE PART OF THE ASS ESSEE IN NOT ATTENDING THE PROCEEDINGS, AS SUCH LEVYING OF PENAL TY AND CONFIRMATION THEREOF IS THE RESULT OF MISINTERPRETA TION OF THE PROVISIONS CONTAINED IN SECTION 271(1)(B) OF THE AC T. 3. IT IS THE ARGUMENT OF THE LD. AR THAT THERE IS N O DENIAL OF THE FACT THAT THE SEARCH WAS CONDUCTED ON 31.01.2008 WI TH RESPECT TO 57 GROUP ENTITIES OF MDLR GROUP AND 303 ASSESSMENTS WERE 3 ITA NOS. 4399 TO 4405/DEL/2015 PRACTICALLY INITIATED DURING THE MONTH OF AUGUST TO OCTOBER, 2012. IT IS FURTHER SUBMITTED THAT ONE MR. GOPAL GOYAL TH E CONTROLLING PERSON OF ALL THESE ENTITIES WAS IN JUDICIAL CUSTOD Y SINCE AUGUST, 2012 AND TILL 04.03.2014 AND DUE TO THIS FACT THERE WAS POOR EMPLOYEE TURNOVER, AND ALL THESE FACTORS CUMULATIVE LY CONTRIBUTED FOR NON REPRESENTATION OF THE ASSESSEE ON CERTAIN D ATES BEFORE THE AO. FURTHER, THE RECORD REVEALS THAT THERE WAS REP RESENTATION FOR THE ASSESSEE BEFORE THE AO ON 05.11.2012, 05.12.201 2 AND 11.01.2013 AND THE ASSESSEE ALSO FILED DATED 11.03. 2015 IN RESPONSE TO A NOTICE U/S 142(1) OF THE ACT, AS SUCH , IT CANNOT BE SAID THAT THERE IS A TOTAL ABSENCE OF THE ASSESSEE DURING THE PROCEEDINGS BEFORE THE AO. FURTHER BASING ON THE D ECISIONS REPORTED IN ANANTHA NAGANNA CHETTY VS. CIT (1970) 78 ITR 743 (A P), CIT VS. SMT. CHITRA MUKHERJEE (1981) 127 ITR 252 (CAL.), CI T VS. SHANKAR D. DHANWATEY 212 ITR 150 (BOM.), RAM SARAN DAS KAPUR V S. CIT 77 ITR 298 (P&H) H E ARGUED THAT IN THIS MATTER ADMITTEDLY SH. ASHOK G AUTAM WAS THE DEPUTY COMMISSIONER OF INCOME TAX AS ON THE DATE OF THE NOTICE DATED 24.06.2013 U/S 271(1)(B) OF THE ACT, W HEREAS ONE SH. JAI NATH VERMA WAS THE LD. DEPUTY COMMISSIONER OF I NCOME TAX WHO PASSED THE ORDER DATED 02.06.2014 LEVYING THE P ENALTY AND IN 4 ITA NOS. 4399 TO 4405/DEL/2015 THE ABSENCE OF ANY NOTICE BY THE SUCCESSOR OFFICER NOTIFYING HIS INTENTION TO CONTINUE THE PROCEEDINGS FROM THE STAG E AT WHICH HIS PREDECESSOR HAD LEFT, THE SUCCESSOR AUTHORITY HAD N O JURISDICTION TO PASS ANY ORDER OF PENALTY WITHOUT GIVING THE ASSESS EE A FRESH OPPORTUNITY OF BEING HEARD. HE FURTHER SUBMITTED T HAT NO SEPARATE NOTICE U/S 271(1)(B) OF THE ACT WAS ISSUED AND THE NOTICE DATED 24.06.2013 AS IS INCORPORATED AT PAGE NO. 13 OF THE PAPER BOOK DOES NOT SPECIFY THE CHARGE FOR WHICH THE PENALTY P ROCEEDINGS WOULD BE INITIATED, AS SUCH, IN VIEW OF THE DECISIO N IN CIT VS. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KA R) THE PENALTY PROCEEDINGS ARE BAD. PER CONTRA, LD. DR VE HEMENTLY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTE D THAT THE ASSESSEE HAD BEEN BLOWING HOT AND COLD AT THE SAME TIME AND ACCORDING TO THE LD. DR SEARCH OPERATIONS ON THE MD LR GROUP IN JANUARY, 2008 OR THE JUDICIAL CUSTODY OF THE GOPAL GOEL OR POOR TURNOUT OF EMPLOYEES AT WORK PLACE OR LARGE NUMBER OF PENDENCY OF ASSESSMENTS U/S 153A OR PREPARATION OF VOLUMINOUS D ETAILS, DO NOT CONSTITUTE SUFFICIENT CAUSE OR REASONABLE CAUSE THAT PREVENTED THE ASSESSEE FROM COMPLYING WITH THE NOTICES. HE P RAYED TO DISMISS THE APPEALS. 5 ITA NOS. 4399 TO 4405/DEL/2015 4. WE HAVE CAREFULLY GONE THROUGH THE RECORD AND SU BMISSIONS MADE ON EITHER SIDE. FACTS REMAIN UNDISPUTED ARE T HAT ONE MR. GOPAL GOEL, THE CONTROLLING PERSON OF THE ASSESSEE S AFFAIRS WAS IN JUDICIAL CUSTODY FROM AUGUST, 2012 TO 04.03.2014 AN D IT RESULTED IN THE POOR EMPLOYEE TURN OUT. FURTHER, THERE IS N O DENIAL OF THE CONTENTION OF THE ASSESSEE TO THE EFFECT THAT THERE WAS SEARCH OPERATION IN ABOUT 57 GROUP ENTITIES ENSUING VOLUMI NOUS 303 ASSESSMENTS. JUDICIAL CUSTODY OF A PERSON IS CERTA INLY BEYOND THE CONTROL OF THE ASSESSEE AND AT THE SAME TIME THE AB SENCE OF THE KEY PERSON FROM THE BUSINESS WILL CERTAINLYH IMPACT THE PACE OF THE WORK AT BUSINESS OR ON EMPLOYEE TURN OUT. IF THESE CIRCUMSTANCES DO NOT CONSTITUTE REASONABLE CAUSE, IT WOULD BE DIF FICULT TO UNDERSTAND WHAT CONSTITUTES REASONABLE CAUSE. FU RTHER, ACCORDING TO THE ASSESSEE, THEIR ABSENCE DURING THE PROCEEDINGS ON SOME DATES IS NOT INTENTIONAL AND AS A MATTER OF FA CT THERE WAS REPRESENTATION OF THE ASSESSEE BEFORE THE AO ON 05. 11.2012, 05.12.2012 AND 11.01.2013, BESIDES FILING A REPLY O N 11.03.2013 A TO THE NOTICE U/S 142(1) OF THE ACT. FURTHER WHEN THE SUCCESSOR ASSESSING OFFICER OPTED TO PROCEED WITH THE PROCEED INGS FROM THE STAGE AT WHICH THE PREDECESSOR LEFT THEM, ADMITTEDL Y THERE WAS NO 6 ITA NOS. 4399 TO 4405/DEL/2015 NOTICE ISSUED TO THE ASSESSEE. CERTAINLY THE SUCCE SSOR OFFICER HAD NO CHANCE OF CONSIDERING WHATEVER THAT WAS TRANSPIR ED AND WHATEVER THAT WAS SUBMITTED IN THE PROCEEDINGS BEFO RE THE PREDECESSOR OF THE AO, WHILE PASSING THE PENALTY OR DER, AND THIS WOULD IMPACT THE PRINCIPLES OF NATURAL JUSTICE. HA VING REGARD TO THIS UNDISPUTED SET OF FACTUAL MATRIX, WE ARE OF TH E CONSIDERED OPINION THAT THE PENALTY OF RS. 20,000/- FOR EACH Y EAR CANNOT BE SUSTAINED. WE, THEREFORE, FIND THAT THE DEFAULT CO MMITTED BY THE ASSESSEE IN NOT ATTENDING THE PROCEEDINGS IS VENIAL BREACH AND DOES NOT INVITE PENALTY. WE, THEREFORE, FIND IT DI FFICULT TO SUSTAIN THE PENALTY AND ACCORDINGLY DIRECT THE AO TO DELETE THE SAME. 5. IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.08.2017 SD/- SD/- (G.D. AGRAWAL) (K.N. CHARY) PRESIDENT JUDICIAL ME MBER DATED: 29.08.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NOS. 4399 TO 4405/DEL/2015 DRAFT DICTATED ON 23.08.2017 DRAFT PLACED BEFORE AUTHOR 24.08.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 29.8.17 APPROVED DRAFT COMES TO THE SR.PS/PS 29.8.17 KEPT FOR PRONOUNCEMENT ON 29.8.17 FILE SENT TO THE BENCH CLERK 30.8.17 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.