M/s King Buildcon Pvt. Ltd, New Delhi V. Deputy Commissioner of Income-tax, New Delhi

ITA 4499/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3617 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2005-2006
• Appeal Filed On: 08-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Reasonable cause
• Section: 273B; 153A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D , NEW DELHI BEFORE SH. BHAVNESH SAINI , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NOS. 4499 TO 4502/DEL/2015 ASSESSMENT YEARS: 2005 - 06 TO 2008 - 09 M/S. KING BUILDCON PVT. LTD., FLAT NO. 4 - R. R. APARTMENT, 3 - 4, MANGLAPURI, MEHRAULI, NEW DELHI VS. DCIT, CENTRAL CIRCLE - 15[CC - 14, NEW DELHI], NEW DELHI PAN : ( APPELLANT ) (RESPONDENT) AND ITA NO S . 4503 TO 4509 /DE L/ 2015 ASSESSMENT YEAR S : 2002 - 03 TO 2008 - 09 SMT. KANTA RANI GAUBA, H. NO. 29, (1 ST FLOOR) SECTOR - 15, PHASE - 1, GURGAON (HARYANA) VS. DCIT, CENTRAL CIRCLE - 15[CC - 14, NEW DELHI], NEW DELHI PAN : AHHPR5061L ( APPELLANT ) (RESPONDENT) ASSESSEE BY SH. GAUTAM JAIN, ADV. & SH. LALIT MOHAN, CA DEPARTMENT BY SH. AMIT JAIN, SR.DR DATE OF HEARING 08.11.2017 DATE OF PRONOUNCEMENT 13.11.2017 ORDER PER BENCH : THESE APPEALS BY TWO ASSESSEES ARE DIRECTED AGAINST TWO SEPARATE ORDER DATED 06.05.2015 , FOR ASSESSMENT YEARS 2005 - 06 TO 2008 - 09 AND ORDER DATED 08.05.2015 FOR ASSESSMENT YEARS 2002 - 03 TO 2008 - 09 RESPECTIVELY, PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 2 - XXVI, NEW DELHI , IN RELATION TO THE PENALTY UNDER SECTION 271(1)(B) OF THE IN COME - TAX ACT, 1961 (FOR SHORT THE ACT ) 2. SINCE FACTS & CIRCUMSTANCES AND THE GROUNDS RAISED IN ALL THE APPEALS ARE IDENTICAL, THEREFORE, THE SAME WERE HEARD TOGETHER AND DISPOSED OFF BY W A S O F A CONSOLIDATED ORDER FOR CONVENIENCE AND BREVITY. AS THE GROUNDS OF APPEAL RAISED IN ALL THE APPEALS ARE IDENTICAL, THEREFORE THE GROUNDS OF APPEAL RAISED IN ITA NO. 4499/DEL/2015 ARE ONLY REPRODUCED AS UNDER: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - XXVI, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE LEVY OF PENALTY OF RS. 20,000/ - U/S 271(L)(B) OF THE ACT. 2. THAT WHILE UPHOLDING THE LEVY OF PENALTY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT ORDER LEVYING PENALTY WAS BASED ON FINDING S CONTRARY TO THE ORDER OF ASSESSMENT AND, OVERLOOKING THE REPLY FURNISHED BY THE APPELLANT DURING THE PENALTY PROCEEDINGS AND, THEREFORE UNTENABLE IN LAW. 2.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO FAILED TO APPRECIATE THAT THERE WAS REASONABLE CAUSE ON THE PART OF THE APPELLANT AND, AS SUCH PENALTY SUSTAINED IS ILLEGAL, INVALID AND UNTENABLE. 2.2 THAT ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS OTHERWISE ALSO BASED ON FACTUAL MISAPPRECIATION OF THE FACTS AND CIRC UMSTANCES OF THE CASE AND, COMPLETE MISINTERPRETATION OF THE PROVISIONS CONTAINED IN SECTION 271(L)(B) OF THE ACT. 3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS OTHERWISE TOO CONFIRMED THE PENALTY WITHOUT PROVIDING FAIR, REASONABLE AND MEANI NGFUL OPPORTUNITY AND AS SUCH ORDER PASSED IS CONTRARY TO THE PRINCIPLES OF NATURAL JUSTICE AND, THEREFORE A NULLITY. IT IS THEREFORE PRAYED THAT THE PENALTY - LEVIED U/S 271(L)(B) OF THE ACT OF RS. 20,000/ - AND UPHELD BY THE LEARNED COMMISSIONER 3 OF INCOM E TAX (APPEALS) BE DELETED AND, APPEAL OF THE APPELLANT COMPANY BE ALLOWED. 3. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN DISPUTE INVOLVED IN THESE APPEALS IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF SH. GOBIND KUMAR GOYAL VS. DEPUTY COMMISSIONER OF INCOME TAX, IN ITA NO. 4315 TO 4321/DEL/2015, ORDER DATED 30.08.2017 . 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. ON PERUSAL OF PARA 8.1 OF THE IMPUGNE D ORDER OF LD. CIT(A) , IT IS EVIDENT THAT THE ASSESSEE CLAIMED TO BE A PART OF THE MDLR GROUP COMPRISING OF SEVERAL ENTITIES IN RESPECT OF WHICH SEARCH OPERATIONS WAS CONDUCTED BY THE INCOME TAX DEPARTMENT ON 31.01.2008. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE ASSESSEE FAILED TO COMPLY WITH THE STATUTORY NOTICES ISSUED BY THE ASSESSING OFFICE R FOR ATTENDING THE PROCEEDINGS. I N VIEW OF NON - COMPLIANCE OF STATUTORY NOTICES BY THE ASSESSEE, THE LEARNED ASSESSING OFFICER LEVIED THE PENALTY UNDER SECT ION 271(1)(B) OF THE ACT, AMOUNTING TO RS.20,000/ - . BEFORE THE LD. CIT(A), T HE ASSESSEE SUBMITTED THAT THE MAIN REASON S FOR NON - COMPLIANCE INCLUDED , SEARCH OPERATION IN MDLR GROUP, DETENTION OF SH. GOPAL GOYAL, POOR TURN - OUT OF EMPLOYEES AT WORK PLACE, LAR GE NUMBER OF PENDENCY OF ASSESSMENTS U/S 153A AND PREPARATION OF VOLUMINOUS DETAILS ETC. 5 . THE CONTENTION OF THE ASSESSEE BEFORE US IS THAT THE ABOVE REASONS CONSTITUTE D A REASONABLE CAUSE THAT PREVENTED THE ASSESSEE FROM COMPLYING WITH THE NOTICE UNDER REFERENCE OR FILING LETTERS TO SEEK ADJOURNMENTS. WE FIND THAT IN THE CASE OF SH. GOBIND KUMAR GOYAL (SUPRA) CITED BY THE ASSESSEE, THE TRIBUNAL HAS DELETED THE PENALTY UN DER SECTION 271(1)(B) OF THE ACT ON SIMILAR SET OF CIRCUMSTANCES. THE SAID CASE IS ALSO ONE OF THE CASE OF MDLR GROUP. THE RELEVANT PARA OF THE 4 DECISION OF THE T RIBUNAL IN THE CASE OF GOBIND KUMAR GOYAL (SUPRA) IS REPRODUCED AS UNDER: 8. WE HAVE HEAR D THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IN THE CASE OF JAWALA PRASHAD AGGARWAL, WHICH IS ALSO ONE OF THE CASES OF THE MDLR GROUP, THE TRIBUNAL HAS DELETED THE PENALTY U/S 271(1)(B) OF THE ACT. IN THE SAID CASE ALSO DUE TO NON - COMPLIANCE OF STATUTORY NOTICES ON TWO OCCASIONS PENALTY OF RS. 20,000/ - UNDER SECTION 271(1)(B) ACT WAS LEVIED BY THE ASSESSING OFFICER IN EACH OF THE ASSESSMENT YEARS FROM 2002 - 03 TO ASSESSMENT YEAR 2008 - 09. IN THE SAID CASE ALSO THE ASSESS EE SUBMITTED REASONS OF NON - COMPLIANCE AS MORE THAN 303 GROUP ASSESSMENTS CONDUCTED DURING SHORT SPAN OF FIVE MONTHS AND THEREFORE IT WAS DIFFICULT TO COMPLY WITH ALL THE NOTICES ON THE APPOINTED DATES. ALSO IT WAS SUBMITTED THAT MAIN CONTROLLING PERSON OF THE GROUP, SH. GOPAL GOYAL WAS DETAINED IN JUDICIAL CUSTODY SINCE AUGUST, 2012 AND HE WAS ENTRUSTED WITH ALL THE DECISIONS AND WAS AWARE OF THE TAX MATTER AND DOCUMENTS AND THEREFORE THERE WAS A DELAY IN COLLECTING INFORMATION AND CONSEQUENTLY MAKING COMP LIANCES. IN THE SAID CASE, THE TRIBUNAL DELETED THE PENALTY MAINLY ON THE GROUND THAT FACTS AND CIRCUMSTANCES OF THE CASE CONSTITUTED REASONABLE CAUSE BEING UNDER THE SCOPE AND AMBIT OF SECTIONS 273B OF THE ACT. THE TRIBUNAL ALSO HELD THAT THAT IN VIEW OF THE DEMAND IN QUANTUM PROCEEDING REDUCED TO NIL, THE ALLEGED BREACH OR NON - COMPLIANCE IS MERELY TECHNICAL AND VENIAL IN NATURE AND THEREFORE PENALTY SHOULD NOT BE LEVIED FOR SUCH VENIAL BREACH. THE RELEVANT FINDING OF THE TRIBUNAL IS REPRODUCED AS UNDER: 5 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, IT IS SEEN THAT NOWHERE THE ASSESSING OFFICER HAS MENTIONED ABOUT ANY PARTICULARS OF STATUTORY NOTICE/S FOR WHICH THERE WAS 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 WHIL E GIVING THE EXPLANATION SHOULD BE AWARE OF THE CHARGE FOR WHICH PENALTY IS BEING INITIATED AND CAN GIVE HIS SPECIFIC REBUTTAL. SUCH VAGUE NOTICE IS FATAL TO THE INITIATION OF THE PROCEEDINGS ITSELF. FURTHER FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT IS GATHERED THAT THE ASSESSEE DID NOT ATTEND THE PROCEEDINGS ON 20.11.2012 AND 30.11.2012. THE ASSESSING OFFICER FURTHER MENTIONS THAT ON 5.12.2012, SHRI VISHAL MEHTA, AR ALONG WITH OTHER AUTHORIZED PERSONS APPEARED BEFORE HIM AND SUBMITTED THAT NON - COMPLIANC E ON THE PART OF THE ASSESSEE ON THE SAID 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 HEADS 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. ASSESSING 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 153 A. HOWEVER ON PERUSAL OF VARIOUS REPLIES FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS, IT IS SEEN THAT MOST OF THE COMPLIANCES HAVE BEEN MADE THROUGH REPLIES/LETTERS 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 VARIOUS GROUP CASES AS REFERRED TO BY LD. COUNSEL BEFORE US. OSTENSIBLY THERE 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. WH AT ARE REQUIRED TO BE SEEN WHILE LEVYING PENALTY FOR NON - COMPLIANCE OF STATUTORY NOTICES, IS THE FACTS AND CIRCUMSTANCES FOR NON - APPEARANCE ON THE SPECIFIED DATE, THAT IS, WHETHER THERE WAS ANY REASONABLE CAUSE AND THE OVERALL CONDUCT OF THE ASSESSEE. THE 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 SO ME CRIMINAL PROCEEDINGS AND THE ENTIRE GROUP AND FAMILY MEMBERS WERE ENGAGED IN ONGOING COURT PROCEEDINGS FOR HIS EARLY RELEASE AND VARIOUS EMPLOYEES WERE LEAVING THE GROUP FURTHER ACCENTUATING THE PROBLEMS; SECONDLY, MORE THAN 300 GROUP ASSESSMENTS WERE I NITIATED IN THE WAKE OF SEARCH PROCEEDINGS WHICH WERE SIMULTANEOUSLY GOING ON, THEREFORE, IT WAS DIFFICULT TO COMPLY TO THE VARIOUS NOTICES ON SHORT DATES; LASTLY, IT HAS BEEN STRONGLY PLEADED BEFORE US, THAT THE COMPLIANCES HAD BEEN MADE THROUGH REPLIES F ILED THROUGH DAK OR REGISTERED POST THOUGH BELATEDLY. THESE FACTS HAVE NOT BEEN CONTROVERTED BY THE AO OR CTT (APPEALS). 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 NOTICES ON A PARTICULAR 6 DATE WAS DUE TO REASONABLE CAUSE AS HIGHLIGHTED BY THE ASSESSEE NOT ONLY DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS BUT ALSO BEFORE THE ASSES SING 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 SUBSTANTIVE NON - COMPLIANCE EITHER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS OR DURING THE APPELLATE PROCEEDINGS. IN SUCH CIRCUMSTANCES SUCH AN ALLEGED BREACH OR NON - COM PLIANCE 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(L)(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. 6 . IN THE INSTANT CASE S ALSO, THE FACTS AND CIRCUMSTANCES ARE IDENTICAL TO THE CASE OF GOBIND KUMAR GOYAL (SUPRA) THUS, RESPECTFULLY FOLLOWING THE FINDING OF THE TRIBUNAL IN THE CASE OF GOBIND KUMAR GOYAL (SUPRA), LEVY OF PENALTY OF RS.20,000/ - IN ALL THE APPEALS ( ITA NOS. 4499 TO 4502/DEL/2015 FOR AY S : 2005 - 06 TO 2008 - 09 AND ITA NO S . 4503 TO 4509/DEL/2015 FOR AYS: 2002 - 03 TO 2008 - 09) UNDER SECTION 271(1)(B) OF TH E ACT, IS DIRECTED TO BE DELETED. 7 . IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ( S ) ARE ALLOWED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 1 3 T H NOV . , 201 7 . S D / - S D / - ( BHAVNESH SAINI ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 3 T H NOVEMBER , 201 7 . RK / - COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI