KORPUS FINANCIAL SERVICES P. LTD, MUMBAI V. DCIT CC 44, MUMBAI

ITA 4634/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3703 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 07-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANTANU KUMAR SAIKIA
• Assessee Lawyers: NIDHI PATEL
• Keywords: Search and seizure; Principle of natural justice; Non compliance
• Section: 143(3); 142(1); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI A BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NOS. 4634 TO 4640/MUM/2014 (ASSESSMENT YEARS:2005-06 TO 2011-12) M/S. KORPUS FINANCIAL SERVICES PVT. LTD., 16, GUNDECHA CHAMBERS, N. M. ROAD, FORT, MUMBAI 400 023 APPELLANT VS. DCIT, C.C.-44, MUMBAI 400 020 RESPONDENT PAN: AACCK4562A /BY APPELLANT : NIDHI PATEL, A.R. /BY RESPONDENT : SHRI SANTANU KUMAR SAIKIA, D.R. /DATE OF HEARING : 10.08.2016 /DATE OF PRONOUNCEMENT : 12.08.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: ALL APPEALS HAVE BEEN FILED BY ASSESSEE AGAINST THE CONSOLIDATED ORDER OF COMMISSIONER OF INCOME-TAX (A PPEALS)- 38, MUMBAI, DATED 30.05.2014 FOR ALL A.YS. I.E. 200 5-06 TO ITA NOS.4634 TO 4640/MUM/14 A.YS. 05-06 TO 11-12 [M/S. KORPUS FINANCIAL SERVICES P. LTD. VS. DCIT] PAGE 2 2011-12. SINCE, THESE APPEALS PERTAIN TO SAME ASSE SSEE AND ON SIMILAR ISSUE, SO THEY ARE BEING DISPOSED OF BY COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO.4634/MUM/2014 FOR A.Y. 2005-06, ASSESS EE HAS FILED APPEAL ON FOLLOWING GROUND: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX, (APPEALS)-38, MUMBAI ERRED IN UPHOLDING THE ACTION OF THE ASSESSI NG OFFICER, MUMBAI IN LEVYING THE PENALTY UNDER SECTIO N 271(1)(B) OF THE INCOME TAX ACT, 1961. 3. A SEARCH AND SEIZURE ACTION U/S.132 OF THE ACT W AS CONDUCTED IN CASE OF M/S. JIK INDUSTRIES LIMITED. DURING COURSE OF SEARCH, CERTAIN INCRIMINATING DOCUMENTS A ND COMPUTER BACK UP WAS FOUND AND SEIZED, WHICH BELONG ED TO ASSESSEE. THEREFORE, THE CASE OF ASSESSEE COMPANY WAS COVERED U/S.153C OF THE ACT. SUBSEQUENTLY, NOTICE U/S. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO ASSESSEE COMPA NY ON 10.08.2012 FOR THE A.YS.2005-06 TO 2011-12 FIXING T HE DATE OF COMPLIANCE ON 21.08.2012, WHICH WERE DULY SERVED UP ON ASSESSEE. THERE IS NOTHING ON RECORD TO SUGGEST TH AT THERE WAS ANY COMPLIANCE FROM ASSESSEE ON THE SCHEDULED DATE. IN VIEW OF ASSESSEES NON-COMPLIANCE TO THE STATUTORY NOTIC E, NOTICE U/S.271(1)(B) OF THE ACT WAS SERVED UPON THE ASSESS EE COMPANY ON 22.03.2013 ALONG WITH ASSESSMENT ORDER TO WHICH THERE WAS NO COMPLIANCE ON THE PART OF ASSESSEE AS MENTIONED IN THE PENALTY ORDER. THEREAFTER, A SHOW CAUSE NOTICE DATE D 08.07.2013 WAS ISSUED TO EXPLAIN AS TO WHY PENALTY ITA NOS.4634 TO 4640/MUM/14 A.YS. 05-06 TO 11-12 [M/S. KORPUS FINANCIAL SERVICES P. LTD. VS. DCIT] PAGE 3 ULS.271(1)(B) OF THE ACT SHOULD NOT BE LEVIED. IN R ESPONSE TO SAME, ASSESSEE COMPANY VIDE LETTER DATED 22.07.2013 SUBMITTED THAT THE REQUISITE REPLY IN THIS REGARD W AS FURNISHED BY THEM BY THEIR LETTER DATED 22.05.2013 AND COPY O F THE SAME WAS FURNISHED. IT WAS SUBMITTED BY ASSESSEE THAT TH ERE WERE EIGHT ASSESSEES IN THE GROUP AND TOTAL 55 SEARCH AS SESSMENTS WERE IN PROGRESS AND HENCE, THERE WAS MINOR DELAY I N SUBMISSION OF DETAILS. ASSESSING OFFICER DID NOT A CCEPT THE EXPLANATION OF ASSESSEE ON THE GROUND THAT ASSESSEE FAILED TO COMPLY WITH TWO STATUTORY NOTICES ISSUED. ACCORDIN GLY, HE LEVIED PENALTY U/S.271(1)(B) OF THE ACT OF RS.10,00 0/EACH IN RESPECT OF DEFAULT COMMITTED BY ASSESSEE IN COMPLYI NG WITH THE NOTICES ISSUED ON TWO OCCASIONS I.E. NOTICE U/S.143 (2) AND NOTICE U/S.142(1) OF THE ACT DATED 10.08.2012 AGGRE GATING TO RS.20,000/- IN RESPECT OF EACH OF THE ASSESSMENT YE ARS 2005- 06 TO 2011-12. SAME WAS CONFIRMED BY CIT(A). 3.1 BEFORE US, LD. AUTHORIZED REPRESENTATIVE SUBMIT TED THAT SIMILAR ISSUE AROSE IN ITA NOS. 4759 TO 4765/MUM/20 14 FOR A.YS. 2005-06 TO 2011-12 IN CASE OF M/S. JIK INDUST RIES LTD. VS. DCIT, WHEREIN TRIBUNAL HELD AS UNDER: 3.3. WE HAVE GONE THROUGH THE FACTS OF THE CASE BR OUGHT BEFORE US. IT IS NOTED THAT IN PURSUANCE TO THE SEA RCH, THE ASSESSMENT PROCEEDINGS OF SEVEN YEARS WERE COMMENCE D BY THE INCOME TAX DEPARTMENT. THE ADMITTED FACTS ON RE CORD ARE THAT THE ASSESSEE COMPANY WAS A SICK COMPANY, A ND WAS UNDER THE SCHEME OF BIFR. WE HAVE FURTHER NOTED THAT IT HAS BEEN STATED BY THE AO WHILE LEVYING THE PENA LTY THAT HE HAD ISSUED NOTICE U/S 142(1) DATED 04.09.2012 FI XING THE HEARING FOR 10.09.2012, AND SINCE NON-COMPLIANCE WA S ITA NOS.4634 TO 4640/MUM/14 A.YS. 05-06 TO 11-12 [M/S. KORPUS FINANCIAL SERVICES P. LTD. VS. DCIT] PAGE 4 MADE BY THE ASSESSEE ON 10.09.2012, AND THEREFORE, IT WAS A FIT CASE FOR LEVY OF PENALTY, AND ACCORDINGLY, PENA LTY WAS LEVIED. WE ARE SURPRISED TO NOTE THAT THE AO HAS NO WHERE MENTIONED IN THE ASSESSMENT OR PENALTY ORDER THAT W HETHER THE IMPUGNED NOTICE WAS SERVED AT ALL UPON THE ASSE SSEE. IT IS FURTHER NOTED THAT IMPUGNED NOTICE CLAIM TO BE I SSUED ON 04.09.2012, FIXED THE DATE FOR HEARING ON 10,09.201 2. IF, WE EXCLUDE SATURDAY AND SUNDAY AND THE TIME TAKEN FOR DISPATCH AND DELIVERY OF THE NOTICE, THE ASSESSEE W AS LEFT WITH HARDLY TWO OR THREE DAY TIME, EVEN IF THE NOTI CE WAS DULY AND EXPEDIENTLY SERVED UPON THE ASSESSEE. FURT HER THERE IS NO CASE MADE OUT BY THE AO OF ANY OTHER NO N- COMPLIANCE ON THE PART OF THE ASSESSEE. RATHER, IT IS NOTED THAT SUBSEQUENTLY DETAILS AND DOCUMENTS WERE FILED BY THE ASSESSEE TO THE AO ON THE BASIS OF WHICH ASSESSMENT PROCEEDINGS WERE COMPLETED AND ASSESSMENT ORDER WAS PASSED U/S 143(3) AND NOT U/S 144. THUS, IT SHOWS T HAT SUBSEQUENTLY, COMPLIANCE HAS BEEN MADE BY THE ASSES SEE. UNDER SUCH CIRCUMSTANCES, IN OUR CONSIDERED OPINION WITHOUT GIVING ADEQUATE TIME AND WITHOUT MAKING OUT A CASE OF SUBSTANTIVE NON-COMPLIANCE BY THE ASSESSEE, IT W AS UNFAIR AND UNJUSTIFIED ON THE PART OF THE AO IN LEV YING THE PENALTY U/S 271(1)(B). IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT LEVY OF PEN ALTY WAS NOT JUSTIFIED. THE ACTION OF THE AO IS UNSUSTAINAB LE IN THE EYES OF LAW, AND THEREFORE, WE DIRECT THE AO TO DEL ETE THE PENALTY. 4. IN THE RESULT, ALL ABOVE SEVEN APPEALS FILED BY THE ASSESSEE ARE ALLOWED. 3.2 SIMILAR VIEW HAS BEEN TAKEN BY ITAT D BENCH, MUMBAI IN CASE OF MR. RAJENDRA G. PARIKH VS. DCIT IN ITA N OS. 6944 TO 6950/MUM/2014 FOR A.YS. 2005-06 TO 2011-12, WHEREIN SIMILAR STATE OF FACTS PENALTY HAS BEEN DELETED BY ITAT BY OBSERVING AS UNDER: 2.1. WE FIND THAT WHILE LEVYING THE PENALTY U/S 27 1(1)(B) OF THE ACT (AS IS OOZING OUT FROM PARA-2 OF THE PENALT Y ORDER), THE ASSESSEE WAS ISSUED NOTICE U/S 142(1) OF THE AC T ON ITA NOS.4634 TO 4640/MUM/14 A.YS. 05-06 TO 11-12 [M/S. KORPUS FINANCIAL SERVICES P. LTD. VS. DCIT] PAGE 5 04/09/2012, FIXING THE COMPLIANCE BY THE ASSESSEE O N 10/09/2012. IT HAS NOT BEEN MENTIONED AS TO WHEN TH E NOTICE WAS SERVED UPON THE ASSESSEE. IT IS ALSO NOT ED THAT DURING THAT PERIOD, AS EXPLAINED BEFORE US, THE ASS ESSEE WAS SUFFERING FROM AILMENT, MEANING THEREBY, SUFFICIENT TIME/OPPORTUNITY FOR COMPLIANCE WAS NOT PROVIDED TO THE ASSESSEE. THIS IS CLEARLY VIOLATION OF PRINCIPLE OF NATURAL JUSTICE ON THE PART OF THE REVENUE. IT IS NOTED THA T THE TRIBUNAL IN THE AFORESAID ORDER DATED 18/02/2016 HA S MADE AN ELABORATE DISCUSSION ON IDENTICAL FACT INCLUDING THE DECISION FROM HONBLE APEX COURT IN M/S HINDUSTAN S TEEL LTD. 83 ITR 26 AND THE CASE OF THE ASSESSEE DELHI B ENCH OF THE TRIBUNAL IN AKHIL BHARTIYA PRATHMIK SHIKSHAK SA NGH BHAWAN TRUST VS ADIT 115 TTJ 419 (DEL.). IF WE EXCL UDE THE SATURDAY AND SUNDAY, FALLING WITHIN THE GIVEN TIME IN THE NOTICE, TIME TAKEN FOR DISPATCH AND DELIVERY OF THE NOTICE HARDLY TWO OR THREE DAYS LEFT WITH THE ASSESSEE. IT IS NOTED THAT THE LD. ASSESSING OFFICER HAS NOT MADE A GOOD CASE FOR NON COMPLIANCE ON THE PART OF THE ASSESSEE. CONSIDE RING THE TOTALITY OF FACTS AND THE CIRCUMSTANCES NARRATED BE FORE US, WE DIRECT THE LD. ASSESSING OFFICER TO DELETE THE P ENALTY, IMPOSED UPON THE ASSESSEE. THUS, THE IMPUGNED APPEA LS ARE ALLOWED. FINALLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED. 3.3 IN THIS CASE, SERVICE OF NOTICE HAS NOT BEEN ES TABLISHED BY ASSESSING OFFICER. IN ABSENCE OF SERVICE, ANY ACTI ON FOR NON COMPLIANCE IS NOT JUSTIFIED. MOREOVER, TIME FOR CO MPLIANCE WAS NOT FOUND SUFFICIENT ACCORDING TO US. MOREOVER, TH ERE IS SUFFICIENT COMPLIANCE BY ASSESSEE IN THE PROCEEDING S, SO, TAKING ALL FACTS AND CIRCUMSTANCES INTO CONSIDERATION, WE ARE OF THE VIEW THAT PENALTY LEVIED BY ASSESSING OFFICER IS NO T SUSTAINABLE. SAME IS DIRECTED TO BE DELETED AS HELD IN CASE OF M /S. JIK INDUSTRIES LTD. VS. DCIT (SUPRA). ITA NOS.4634 TO 4640/MUM/14 A.YS. 05-06 TO 11-12 [M/S. KORPUS FINANCIAL SERVICES P. LTD. VS. DCIT] PAGE 6 3.4 AS A RESULT, APPEAL FILED BY ASSESSEE FOR A.Y. 2005-06 IS ALLOWED. 4. IN ITA NOS. 4635 TO 4540/MUM/2014 FOR A.YS. 2006 -07 TO 2011-12 SIMILAR ISSUE AROSE THAT OF 4634/MUM/2014 F OR A.Y. 2005-06. FACTS BEING SIMILAR, SO, FOLLOWING SAME R EASONING, PENALTY IN ALL THESE YEARS ARE ALSO DIRECTED TO BE DELETED. 5. IN THE RESULT, ALL APPEALS FILED BY ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 12 TH DAY OF AUGUST, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 12/08/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. / CONCERNED CIT 4. - / CIT (A) 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. BY ORDER / , / , ,