JIK INDUSTRIES LIMITED, MUMBAI V. DCIT, CC - 44, MUMBAI

ITA 4760/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3910 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: J
• Assessment Year: 2006-2007
• Appeal Filed On: 14-07-2014
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S
• Assessee Lawyers: NIDHI PATEL
• Section: 143(3); 142(1)

Judgement Text

, , J, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI , , , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.4759/MUM/2014 ASSESSMENT YEAR: 2005-06 & ITA NO.4760/MUM/2014 ASSESSMENT YEAR: 2006-07 & ITA NO.4761/MUM/2014 ASSESSMENT YEAR: 2007-08 & ITA NO.4762/MUM/2014 ASSESSMENT YEAR: 2008-09 & ITA NO.4763/MUM/2014 ASSESSMENT YEAR: 2009-10 & ITA NO.4764/MUM/2014 ASSESSMENT YEAR: 2010-11 & ITA NO.4765/MUM/2014 ASSESSMENT YEAR: 2011-12 M/S. JIK INDUSTRIES LTD. 16, GUNDECHA CHAMBERS, N.M. ROAD, FORT, MUMBAI-400023 / VS. DCIT CC - 44 656,6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 (ASSESSEE ) (REVENUE) P.A. NO. AABCJ2982J JIK INDUSTRIES LTD. 2 / ASSESSEE BY NIDHI PATEL (AR) / REVENUE BY SHRI K. MOHANDAS ( DR) ! ' / DATE O F HEARING : 18/02/2016 ! ' / DATE OF ORDER: 18/02/2016 / O R D E R PER BENCH: THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-3 8, MUMBAI {(IN SHORT CIT(A)}, DATED 30.05.2014 FOR THE ASSESSMENT YEARS 2005-06 TO 2011-12, PASSED AGAINST THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER (IN S HORT AO) U/S 271(1)(B) OF THE ACT, INVOLVING COMMON ISSUE OF LEVY OF PENALTY ON THE FOLLOWING GROUNDS: 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE COMMISSIONER OF INCOME TAX,(APPEALS)-38, MUMBAI ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFI CER, MUMBAI IN LEVYING THE PENALTY UNDER SECTION 271(1)( B) OF THE INCOME TAX ACT, 1961. 2. THE APPELLANT CARVES TO LEAVE TO ADD, TO ALTER, TO AMEND, TO MODIFY AND TO SUBSTITUTE THE GROUNDS OF APPEAL A T ANY TIME BEFORE OR AT ANY TIME OF HEARING OF THE APPEAL . 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y MS. NIDHI PATEL, AUTHORISED REPRESENTATIVE (AR) ON BEHALF OF JIK INDUSTRIES LTD. 3 THE ASSESSEE AND BY SHRI K MOHANDAS, SENIOR DEPARTM ENTAL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3. SINCE, COMMON ISSUE IS INVOLVED IN THESE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED TO GETHER BY THIS ORDER. 3.1. DURING THE COURSE OF HEARING DETAILED ARGUMENTS HA VE BEEN MADE BY MS. NIDHI PATEL, LEARNED COUNSEL OF TH E ASSESSEE, ASSAILING THE ORDER OF THE AO IN LEVYING THE PENALT Y U/S 271(1)(B) FOR ALLEGED NON-COMPLIANCE OF NOTICE U/S 142(1) DATED 04.09.2012, ISSUED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT HAS BEEN SUBMITTED THAT ASSESSEE WA S SICK COMPANY AND APPROVED BY BIFR VIDE ORDER DATED 26.08 .2008. THE ASSESSEE HAS TWO DIRECTORS AND BOTH ARE ABOVE T HE AGE OF 60 YEARS. THE CHEMICAL RECYCLING UNIT OF THE ASSESS EE WAS BADLY AFFECTED DUE TO FIRE IN JULY, 2004 AND OPERAT ION HAD TO BE DISCONTINUED. FURTHER, DUE TO NEGATIVE NET WORTH THE COMPANY HAD TO SURRENDER ITS LICENSE TO RESERVE BAN K OF INDIA. IT WAS FURTHER SUBMITTED THAT INCOME TAX SEARCH HAD TAKEN PLACE IN THE CASE OF COMPANY AND IN PURSUANCE TO TH E SAME ASSESSMENT PROCEEDINGS OF SEVEN YEARS HAD BEEN COMM ENCED BY THE INCOME TAX DEPARTMENT, AND THE ASSESSEE COMP ANY HAD NO STAFF OR INFRASTRUCTURE TO TAKE CARE OF SUCH A V OLUMINOUS WORK OF COLLECTION OF HUGE DETAILS AND DOCUMENTS FO R SEVEN YEARS AND MAKING REPRESENTATION BEFORE THE AO. THE FINANCIAL CONDITION OF THE COMPANY WAS ALSO VERY BAD. UNDER T HESE CIRCUMSTANCES THE AO CLAIMED TO HAVE ISSUE NOTICE U /S 142(1) JIK INDUSTRIES LTD. 4 DATED 04.09.2012 FIXING THE DATE OF HEARING ON 10 TH SEPTEMBER, 2012. SHE SUBMITTED THAT IT HAS NOT BEEN STATED BY THE AO BEFORE LEVYING THE PENALTY THAT THE NOTICE WAS DULY SERVED UPON THE ASSESSEE. SHE FURTHER SUBMITTED THAT IN AN Y CASE, THE TIME GIVEN WAS TOO SHORT, AND AFTER EXCLUDING SATUR DAY AND SUNDAY AND TIME TAKEN FOR DISPATCH AND DELIVERY, TH ERE WERE HARDLY TWO OR THREE DAYS AVAILABLE WITH THE ASSESSE E TO RESPOND. UNDER SUCH CIRCUMSTANCES THE AO DID NOT GI VE PROPER OPPORTUNITY OF HEARING. FURTHER, IN ANY CASE , SUBSEQUENTLY, THE ASSESSEE HAD SINCERELY ATTENDED A ND SUBMITTED WHATEVER DETAILS AND DOCUMENTS WERE AVAIL ABLE WITH THE ASSESSEE, WHICH IS EVIDENT FROM THIS FACT THAT ASSESSMENT ORDER WAS FRAMED U/S 143(3) AND NOT U/S 144, AND TH EREFORE, IT WAS NOT A FIT CASE FOR LEVY OF PENALTY U/S. 271( 1)(B). IN SUPPORT OF HER ARGUMENTS, SHE RELIED UPON THE JUDGM ENT OF HONBLE SUPREME COURT IN THE CASE OF M/S. HINDUSTAN STEEL LTD. 83 ITR 26 AND JUDGMENT OF HONBLE DELHI BENCH ITAT IN THE CASE OF AKHIL BHARTIYA PRATHMIK SHIKSHAK SANGH BHAVAN TRUST VS. ADIT 115 TTJ 419 (DEL.) IN NUTSHELL SHE S UBMITTED THAT THE PENALTY ORDER PASSED BY THE AO WAS UNFAIR AND FACTUALLY INCORRECT, UNJUSTIFIED AND CONTRARY TO LA W AND FACTS, AND THEREFORE, PENALTY LEVIED BY THE AO SHOULD BE D ELETED. 3.2. PER CONTRA LD. DR RELIED UPON THE ORDERS OF THE LO WER AUTHORITIES AND SUBMITTED THAT SINCE THERE WAS NON- COMPLIANCE ON THE PART OF THE ASSESSEE, THEREFORE, PENALTY WAS RIGHTLY LEVIED BY THE AO AND CONFIRMED BY LD. CIT(A ). JIK INDUSTRIES LTD. 5 3.3. WE HAVE GONE THROUGH THE FACTS OF THE CASE BROUGHT BEFORE US. IT IS NOTED THAT IN PURSUANCE TO THE SEARCH, TH E ASSESSMENT PROCEEDINGS OF SEVEN YEARS WERE COMMENCED BY THE IN COME TAX DEPARTMENT. THE ADMITTED FACTS ON RECORD ARE TH AT THE ASSESSEE COMPANY WAS A SICK COMPANY, AND WAS UNDER THE SCHEME OF BIFR. WE HAVE FURTHER NOTED THAT IT HAS B EEN STATED BY THE AO WHILE LEVYING THE PENALTY THAT HE HAD ISS UED NOTICE U/S 142(1) DATED 04.09.2012 FIXING THE HEARING FOR 10.09.2012, AND SINCE NON-COMPLIANCE WAS MADE BY TH E ASSESSEE ON 10.09.2012, AND THEREFORE, IT WAS A FIT CASE FOR LEVY OF PENALTY, AND ACCORDINGLY, PENALTY WAS LEVIE D. WE ARE SURPRISED TO NOTE THAT THE AO HAS NO WHERE MENTIONE D IN THE ASSESSMENT OR PENALTY ORDER THAT WHETHER THE IMPUGN ED NOTICE WAS SERVED AT ALL UPON THE ASSESSEE. IT IS FURTHER NOTED THAT IMPUGNED NOTICE CLAIM TO BE ISSUED ON 04.09.2012, F IXED THE DATE FOR HEARING ON 10.09.2012. IF, WE EXCLUDE SATU RDAY AND SUNDAY AND THE TIME TAKEN FOR DISPATCH AND DELIVERY OF THE NOTICE, THE ASSESSEE WAS LEFT WITH HARDLY TWO OR TH REE DAY TIME, EVEN IF THE NOTICE WAS DULY AND EXPEDIENTLY SERVED UPON THE ASSESSEE. FURTHER THERE IS NO CASE MADE OUT BY THE AO OF ANY OTHER NON-COMPLIANCE ON THE PART OF THE ASSESSEE. R ATHER, IT IS NOTED THAT SUBSEQUENTLY DETAILS AND DOCUMENTS WERE FILED BY THE ASSESSEE TO THE AO ON THE BASIS OF WHICH ASSESS MENT PROCEEDINGS WERE COMPLETED AND ASSESSMENT ORDER WAS PASSED U/S 143(3) AND NOT U/S 144. THUS, IT SHOWS THAT 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 JIK INDUSTRIES LTD. 6 SUBSTANTIVE NON-COMPLIANCE BY THE ASSESSEE, IT WAS UNFAIR AND UNJUSTIFIED ON THE PART OF THE AO IN LEVYING THE PE NALTY U/S 271(1)(B). IN THE TOTALITY OF THE FACTS AND CIRCUMS TANCES OF THE CASE, WE FIND THAT LEVY OF PENALTY WAS NOT JUSTIFIE D. THE ACTION OF THE AO IS UNSUSTAINABLE IN THE EYES OF LAW, AND THEREFORE, WE DIRECT THE AO TO DELETE THE PENALTY. 4. IN THE RESULT, ALL ABOVE SEVEN APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.02 . 2016. SD/- (SANJAY GARG ) SD/- (ASHWANI TANEJA) '# / JUDICIAL MEMBER $# / ACCOUNTANT MEMBER MUMBAI; $ DATED : 18/02/2016 CTX? P.S/. .. %'&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. & '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. + + , ( & ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI 5. /0 ) 1 , + &' 12 , / DR, ITAT, MUMBAI 6. 3 4 / GUARD FILE. / BY ORDER, * /& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI