Sh. Rakesh puri, New Delhi V. ACIT, New Delhi

ITA 4797/DEL/2013

• Counselvise Citation: 479720114 RSA 2013
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 12-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Reasonable cause; Non compliance
• Section: 143(3); 142(1); 153A; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S.KAPOOR, ACCOUNTANT MEMBER I.T.A .NOS.-4797 TO 4800/DEL/ 2013 (ASSESSMENT YEARS-2007-08, 2008-09, 2009-10 & 2010-11) RAKESH PURI, BK 1/50, DDA FLATS, SHALIMAR BAGH, NEW DELHI. PAN-APTPP6047G (APPELLANT) VS ACIT, CENTRAL CIRCLE-11, ARA CENTRE, JHANDEWALAN, NEW DELHI (RESPONDENT) APPELLANT BY NONE RESPONDENT BY MS. MEENAKSHI VOHRA, SR. DR ORDER PER BENCH THESE ARE FOUR APPEALS FILED BY THE ASSESSEE AGAI NST THE CONSOLIDATED ORDER DATED 29.05.2013 OF CIT(A)-XXXI, NEW DELHI PERTAINI NG TO 2007-08, 2008-09, 2009-10 & 2010-11 ASSESSMENT YEARS AGITATED AGAINS T THE ACTION OF THE CIT(A) IN CONFIRMING THE PENALTY IMPOSED BY THE AO U/S 271 (1)(B) OF RS.10,000/- EACH. 2. NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE AT THE TIME OF HEARING. HOWEVER ON CONSIDERING THE GROUNDS RAISED AND THE M ATERIAL AVAILABLE ON RECORD, IT WAS CONSIDERED APPROPRIATE TO PROCEED WITH THE PRES ENT APPEAL EX-PARTE QUA THE ASSESSEE APPELLANT ON MERIT AFTER HEARING THE LD. S R. DR, MS. MEENAKSHI VOHRA. 2.1. THE FACTS ARE APPRECIATED BY THE CIT(A) IN THE FOL LOWING MANNERS :- 2.1. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE CASE OF ASSESSEE AND DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAD FAILED TO COMPLY WITH 2 I.T.A .NOS.-4797 TO 4800/DEL/2013 THE NOTICE U/S 142(1) ISSUED BY AO AND IN THE RESUL T THE AO PASSED PENALTY ORDER U.S 271(1)(B) FOR ALL THE 6 A.YS. 3.2. AGAIN ON 04/01/2012 A SHOWCAUSE NOTICE U/S 271 (1)(B) ALONGWITH NOTICE U/S 143(2) WAS ISSUED FOR HEARING ON 11/01/2012. T HE ASSESSEE DID NOT FILE ANY REPLY/RETURN TO THIS NOTICE ALSO. IN VIEW OF T HE ABOVE FACTS AND IN THE LIGHT OF THE JUDGEMENT GIVEN BY HONBLE PATNA HIGH COURT IN THE CASE OF CIT VS STANDARD MERCANTILE CO.(160 ITR 613) THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS FAILED TO COMPLY WITH THE PROVISIONS O F NOTICE U/S 142(1) AND PENALTY U/S 271(1)(B) WAS IMPOSED. 2.2. IT IS SEEN THAT BEFORE THE CIT(A) APART FROM O THER GROUNDS, THE ASSESSEE AGITATED THE FOLLOWING TWO GROUNDS:- (II). THE PENALTY LEVIED AT RS.10,000/- IS UNJUSTI FIED AND UNWARRANTED. (III). THE ASSESSING OFFICER WAS WRONG IN IMPOSING PENALTY ON THE ASSESSEE U/S 271(1)(B) WITHOUT AFFORDING HIM A REASONABLE OPPORT UNITY OF BEING HEARD. 3. BEFORE THE CIT(A) THE ASSESSEE OFFERED THE FOLLO WING EXPLANATION WHICH IS EXTRACTED FROM HIS ORDER:- 4. DURING THE APPELLATE PROCEEDINGS THE AR OF THE ASSESSEE SUBMITTED THAT:- THE ASSESSEE MOST RESPECTFULLY BEGS TO SUBMIT THE FOLLOWING: 1. THAT THE ASSESSEE IS CORPORATE AND IS FILING TH E RETURN OF INCOME REGULARLY. SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED ON SHIV VANI GROUP ON 06-01-2011. 2. THAT THE SEIZED MATERIALS WERE COMMON FOR ALL T HE ASSESSEE. 3. THAT THE GROUP CASES WERE NOT FULLY CENTRALIZED AT CENTRAL CIRCLE, NEW DELHI AT TIME OF ISSUE OF NOTICE U/S 1 42(1). 4. THAT THE COUNSEL OF THE ASSESSEE WAS FROM NAGPU R SINCE MOST OF THE GROUP CASES WERE ASSESSEE TO TAX EARLIER AT NAGPUR . 5. THE NOTICE U/S 142(1) WAS SERVED AT F 315, LADOSARAI, NEW DELHI AND NOT AT THE REGISTERED OR ADMINISTRATIVE OFFICE OF THE A SSESSEE NOR ON THE ADDRESS MENTIONED IN RECORDS WITH THE DEPARTMENT. 6. THE PENALTY U/S. 271(1) (B) IS FOR NON COMPLIANCE TO THE NOTICE BUT THE ASSESSEE HAD REPLIED TO THE NOTICE FOR SHOW-CAUSE I SSUED BY THE AO. 7. THAT THE DEPARTMENT REQUESTED THE COUNSEL OF TH E ASSESSEE TO FACILITATE IN CENTRALIZATION OF CASES FROM NAGPUR & OTHER PARTS TO DELHI, TO WHICH THE COUNSEL HAS FULLY CO-OPERATED. THERE ARE AROUND 120 ASSESSEE IN THE GROUP WHICH HAD BEEN ASSESSED AT CENTRAL CIRCLE-11 , NEW DELHI. 8. THAT THE ASSESSEE HAD FILED THE RETURN OF INCOM E AFTER THE CENTRALIZATION OF GROUP CASES. 9. THAT THE ASSESSEE GROUP IS ASSESSED TO TAX FROM MANY YEARS AND THEY HAD FULLY CO-OPERATED WITH THE DEPARTMENT IN ASSESSMENT S PROCEEDINGS AND EVEN DURING INVESTIGATION PROCEEDINGS WITH THE DEPARTMEN T. 3 I.T.A .NOS.-4797 TO 4800/DEL/2013 10. THAT THE ASSESSMENT ORDER FOR THE YEAR WAS PAS SED U/S. 153A R.W.S. 143(3) & NOT UNDER SECTION 144 OF THE ACT. FROM THIS FACT IT IS CRYSTAL CLEAR THAT THE ASSESSEE MADE THE COMPLIANCE IN THE ASSESS MENT PROCEEDINGS & AS SUCH THERE COULD HAVE BEEN NO REASON TO COME TO THE CONCLUSION THAT THE DEFAULT WAS DELIBERATELY OR WILLFUL. THIS IS WELL S UPPORTED BY THE JUDGMENT GIVEN BY HON'BLE ITAT DELHI BENCH G IN THE CASE OF AKHIL BHARTIYA PRATHMIK SHIKSHAK SANG BHAWAN TRUST VS. ASSISTANT DIRECTOR O F INCOME-TAX (2008)115 TTJ (DELHI) 419. 11. THAT THE LAW IS WELL SETTLED THAT AN ORDER IMP OSING PENALTY IS A RESULT OF QUASI-CRIMINAL PROCEEDING AND PENALTY SHOULD NOT OR DINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT, CONTUMACIOUS OR DISHONEST OR ACT ED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. NO PENALTY SHOULD BE IMPOSED IF THE ASSESSEE WAS ACTING IN HONEST AND GENUINE BELIEF IN A PARTICULAR MANNER. A S HELD BE THE SUPREME COURT IN HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (1972) 83 ITR 26 (SC), PENALTY SHOULD NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCIS ED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EV EN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE P ENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNIC AL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHEN THE BREACH FLOWS FROM A BONAFIED BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. 4. THE CIT(A) REJECTED THE ASSESSEES EXPLANATION O N THE FOLLOWING REASONING:- 5.1. I HAVE CONSIDERED THE SUBMISSIONS OF THE AR A ND THE PENALTY ORDER. NO REASONABLE CAUSE HAS BEEN SHOWN EXCEPT THAT THEY WE RE FROM NAGPUR AND THAT NOT ALL THE CASES OF THE GROUP HAVE BEEN CENTRALIZE D. THESE CANNOT BE GROUNDS FOR TOTAL NON-COMPLIANCE TO STATUTORY NOTICES. THE NON COMPLIANCE TO THE NOTICES IS NOT DISPUTED. I AM OF THE VIEW THAT, TH E APPELLANT SHOULD HAVE ATTENDED BEFORE THE AO AND TAKEN ADJOURNMENTS. IN THE GIVEN CIRCUMSTANCES PENALTY IS LEVIABLE. 4.1. LD. SR. DR, MS. MEENAKSHI VOHRA PLACES RELIANC E UPON THE IMPUGNED ORDER. 5. HAVING HEARD THE LD. SR. DR AND THE MATERIAL AVA ILABLE ON RECORD IN THE ABOVE-MENTIONED FACTUAL MATRIX, WE ARE OF THE VIEW THAT IN THE FACTS OF THE PRESENT CASE THERE IS NOTHING ON RECORD TO SHOW THAT PENAL ACTION WAS WARRANTED AS IN ALL THESE YEARS ON THE SPECIFIC DATE VERY LITTLE TIME W AS GIVEN BY THE AO TO THE ASSESSEE TO OFFER EXPLANATION. MOREOVER, THE RETURNED INCOM E WAS ACCEPTED VIDE ORDER U/S 4 I.T.A .NOS.-4797 TO 4800/DEL/2013 153A R.W.S 143(3) FOR EACH OF THE YEARS EVIDENT FRO M THE COPIES FILED. IN THESE FACTS IT CAN BE SAFELY CONCLUDED THAT THE SUBSEQUEN T COMPLIANCE IN ASSESSMENT PROCEEDINGS WAS CONSIDERED AS GOOD COMPLIANCE AND T HE DEFAULTS COMMITTED EARLIER WERE IGNORED BY THE AO WHICH ARE THE PRINCIPLES LAI D DOWN BY THE DECISION BY THE CO-ORDINATE BENCH IN THE CASE OF AKHIL BHARTIYA PRA THMIK SHIKSHAK SANGH BHAWAN TRUST VS ACIT (2008) 115 TTJ (DELHI) 419 REL IED UPON BY THE ASSESSEE IN ITS GROUND NO-4 AND WHICH HAS BEEN FOLLOWED IN VARI OUS ORDERS BY CO-ORDINATE BENCHES. REFERENCE MAY BE MADE TO ORDER DATED 31.0 1.2014 IN THE CASE OF M/S MANJUSHA MADAN VS DCIT IN ITA NO-4698 TO 4703/DEL/2 013. FOR READY-REFERENCE WE REPRODUCE FROM THE SAID ORDER AS UNDER:- 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS A ND PERUSED THE RECORDS. WE FIND CONSIDERABLE COGENCY IN THE LD. COUNSEL OF THE ASSESSEES SUBMISSION THAT THE SHOW CAUSE NOTICE DOES NOT MENTION ABOUT T HE NON-COMPLIANCE OF NOTICE ON WHICH PENALTY HAS BEEN LEVIED. HENCE, ASSUMPTIO N OF JURISDICTION IS NOT PROPER. WE FURTHER FIND THAT IN THESE CASES THE AO HAS ASKED EXPLANATION OF QUESTIONS AND ASSESSEE WAS GIVEN ONLY 7 DAYS TIME. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THE ASSESSEE WAS NOT GIVEN PROPER OPPORTUNITY AND IN THE SAME SITUATION THIS TRIBUNAL IN ITA NO. 4239/DEL/2 013 IN THE CASE OF SHIVAANSH ADVERTISING AND PUBLICATIONS (P) LTD. VIDE ITS ORDE R DATED 3.1.2014 HAS DELETED THE SIMILAR PENALTY HOLDING AS UNDER:- WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATER IAL PLACED BEFORE US. THE PENALTY HAD BEEN LEVIED BY THE ASSESSING OFFICER FO R NON-COMPLIANCE OF THE NOTICE DATED 8.11.2010. FROM THE ASSESSMENT ORDER, IT IS EVIDENT THAT THE NOTICE UNDER SECTION 142(1)/143(2) DATED 8.11.2010 ALONGWI TH THE DETAILED QUESTIONNAIRE WAS ISSUED FIXING THE CASE FOR 18.11 .2010. THESE DETAILS HAVE BEEN MENTIONED BY THE ASSESSING OFFICER IN PARAGRAP H 2 PAGE 1 OF THE ASSESSMENT ORDER. THUS, TOTAL TEN DAYS TIME WAS AL LOWED FROM THE DATE OF ISSUE OF THE NOTICE. IN THE ASSESSMENT ORDER, THE ASSESSI NG OFFICER HAS NOT MENTIONED THE DATE ON WHICH SUCH NOTICE WAS SERVED UPON THE A SSESSEE. THEREFORE, IN OUR OPINION, THE TIME OF LESS THAN TEN DAYS ALLOWED BY THE ASSESSING OFFICER FOR COMPLYING WITH THE DETAILED QUESTIONNAIRE CANNOT BE SAID TO BE A SUFFICIENT TIME BEING ALLOWED TO THE ASSESSEE AND, THEREFORE, FAILU RE OF THE ASSESSEE TO COMPLY WITH SUCH NOTICE CANNOT BE SAID TO BE A DEFAULT WHI CH MAY JUSTIFY THE LEVY OF PENALTY UNDER SECTION 271(1)((B) OF THE ACT. ACCORD INGLY, THE SAME IS CANCELLED. 8. FURTHERMORE, WE ALSO NOTE THAT ASSESSMENT IN TH IS CASE WERE COMPLETED U/S. 143(3) OF THE I.T. ACT, IT DOES MEAN THE SUBSE QUENT COMPLIANCE IN THE ASSESSMENT PROCEEDINGS WAS CONSIDERED AS GOOD COMPL IANCE. THE DECISION 5 I.T.A .NOS.-4797 TO 4800/DEL/2013 RELIED UPON BY THE LD. COUNSEL OF THE ASSESSEE AS A BOVE ALSO COME TO THE RESCUE OF THE ASSESSEE. 6. IN VIEW OF THE DETAILED REASONING ON FACTS AND L AW, THE PENALTY IMPOSED IN EACH OF THE YEARS IS QUASHED. THE SAID ORDER WAS P RONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 7. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE AL LOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 06 TH OF FEBRUARY 2014. SD/- SD/- (T.S.KAPOOR) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:- 06 /02 /2014 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI