M/s Chetan Arc Electrodes Pvt. Ltd., Nagpur V. ACIT, New Delhi

ITA 4845/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0228 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 12-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Keywords: Bonafide belief; Non compliance
• Section: 143(3); 142(1); 153A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. J.S.REDDY , ACCOUNTANT MEMBER I.T.A .NO S . - 4842 - 4846 /DEL/201 3 (ASSESSMENT YEAR S - 200 7 - 0 8 TO 2011 - 2012 ) CHETAN ARC ELCTRODOES PVT.LTD., C/O - KAILASH JOGANI, 4 TH FLOOR, ASSHIRWAAD COMMERCIAL COMPLEX, OPP. KALPANA BUILDING RAMDASPETH, NAGPUR. PAN - AAACC9877G (APPELLANT) VS ACIT, CENTRAL CIRCLE - 11, NEW DELHI (RESPONDENT) APPELLANT BY NONE RESPONDENT BY SH.RAVI JAIN, CIT DR ORDER PER DIVA SINGH, JM TH E PRESENT FIVE APPEAL S HAVE BEEN FILED BY THE ASSESSEE PERTAIN TO 200 7 - 0 8 TO 2011 - 12 ASSESSMENT YEAR S WHEREIN CONSOLIDATED ORDER DATED 28.05.2013 FOR 2005 - 06 TO 2011 - 12 ASSESSMENT YEAR S HAS BEEN PASSED BY CIT(A) - XXXI. THE CORRECTNESS OF THE SAID ORDER IS ASSAILED RELYING ON HINDUSTAN STEEL LTD. VS. STATE OF ORISSA {1972} 83 ITR 26 (SC); AND AKHIL BHARTIYA PRATHMI K SHIKSHAK SANGH BHAWAN TRUST VS ADIT [2008] 115 TTJ (DEL.) 419 IN THE GROUNDS RAISED PRAYING FOR QUASHING THE P ENALTY U/S 271(1)(B) IN EACH OF THE YEARS UPHELD BY THE CIT(A) ON THE PLEA THAT ON FACTS THERE WAS BONAFIDE BELIEF THAT THERE WAS NO WILLFUL D EFAULT ON THE PART OF THE ASSESSEE. 2. AT THE TIME OF HEARING, NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE. HOWEVER, CONSIDERING THE MATERIAL AVAILABLE ON RECORD, IT WAS CONSIDERED DATE OF HEARING 14 .0 7 .2015 DATE OF PRONOUNCEMENT 22 .07 .2015 I.T.A .NOS. - 4842 - 4846/DEL/2013 PAGE 2 OF 5 APPROPRIATE TO PROCEED WITH THE PRESENT APPEALS EX - PARTE QUA THE ASSESSEE - APPELLANT ON MERITS AFTER HEARING THE LD. CIT DR WHO PLACED RELIANCE ON THE SUBMISSIONS IN WRITING ON RECORD PLACED BY DR. SUDHA KUMAR I , CIT DR. 3. THE RELEVANT FACTS OF THE CASE ARE THAT A SEARCH & SEIZURE OPERATION WAS CONDUCTED ON THE CASE OF THE ASSES SEE WHO IS DESCRIBED AS SHIV VANI GROUP ON 06.01.2011. THE CASE SUBSEQUENTLY WAS CENTRALIZED ALONGWITH OTHER GROUP CASES. ON 07.03.2012 A NOTICE U/S 153A OF THE INCOME TAX ACT, 1961 WAS ISSUED AND SERVED UPON THE ASSESSEE DIRECTING THE FILING OF THE IN COME TAX RETURN. RETURN DECLARING NIL INCOME WAS FILED ON 04.06.2012. THEREAFTER QUESTIONNAIRE ETC. WAS ISSUED ON 01.10.2012 ULTIMATELY INCOME WAS ASSESSED AT NIL IN 2007 - 08 ASSESSMENT YEAR BY ORDER DATED 18.03.2013 U/S 153A. SIMILARLY FOR EACH OF THE Y EARS THE RETURNED INCOME WAS NOT VARIED IN THE 143(3) ORDER. HOWEVER, IN VIEW OF THE FACT THAT WITHIN THE TIME PRESCRIBED IN THE NOTICE DATED 07.03.2012 , NO RESPONSE WAS GIVEN BY THE ASSESSEE PENALTY U/S 271(1)(B) WAS I NITIATED AND THE ASSESSEE WAS SHOW C AUSED WHY IN EACH OF THE YEARS SINCE THE ASSESSEE FAILED TO GIVE ANY REPLY PENALTY SHOULD NOT BE IMPOSED. SINCE NO REPLY WAS GIVEN D ESPITE OPPORTUNITY PENALTY @ RS. 10,000/ - WAS IMPOSED FOR EACH OF THE YEARS UNDER CONSIDERATION. 4 . AGGRIEVED BY THIS, THE ASSESSEE CAME IN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) CONSIDERING THE FACTS AND ARGUMENTS WHICH WE SHALL REFER TO SUBSEQUENTLY GRANTED PARTIAL RELIEF AND CONFI RM ED PENALTY ONLY FOR 5 YEARS INSTEAD OF 7 YEARS AS ORIGINALLY LEVIED BY THE AO. THE FACTS WHICH THE LD. CIT(A) TOOK INTO CONSIDERATION ARE INFACT REPRODUCED IN THE ORDER UNDER CHALLENGE. A PERUSAL OF THE SAME SHOWS THAT THE ASSESSEE SUBMITTED THAT AS A CORPORATE ENTITY IT HAD BEEN REGULARLY FILING ITS RETURNS OF INCOME. IN THE FACTS OF THE CASE IT WAS PLEADED THAT THE SEIZED MATERIALS WERE COMMON FOR ALL THE ASSESSEES IN THE GROUP AND AT THE TIME OF ISSUANCE OF NOTICE U/S 142(1) THE ENTIRE GROUP CASES WERE NOT FULLY CENTRALIZED AT CENTRAL CIRCLE, NEW DELHI. IT WAS SUBM ITTED THAT MOST OF THE GROUP CASES WERE ASSESSED TO TAX EARLIER AT NAGPUR. AS A RESULT OF THIS, THE COUNSEL OF THE ASSESSEE WHO I.T.A .NOS. - 4842 - 4846/DEL/2013 PAGE 3 OF 5 WAS TO COME HAD TO COME FROM NAGPUR. APART FROM THIS, IT HAS ALSO BEEN STATED THAT THE NOTICE U/S 142(1) FOR THE SPECI FIC DATE WAS NOT SERVED AT F - 315, LADO SARAI, NEW DELHI; NEITHER AT THE REGISTERED OFFICE ADDRESS NOR AT THE ADMINISTRATIVE OFFICE OF THE ASSESSEE NOR FOR THAT MATTER AT ANY OF THE ADDRESSE S MENTIONED IN THE RECORDS WITH THE DEPARTMENT. ADDRESSING THE NOT ICE FOR PENALTY U/S 271(1)(B) IT WAS SUBMITTED THAT THE ASSESSEE HAS REPLIED TO THE SHOW CAUSE NOTICE ISSUED BY THE AO AND THE DEPARTMENT INFACT HAD REQUESTED THE COUNSEL OF THE ASSESSEE TO FACILITATE IN CENTRALIZATION OF THE CASES FROM NAGPUR AND OTHER PARTS TO DELHI. THE SAID REQUEST IT HAS BEEN STATED WAS FULLY CO - OPERATED WITH BY THE COUNSEL ON BEHALF OF THE ASSESSEE. IT WAS SUBMITTED THAT THERE ARE AROUND 120 ASSESSEE IN THE GROUP WHICH HAD BEEN ASSESSED AT CENTRAL CIRCLE - 11, NEW DELHI AND IMMEDIAT ELY AFTER CENTRALIZATION OF THE GROUP CASES THE RETURN WAS FILED. AT THIS JUNCTURE IT MAY NOT BE OUT OF PLACE TO REPRODUCE THE FOLLOWING EXTRACT FROM THE ASSESSEE S SUBMISSION ON RECORD: - 9. THAT THE ASSESSEE GROUP IS ASSESSED TO TAX FROM MANY YEARS AND THEY HAD FULLY CO - OPERATED WITH THE DEPARTMENT IN ASSESSMENTS PROCEEDINGS AND EVEN DURING INVESTIGATION PROCEEDINGS WITH THE DEPARTMENT. 10. THAT THE ASSESSMENT ORDER FOR THE YEAR WAS PASSED 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 ASSESSMENT PROCEEDINGS & AS SUCH THERE COULD HAVE BEEN NO REASON TO COME TO THE CONCLUSION THAT THE DEFAULT WAS DELIBERATELY OR WILLFUL. THIS IS WELL SUPPORTED 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 OF INCOME - TAX (2008) 115 TT J (DELHI) 419. 11. THAT THE LAW IS WELL SETTLED THAT AN ORDER IMPOSING PENALTY IS A RESULT OF QUASI - CRIMINAL PROCEEDING AND PENALTY SHOULD NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT, CONTUMACIOUS OR DISHONEST OR ACTED 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. AS 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. W HETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTH ORITY COMPETENT TO IMPOSE THE PENALTY WILL BE I.T.A .NOS. - 4842 - 4846/DEL/2013 PAGE 4 OF 5 JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL 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 MAN NER PRESCRIBED BY THE STATUTE. 4 .1. CONSIDERING THESE FACTS, LD. CIT(A) PROCEEDED TO CONFIRM PENALTY FOR 5 YEARS OUT OF THE 7 YEARS HOLDING AS UNDER: - 5. DETERMINATION 5.1 I HAVE CONSIDERED THE SUBMISSIONS OF THE AR AND THE PENALTY ORDER. NO REASONA BLE CAUSE HAS BEEN SHOWN EXCEPT THAT THEY WERE FROM NAGPUR AND THAT NOT ALL THE CASES OF THE GROUP HAVE BEEN CENTRALIZED. 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, THE APPELLANT SHOULD HAVE ATTENDED BEFORE THE AO AND TAKEN ADJOURNMENTS. IN THE GIVEN CIRCUMSTANCES PENALTY IS LEVIABLE. 5.2 HOWEVER, LEVYING PENALTY FOR ALL THE 7 YEARS MAY BE A BIT TOO HARSH. HENCE PENALTY IS CONFIRMED FOR 5 OUT OF 7 YEARS. 5.3 IN THE RESULT PENALTY FOR A.Y. 2005 - 06 AND 2006 - 07 ARE DELETED AND CONFIRMED FOR 2007 - 08, 2008 - 09, 2009 - 10, 2010 - 11 AND 2011 - 12. 4 .2. I N THE CONTEXT OF THE ABOVE FACTS ON RECORD, WE FIND THAT THE LD.CIT(A HAVING BEEN SATISFIED TO QUASH PENALTY IN TWO OUT OF THE 7 YEARS INFACT SHOULD HAVE QUASHED THE PENALTY PROCEEDINGS IN ALL THE YEARS. WHEN THE ADMITTED FACTS ARE THAT THE SEIZED DOCUMENT S WERE COMMON TO ALL THE GROUP CASES NUMBERING 120 IN ALL AND AT THE RELEVANT POINT OF TIME THE CASES WERE PARTIALLY IN NAGPUR AND PARTIALLY IN DELHI AND THE COUNSELS INFACT WERE FACILITATING I N THE PROCESS OF CENTRALIZING THE ENTIRE GROUP OF CASES AT DELH I FROM NAGPUR THE OCCASION TO WILLFULLY DEFAULT DOES NOT ARISE. IN FACT THERE IS MORE THAN SUFFICIENT EVIDENCE ON RECORD TO HOLD THAT THE PENALTY U/S 271(1)(B) IN THESE ADMITTED FACTS WAS NOT WARRANTED. WE HAVE SEEN THAT THE ASSESSMENTS ARE CONCLUDED U/S 143(3)/153A THEREBY MEANING THAT SHORTCOMING IF ANY WAS MADE GOOD IN THE ASSESSMENT PROCEEDINGS. WHILE COMING TO THE ABOVE CONCLUSION WE HAVE TAKEN INTO CONSIDERATION THE WRITTEN SUBMISSIONS OF DR. SUDHA KUMARI WHO PLACES RELIANCE ON DECISIONS WHICH HAVE NO RELEVANCE TO THE FACTS OF THE PRESENT CASE. THE CONCLUSION ARRIVED AT IN THE PRESENT PROCEEDINGS IS PURELY FACTUAL AND BORNE OUT FROM THE PLEADINGS REPRODUCED IN THE IMPUGNED ORDER ITSELF. HAVING CONSIDERED THE I.T.A .NOS. - 4842 - 4846/DEL/2013 PAGE 5 OF 5 EXPLANATION ON RECORD OFFERED BEFORE THE CIT(A) FOUND REPRODUCED IN HIS ORDER. WE QUASH THE PENALTY OF RS.10,000/ - IMPOSED U/S 271(1)(B) FOR EACH OF THE YEARS AND ALLOW THE APPEALS OF THE ASSESSEE. 5. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. T HE ORDER IS PRONOUNCED IN THE OPEN CO URT ON 2 2 N D OF JULY , 2015. S D / - S D / - ( J.S.REDDY ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 2 /0 7 /2015 * AMIT KUMAR * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI