Smt. Pushpa Garg, New Delhi V. ACIT, New Delhi

ITA 4852/DEL/2013

• Counselvise Citation: 485220114 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; Bonafide belief; 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.-4852 TO 4855/DEL/ 2013 (ASSESSMENT YEARS-2007-08, 2008-09, 2009-10 & 2010-11) PUSHPA GARG, 85, BHARAT NAGAR, NEW FRIENDS COLONY, NEW DELHI. PAN-AAHPG9942J (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 U/S 271(1)(B). 2. NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE AT THE TIME OF HEARING. HOWEVER ON CONSIDERING THE MATERIAL AVAILABLE ON RE CORD AND THE SUBMISSIONS OF THE SR. DR, IT WAS CONSIDERED APPROPRIATE TO PROCEE D WITH THE PRESENT APPEAL EX- PARTE QUA THE ASSESSEE APPELLANT ON MERIT. 3. THE RELEVANT FACTS OF THE CASE AS APPRECIATED BY THE CIT(A) ARE EXTRACTED AS UNDER:- 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 THE NOTICE U/S 142(1) ISSUED BY AO AND IN THE RESULT THE AO PASSED PENALTY ORDER U.S 271(1)(B) FOR ALL THE 7 A. YS. 2 I.T.A .NOS.-4852 TO 4855/DEL/2013 3. THE FOLLOWING FACTS EMERGE FROM THE AOS ORDER: 3.1. CONSEQUENT UPON SEARCH AND SEIZURE ON SHIV VAN I GROUP DATED 6/01/2011 THIS CASE 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 HIM TO FILE INCO ME TAX RETURN. THIS REMAINED UNCOMPLIED WITH. ON 03/04/2012 A NOTICE U /S 271(1)(B) OF THE INCOME TAX ACT WAS ISSUED TO THE ASSESSEE FIXING TH E CASE OF HEARING ON 11/04/2012 WHICH ALSO REMAINED UNCOMPLIED WITH. 3.2. AGAIN ON 25/04/2012 A SHOWCAUSE NOTICE U/S 271 (1)(B) ALONGWITH NOTICE U/S 142(1) WAS ISSUED FOR HEARING ON 3/5/2012. THE ASSESSEE DID NOT FILE ANY REPLY/RETURN TO THIS NOTICE ALSO. IN VIEW OF THE A BOVE 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. 3.1. A PERUSAL OF THE IMPUGNED ORDER FURTHER SHOWS THAT BEFORE THE CIT(A) AMONGST OTHERS, THE ASSESSEE AGITATED THE FOLLOWING 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. 3.2. THE ACTION OF THE AO IN IMPOSING THE PENALTY W AS CONFIRMED HOLDING THAT THE ARGUMENT THAT THE AR WAS TO COME FROM NAGPUR AND NO T ALL CASES WERE CENTRALIZED CAN NOT BE CONSIDERED TO BE A REASONABLE CAUSE. TH E RELEVANT FINDING UNDER CHALLENGE IS EXTRACTED HEREUNDER:- 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. AGGRIEVED BY THIS THE ASSESSEE IS BEFORE THE IT AT, RELYING UPON THE AKHIL BHARTIYA PRATHMIK SHIKSHAK SANGH BHAWAN TRUST VS AC IT (2008) 115 TTJ (DELHI) 419 AND HINDUSTAN STEEL LTD. VS STATE OF OR ISSA (1972) 83 ITR 26(SC) ADDRESSED VIDE GROUND NO-4 & 5 IN THE PRESENT PROCE EDINGS. THE LD. SR. DR, MS. MEENAKSHI VOHRA PLACES RELIANCE UPON THE IMPUGNED O RDER. 3 I.T.A .NOS.-4852 TO 4855/DEL/2013 5. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE MA TERIAL AVAILABLE ON RECORD ON A CONSIDERATION OF THE SAME IN THE PECULIAR FACT S AND CIRCUMSTANCES OF THE SAME, WE HOLD RELYING UPON THE LEGAL PRECEDENTS CITED THA T IN THE FACTS OF THE PRESENT CASE PENAL ACTION IS NOT WARRANTED AS THE PRESENT CASE DOES NOT FALL IN THE ARENA OF DELIBERATE AND WILLFUL DEFIANCE BY NOT APPEARING BE FORE THE AO ON THE SPECIFIC DATE. A PERUSAL OF THE RECORD SHOWS THAT THE ASSES SEE WAS GIVEN ABOUT 10 DAYS TO GIVE ITS EXPLANATION. IT IS ALSO SEEN THAT THE RET URNED INCOME HAS BEEN ACCEPTED BY THE AO VIDE ORDER U/S 153A R.W.S 143(3) AND NOT U/S 144 OF THE ACT. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE PRESENT CAS E IS AN ATTEMPT OF DELIBERATE DEFIANCE ON PART OF THE ASSESSEE. INFACT THE ASSES SMENT HAVING BEEN COMPLETED U/S 143(3) OF THE INCOME TAX ACT MEANS THAT SUBSEQUENT COMPLIANCE IN THE ASSESSMENT PROCEEDINGS WAS CONSIDERED AS GOOD COMPL IANCE. IT IS FURTHER SEEN THAT NO REASONING HAS BEEN GIVEN BY THE CIT(A) AS T O WHY THE FOLLOWING EXPLANATION EXTRACTED BY HIM IN PAGES 3 & 4 IN PARA 4 OF HIS ORDER CANNOT BE ACCEPTED::- 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 4 I.T.A .NOS.-4852 TO 4855/DEL/2013 DURING INVESTIGATION PROCEEDINGS WITH THE DEPARTMEN T. 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. 5.1. IN THE LIGHT OF THE ABOVE FACTS AND EXPLANATIO N OFFERED IN THE PROCEEDINGS BEFORE THE CIT(A) AND THE CASE LAW RELIED UPON IN T HE GROUNDS BEFORE US, WE ARE OF THE VIEW THAT THE PENALTY ORDER U/S 271(1)(B) IN EACH OF THE YEARS DESERVES TO BE QUASHED. IDENTICAL ISSUE HAS BEEN CONSIDERED BY C O-ORDINATE BENCH CITED EARLIER NAMELY AKHIL BHARTIYA PRATHMIK SHIKSHAK SANGH BHAWA N TRUST VS ACIT (CITED SUPRA) AND IN ITA NO-4698 TO 4703/DEL/2013 ORDER DA TED 31.01.2014 IN THE CASE OF MANJUSHA MADAN VS DCIT WHEREIN THE FACTS WERE MO RE OR LESS SIMILAR IN REGARD TO THE SHORT NOTICE GIVEN FOR COMPLIANCE AND THE AS SESSMENT CONCLUDED U/S 143(3). WE EXTRACT THE RELEVANT PORTION FROM MANJUSHA MADAN S CASE 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 MENT ION ABOUT THE NON- COMPLIANCE OF NOTICE ON WHICH PENALTY HAS BEEN LEV IED. HENCE, ASSUMPTION OF JURISDICTION IS NOT PROPER. WE FURTHER FIND THAT IN THESE CASES THE AO HAS ASKED EXPLANATION OF QUESTIONS AND ASSESSEE WAS GIVEN ONL Y 7 DAYS TIME. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THE ASSES SEE WAS NOT GIVEN PROPER 5 I.T.A .NOS.-4852 TO 4855/DEL/2013 OPPORTUNITY AND IN THE SAME SITUATION THIS TRIBUNAL IN ITA NO. 4239/DEL/2013 IN THE CASE OF SHIVAANSH ADVERTISING AND PUBLICATIO NS (P) LTD. VIDE ITS ORDER DATED 3.1.2014 HAS DELETED THE SIMILAR PENALTY HOL DING AS UNDER:- WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATER IAL PLACED BEFORE US. THE PENALTY HAD BEEN LEVIED BY THE ASSESSING OFFICE R FOR NON-COMPLIANCE OF THE NOTICE DATED 8.11.2010. FROM THE ASSESSMENT ORD ER, IT IS EVIDENT THAT THE NOTICE UNDER SECTION 142(1)/143(2) DATED 8.11.2010 ALONGWITH 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 A SSESSING OFFICER HAS NOT MENTIONED THE DATE ON WHICH SUCH NOTICE WAS SERVED UPON THE ASSESSEE. THEREFORE, IN OUR OPINION, THE TIME OF LESS THAN TE N DAYS ALLOWED BY THE ASSESSING OFFICER FOR COMPLYING WITH THE DETAILED QUESTIONNAIRE CANNOT BE SAID TO BE A SUFFICIENT TIME BEING ALLOWED TO THE A SSESSEE AND, THEREFORE, FAILURE OF THE ASSESSEE TO COMPLY WITH SUCH NOTICE CANNOT BE SAID TO BE A DEFAULT WHICH MAY JUSTIFY THE LEVY OF PENALTY UNDER SECTION 271(1)((B) OF THE ACT. ACCORDINGLY, 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 RELIED UPON BY THE LD. COUNSEL OF THE ASSESSEE AS A BOVE ALSO COME TO THE RESCUE OF THE ASSESSEE. 8.1 FURTHERMORE, WE FIND THAT HONBLE APEX COURT IN A DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSH IPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 H ELD THAT THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTO RY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY 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. PENALTY WILL NOT ALSO BE IMPOSE D MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FA ILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVA NT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPET ENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WH EN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHER E THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 6. ACCORDINGLY ON ACCOUNT OF THE AFORE-MENTIONED DE TAILED REASONING ON FACTS AND LAW, THE PENALTY ORDER IN EACH OF THE YEARS IS DIRECTED TO BE QUASHED. THE SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 6 I.T.A .NOS.-4852 TO 4855/DEL/2013 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