Sivam India Private Ltd., Nagpur V. ACIT, New Delhi

ITA 4856/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74172 (ITAT-DELHI)
• 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: G
• Assessment Year: 2007-2008
• Appeal Filed On: 12-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NITESH AGGARWAL; KAILASH M JOGANI
• Keywords: Search and seizure; Bonafide belief; Reasonable cause; Non compliance
• Section: 273B; 143(3); 142(1); 153A; 132; 144

Judgement Text

ITA NOS. 4792-4796; 4806-4809; 4810-4814; 4856-4860; 4838-4841 & 4828-4828/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NOS. 4792-4796/DEL/2013 A.YRS. : 2007-08 TO 2011-12 SHIV VANI PETRO SERVICES PVT. LTD., F-315, GROUND FLOOR, OLD MB ROAD, LADOSARAI, NEW DELHI (PAN: AAKCS3567R) VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 11, ARA CENTRE, JHANDEWALAN, NEW DELHI I.T.A. NOS. 4806-4809/DEL/2013 A.YRS. : 2007-08 TO 2010-11 SHIV VANI ENERGY LTD., 5 TH FLOOR, FOWER-1, NBCC PLAZA, PUSHP VIHAR, SAKET, NEW DELHI (PAN: AALCS5929A) VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 11, ARA CENTRE, JHANDEWALAN, NEW DELHI I.T.A. NOS. 4810-4814/DEL/2013 A.YRS. : 2007-08 TO 2011-12 S UVIDHA MAINTENANCE SERVICES PVT. LTD., C/O KAILASH JOGANI, 4 TH FLOOR, AASHIRWAD COMMERCIAL COMPLEX, OPP. KALPANA BUILDING, RAMDASPETH, NAGPUR (PAN: AAGCS4020F) VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 11, ARA CENTRE, JHANDEWALAN, NEW DELHI I.T.A. NOS. 4856-4860/DEL/2013 A.YRS. : 2007-08 TO 2011-12 SHIV AM INDIA PRIVATE LIMITED, C/O KAILASH JOGANI, 4 TH FLOOR, AASHIRWAD COMMERCIAL COMPLEX, OPP. KALPANA BUILDING, VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 11, ARA CENTRE, JHANDEWALAN, NEW DELHI ITA NOS. 4792-4796; 4806-4809; 4810-4814; 4856-4860; 4838-4841 & 4828-4828/DEL/2013 2 RAMDASPETH, NAGPUR (PAN: AAICS1474K) I.T.A. NOS. 4838-4841/DEL/2013 A.YRS. : 2007-08 TO 2010-11 SWATI GARG, 85, BHARAT NAGAR, NEW FRIENDS COLONY, NEW DELHI (PAN: AEATPG5437C) VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 11, ARA CENTRE, JHANDEWALAN, NEW DELHI I.T.A. NOS. 4824-4828/DEL/2013 A.YRS. : 2007-08 TO 2011-12 SHIV VANI OIL & GAS EXPLORATION SERVICES LTD., 5 TH FLOOR, FOWER-1, NBCC PLAZA, PUSHP VIHAR, SAKET, NEW DELHI (PAN: AAACS2523H) VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 11, ARA CENTRE, JHANDEWALAN, NEW DELHI (APPELLANT (APPELLANT (APPELLANT (APPELLANTS SS S) )) ) (RESPONDENT (RESPONDENT (RESPONDENT (RESPONDENTS SS S) )) ) ASSESSEE BY : SH. KAILASH M. JOGANI, CA & NITESH AGGARWAL, CA DEPARTMENT BY: NONE ORDER ORDER ORDER ORDER PER PER PER PER BENCH BENCH BENCH BENCH THESE APPEALS BY THE SEPARATE ASSESSEES ARE DIRECT ED AGAINST THE SEPARATE COMMON ORDER OF THE LD. CIT(A) IN THE C ONCERNED ASSESSMENT YEARS. SINCE THE APPEALS WERE HEARD TOG ETHER AND SOME OF THE ISSUE ARE COMMON, HENCE, THESE APPEALS ARE BEI NG CONSOLIDATED AND DISPOSED OFF TOGETHER BY THIS COMMON ORDER. 2. AT THE OUTSET WE NOTE THAT REVENUE HAS SOUGHT AD JOURNMENT IN THESE CASES ON THE GROUND THAT REGULAR SR. DEPARTMEN TAL ITA NOS. 4792-4796; 4806-4809; 4810-4814; 4856-4860; 4838-4841 & 4828-4828/DEL/2013 3 REPRESENTATIVE IS SUFFERING FROM ALERGIC BRONCHITIS. HOWEVER, WE NOTE THAT SIMILAR ADJOURNMENT WAS SOUGHT BY THE DEPARTMENT ON 3.2.2012. ON THE SAID DATE THE LD. DR HAD AGREED THAT THE MATE R CAN BE TAKEN UP ON 6.2.2014. UPON CAREFUL CONSIDERATION, WE FIND T HAT MATTER CAN BE DISPOSED OFF BY HEARING THE LD. COUNSEL OF THE ASSE SSEE AND PERUSING THE RECORDS. IN SUCH CIRCUMSTANCES, WE HAVE DISMISS ED THE ADJOURNMENT PETITION FILED BY THE REVENUE. 3. THE COMMON ISSUE RAISED IS THAT LD. CIT(A) ERRE D IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN IMPOSING THE PENALTY OF RS. 10,000/- U/S. 271(1)(B) OF THE I.T. ACT. 4. THERE WAS A SEARCH AND SEIZURE OPERATION CONDUC TED IN THE CASE OF THE ASSESSEE AND ITS GROUP COMPANIES. PENALTY U /S. 271(1)(B) WAS IMPOSED FOR FAILURE OF THE ASSESSEE TO COMPLY WITH TH E NOTICE U/S. 142(1) ISSUED BY THE AO. PENALTY WAS LEVIED IN ALL THE 7 YEARS EXCEPT FOR MS. SWATI GARG IN WHICH CASE PENALTY WAS LEVIED FOR SIX YEARS. IN RESPONSE TO THE SHOW CAUSE NOTICE IN THIS REGARD IN THE WRITTEN REPLY, BEFORE THE AO, ASSESSEE HAS SUBMITTED AS UNDER:- - THAT THE GROUP CASE OF SHIV VANI GROUP IS NOT YET FULLY CENTRALIZED WITH THE CENTRAL CIRCLE-11, NEW DELHI. - THAT THE GROUP WAS EARLIER ASSESSED AT NAGPUR, HENCE ALL THE PHOTOCOPIES OF SEIZED MATERIALS ARE LYING AT NAGPUR. - THAT THE COUNSEL FOR THE ASSESSMENT IS FROM NAGPUR. - THAT THE PHOTOCOPIES OF SEIZED MATERIAL ARE IN COMMON FOR ALL THE ASSESSEE, THUS THE ASSESSEE ITA NOS. 4792-4796; 4806-4809; 4810-4814; 4856-4860; 4838-4841 & 4828-4828/DEL/2013 4 REQUIRES ABOUT 45 DAYS TO CO-RELATE THE ENTIRE SEIZED MATERIAL IN ORDER TO FILE THE RETURN OF INCO ME. SINCE THE DELAY IN FILING OF THE RETURN IS NON INTE NTIONAL, I REQUEST YOUR HONOUR TO GRANT ME TIME OF 45 DAYS TO FILE THE RETURN AND SO DROP THE PENALTY PROCEEDINGS INITIATED AGAINST ME. 4.1 HOWEVER, THE AO WAS NOT SATISFIED AND HE PROCEE DED TO LEVY A PENALTY OF RS. 10000/- IN EACH CASE FOR EACH ASSESS MENT YEAR. 5. BEFORE THE LD. CIT(A) ASSESSEE SUBMITTED AS UNDER :- 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 06.1.2011. 2. THAT THE COMPANY WAS INCORPORATED ON 24 TH MARCH, 2006 WHICH WAS SUBMITTED BEFORE AO ALONGWITH CERTIFICATE OF INCORPORATION. 3. THAT THE SEIZED MATERIALS WERE COMMON FOR ALL THE ASSESSEE. 4. THAT THE GROUP CASES WERE NOT FULLY CENTRALIZED AT CENTRAL CIRCLE, NEW DELHI AT THE TIME OF ISSUE OF NOTICE U/S. 142(1). 5. THAT THE COUNSEL OF THE ASSESSEE WAS FROM NAGPUR SINCE MOST OF THE GROUP CASES WERE ASSESSEE TO TAX EARLIER AT NAGPUR. ITA NOS. 4792-4796; 4806-4809; 4810-4814; 4856-4860; 4838-4841 & 4828-4828/DEL/2013 5 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 ISSUED BY THE AO. 7. THAT THE DEPARTMENT REQUESTED THE COUNSEL OF THE ASSESSEE TO FACILITATE IN CENTRALIZATION OF CAS ES FROM NAGPUR AND OTHER PARTS TO DELHI, TO WHICH THE COUNSEL HAS FULLY COOPERATED. 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 INCOME AFTER THE CENTRALIZATION OF GROUP CASES. 9. THAT THE ASSESSEE COMPANY IS ASSESSED TO TAX FROM MANY YEARS AND THEY HAD FULLY COOPERATED WITH THE DEPARTMENT IN ASSESSMENTS PROCEEDINGS AND EVEN DURING INVESTIGATION PROCEEDINGS WITH THE DEPARTMENT. 10. THAT THE ASSESSMENT FOR THE YEAR WAS PASSED U/S. 153A R.W.S. 143(3) AND NOT UNDER SECTION 144 O F THE ACT. FROM THIS FACT IT IS CRYSTAL CLEAR THAT TH E ASSESSEE MADE THE COMPLIANCE IN THE ASSESSMENT PROCEEDINGS AND AS SUCH THERE COULD HAVE BEEN NO REASON TO COME TO THE CONCLUSION THAT THE DEFAULT W AS DELIBERATELY OR WILLFUL. THIS IS WELL SUPPORTED BY THE JUDGMENT GIVEN BY THE HONBLE ITAT, DELHI BENCH G IN THE CASE OF AKHIL BHARTIYA PRATHMIK SHIKSHAK SANG BHAVAN TRUST VS. ASSISTANT DIRECTOR OF INCOME TAX (2008) 115 TTJ (DELHI) 419. ITA NOS. 4792-4796; 4806-4809; 4810-4814; 4856-4860; 4838-4841 & 4828-4828/DEL/2013 6 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 BY THE SUPREME COURT IN HINDUSTAN STEEL LTD. VS . STATE OF ORISSA (1972) 83 ITR 26 (SC), PENALTY SHOU LD NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY 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 AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICA L OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WH EN THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIB ED BY THE STATUTE. 6. CONSIDERING THE ABOVE, LD. CIT(A) HELD THAT THE LEVY OF PENALTY FOR ALL THE 7 YEARS MAY BE TOO HARSH. HENCE, HE DELETED THE PENALTY FOR TWO YEARS AND AFFIRMED THE PENALTY FOR OTHER Y EARS. 7. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. ITA NOS. 4792-4796; 4806-4809; 4810-4814; 4856-4860; 4838-4841 & 4828-4828/DEL/2013 7 8. UPON HEARING THE LD. COUNSEL OF THE ASSESSEE AND PERUSING THE RECORDS, WE FIND THAT PENALTY IN THESE CASES HAS BE EN LEVIED FOR FAILURE OF THE ASSESSEE TO COMPLY WITH THE NOTICE U/S. 142(1 ) OF THE I.T. ACT., IN THIS REGARD, IT IS THE CONTENTION OF THE LD. COU NSEL OF THE ASSESSEE THAT THE ASSESSEES GROUP WAS EARLIER ASSESSED AT N AGPUR. HENCE, THE COUNSEL WAS FROM NAGPUR. ALL THE PHOTOCOPIES OF TH E SEIZED MATERIALS WERE ALSO LYING AT NAGPUR. IN THESE CIRCUMSTANCES, THERE WAS REASONABLE CAUSE FOR THE FAILURE OF THE ASSESSEE TO COMPLY WITH THE NOTICE ON THE SPECIFIED DATE. FURTHERMORE, SUBSEQU ENTLY IN RESPONSE TO SHOW CAUSE NOTICE, ASSESSEE HAS SOUGHT 45 DAYS TIME TO COMPLY WITH THE NOTICE IN THIS REGARD. IN OUR CONSIDERED OPINION, THE ABOVE CAN BE CONSTRUED AS REASONABLE CAUSE FOR FAILURE ON THE PART OF THE ASSESSEE TO COMPLY WITH THE NOTICE. SECTION 273B P ROVIDES THAT THAT NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAI D PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. IN OUR CONSIDERED OPINION, AS PER THE FACTS NARRATED ABOVE , THERE WAS REASONABLE CAUSE FOR THE FAILURE ON THE PART OF THE ASSESSEE. 9. FURTHERMORE, WE NOTE THAT IS ALL THE ASSESSMENT Y EARS IN THESE CASES ASSESSMENT ORDERS WERE PASSED UNDER SECTION 1 53A READ WITH SECTION 143(3) OF THE I.T. ACT AND NOT UNDER SECTIO N 144 OF THE I.T. ACT. IN SUCH CIRCUMSTANCES, WE AGREE WITH THE LD. COUNSE L OF THE ASSESSEE THAT THE ASSESSEE MADE THE COMPLIANCE IN THE ASSESS MENT PROCEEDINGS AND AS SUCH THERE COULD BE NO REASON T O COME TO THE CONCLUSION THAT DEFAULT WAS DELIBERATE OR WILLFUL . 10. IN THIS REGARD LD. COUNSEL FURTHER REFERRED TO THE DECISION OF THIS TRIBUNAL IN AKHIL BHARTIYA PRATHMIK SHIKSHAK SANGH BHAWAN TRUST VS. AKHIL BHARTIYA PRATHMIK SHIKSHAK SANGH BHAWAN TRUST VS. AKHIL BHARTIYA PRATHMIK SHIKSHAK SANGH BHAWAN TRUST VS. AKHIL BHARTIYA PRATHMIK SHIKSHAK SANGH BHAWAN TRUST VS. ITA NOS. 4792-4796; 4806-4809; 4810-4814; 4856-4860; 4838-4841 & 4828-4828/DEL/2013 8 ASSISTANT DIRECTOR OF INCOME TAX, (200 ASSISTANT DIRECTOR OF INCOME TAX, (200 ASSISTANT DIRECTOR OF INCOME TAX, (200 ASSISTANT DIRECTOR OF INCOME TAX, (2008) 115 TTJ ( DEL.) 419. 8) 115 TTJ (DEL.) 419. 8) 115 TTJ (DEL.) 419. 8) 115 TTJ (DEL.) 419. IN THIS CASE IT WAS HELD THAT ASSESSMENT HAVE BEEN MADE UNDER SECTION 143(3) AND NOT UNDER SECTION 144 OF THE IT ACT. IT MEANS TH AT SUBSEQUENT COMPLIANCE IN THE ASSESSMENT PROCEEDINGS WAS CONSIDE RED AS GOOD COMPLIANCE AND THE DEFAULTS COMMITTED EARLIER WERE IG NORED BY THE AO. HENCE, THE PENALTY U/S. 271(1)(B) COULD NOT BE LEVIED. 11. WE FURTHER FIND THAT ASSESSEES CONDUCT IN TH IS CASE CANNOT BE TERMED AS CONTUMACIOUS SO AS TO WARRANT LEVY OF PENA LTY. IN THIS REGARD, WE REFER TO THE DECISION OF THE HONBLE APE X COURT RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSHI PS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26. IN THIS CASE IT WAS HELD THAT THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMIN AL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PA RTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY B ECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAI LURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL T HE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBE D, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. ITA NOS. 4792-4796; 4806-4809; 4810-4814; 4856-4860; 4838-4841 & 4828-4828/DEL/2013 9 12. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENTS, WE SET ASIDE THE ORDERS OF THE LD. CIT(A) AND DELET E THE LEVY OF PENALTY OF RS. 10,000/- IN EACH CASE. 13. IN THE RESULT, THE ALL THE APPEALS FILED BY THE SEPARATE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/2/2014. SD/- SD/- [ [[ [A.D. JAIN A.D. JAIN A.D. JAIN A.D. JAIN] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 06/2/2014 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES