SHRI SADHU RAM, JAIPUR V. INCOME TAX OFFICER, WARD-6-4, JAIPUR

ITA 511/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0939 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 16-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Keywords: Reasonable cause
• Section: 271(1)(b); 142(1); 27; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE - A, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 511/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2004-05 SH. SADHU RAM S/O DEBU RAM V & P MANGRA KI DHANI SEWAPURA, TEHSIL AMER, JAIPUR CUKE VS. ITO, WARD 6(4), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AKHPR4766R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI SHRAWAN KUMAR GUPTA (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J. C. KULHARI (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 15/11/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 26/11/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-3, JAIPUR DATED 03.04.2018 FOR A.Y 2004-05. THE EFFECTIVE GROUND OF APPEAL RELATES TO SUSTENANCE OF PENALTY O F RS. 10,000/- IMPOSED BY THE AO U/S 271(1) (B) OF THE ACT. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT VIDE ORDER DATED 27.11 .2006 WHEREIN THE AO BROUGHT TO TAX AN AMOUNT OF RS. 9,50,000/- IN TH E HANDS OF THE ITA NO. 511/JP/2018 SHRI SADHU RAM, JAIPUR VS. ITO, JAIPUR 2 ASSESSEE. THE PENALTY PROCEEDINGS WERE SEPARATELY I NITIATED U/S 271(1)(B) FOR ASSESSEES FAILURE TO COMPLY WITH THE NOTICE ISSUED U/S 142(1) OF THE ACT. 3. IN THE QUANTUM PROCEEDINGS, ON APPEAL BY THE ASS ESSEE, THE CO- ORDINATE BENCH SET ASIDE THE MATTER TO THE FILE OF THE LD CIT(A) AND IN THE SET ASIDE PROCEEDINGS, AFTER CALLING THE REMAND REPORT FROM THE AO, THE LD. CIT(A) HAS SINCE DELETED THE ADDITION OF RS 9,00,000 AND THE ADDITION OF RS. 50,000/- HAS BEEN SUSTAINED. 4. THE AO VIDE ORDER DATED 21.06.2007 HAS LEVIED PE NALTY OF RS. 10,000/- U/S 271(1)(B) FOR ASSESSEES FAILURE T O COMPLY WITH THE NOTICE ISSUED U/S 142(1) OF THE ACT DATED 19.7.2005 AND 6.12.2006 IN ABSENCE OF ANY REASONABLE CAUSE BEING SHOWN BY THE ASSESSEE. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE PENALTY ST ATING THAT THE ASSESSEE HAS FAILED TO FILE ANY EVIDENCE WHICH ESTA BLISHES THAT THE NOTICE WAS NOT SERVED ON THE ASSESSEE. ACCORDINGLY, HE CONFIRMED THE LEVY OF PENALTY. NOW THE ASSESSEE IS IN APPEAL BEFO RE US. 5. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT THE ASSESSEE IS AN ILLITERATE SENIOR CITIZEN BELONGING TO A RURAL BACKGROUND AND DERIVED INCOME FROM LABOUR WORK AND SOME SMALL AGRICULTURE ACTIVITIES. THE ASSESSEE, ALONG WITH OTHER FAMILY M EMBERS, HAS SOLD HIS AGRICULTURE LAND AND HAS DEPOSITED THE SALE CONSIDE RATION IN HIS BANK AND OUT OF THE SAME, FDRS WERE MADE IN THE F.Y 2002 -03 TO RELEVANT TO AY 2003-04. HOWEVER, THE ASSESSMENT HAS BEEN WRONGL Y MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF FDRS DEPOSITS F OR THE IMPUGNED ITA NO. 511/JP/2018 SHRI SADHU RAM, JAIPUR VS. ITO, JAIPUR 3 ASSESSMENT YEAR 2004-05 AND THE SAME HAS SINCE BEEN DELETED BY THE LD. CIT(A) (IN APPEAL NO. 865/A-3/16-17 DATED 02.04.2018) IN THE SET ASIDE PROCEEDING PURSUANT TO THE DIRECTIONS OF THE TRIBUNAL. IT WAS ACCORDINGLY SUBMITTED THAT WHEN THE ADDITION MADE I N THIS YEAR WAS PRIMA FACIE ILLEGAL AND WHICH HAS SINCE BEEN DELETE D BY THE LD. CIT(A), ALL CONSEQUENT PROCEEDINGS ARE ILLEGAL AND BAD IN L AW AND LIABLE TO BE QUASHED. IT WAS ACCORDINGLY SUBMITTED THAT WHEN THE RE IS NO ADDITION WHICH HAS BEEN MADE FOR THE YEAR UNDER CONSIDERATIO N, THERE IS NO BASIS FOR LEVY OF PENALTY IN THE HANDS OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THERE IS NO EVIDENCE ON RECORD THAT THE IMPUNGED NOTICES HAVE BEEN SERVED UPON THE ASSESSEE AND UNLE SS AND UNTIL, IT IS PROVED BY THE REVENUE THAT THE NOTICES HAVE BEEN SE RVED UPON THE ASSESSEE, NO PENALTY CAN BE IMPOSED ON THE ASSESSEE ON NON- COMPLIANCE OF THE SAID NOTICES. IT WAS FURTHER SUB MITTED THAT EVEN ASSUMING THAT SOME DEFAULT WAS COMMITTED BY THE ASS ESSEE, THE SAME AT THE BEST WAS A MERELY TECHNICAL AND VENIAL BREAC H OF LAW AND THE CONDUCT OF THE ASSESSEE HAS NOT BEEN SHOWN TO BE CO NTUMACIOUS AND NO DELIBERATE DEFIANCE OF LAW IS ESTABLISHED AND IN SUPPORT, RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF HINDUSTAN STEELS VS. STATE OF ORISSA 83 ITR 26 (SC) AND THE D ECISION OF CO- ORDINATE BENCH IN CASE OF BHAWANA BHALLA VS. ACIT ( 2015) 43 CCH 0198 DEL TRIB. 6. THE LD DR IS HEARD WHO HAS RELIED ON THE ORDER O F THE LOWER AUTHORITIES. REGARDING THE CONTENTION OF THE LD AR THAT WHEN THERE IS NO ADDITION WHICH HAS BEEN MADE FOR THE YEAR UNDER CONSIDERATION, THERE IS NO BASIS FOR LEVY OF PENALTY IN THE HANDS OF THE ASSESSEE, OUR ITA NO. 511/JP/2018 SHRI SADHU RAM, JAIPUR VS. ITO, JAIPUR 4 ATTENTION WAS DRAWN TO THE PROVISIONS OF SECTION 27 1(1)(B) WHICH PROVIDES THAT 271. (1) IF THE ASSESSING OFFICER OR THE COMMISSIO NER (APPEALS) OR THE PRINCIPAL COMMISSIONER OR COMMISSI ONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THA T ANY PERSON (A) .. (B) HAS FAILED TO COMPLY WITH A NOTICE UNDER SUB-SECTIO N (2) OF SECTION 115WD OR UNDER SUB-SECTION (2) OF SECTION 115WE OR UNDER SUB - SECTION (1) OF SECTION 142 OR SUB-SECTION (2) OF SE CTION 143 OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB-SECTION (2A) OF SECTION 142, OR (C) . (D) . HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, (I) .. (II) IN THE CASES REFERRED TO IN CLAUSE (B), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM OF TEN THOUSAND RUPEES FOR EA CH SUCH FAILURE. IT WAS SUBMITTED BY THE LD DR THAT THE PROVISIONS O F SECTION 271(1)(B) ARE CLEAR AND UNAMBIGUOUS TO THE EFFECT THAT IRRESP ECTIVE OF WHETHER ANY TAX IS FINALLY PAYABLE ON NOT, THE ASSESSEE CAN STILL BE FASTENED WITH THE PENALTY LIABILITY AND THE PENALTY IS NOT DEPEND ENT ON THE OUTCOME OF THE ASSESSMENT PROCEEDINGS. IT WAS ACCORDINGLY SUB MITTED THAT IN ABSENCE OF ANY REASONABLE CAUSE BEING SHOW BY THE A SSESSEE, THE PENALTY HAS BEEN RIGHTLY LEVIED BY THE AO AND WHICH HAS BEEN CONFIRMED BY THE LD CIT(A). ITA NO. 511/JP/2018 SHRI SADHU RAM, JAIPUR VS. ITO, JAIPUR 5 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, WE AGREE WITH THE CON TENTION OF THE LD DR THAT LEVY OF PENALTY UNDER SECTION 271(1)(B) IS IND EPENDENT OF OUTCOME OF THE ASSESSMENT PROCEEDINGS AND IRRESPECTIVE OF W HETHER THE TAX IS FINALLY DETERMINED AS PAYABLE OR NOT, THE NON-COMPL IANCE TO THE NOTICES MAY ATTRACT PENALTY UNDER SECTION 271(1)(B) OF THE ACT. HOWEVER, IN THE INSTANT CASE, WE FIND THAT THE AO IN THE PENALT Y ORDER HAS STATED ABOUT NON-COMPLIANCE OF NOTICES ISSUED UNDER SECTIO N 142(1) DATED 19.7.2005 AND THE SUBSEQUENT NOTICE ISSUED ON 6.12. 2006 AND THEREAFTER, HAS LEVIED THE PENALTY OF RS 10,000 ONL Y AS AGAINST THE PROVISIONS OF SECTION 271(1)(B) WHICH PROVIDES FOR LEVY OF PENALTY OF RS 10,000 FOR EACH SUCH FAILURE AND NON-COMPLIANCE. THEREFORE, IT IS NOT CLEAR WHETHER THE AO HAS CONSIDERED THE SUBSEQU ENT NOTICE AS A CONTINUANCE OF THE FIRST NOTICE IN FORM OF A REMIND ER OR HAS CONSIDERED ONE OF THE NON-COMPLIANCES TO BE ADEQUATELY EXPLAIN ED OR THERE IS A MISTAKE IN THE ORDER OF THE AO. IN ABSENCE OF THE SAME, AS PER THE FACTS ON RECORD, THERE APPEARS TO BE A LACK OF CLAR ITY ON THE SPECIFIC DEFAULT WHICH HAS BEEN COMMITTED BY THE ASSESSEE. F URTHER, ON PERUSAL OF THE RECORDS, WE FIND THAT THE NOTICES HAVE BEEN TRIED TO BE SERVED ON THE ASSESSEE ON NUMBER OF OCCASIONS AS REPORTED BY THE POSTAL DEPARTMENT, HOWEVER, THE SAME HAVE BEEN RETURNED UN SERVED, WHICH SUPPORTS THE CONTENTION OF THE LD AR REGARDING NON- RECEIPT AND CONSEQUENT NON-COMPLIANCE TO THE SAID NOTICES. IN L IGHT OF THE SAME, WHERE THERE IS NO MATERIAL ON RECORD WHICH PROVES T HAT THE NOTICES HAVE BEEN DULY SERVED ON THE ASSESSEE, THERE IS A REASON ABLE CAUSE FOR NON- COMPLIANCE OF THE SAID NOTICES AND IN VIEW OF THE S AME, THE LEVY OF PENALTY UNDER SECTION 271(1)(B) OF THE ACT IS NOT J USTIFIED. IN THE RESULT, ITA NO. 511/JP/2018 SHRI SADHU RAM, JAIPUR VS. ITO, JAIPUR 6 WE HEREBY DIRECT FOR DELETION OF PENALTY SO LEVIED BY THE ASSESSING OFFICER. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 26/11/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 26/11/2018. * GANESH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI SADHU RAM, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ITO, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 511/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR