Calcutta Urology Research Centre Pvt Ltd, Kolkata V. A.C.I.T CC - VII,kolkata, Kolkata

ITA 518/KOL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4907 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 15-03-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 12-03-2013
• Court: TRIBUNAL
• Department Lawyers: S ALONG YADEN
• Keywords: Document seized; Bonafide belief; Reasonable cause; Documents seized; Ignorance of law
• Section: 273B; 153A; 132; 144

Judgement Text

ITA NOS.518-522/KOL/2013 A AM M/ S. CALCUTTA UROLOGY RESEARCH CENTRE P.LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, K OLKATA BEFORE : SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NOS. 518 TO 522/KOL/2013 A.YS 2004-05 TO 2008-09 CALCUTTA UROLOGY RESEARCH CENTRE VS. ACIT, C .C-VII, KOLKATA PVT. LTD. PAN: AABCC 5906-B (APPELLANT/ASSESSEE) (DEPARTMENT/RESPONDENT) FOR THE APPE LLANT/ASSESSEE: S/SHRI V.N PUROHIT HARISH VARDHAN BHARDWAJ, FCAS, LD.ARS FOR THE RESPONDENT/DEPARTMENT: SHRI S ALONG YADEN, ADDL.CIT, LD.DR DATE OF HEARING: 15-03-2016 DATE OF PRONOUNCEMENT: 21 -03 -2016 ORDER SHRI M.BALAGANESH, AM : THESE APPEALS OF THE ASSESSEE ARISE OUT OF THE COMM ON ORDER OF THE LEARNED CIT(A), CENTRAL-1, KOLKATA IN APPEAL NOS. 384-388/C C-VII/CIT(A)C-I/12-13 DATED 28.2.2013 AGAINST THE ORDER FOR THE ASST YEARS 2004 -05 TO 2008-09 BY THE LEARNED AO LEVYING PENALTY U/S 271B OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE ONLY ISSUE TO BE DECIDED IN ALL THESE APPEA LS IS AS TO WHETHER PENALTY U/S 271B OF THE ACT COULD BE LEVIED IN THE FACTS AND CI RCUMSTANCES OF THE CASE. AS THE ISSUE INVOLVED IN ALL THESE APPEALS ARE IDENTICAL, THE SAME ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAK E OF CONVENIENCE. ITA NOS.518-522/KOL/2013 A AM M/ S. CALCUTTA UROLOGY RESEARCH CENTRE P.LTD 2 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF RUNNING A NURSING HOME. THERE WAS A SEARCH U/S 132 OF THE ACT IN THE PREMISES OF THE ASSESSEE ON 2.12.2009 AND IT WAS UNEARTHED THAT THE ASSESSEE HAD NOT FILED ITS RETURN OF INCOME U/S 139(1) OF THE ACT FOR THE ASST YEARS 200 4-05 TO 2008-09. THE ASSESSEE EXPLAINED THAT IT HAD INCURRED ONLY LOSSES IN THE E ARLIER YEARS AND HAD ENTRUSTED THE HANDLING OF TAX MATTERS TO A CHARTERED ACCOUNTANT A ND PLEADED COMPLETE IGNORANCE OF NON-FILING OF INCOME TAX RETURNS AND STATED THAT TH E FACT OF NON-FILING OF INCOME TAX RETURNS HAD COME TO ITS KNOWLEDGE ONLY PURSUANT TO THE SEARCH CONDUCTED IN THE PREMISES. IN THE COURSE OF ASSESSMENT PROCEEDINGS U/S 153A OF THE ACT, THE ASSESSEE ADMITTED UNDISCLOSED INCOME OF RS. 92,85,985/- ON A CCOUNT OF SUPPRESSED RECEIPTS ON THE BASIS OF THE SEIZED DOCUMENTS MARKED RMD/1 TO R MD/53 AND ADDITION WAS ACCORDINGLY MADE IN THE ASSESSMENT. THE ASSESSEE F ILED THE TAX AUDIT REPORT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. BUT THE LEARNED A O FOUND THAT THE TAX AUDIT REPORT WAS NOT SIGNED BY THE TAX AUDITOR AND HENCE THE LEA RNED AO IGNORED THE SAME. THE LEARNED AO ACCORDINGLY LEVIED PENALTY @ 0.5% OF GRO SS RECEIPTS IN TERMS OF SECTION 271B OF THE ACT. ON FIRST APPEAL, THE LEARNED CITA CONFIRMED THE LEVY OF PENALTY AND ALSO ENHANCED THE PENALTY TO BE LEVIED ON SUPPRESSE D RECEIPTS WHICH WERE ACCEPTED BY THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS IN APPEA L BEFORE US . 4. THE LEARNED AR ARGUED THAT THE ASSESSEE WAS CO MPLETELY IN DARK ABOUT THE TAXATION LAWS AND HAD WITH BONAFIDE BELIEF HAD ENTR USTED THE JOB OF HANDLING THE ENTIRE TAXATION MATTERS TO A CHARTERED ACCOUNTANT AND TO I TS UTTER DISMAY AND SHOCK, PURSUANT TO THE SEARCH BY THE INCOME TAX DEPARTMENT, IT CAME TO KNOW THAT THE INCOME TAX RETURNS HAD NOT BEEN FILED BY THE CHARTERED ACCOUNT ANT. HE ARGUED THAT EVEN THE RETURNS IN RESPONSE TO NOTICE U/S 153A OF THE ACT WERE NOT ADVISED TO BE FILED BY THE CHARTERED ACCOUNTANT. NO PROPER REPRESENTATION HAD BEEN MADE BEFORE THE LEARNED AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ULTIMATELY THE ASSESSMENTS U/S 153A OF THE ACT WERE COMPLETED U/S 144 OF THE ACT BY ESTIMATION OF PROFITS @ 35% OF GROSS RECEIPTS. HE ARGUED THAT THE TAX AUDIT REPORT SUBM ITTED BY THE TAX AUDITOR WAS NOT ITA NOS.518-522/KOL/2013 A AM M/ S. CALCUTTA UROLOGY RESEARCH CENTRE P.LTD 3 SIGNED BY HIM . IN VIEW OF ALL THESE FACTS , THE A SSESSEE THOUGHT IT FIT TO PREFER A COMPLAINT AGAINST THE SAID CHARTERED ACCOUNTANT WHO HAD SIGNED THE ACCOUNTS BEFORE THE DISCIPLINARY COMMITTEE OF THE INSTITUTE OF CHAR TERED ACCOUNTANTS OF INDIA (ICAI) . THE LEARNED AR ALSO PRODUCED EVIDENCE OF LODGING THE COMPLAINT TO ICAI AND ICAI IN TURN ACKNOWLEDGING THE RECEIPT OF THE COMPLAINT AND ALLOTTING COMPLIANT NUMBER TO THE ASSESSEE FOR FUTURE CORRESPONDENCE. HE ALSO ST ATED THAT THE PROCEEDINGS BEFORE THE ICAI AGAINST THE CHARTERED ACCOUNTANT ARE STILL PEN DING DISPOSAL. HE PLEADED THAT THE ASSESSEES BONAFIDE BELIEF OF ENTRUSTING THE JOB TO THE CHARTERED ACCOUNTANT CANNOT BE DOUBTED WITH AND THE ASSESSEE HAD ACTUALLY GOT ITS ACCOUNTS TAX AUDITED BUT THE TAX AUDITOR FOR REASONS BEST KNOWN TO HIM HAD CHOSEN NO T TO SIGN THE TAX AUDIT REPORT WHILE SUBMITTING THE SAME BEFORE THE INCOME TAX DEPARTMEN T. ACCORDINGLY, HE PRAYED FOR CANCELLATION OF PENALTY LEVIED U/S 271B OF THE ACT WHICH HAS HAPPENED DUE TO REASONS BEYOND THE CONTROL OF THE ASSESSEE. HE ALSO ARGUED THAT DUE TO MISTAKE OF THE CHARTERED ACCOUNTANT, THE ASSESSEE SHOULD NOT BE PENALIZED. IN RESPONSE TO THIS, THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHOR ITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK FILED BY THE ASSESS EE CONTAINING THE COMPLAINT LODGED BEFORE ICAI AGAINST THE CHARTERED ACCOUNTANT FOR AL LEGED PROFESSIONAL NEGLIGENCE AND ICAI ACKNOWLEDGING THE RECEIPT OF COMPLIANT THEREON , AMONG OTHERS. WE FIND THAT IN THE FACTS NAD CIRCUMSTANCES BEFORE US, THE ASSESSEE HAD BELIEVED THE CHARTERED ACCOUNTANT TO A LARGE EXTENT AS IT IS NOT AWARE OF THE RIGOUROUS PROVISIONS OF TAXATION LAWS. IT ONLY AMOUNTS TO SHEER IGNORANCE OF LAW. HOWEVER, THE BELIEF OF THE ASSESSEE SEEMS TO BE BONAFIDE AND THAT CANNOT BE DOUBTED WIT H. IT IS WELL SETTLED THAT IGNORANTIA JURIS NON EXCUSAT MEANING IGNORANCE O F LAW IS OF NO EXCUSE. HOWEVER, THIS MAXIM HAS BEEN DULY CONSIDERED BY THE HONBLE APEX COURT IN THE CASE OF MOTILAL PADAMPAT SUGAR MILLS CO. LTD VS STATE OF UT TAR PRADESH & ORS REPORTED IN (1979) 118 ITR 326 (SC ) WHEREIN IT WAS OBSERVED THAT ITA NOS.518-522/KOL/2013 A AM M/ S. CALCUTTA UROLOGY RESEARCH CENTRE P.LTD 4 THERE IS NO PRESUMPTION THAT EVERY PERSON KNOWS THE LAW. IT IS OFTEN SAID THAT EVERY ONE IS PRESUMED TO KNOW THE LAW, BUT THA T IS NOT A CORRECT STATEMENT ; THERE IS NO SUCH MAXIM KNOWN TO THE LAW . OVER A HUNDRED AND THIRTY YEARS AGO , MAULA J. POINTED OUT IN MARTINDA LE V FALKNER (1846) 2 CB 706 : THERE IS NO PRESUMPTION IN THIS COUNTRY THAT EVERY PERSON KNOWS THE LAW : IT WOULD BE CONTRARY TO COMMON SENSE AND REASON IF IT WERE SO. SCRUTTON L.J. ALSO ONCE SAID : IT IS IMPOSSIBLE T O KNOW ALL THE STATUTORY LAW, AND NOT VERY POSSIBLE TO KNOW ALL THE COMMON L AW. BUT IT WAS LORD ATKIN WHO, AS IN SO MANY OTHER SPHERES, PUT THE POI NT IN ITS PROPER CONTEXT WHEN HE SAID IN EVANS VS BARTLAM (1937) AC 473 : . THE FACT IS THAT THERE IS NOT AND NEVER HAS BEEN A PRESUMPTION THAT EVERY ONE KNOWS THE LAW. THERE IS THE RULE THAT IGNORANCE OF THE LAW DO ES NOT EXCUSE, A MAXIM OF VERY DIFFERENT SCOPE AND APPLICATION. IT IS, T HEREFORE, NOT POSSIBLE TO PRESUME, IN THE ABSENCE OF ANY MATERIAL PLACED BEFO RE THE COURT , THAT THE APPELLANT HAD FULL KNOWLEDGE OF ITS RIGHT TO EXEMPT ION SO AS TO WARRANT AN INFERENCE THAT THE APPELLANT WAIVED SUCH RIGHT BY A DDRESSING THE LETTER DT 25 TH JUNE , 1970 . WE, ACCORDINGLY, REJECT THE PLEA OF WAIVER RAISED ON BEHALF OF THE STATE GOVERNMENT. 5.1. IT WAS THE SUBMISSION OF THE LEARNED AR THAT THE ASSESSEE HAD ENTRUSTED THE ENTIRE JOBOF HANDLING THE TAX AFFAIRS TO A CHARTERED ACCOU NTANT AND ASSESSEE SHOULD NOT BE PENALIZED FOR ANY MISTAKE COMMITTED BY HIM. WE FI ND THAT THE DECISION OF THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CI T VS KHEMRAJ LAXMICHAND REPORTED IN (1978) 114 ITR 75 (MP) SUPPORTS THIS PROPOSITION , WHEREIN IT PLACED RELIANCE ON THE DECISION OF HONBLE APEX COURT IN T HE CASE OF MATA DIN VS A. NARAYANAN , AIR 1970 SC 1953, 1954, HIDAYATULLAH C. J. SPEAKING FOR THE COURT SAID : THE LAW IS WELL SETTLED THAT MISTAKE OF COUNSEL M AY IN CERTAIN CIRCUMSTANCES BE TAKEN INTO ACCOUNT IN CONDONING DE LAY ALTHOUGH THERE IS NO GENERAL PROPOSITION THAT MISTAKE OF COUNSEL BY I TSELF IS ALWAYS A SUFFICIENT GROUND. IT IS ALWAYS A QUESTION WHETHER THE MISTAKE WAS BONA FIDE OR WAS MERELY A DEVICE TO COVER AN ULTERIOR P URPOSE SUCH AS LACHES ON THE PART OF THE LITIGANT OR AN ATTEMPT TO SAVE LIMI TATION IN AN UNDERHAND WAY. SO ALSO IN PUNJABI UNIVERSITY VS ACHARYA SWA MI GANESH, AIR 1972 SC 1973, 1974 , THEIR LORDSHIPS HELD THAT BONA FIDE MISTAKES HAVE GOT TO BE TAKEN NOTE OF BY THE COURTS IN CONSIDERING WHETHER THE DELAY IN FILING AN APPEAL SHOULD BE CONDONED OR NOT. IT WAS OBSERVED : IT HAS BEEN REPEATEDLY HELD BY COURTS THAT A MISTAKE BY A LAWYE R IS GOOD GROUND FOR ITA NOS.518-522/KOL/2013 A AM M/ S. CALCUTTA UROLOGY RESEARCH CENTRE P.LTD 5 CONDONING THE DELAY IN FILING THE APPEAL. THUS , IT IS ESSENTIALLY A QUESTION OF FACT WHETHER THE MISTAKE OF THE COUNSEL WAS BONA FIDE. THAT IS THE CRUX OF THE MATTER . 5.2. IN THE INSTANT CASE, WE ARE CONVINCED THAT TH E ASSESSEE HAD PLACED A BONA FIDE BELIEF ON ITS CHARTERED ACCOUNTANT WHO HAS BEEN ENT RUSTED TO HANDLE THE TAX MATTERS OF THE ASSESSEE AND THE SAID BONAFIDE BELIEF CANNOT BE DOUBTED WITH. HENCE WE FIND THAT THE ASSESSEE HAD ADDUCED REASONABLE CAUSE IN TERMS OF SECTION 273B OF THE ACT AND ACCORDINGLY IS ENTITLED FOR IMMUNITY FROM LEVY OF P ENALTY U/S 271B OF THE ACT. WE ARE MAKING IT CLEAR THAT THIS ORDER SHALL NOT HAVE ANY BEARING ON THE PROCEEDINGS PENDING BEFORE THE DISCIPLINARY COMMITTEE OF ICAI AGAINST T HE COMPLAINT LODGED BY THE ASSESSEE ON ITS CHARTERED ACCOUNTANT AND THIS DECIS ION SHOULD NOT BE USED IN THE SAID PROCEEDINGS THEREON. 6. IN THE RESULT, THE APPEALS OF THE ASSESSEE AR E ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 -03-201 6. SD/- SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) ( M.BALAGANESH, ACCOUNTANT MEMBER) DATE : 21 -03-2016 ITA NOS.518-522/KOL/2013 A AM M/ S. CALCUTTA UROLOGY RESEARCH CENTRE P.LTD 6 1. THE APPELLANT/ASSESSEE: M/S. CALCUTTA UROLOGY R ESEARCH CENTRE PVT. LTD C/O V.N PUROHIT & CO., CHATRERED ACCOUNTANTS, DIAMO ND CHAMBERS, UNIT-III, 4 TH FL., SUIT NO.4G, 4 CHOWRINGHEE LANE, KOL-16. 2 THE RESPONDENT/DEPARTMENT; THE ASSTT. COMMISSION ER OF INCOME TAX CENTRAL CIRCLE-VI, AAYKAR BHAWAN PURVA, 110 SHANTIP ALLY, 6 TH FL., KOLKATA-107. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP/SPS COPY OF THE ORDER F ORWARDED TO: