Appeal details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 0709 (ITAT-AGRA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 year(s) 3 month(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
16-05-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
23-04-2013
Assessment Year
2005-2006
Appeal Filed On
15-02-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 53/AGRA/2013 ASSTT. YEAR : 2005-06 M/S. OSHO ASSOCIATES, VS. A.C.I.T., CIRCLE-3, 25 SATYA DEO NAGAR, GWALIOR. GWALIOR. (PAN: AABFO 4964 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJENDRA SHARMA, ADVOCATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 23.04.2013 DATE OF PRONOUNCEMENT OF ORDER : 03.05.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A), GWALIOR DATED 21.01.2013 FOR THE ASSESSMENT YEAR 20 05-06, CHALLENGING THE CONFIRMATION OF PENALTY U/S. 271(1)(B) OF THE IT AC T. 2. THE AO IN THE PENALTY ORDER NOTED THAT NOTICES U /S. 143(2) WERE ISSUED ON 07.01.2006, 22.06.2006, 05.07.2006, 18.09.2006, 22. 12.2006, 21.03.2007 AND NOTICES U/S. 142(1) WERE ISSUED DULY SERVED UPON TH E ASSESSEE BY 11.07.2007. THE ASSESSEE DID NOT COMPLY WITH THE ABOVE STATUTORY NO TICES. THEREFORE, PENALTY PROCEEDINGS WERE INITIATED. NO COMPLIANCE WAS MADE OF THE SHOW CAUSE NOTICE. ITA NO. 53/AGRA/2013 2 THE AO, THEREFORE, WAS OF THE VIEW THAT THE ASSESSE E HAS NOTHING TO SAY IN THIS REGARD. THEREFORE, FOR SEVEN DEFAULTS COMMITTED BY THE ASSESSEE, PENALTY OF RS.10,000/- EACH WAS IMPOSED TOTALING TO RS.70,000/ -. NONE APPEARED BEFORE THE LD. CIT(A). THEREFORE, PENALTY ORDER WAS CONFIRMED AND THE APPEAL OF THE ASSESSEE HAS BEEN DISMISSED. 3. THE LD. COUNSEL FOR THE ASSESSEE FILED COPY OF A SSESSMENT ORDER U/S. 144 DATED 26.12.2007, ORDER OF LD. CIT(A) GWALIOR DATED 21.08 .2008 AND ORDER OF ITAT, AGRA BENCH IN ITA NO. 704/2008 DATED 17.09.2010 IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR UNDER APPEAL, I.E., 2005-06. BY REF ERRING TO THESE ORDERS, HE HAS SUBMITTED THAT THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE AND THAT THE AO ISSUED ONLY ONE SHOW CAUSE NOTICE FOR LEVY OF PENAL TY FOR SEVEN DEFAULTS, FOR WHICH NO SEPARATE NOTICE HAS BEEN ISSUED. ON THE OTHER HA ND, THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND THE MAT ERIAL ON RECORD. SECTION 274(1) OF THE IT ACT PROVIDES THAT NO ORDER IMPOSIN G PENALTY UNDER THIS CHAPTER (INCLUDING 271(1)(B)) SHALL BE MADE UNLESS THE ASSE SSEE HAS BEEN HEARD OR HAS BEEN GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. IN THI S CASE, THE AO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(B) AT THE ASSESSMENT PROCEE DINGS ITSELF BECAUSE THE ASSESSEE DID NOT COMPLY WITH ABOVE STATUTORY NOTICE S. THE AO AT THE PENALTY STAGE, ITA NO. 53/AGRA/2013 3 ISSUED A SHOW CAUSE NOTICE REQUIRING THE ASSESSEE T O EXPLAIN AS TO WHY THE PENALTY U/S. 271(1)(B) MAY NOT BE LEVIED FOR THE DEFAULTS C OMMITTED BY THE ASSESSEE BY NOT MAKING COMPLIANCE OF STATUTORY NOTICES ISSUED U/S. 142(1) AND 143(2) OF THE IT ACT. THE ASSESSEE DID NOT MAKE ANY COMPLIANCE OF THE SHO W CAUSE NOTICE ISSUED BEFORE LEVY OF PENALTY. THUS, THE ASSESSEE HAS BEEN GIVEN REASONABLE OPPORTUNITY OF BEING HEARD BEFORE LEVY OF PENALTY. HOWEVER, THE ASSESSEE DID NOT AVAIL THE OPPORTUNITY OF HEARING AT THE PENALTY STAGE. THUS, THERE IS COM PLIANCE OF SECTION 274(1) OF THE IT ACT. THEREFORE, THERE IS NO FURTHER REQUIREMENT TO ISSUE NOTICE FOR EACH DEFAULT COMMITTED BY THE ASSESSEE AS PER ABOVE PROVISION. T HE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT FOR EACH DEFAULT, SEP ARATE NOTICE SHALL HAVE TO BE ISSUED IS, THEREFORE, REJECTED. 4.1 ON CONSIDERATION OF THE ASSESSMENT ORDER, ORDE R OF THE LD. CIT(A) AND THE TRIBUNAL FOR THE YEAR UNDER APPEAL, WE ARE OF THE V IEW THAT THE MATTER REQUIRES RECONSIDERATION AT THE STAGE OF AO. COPIES OF ABOVE ORDERS ARE PLACED ON RECORD. THE AO PASSED EXPARTE ASSESSMENT ORDER U/S. 144 OF THE IT ACT ON DATED 26.12.2007 FOR THE ASSESSMENT YEAR UNDER APPEAL, I. E., 2005-06. THE AO ISSUED STATUTORY NOTICES REQUIRING THE ASSESSEE TO PRODUCE RELEVANT DOCUMENTS AND BOOKS OF ACCOUNTS AND COMPLETE VOUCHERS TO EXPLAIN SEVERA L DETAILS. THE ASSESSEE, HOWEVER, DID NOT MAKE ANY COMPLIANCE AND NO BOOKS O F ACCOUNT ETC. HAVE BEEN PRODUCED. THE AO NOTED THAT THE ASSESSEE IN RESPONS E TO NOTICE FILED A SINGLE LETTER ITA NO. 53/AGRA/2013 4 STATING THAT ALL INFORMATION AS REQUIRED HAVE BEEN MADE AVAILABLE ON RECORD FROM TIME TO TIME AND PLACED ON RECORD. IT WAS PLEADED T HAT IN ASSESSMENT YEAR 2003-04, THE LD. CIT(A) HAS APPLIED NET PROFIT RATE OF 2%. T HE AO, HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE IN THE ABSENCE OF PR ODUCTION OF BOOKS OF ACCOUNT AND SUPPORTING DOCUMENTS AND CONSIDERING THE ASSESSEE F IRM HAVING CONTRACTUAL RECEIPTS APPLIED NET PROFIT RATE OF 8% FOR COMPUTIN G BUSINESS INCOME OF THE ASSESSEE. SINCE EXPARTE ASSESSMENT ORDER U/S. 144 W AS PASSED, THEREFORE, DEDUCTION ON ACCOUNT OF INTEREST AND SALARY PAID BY THE ASSES SEE FIRM TO ITS PARTNER WERE NOT ALLOWED AND INCOME OF THE ASSESSEE WAS COMPUTED AT RS.21,89,628/-. THE ASSESSEE CHALLENGED THE ABOVE EXPARTE ASSESSMENT ORDER BEFOR E THE LD. CIT(A) WHO HAS DECIDED THE APPEAL OF ASSESSEE VIDE ORDER DATED 21. 08.2008 AND DETAILED WRITTEN SUBMISSION OF THE ASSESSEE WAS CONSIDERED. THE LD. CIT(A) FOUND THAT IN ASSESSMENT YEAR 2002-03, PROFIT RATE OF 2% WAS APPL IED AND FOUND THAT THE AO HAS NOT MADE OUT ANY CASE OF REJECTION OF BOOKS OF ACCO UNT BECAUSE THE BOOKS OF ACCOUNT AND OTHER RECORDS WERE ALREADY IN POSSESSIO N OF THE DEPARTMENT AS IMPOUNDED DURING THE COURSE OF SURVEY U/S. 133A OF THE IT ACT. THEREFORE, NET PROFIT RATE APPLIED BY THE AO AT 8% IS NOT JUSTIFIE D. IT WAS FURTHER OBSERVED IN THE APPELLATE ORDER THAT THE ASSESSEE HAS COMPLIED WITH THE NUMBER OF NOTICES ISSUED BY THE AO FROM TIME TO TIME AND FURNISHED VOLUMINOUS I NFORMATION IN RESPECT OF QUERIES RAISED BY THE AO FROM TIME TO TIME. THE LD. CIT(A), THEREFORE, DID NOT JUSTIFY EXPARTE ORDER U/S. 144 OF THE IT ACT OR PRO FIT RATE OF 8%. THE LD. CIT(A), ITA NO. 53/AGRA/2013 5 ACCORDINGLY, RESTRICTED THE ADDITION TO RS.1,00,000 /- FOR INADMISSIBLE EXPENSES AND THE AO WAS ACCORDINGLY DIRECTED TO COMPUTE BUSINESS INCOME. THE LD. CIT(A) ALSO DIRECTED THAT SINCE PROCEEDINGS U/S. 144 IS NOT JUS TIFIED IN THE MATTER, THEREFORE, SALARY AND INTEREST PAID TO THE PARTNERS AS PER PAR TNERSHIP DEED SHALL HAVE TO BE ALLOWED AND THE AO WAS ACCORDINGLY DIRECTED TO DO S O. THE APPEAL OF THE ASSESSEE WAS PARTLY ALLOWED FOR THE ASSESSMENT YEAR UNDER AP PEAL. THE DEPARTMENT PREFERRED APPEAL BEFORE THE ITAT, AGRA BENCH IN ITA NO. 704/2 008 IN WHICH THE REVENUE CHALLENGED THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION OF RS.18,09,416/- AND ALSO GRANTING DEDUCTION ON ACCOUNT OF SALARY/INTERE ST PAID TO PARTNERS. THE TRIBUNAL, HOWEVER, DISMISSED THE APPEAL OF THE REVENUE VIDE O RDER DATED 17.09.2010. TRIBUNAL ALSO OBSERVED THAT THE PROVISIONS OF SECTI ON 144 ARE NOT APPLICABLE IN THE CASE OF ASSESSEE BECAUSE THERE IS NO FAILURE ON THE PART OF THE ASSESSEE IN COMPLYING WITH THE STATUTORY NOTICES. CONSIDERING THE ASSESSM ENT ORDER, APPEAL ORDER PASSED BY LD. CIT(A) AND THE APPELLATE ORDER PASSED BY THE TRIBUNAL FOR THE ASSESSMENT YEAR UNDER APPEAL IN THE CASE OF THE SAME ASSESSEE, IT APPEARS THAT WHOLE OF THE FACTUAL FOUNDATION FOR LEVY OF PENALTY HAS BEEN SHA KEN AND DISTORTED. HOWEVER, THE ASSESSEE IS EQUALLY RESPONSIBLE FOR NOT BRINGING AL L THE RELEVANT FACTS TO THE NOTICE OF THE AO AND THE LD. CIT(A) IN THE PENALTY MATTER. THERE IS NO OCCASION FOR THE AUTHORITIES BELOW TO CONSIDER THE CASE OF THE ASSES SEE IN THE LIGHT OF ABOVE ORDERS PASSED ON QUANTUM ASSESSMENT. SINCE THE QUANTUM ASS ESSMENT ORDER, ORDER OF CIT(A) AND ORDER OF THE TRIBUNAL HAVE BEEN PLACED O N RECORD FOR THE FIRST TIME ITA NO. 53/AGRA/2013 6 BEFORE THE TRIBUNAL, THEREFORE, IT IS REASONABLE AN D APPROPRIATE TO RESTORE THE MATTER TO THE FILE OF AO FOR RECONSIDERATION OF THE PENALT Y MATTER IN THE LIGHT OF ABOVE ORDERS. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE PENALTY MATTER TO THE FILE OF AO WITH DIRECTION TO RE-DECIDE THE PENALTY MATTER IN THE LIGHT OF THE QUANTUM ASSESSMENT ORDER DATED 26.12.2 007, APPELLATE ORDER OF LD. CIT(A) DATED 21.08.2008 AND DECISION OF ITAT, AGRA BENCH DATED 17.09.2010 PASSED IN THE CASE OF SAME ASSESSEE FOR SAME ASSESS MENT YEAR. THE AO SHALL GIVE REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE AND WE HOPE THAT THE ASSESSEE WOULD ATTEND THE PROCEEDINGS BEFO RE THE AO AND SHALL CO-OPERATE IN FINALIZATION OF THE MATTER. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY
