HEENA N. KANAKIA, MUMBAI V. ACIT CC 32, MUMBAI

ITA 5419/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8315 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 07-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BORA
• Keywords: Principle of natural justice; Reasonable cause
• Section: 273B; 142(1)

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - H BENCH . , !'# !$%&' , %! () BEFORE S/SH.D.MANMOHAN, VICE-PRESIDEN T & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.5419/MUM/2013, ! ! ! ! * * * * / ASSESSMENT YEAR-2008-09 HEENA N. KANAKIA, 701/702, QUARTER DECK, J.P.ROAD, VERSOVA, ANDHERI (E), MUMBAI-400061 PAN: ANTPK4556B ! VS. ACIT, CC-32, MUMBAI. ( !,- / APPELLANT) ( ./,- / RESPONDENT) !01 !01 !01 !01 2 2 2 2 % %% % / ASSESSEE BY : SHRI GOVIND JAVERI !$) 3 2 % / REVENUE BY : SHRI VIJAY KUMAR BORA ! ! ! ! 3 33 3 1! 1! 1! 1! / DATE OF HEARING :10 -12-2014 4* ! 3 1! / DATE OF PRONOUNCEMENT :10 -12-2014 , 1961 3 33 3 !! !! !! !! 254(1) % %% % &151 &151 &151 &151 (%6 (%6 (%6 (%6 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. %! () !$%&' % ! : CHALLENGING THE ORDER DTD. 03.05.2013 OF THE CIT(A) -41,MUMBAI THE ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPEAL: FOLLOWING GROUNDS OF APPEAL ARE WITHOUT PREJUDICE T O EACH OTHER: 1.THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ORDER PASSED BY THE AO U/S. 271(1)(B) OF THE INCOME-TAX ACT, 1961 WHICH IS INVA LID AND BAD IN LAW. 2.THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE PENALTY OF RS. 30,000/- LEVIED BY THE AO FOR THE ALLEGED FAILURE OF APPELLANT IN N OT RESPONDING TO THE VARIOUS NOTICES ISSUED BY THE AO DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. 3.THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THERE WAS REASONABLE CAUSE FOR NOT COMPLYING WITH THE NOTICES ISSUED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4.THE ORDER PASSED BY THE CIT (A) IS BAD IN LAW AND IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 5.THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALTE R OR DELETE ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL. 2. EFFECTIVE GROUND OF APPEAL FILED BY THE ASSESSEE DE ALS WITH LEVYING OF PENALTY U/S. 271(1)(B) OF THE ACT.THE FACTS OF THE CASE LEADING TO THE LEVY O F THE PENALTY OF RS.70,000/-,ARE AS FOLLOWS :- DURING THE ASSESSMENT PROCEEDINGS,THE ASSESSEE HAD BEEN ISSUED VARIOUS NOTICES TO ATTEND IN THE OFFICE EITHER PERSONALLY OR BY AN AUTHORISED REPRES ENTATIVE IN WRITING TO PRODUCE DOCUMENTS, ACCOUNTS ETC. AND TO EXPLAIN THE FACTS FOR COMPLETI NG THE ASSESSMENT.AS PER THE AO THE ASSESSEE DISPLAYED EITHER NON-COMPLIANCE OR DELAYED AND INAD EQUATE RESPONSE TO THE NOTICES ISSUED BY HIM.THE AO INITIATED PENALTY PROCEEDINGS U/S. 271(1 )(B) VIDE NOTICE DATED 31.12.2010.SHE DID NOT COMPLY TO THE SHOW CAUSE NOTICES ALSO.THE AO, IN VI EW OF THE NON-COMPLIANCE OF THE ASSESSEE AND IN VIEW OF THE ABOVE NOTED FACTS CONCLUDED THAT THI S WAS A FIT CASE FOR THE IMPOSITION OF THE PENALTY U/S. 271(1)(B) OF THE ACT.ACCORDINGLY,HE LEVIED THE PENALTY OF RS.70,000/- (RS.10, 000/-EACH FOR SEVEN NOTICES)UNDER THE SAID SECTION. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).AFTER CONSIDERING THE FACTS OF THE C ASE AND THE SUBMISSIONS MADE BY THE ASSESSEE,HE HELD THAT TWO NOTICES U/S. 142(1) AND O NE NOTICE U/S. 143(2) WAS ISSUED BY THE AO TO 2 ITA NO. 5419/M/2013 HEENA N. KANAKIA THE ASSESSEE, THAT ADJOURNMENT LETTER DATED 26,11.2 010 WAS FILED ON BEHALF OF THE ASSESSEE IN RESPECT OF THE NOTICE U/S. 143(2),THAT THE ADJOURNM ENT LETTER DATED 26.11.2010 WAS FILED ON BEHALF OF THE ASSESSEE IN RESPECT OF THE NOTICE U/S. 142(1 ) DATED 22,11.201,THAT IT COULD NOT BE SAID THAT THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE TO THESE NOTICES,THAT THE ASSESSE HAD MADE A REQUEST FOR ADJOURNMENT IN RESPECT OF THOSE NOTICES ,THAT AND THERE WAS NOTHING IN THE PENALTY ORDER THAT SUCH REQUESTS WERE REJECTED,THAT PENALTY LEVIE D IN RESPECT OF THOSE THREE NOTICES COULD NOT BE UPHELD,THAT THERE WAS PART COMPLIANCE IN RESPECT OF THE SHOW CAUSE LETTER DATED 12.11.2010 AND 16.12.2010,THAT NO PENALTY U/S.271(1)(B) COULD,THER EFORE,BE LEVIED IN RESPECT OF THE SAID SHOW CAUSE NOTICES ISSUED.WITH REGARD TO THE NOTICES DAT ED 03.12.2010,06.12.2010,SHOW CAUSE LETTER DATED 03.12.2010 AND NOTICE U/S. 142(1) DATED 24.09 .2010,HE HELD THAT NOT ONLY DID THE ASSESSEE NOT COMPLY WITH THE NOTICES SHE ALSO DID NOT SEEK A N ADJOURNMENT AND ALSO DID NOT MAKE ANY COMPLIANCE TO EVEN THE SHOW CAUSE ISSUED TO THE AS SESSEE TO EXPLAIN AS TO WHY THE PENALTY U/S. 271(1)(B) SHOULD NOT BE LEVIED.FINALLY,HE CONFIRMED PENALTY OF RS.30,000/- OUT OF THE TOTAL PENALTY LEVIED U/S.271(1)(B)OF THE ACT,AMOUNTING TO RS.70,0 00/-. 4. BEFORE US,THE AUTHORISED REPRESENTATIVE(AR)STATED T HAT IDENTICAL ISSUE HAD ARISEN IN THE APPEALS FILED BY THE ASSESSEE BEFORE THE TRIBUNAL FOR THE A Y.S.2004-05 TO 2007-08(ITA/5206 TO 5210/ MUM/2013 DATED.21.11.2014),THAT THE TRIBUNAL HAD HE LD THAT THE NON-COMPLIANCE WAS DUE TO REASONABLE CAUSE,THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT AND JUSTIFIABLE CAUSE FOR NOT PROVIDING THE INFORMATION OR NOT APPEARING BEFORE T HE AO.DEPARTMENTAL REPRESENTATIVE(DR)LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD.WE FIND THAT WHILE DECIDING THE PENALTY APPEAL FOR THE EARLIER F OUR AY.S.THE TRIBUNAL HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE.THE TRIBUNAL HAD HE LD AS UNDER ; 4.1.THE STAND OF THE ASSESSEE, RIGHT FROM ASSESSMEN T STAGE, IS THAT THE ASSESSEE IS UNABLE TO FURNISH DETAILS AS SUCH DETAILS WERE KEPT AT THE OFFICE SIT UATED IN X-CUBE BUILDING, WHICH WAS UNDER DISPUTE AND SEIZED BY CIVIL COURT, DINDOSHI (BORIVILI DVN.) . THEREFORE, THE ASSESSEE IS UNABLE TO PRODUCE THE DETAILS. EVEN BEFORE THE ID. COMMISSIONER OF IN COME TAX (APPEALS) INSPITE OF VARIOUS DIFFICULTIES, THE ASSESSEE FILED SUCH DETAILS BUT T HE SAME WERE DECLINED ON THE GROUND THAT THE ASSESSING OFFICER HAD ALREADY PROVIDED SUFFICIENT O PPORTUNITY TO FILE THESE DETAILS. WE ARE OF THE VIEW THAT ATLEAST THE LD. COMMISSIONER OF INCOME TA X (APPEALS) WAS EXPECTED TO EXAMINE THESE DETAILS ALONGWITH CLAIMED DIFFICULTIES FACED BY THE ASSESSEE AND THEN SHOULD HAVE REACHED TO, A CONCLUSION. HOWEVER, THE LD. COMMISSIONER, OF INCOM E TAX (APPEALS), ON THE BASIS OF OBSERVATION MADE IN THE ASSESSMENT ORDER PROCEEDED TO DISPOSE O F THE APPEAL. THIS CLAIM OF THE ASSESSEE IS EVEN EVIDENT FROM PARA-7 (PAGE-3) OF THE WRITTEN SUBMISS ION REPRODUCED IN THE IMPUGNED ORDER. THE DIFFICULTIES OF THE ASSESSEE WERE ANALYZED AND APPR ECIATED BY THE TRIBUNAL AS HAS BEEN REPRODUCED (SUPRA), IN ITS ORDER DATED 18/10/2012 WHEREIN, THE APPEAL WAS ALLOWED FOR STATISTICAL PURPOSES DIRECTING THE ASSESSING OFFICER TO RE-ADJUDICATE AF TER PROVIDING DUE OPPORTUNITY TO THE ASSESSEE. 5.THE WORD REASONABLE CAUSE IN SECTION 273B MUST NECESSARILY HAVE A RELATION TO THE FAILURE ON THE PART OF THE ASSESSEE TO COMPLY WITH THE REQUIRE MENT OF LAW WHICH HE/SHE HAD FAILED TO COMPLY WITH. IN CASE OF DELAY IN COMPLIANCE, THE CAUSE SHO WN BY THE ASSESSEE FOR SUCH DELAY HAS TO BE SEEN WHETHER THERE WAS A GOOD AND SUFFICIENT CAUSE FOR SUCH NONCOMPLIANCE. IF THE CAUSE SHOWN IS SUCH AS TO EXPLAIN THE DELAY CONSTITUTE A GOOD REAS ON FOR NON-COMPLIANCE, NO PENALTY WOULD BE LEVIABLE. HOWEVER, IN CASES WHERE THE CAUSE SHOWN I S SUCH WHICH IS ONLY TO MITIGATE THE GRAVITY OF NON-COMPLIANCE SUCH A CAUSE CANNOT BE EXTRAPOLATED AND TREATED AS BEING A GOOD CAUSE. A CONSTRUCTION WHICH WOULD PRESERVE THE EXERCISE OF T HE POWER IN FAVOUR OF THE ASSESSEE, UNDER THE CIRCUMSTANCES, WHICH WARRANT IT IS TO BE PREFERRED TO A CONSTRUCTION WHICH WOULD RESULT IN THE LIKELIHOOD OF DENIAL OF RELIEF. REASONABLE CAUSE IS NOT SUSCEPTIBLE OF A CLEAR AND PRECISE DEFINITION BUT AS APPLIED TO HUMAN ACTION WHICH WOULD CONSTRAI N A PERSON OF AVERAGE INTELLIGENCE AND ORDINARY PRUDENCE ACTING UNDER NORMAL CIRCUMSTANCES . THE ASSESSEE, BEING A LADY, WHO WAS FACING THE CLAIMED DIFFICULTIES, THEREFORE, EVEN UNDER THE FACTS AVAILABLE ON RECORD THE ASSESSING OFFICER 3 ITA NO. 5419/M/2013 HEENA N. KANAKIA WAS EXPECTED NOT TO BE SO TECHNICAL IN IMPOSING THE PENALTY, MORE SPECIFICALLY WHEN THE DOCUMENTS, AS CALLED FOR, WERE UNDER DISPUTE AND SEIZED BY THE DIRECTION OF THE COURT. THEREFORE, THE ASSESSEE COULD NOT FILE THESE DETAILS. WE APPRECIATE THAT TH E LD. COMMISSIONER OF INCOME TAX (APPEALS), CONSIDERING THE FACTS, ATLEAST GAVE PART RELIEF TO THE ASSESSEE. IN THE PRESENT APPEALS THOUGH THERE I S A TECHNICAL BREACH ON THE PART OF THE ASSESSEE, STI LL, KEEPING IN VIEW THE TOTALITY OF THE FACTS AND T HE CIRCUMSTANCES, BY TAKING A LENIENT VIEW, THE PENALT Y IMPOSED/SUSTAINED IN EACH CASE IS DELETED.. AS THE FACTS AND CIRCUMSTANCES OF THE CASE UNDER CO NSIDERATION ARE SAME THAT OF EARLIER YEARS,THEREFORE,RESPECTFULLY FOLLOWING THE SAME WE REVERSE THE ORDER OF THE FAA AND DECIDE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSE E. AS A RESULT,APPEAL FI LED BY THE ASSESSEE STANDS ALLOWED. 718 !01 9!! (!: 3 5 $; 3 $!1 < . ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH ,DECEMBER,2014. (%6 3 4* ! % &!! = >(! 10 >( , ,, , 201 4 3 5 C SD/- SD/- ( . / D. MANMOHAN) ( !$%&' / RAJENDRA) !'# / VICE PRESIDENT %! %! %! %! () () () () / ACCOUNTANT MEMBER / MUMBAI, >(! /DATE: 10.12.2014 SK (%6 (%6 (%6 (%6 3 33 3 .1D .1D .1D .1D E%D*1 E%D*1 E%D*1 E%D*1 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / !,- 2. RESPONDENT / ./,- 3. THE CONCERNED CIT(A)/ F G , 4. THE CONCERNED CIT / F G 5. DR H BENCH, ITAT, MUMBAI / DH!5 .1 ,P ,P,P ,P , . . &!! . 6. GUARD FILE/ 5! 7! /!D1 .1 //TRUE COPY// (%6!! / BY ORDER, / ! $! DY./ASST. REGISTRAR , /ITAT, MUMBAI