Shri Vinnd Jain, Indore V. The ITO, Indore

ITA 548/IND/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6063 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-02-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 07-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: CHANDRESH JAIN
• Keywords: Period of limitation; Condonation of delay
• Section: 142(1); 69

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO. 548/IND/2009 A.Y. 2006-07 VINOD JAIN INDORE (PAN ABTPJ-0197-M) .APPELLANT VS INCOME TAX OFFICER 2(3) INDORE .RESPONDENT APPELLANT BY : SHRI CHANDRESH JAIN RESPONDENT BY : SMT. APARNA KARAN, SR. DR O R D E R THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER D ATED 25.8.2009 OF THE LEARNED CIT(A), INDORE, ON THE GROUND THAT ON THE F ACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED FIRST APPELLATE AUTHORITY ERR ED IN CONFIRMING THE IMPOSITION OF PENALTY OF RS.50,000/- U/S 271(1)(B) OF THE ACT. 2. DURING HEARING OF THIS APPEAL, I HAVE HEARD SHRI CHANDRESH JAIN, LEARNED COUNSEL FOR THE ASSESSEE AND SMT. APARNA KARAN, LEA RNED SR. DR. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE ASS ESSEE IS AN AGRICULTURIST HAVING 25 BIGHAS OF ANCESTRAL AGRICULTURAL LAND SITUATED A T DHABLA KHURD TARANA DISTT. UJJAIN DECLARED TOTAL INCOME OF RS. 1,26,940/-. IT WAS PLEADED THAT THE NOTICES RECEIVED FROM THE DEPARTMENT BY THE ASSESSEE WERE D ULY HANDED OVER TO HIS PREVIOUS CA SHRI RAKESH JAIN WHO DID NOT ATTEND THE HEARING. HOWEVER, THE 2 ASSESSEE WAS UNDER THE BONA FIDE BELIEF THAT COMPLI ANCE OF THE NOTICE IS MADE OUT BY HIS CHARTERED ACCOUNTANT, THEREFORE, THE IMPOSIT ION OF PENALTY FOR THE FAULT OF THE COUNSEL WAS CHALLENGED BEFORE ME. THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT STATING THAT THE NOTICES WERE DULY HANDED OVER TO T HE CHARTERED ACCOUNTANT WHO DID NOT COMPLY WITH SUCH NOTICES. IT WAS ALSO PLEA DED THAT THE ASSESSEE IS FORTIFIED BY THE DECISION IN THE CASE OF M/S KISAN FERTILIZER S, DHAR V. ITO REPORTED IN 12 ITJ 125 WHEREIN THE DECISION IN 172 ITR 331 (MP) IN THE CASE OF MAHAVIR JAIN V. CIT WAS CONSIDERED. THE CRUX OF THE ARGUMENT IS THAT NOBODY SHOULD BE PENALIZED FOR THE FAULT OF THE COUNSEL/CHARTERED ACCOUNTANT. ON THE OTHER HAND, THE LEARNED SR. DR STRONGLY DEFENDED THE IMPOSITION OF PENALTY BY CONT ENDING THAT THE ASSESSEE DELIBERATELY DEFIED THE NOTICES OF THE DEPARTMENT I SSUED TO THE ASSESSEE. I HAVE CONSIDERED THE SUBMISSIONS PUT FORTH BY THE LEARNED RESPECTIVE COUNSELS AND PERUSED THE MATERIAL AVAILABLE ON THE FILE. BRIEF FACTS ARE THAT THE ASSESSEE IS AN AGRICULTURIST RESIDING AT VILLAGE DH ABLA KHURD TARANA DISTT. UJJAIN AND ALSO HAVING RENTAL INCOME FROM THE PROPERTY SITUATE D AT INDORE. ADMITTEDLY, NOTICES OF VARIOUS DATES WERE ISSUED AND SERVED UPO N THE ASSESSEE. AS PER THE ASSESSEE, THE SAID NOTICES WERE DULY HANDED OVER TO HIS CHARTERED ACCOUNTANT, WHO FOR THE REASONS BEST KNOWN TO HIM, DID NOT ATTEND T HE PROCEEDINGS, HOWEVER, IN COMPLIANCE WITH THE NOTICE DATED 18.8.2008 THE CHAR TERED ACCOUNTANT ATTENDED THE PROCEEDINGS ON 29.8.2008 FURNISHED WRITTEN REPL Y ALONG WITH DOCUMENTS IN SUPPORT OF INCOME FURNISHED IN THE RETURN. HOWEVER, THE AO IMPOSED PENALTY OF RS.50,000/- VIDE ORDER DATED 18.8.2008 FOR NON-COMP LIANCE OF THE NOTICES OF VARIOUS DATES. NOW THE QUESTION ARISES WHETHER TH E ASSESSEE CAN BE PENALIZED FOR THE NON-COMPLIANCE OF NOTICE BY HIS COUNSEL ESPECIA LLY WHEN THE NOTICES WERE DULY HANDED OVER TO HIM BY THE ASSESSEE IN TIME. THE OBV IOUS REPLY IS NO BECAUSE THE 3 ASSESSEE WAS UNDER A BONA FIDE BELIEF THAT HIS COUN SEL HAS DULY COMPLIED WITH THE NOTICES ISSUED TO THE ASSESSEE. THE CLAIM OF THE AS SESSEE IS DULY FORTIFIED BY THE AFFIDAVIT DATED 12.2.2010 FILED BY THE ASSESSEE WHI CH IS OF SELF EXPLANATORY NATURE. THE ASSESSEE FURTHER FINDS SUPPORT FROM THE DECISIO N OF THE TRIBUNAL, ON IDENTICAL FACTS, IN THE CASE OF ITA NO. 550/IND/09 (MRS. SHAI FALI GODHA) THE RELEVANT PORTION OF WHICH IS REPRODUCED HEREUNDER : - THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER O F THE LEARNED FIRST APPELLATE AUTHORITY, DATED 9.9.2009 ON THE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN MAINTAINING PENALTY OF RS.10,000/- IMPOSED U/S 271(1)(B) OF THE ACT. DURING THE HEARING OF THE APPEAL, I HAVE HEARD SHRI S.N. AGRAWAL, LD. COUNSEL FOR THE ASSESSEE AND SMT. APARNA KARAN, LD. SR. DR. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE NOTICES FROM THE DEPARTMENT WERE DULY RECEIVED BY THE ASSESSEE AND THE SAME WERE HANDED OVER TO THE CHARTERED ACCOUNTANT WHO IS DEALING WITH THE INCOME-TAX MATTERS OF THE ASSESSEE AND ALSO FILING INCOME-TAX RETURN. IT WAS POINTED OUT THAT EVEN ON 1.10.2008, THE HUSBAND OF THE ASSESSEE ATTENDED THE PROCEEDINGS BEFORE THE ASSESSING OFFICER AND MADE A REQUEST FOR ADJOURNMENT WHICH WAS GRANTED TO 6.10.2008, AND THE NEXT DATE WAS COMMUNICATED TO THE CHARTERED ACCOUNTANT. THE ASSESSEE WAS SHOCKED TO RECEIVE THE PENALTY ORDER. THE ASSESSEE ALSO FILED AN AFFIDAVIT STATING THE CLAIMED FACTS. IT WAS PLEADED THAT THERE IS NO FAULT OF THE ASSESSEE, THEREFORE, PENALTY MAY BE DELETED. 2. ON THE OTHER HAND, THE LD. SR. DR STRONGLY DEFENDED THE PENALTY ORDER BY CONTENDING THAT IT WAS THE DUTY OF THE ASSESSEE TO ATTEND THE PROCEEDINGS AND FILING OF AN AFFIDAVIT IS AN AFTERTHOUGHT. IMPOSITION OF PENALTY WAS ARGUED TO BE VALIDLY LEVIED. IT WAS PLEADED THAT THE CASE OF THE ASSESSEE WAS ADJOURNED ON VARIOUS DATES FOR 4 WHICH MY ATTENTION WAS INVITED TO PAGE 2 OF THE IMPUGNED ORDER. 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON THE FILE. THE ISSUANCE OF NOTICES AND REMARKS ARE SUMMARIZED HEREUNDER: DATE OF THE NOTICE DATE OF HEARING REMARKS NOTICE U/S 143(2) DATED 22.10.07 SERVED ON 5.11.07 23.11.2007 FIRST STATUTORY NOTICE ISSUED FOR SELECTING CASE UNDER AN SCRUTINY NOTICE U/S 143(2)/142(1) ISSUED ON 18.2.08 7.3.2008 REFERRED TO THE THEN CONSULTANT FOR ATTENDING NOTICE DATED 21.5.2008 2.7.2008 REFERRED TO THE THEN CONSULTANT FOR ATTENDING SHOW CAUSE NOTICE FOR PENALTY U/S 271(1)(B) ALONGWITH A NOTICE U/S 142(1) DATED 9.9.2008 1.10.2008 DULY ATTENDED BY THE HUSBAND OF THE ASSESSEE AND ON HIS REQUEST CASE WAS ADJOURNED TO 6.10.2008 6.10.2008 DATE WAS COMMUNICATED TO THE THEN CONSULTANT 4. IF THE AFORESAID CHART IS ANALYSED, ONE FACT IS CLEARLY OOZING OUT THAT THE NOTICES WERE DULY RECEIVED BY THE ASSESSEE AND EVEN ON ONE DATE, THE HUSBAND OF THE ASSESSEE DULY ATTENDED THE ASSESSMENT PROCEEDINGS AND SOUGHT ADJOURNMENT. THE NEXT DATE WAS COMMUNICATED BY HIM TO THE CHARTERED ACCOUNTANT AND INSPITE OF THAT, THE LD. CHARTERED ACCOUNTANT DID NOT ATTEND THE PROCEEDINGS. IT CAN BE SAID THAT AT-LEAST THERE WAS A FAULT OF THE COUNSEL. THE ASSESSEE HAS ALSO FILED AFFIDAVIT STATING THE FACTS THEREIN WHICH ARE SELF- EXPLANATORY. NOW QUESTION ARISES WHETHER THE ASSESSEE CAN BE PANELIZED FOR THE FAULT OF THE COUNSEL. THE OBVIOUS REPLY IS NO BECAUSE NO PERSON SHOULD BE PENALIZED FOR THE FAULT OF THE OTHERS AND ESPECIALLY WHEN THE ASSESSEE/HUSBAND OF THE ASSESSEE DULY DELIVERED THE NOTICES TO HIS COUNSEL AND ALSO COMMUNICATED THE NEXT DATE. IF THE 5 NOTICES RECEIVED BY THE ASSESSEE WOULD NOT HAVE BEEN DELIVERED TO HIS COUNSEL AND ALSO THE NEXT DATE OF HEARING THEN CERTAINLY IT WOULD HAVE BEEN A FIT CASE FOR IMPOSITION PENALTY U/S 271(1)(B) OF TH E ACT. SUB-CLAUSE (B) OF SEC. 271(1) PROVIDES FOR THE FAILURE ON THE PART OF THE ASSESSEE NOT TO COMPLY WITH THE DIRECTION AND ALSO THE SATISFACTION OF THE AUTHORITY. HOWEVER, IN THE PRESENT APPEAL, EVEN IN THE IMPUGNED ORDER, IT IS MENTIONED THAT ON 1.10.2008, THE HUSBAND OF THE ASSESSEE DULY ATTENDED THE PROCEEDINGS MEANING THEREBY IT CAN BE SAID THAT HE WAS VERY MUCH AWARE ABOUT HIS DUTY BUT HIS COUNSEL, REASONS BEST KNOWN TO HIM, DID NOT ATTEND THE PROCEEDINGS. IN SUCH A SITUATION , IT CAN BE SAID THAT THE POOR ASSESSEE SHOULD NOT SUFFER FOR THE FAULT OF HIS COUNSEL, WHICH WAS BEYOND HIS CONTROL. MY VIEW FINDS SUPPORT FROM THE DECISION FROM THE HONBLE P & H HIGH COURT IN THE CASE OF SMT. NIRMAL KHOSLA VS. UNION OF INDIA AND OTHERS (AIR 1976 P & H 22) WHEREIN THE HONBLE CHIEF JUSTICE WRITING THE ORDER FOR THE BENCH (IN PARA 4) CLEARLY HELD AS UNDER: AT THE HEARING OF THIS APPEAL, A PRELIMINARY OBJECTION HAS BEEN RAISED BY MR. H.S. BRAR, LEARNED SENIOR DEPUTY ADVOCATE GENERAL FOR THE STATE OF PUNJAB, TO THE EFFECT THAT THIS APPEAL IS BARRED BY TIME, AND THAT THE APPLICATION OF THE APPELLANT (C.M.2230 OF 1973) FOR CONDONATION OF DELAY AND EXTENSION OF TIME BY ONE DAY SHOULD BE DISMISSED. THE JUDGMENT OF THE LEARNED SINGLE JUDGE WAS PRONOUNCED ON JANUARY 27, 1972. THE LIMITATION FOR FILING AN APPEAL UNDER CLAUSE 10 OF THE LETTERS PATENT IS THIRTY DAYS. THE APPEAL IS FILED ON FEBRUARY 26, 1972, WOULD HAVE BEEN WITHIN TIME. THE APPELLANT IS ALSO ENTITLED TO EXCLUDE FROM THE ABOVE QUOTED STATUTORY PERIOD ALLOWED FOR PREFERRING THE APPEAL THE TIME IF ANY SPENT IN OBTAINING THE REQUISITE CERTIFIED COPY OF THE JUDGMENT OF THE LEARNED SINGLE JUDGE. THE TIME SPENT IN OBTAINING SUCH A COPY (IF SUCH A COPY WAS OBTAINED) HAS NOT BEEN DISCLOSED IN THE APPLICATION. ASSUMING THAT NO CERTIFIED COPY WAS OBTAINED BY THE APPELLANT, THIS APPEAL COULD HAVE 6 BEEN FILED WITHIN LIMITATION BY FEBRUARY 26, 1972. FEBRUARY 27, 28 AND 29, 1972, WERE ADMITTEDLY HOLIDAYS, AND THE COURT WAS CLOSED ON THOSE DAYS. THE APPEAL WAS ACTUALLY FILED ON 1.3.1972, BY MR. I.B. BHANDARI, ADVOCATE, WHO WAS AT THAT TIME A RANK JUNIOR IN THE PROFESSION. IT APPEARS FROM THE APPLICATION FILED BY HIM UNDER HIS OWN SIGNATURE THAT HE DID NOT DISTINGUISH BETWEEN A MONTH OF 31 DAYS AND A MONTH OF 30 DAYS IN CALCULATING THE PERIOD OF LIMITATION FOR FILING THE APPEAL, AND THINKING THAT ONE MONTH AND NOT THIRTY DAYS WAS THE PRESCRIBED PERIOD OF LIMITATION AND THE APPEAL COULD BE FILED ON FEBRUARY 27, 1972 (THE CLOSED DAY), ACTUALLY FILED IT ON THE REOPENING DAY OF THE COURT AFTER THE ABOVE-MENTIONED HOLIDAYS. THE ABOVE-MENTIONED FACTS STATED IN THE APPLICATION OF MR. I.B. BHANDARI (FILED BY HIM UNDER HIS OWN SIGNATURE) CLEARLY SHOW THAT ONE DAYS DELAY WAS CAUSED IN THE FILING OF THIS APPEAL DUE TO A BONA FIDE MISTAKEN IMPRESSION OF THE LAW BY MR. I.B. BHANDARI. IT IS SETTLED LAW THAT NO LITIGANT SHOULD ORDINARILY SUFFER FOR SUCH A MISTAKE OF HIS COUNSEL. IN THESE CIRCUMSTANCES WE ARE SATISFIED THAT THERE WAS SUFFICIENT CAUSE FOR ONE DAYS DELAY IN PREFERRING THE APPEAL. WE ACCORDINGLY ALLOW THE APPLICATION FOR CONDONATION OF DELAY AND TREAT THE APPEAL AS HAVING BEEN FILED WITHIN TIME. IDENTICAL RATIO WAS LAID DOWN IN THE CASE OF MANOJ AHUJA & ANOTHER VS. INSPECTING ACIT (150 ITR 696) (P & H) WHEREIN AT PAGE 697, IT WAS HELD AS UNDER: HELD, THAT NO LITIGANT SHOULD ORDINARILY SUFFER FO R THE MISTAKE OF HIS COUNSEL AND IT IS AXIOMATIC THAT THE COURT IS THE GUARDIAN OF MINORS AND IT IS THE DUTY OF THE COURT TO PROTECT THE INTEREST OF THE MINORS. HENCE, THE DELAY IN PRESENTING THE APPEAL IN THE INSTANT CASE HAD TO BE CONDONED. 5. RELIANCE CAN ALSO BE PLACED UPON THE DECISION FROM THE HONBLE APEX COURT IN CST VS. MADANLAL DAS & SONS (1976) (38 STC 543) (SC), BHARAT RUBBER AND ALLIED INDUSTRIES VS. STATE OF 7 PUNJAB (1980) (46 STC 367) (P & H) (FB) AND PYARELAL KHUSBAKHATA RAI VS. STATE OF PUNJAB (1971) (27 STC 398) (P & H). THE HONBLE COURT WHILE COMING TO A PARTICULAR CONCLUSION IN THE CASE OF MANOJ AHUJA & ANOTHER (SUPRA) DISSENTED FROM IAC VS. KEDARNATH JHUNJHUNWALA (1982) (133 ITR 746) (PAT). ADMITTEDLY, THE ASSESSING OFFICER IS VESTED WITH THE POWERS TO IMPOSE PENALTY BUT THE SAME HAS TO BE EXERCISED JUDICIOUSLY AND REASONABLY BECAUSE VESTING OF POWERS IS COUPLED WITH DUTY TO EXERCISE IT WHEN CONDITION FOR EXERCISE FOR SUCH POWERS IS SHOWN TO BE EXISTING. EVEN OTHERWISE, PENALTY IS NOT IMPOSABLE IF THERE IS NO CONSCIOUS BREACH OF LAW, FOR THIS PROPOSITION, THE ASSESSEE DRAWS SUPPORT FROM THE DECISION IN SANGAM PLASTIC CENTRE VS. CIT (226 ITR 260) (GUJ), HINDUSTAN STEEL LTD. VS. STATE OF ORRISA (83 ITR 26)(SC) AND K.C. BUILDERS VS. ACIT (265 ITR 562) (SC). IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS, I AM OF THE CONSIDERED OPINION THAT NORMALLY, NO PERSON SHOULD SUFFER FOR THE FAULT OF HIS COUNSEL/OTHERS, THEREFORE, THE PENALTY OF RS.10,000/-, IMPOSED U/S 271(1)(B), IS DELETED. THEREFORE, THIS APPEAL OF TH E ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.2.2010. IN THE PRESENT APPEAL THE ASSESSEE FILED HIS RETURN DECLARING INCOME OF RS.1,26,940- ON 31.3.2007 WHICH WAS ACCEPTED ON 24. 7.2007 AS DISCLOSED BY THE ASSESSEE. SINCE THE CASE WAS SELECTED FOR SC RUTINY BY THE COMPUTER ASSISTED SCRUTINY SELECTION (CASS), THEREFORE, FIRS T NOTICE U/S 143(2) WAS SERVED UPON THE ASSESSEE ON 5.11.2007. NOTICE U/S 1 42(1) AND 143(2) ALONG WITH QUESTIONNAIRE WAS SERVED ON THE ASSESSEE ON 23.1.2008. FURTHER NOTICES U/S 143(2) ISSUED ON 15.5.2008 AND 16.6.2008 WERE ALSO SERVED UPON THE ASSESSEE TO WHICH ALSO THERE WAS NO COMPLIANCE. SHOW 8 CAUSE NOTICE WAS SERVED UPON THE ASSESSEE AS TO WHY PENALTY OF U/S 271(1)(B) SHOULD NOT BE IMPOSED. AT THIS STAGE, PEN ALTY OF RS.50,000/- WAS IMPOSED. ANOTHER NOTICE U/S 143(2) WAS SERVED ON THE ASSESSEE ON 21.7.2008 TO WHICH THE COUNSEL OF THE ASSESSEE APPE ARED ON 29.8.2008 AND FURNISHED WRITTEN SUBMISSIONS ALONG WITH SUPPOR TING DOCUMENTS FOR THE CLAIM OF RETURNED INCOME. IT WAS FOUND THAT THE ASSESSEE RECEIVED INTEREST OF RS. 47/- FROM SAVINGS BANK ACCOUNT AND RS.18/- FROM ANOTHER SAVINGS BANK ACCOUNT. THE AO MADE ADDITION OF RS.65 /-. IT WAS FURTHER FOUND THAT A SUM OF RS.952/- WAS CREDITED ON 12.12. 2005 WHICH WAS ALSO ADDED UNDER SECTION 69 OF THE ACT AS UNEXPLAINED IN VESTMENT. IT IS SEEN THAT TOTAL ADDITION MADE BY THE AO IS RS.1,27,960/- AGAINST THE DECLARED INCOME OF RS.1,26,940/- MEANING THEREBY ONLY THE AD DITION OF RS. 1017/- WAS MADE BY THE AO. IT IS NOT THE CASE THAT THE AS SESSEE/HIS COUNSEL DID NOT ATTEND THE PROCEEDINGS AT ALL AS IS EVIDENT FRO M PARA 1.3 OF THE ASSESSMENT ORDER THAT ON 29.8.2008 THE COUNSEL FOR THE ASSESSEE DULY ATTENDED THE PROCEEDINGS AND FILED DOCUMENTARY EVID ENCE ALONG WITH WRITTEN SUBMISSIONS. IT SEEMS THAT THE AO EVEN DID NOT WAIT UPTO COMPLETION OF ASSESSMENT PROCEEDINGS WHICH WERE DON E ON 29.8.2008 AND RATHER PROCEEDED TO LEVY PENALTY ON 18.8.2008 ITSEL F THAT TOO FOR THE FAULT OF THE COUNSEL OF THE ASSESSEE. IN THE LIGHT OF TH ESE FACTS, AND THE DECISION OF MRS. SHAIFALI GODHA (SUPRA), I AM OF TH E CONSIDERED OPINION THAT NO PERSON SHOULD BE PENALIZED FOR THE FAULT OF THE COUNSEL ESPECIALLY 9 WHEN ALL THE FACTS ARE SUPPORTED BY AN AFFIDAVIT. THE CASE LAWS RELIED UPON IN THE AFORESAID CASE ARE NOT BEING REPEATED A S THE SAME HAVE BEEN REPRODUCED ABOVE. THE SAME BE READ AS PART AND PAR CEL OF THIS ORDER. CONSEQUENTLY, THIS APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 17.2.2010. (JOGINDER SINGH) JUDICIAL MEMBER FEBRUARY 17 TH , 2010 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR,GU ARD FILE *DBN/