PRAMILA K. SETH, MUMBAI V. ASST CIT CEN CIR 14, MUMBAI

ITA 608/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3622 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 21-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOPAK KUMAR
• Keywords: Reasonable cause
• Section: 142(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI . . , / BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND . , SHRI D.KARUNAKAR RAO, ACCOUNTANT MEMBER . / ITA NO.606, 608 TO 613/MUM/2011 ! ! ! ! / A.YS. 2003-04 TO 2008-09 SMT. PRAMILA K. SETH, 304, 3 RD FLOOR, B WING, PRATIKSHA TOWERS, R.M. NIMKAR MARG, MUMBAI - 400 008 / VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-14, AAYKAR BHAVAN, MK ROAD, MUMBAI - 20. ' ./ #$ ./ PAN/GIR NO. : ACAPS 6157N ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '% ( / APPELLANT BY: NONE &''% ) ( / RESPONDENT BY : SHRI ROOPAK KUMAR ) * / DATE OF HEARING : 25/04/2013 +,! ) * / DATE OF PRONOUNCEMENT : 25/04/2013 - / O R D E R PER BENCH: ALL THESE APPEALS ARE FILED BY THE ASSESSEE. THE Y ARE DIRECTED AGAINST CONSOLIDATED ORDER PASSED BY LD. CIT(A) DATED 11/ 11/2010 FOR ASSESSMENT YEARS 2003-04 TO 2008-09. THE GROUNDS OF APPEAL IN ALL T HESE APPEALS ARE COMMON AND READ AS UNDER: 1. THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING ORDER OF THE LEARNED ASSESSING OFFICER LEVYING PEN ALTY OF RS. 10,000/- U/S 271 (1) (B) OF INCOME TAX ACT, 1961. SUCH ORDER IS PASS ED WITHOUT CONSIDERING THE . / ITA NO.606, 608 TO 613/MUM/2011 ! ! ! ! / A.YS. 2003-04 TO 2008-09 2 SUBMISSION MADE BEFORE HIM AS WELL AS WITHOUT CONSI DERING FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, PENALTY LEV IED U/S.271 (1) (B) OF INCOME TAX ACT, 1961 OF RS. 10,000/- SHOULD BE CANCELLED. 2.YOUR APPELLANT CRAVES TO ADD, ALTER, OR AMEND ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING OF APPEAL. 2. THE FACTS IN ALL THESE APPEALS ARE SAME AND THES E APPEALS ALSO HAVE BEEN DECIDED BY LD. CIT(A) WITH A CONSOLIDATED ORDER, TH EREFORE, FOR THE SAKE OF CONVENIENCE WE PROCEED TO DECIDE ALL THE APPEALS BY THIS CONSOLIDATED ORDER. 3. NOTICE OF HEARING WAS SENT TO ASSESSEE THROUGH RPAD. HOWEVER, ON THE FIXED DATE OF HEARING NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. SINCE FACTS ARE AVAILABLE IN THE PENALTY ORDER AS WELL AS IN THE OR DER PASSED BY LD. CIT(A) AND THESE ARE VERY SMALL APPEALS, WE PROCEED TO DECIDE THESE APPEALS EX-PARTE QUA THE ASSESSEE AFTER HEARING LD. D.R. 4. FAILURE OF THE ASSESSEE TO ATTEND BEFORE AO IS D ESCRIBED IN THE ORDER OF LD. CIT(A) IN THE SHAPE OF A CHART AND FOR THE SAKE OF CONVENIENCE SUCH CHART IS PRODUCED HERE UNDER: S.NO. NOTICE UNDER WHICH SECTION AND DATED DATE OF HEARING REMARKS 1. 143(2) DATED 25/8/2009 ISSUED AND DULY SERVED UPON THE APPELLANT. 15/09/2009 REQUISITE DETAILS NOT FILED. NOBODY ATTENDED AND ADJOURNMENT LETTER FILED BY M/S. MALPANI & ASSOCIATES WITHOUT ENCLOSING ANY LETTER OF AUTHORITY. 2. 142(1) DATED 1/10/2009 ALONG WITH QUESTIONNAIRE ISSUED AND DULY SERVED UPON THE APPELLANT 26/10/2009 -DO- 3. NOTICE U/S. 274 RWS 271(1)(B) DATED 25/3/2010 ISSUED AND DULY SERVED UPON THE APPELLANT. 5/4/2010 -DO- ACCORDING TO A.O THE REPRESENTATIVE OF M/S. MALPA NI & ASSOCIATES, HAD NEVER FILED LETTER OF AUTHORITY EXECUTED BY THE ASSESSEE IN THEIR FAVOUR. THUS THE SAID FIRM HAD NO AUTHORITY TO FILE ANY REPLY. ACCORDIN G TO AO SUCH UNAUTHORIZED AND . / ITA NO.606, 608 TO 613/MUM/2011 ! ! ! ! / A.YS. 2003-04 TO 2008-09 3 IRREGULAR REPLY WAS NOT TO BE CONSIDERED. IN RESPO NSE TO NOTICE ISSUED UNDER SECTION 271(1)(B) OF INCOME TAX ACT, 1961(THE ACT), THE REPLY OF THE ASSESSEE WAS THAT NOTICE UNDER SECTION 142(1) DATED 1/10/2009 A SKING TO ATTEND ON 26/10/2009 WAS RECEIVED BY HER. ON THE SAID DATE A N ADJOURNMENT WAS SOUGHT AND IT WAS INFORMED THAT FRESH NOTICE WILL BE ISSUE D IN THIS MATTER. ALONG WITH THE SAID REPLY COPY OF ADJOURNMENT LETTER WAS ALSO FILE D. THUS IT WAS SUBMITTED THAT THERE WAS NO NON-COMPLIANCE OF THE STATUTORY NOTIC E AND PROCEEDINGS UNDER SECTION 271(1)(B) SHOULD BE DROPPED. HOWEVER, A.O HAS REJECTED SUCH EXPLANATION OF THE ASSESSEE ON THE GROUND THAT THE REPLY FILED BY M/S. MALPANI & ASSOCIATES, CHARTERED ACCOUNTANTS IS NOT SATISFACTORY AND IS NO T ACCEPTABLE. STATING THE REASON, AO HAS OBSERVED THAT M/S. MALPANI & ASSOC IATES HAS NOT FILED LETTER OF AUTHORITY THUS, THAT CONCERN IS NOT AUTHORIZED TO F ILE REPLY AND M/S. MALPANI & ASSOCIATES IS ALSO WRONG IN SAYING THAT FRESH NOTIC ES WILL BE ISSUED IN THIS MATTER. FURTHER, A.O HAS OBSERVED THAT ASSESSEE BELONGS TO M/S. PRAKASH STEELAGE GROUP, WHICH IS A CONTINUOUS DEFAULTER OF NON-COMPLIANCE O F NOTICES. THE ASSESSEE HAS FAILED TO FILE EXPLANATION ON THE SHOW CAUSE NOTICE AND, THEREFORE, HE IS SATISFIED THAT THE ASSESSEE IS LIABLE FOR PENALTY UNDER SECTI ON 271(1)(B) OF THE ACT. SIMILAR ORDER HAS ALSO BEEN PASSED IN RESPECT OF ALL OTHER ASSESSMENT YEARS. 5. IN THE SUBMISSIONS MADE BEFORE LD. CIT(A) IT HAS BEEN MENTIONED THAT SPECIFIC ADJOURNMENT REQUEST LETTER WAS FILED ON T HE DATE OF HEARING AND IT WAS ALSO STATED THAT LETTER OF AUTHORITY WAS SUBSEQUENTLY FI LED. THUS, IT WAS SUBMITTED THAT PENALTY CANNOT BE IMPOSED UNLESS THERE IS MENS-REA ON THE PART OF THE ASSESSEE. RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPR EME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA, 83 ITR 26 (SC), IN WHICH IT HAS BEEN HELD THAT PENALTY IS A QUASI CRIMINAL PROCEEDINGS AND P ENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED, EITHER ACTED DEL IBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. THUS IT WAS PLEADED THAT PENALT Y SHOULD BE DELETED. ON THESE SUBMISSIONS LD. CIT(A) HAS OBSERVED THAT THE LETTER OF AUTHORITY WAS NOT FILED . / ITA NO.606, 608 TO 613/MUM/2011 ! ! ! ! / A.YS. 2003-04 TO 2008-09 4 BEFORE THE AO. IT WAS THE OBLIGATION OF THE ASSES SEE TO SHOW REASONABLE CAUSE AND AO IS NOT REQUIRED TO ESTABLISH CONTUMACIOUS CONDUC T ON THE PART OF THE ASSESSEE AND DELIBERATE DEFIANCE OF LAW. IN ABSENCE OF ANY EVIDENCE OR MATERIAL TO SHOW THAT WHY THE ASSESSEE DID NOT MAKE COMPLIANCE OF THE NOT ICES, THEREFORE, PENALTY WAS LEVIABLE. LD. CIT(A) HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF K.P.MADHUSUDANAN VS. CIT, 251 ITR 99(SC), W HEREIN IT HAS BEEN HELD THAT MENS-REA IS NOT REQUIRED TO BE PROVED IN THE CASE O F PENALTY LEVIABLE UNDER SECTION 271(1)(C). LD. CIT(A) HAS ALSO REFERRED TO VARIOU S DECISIONS INTER-ALIA INCLUDING DECISION OF HONBLE SUPREME COURT IN THE CASE OF UN ION OF INDIA & OTHERS VS. DHARMENDRA TEXTILES PROCESSORS, 306 ITR 277 (SC) TO COME TO A CONCLUSION THAT MENS-REA IS NOT AN ESSENTIAL ELEMENT TO IMPOSE PEN ALTY. LD. CIT(A) HAS ALSO LINKED THE FAILURE OF THE ASSESSEE WITH THE MATERIAL FOUND AND SEIZED BY THE DEPARTMENT AS A RESULT OF SEARCH AND THE ACTION OF THE ASSESSEE I N AVOIDING THE PROCEEDINGS AND HER FAILURE TO FURNISH THE DETAILS. FINALLY, LD. C IT(A) HAS COME TO A CONCLUSION THAT AO WAS JUSTIFIED IN IMPOSING THE PENALTY AND IN THI S MANNER LEVY OF PENALTY HAS BEEN SUSTAINED. 6. LD. D.R RELYING UPON THE ORDERS PASSED BY AO AND LD. CIT(A) PLEADED THAT ASSESSEE DID NOT ATTEND ON THE VARIOUS DATES AND DI D NOT FILE THE DETAILS. M/S. MALPANI & ASSOCIATES WERE NOT AUTHORIZED TO TAKE AD JOURNMENT ON BEHALF OF THE ASSESSEE AS NO LETTER OF AUTHORITY WAS FILED. THUS , LD. D.R PLEADED THAT PENALTY HAS RIGHTLY BEEN SUSTAINED BY LD. CIT(A) AND HIS OR DER SHOULD BE UPHELD. 7. WE HAVE HEARD LD. D.R. WE HAVE ALSO CAREFULLY G ONE THROUGH THE PENALTY ORDER AS WELL AS ORDER PASSED BY LD. CIT(A). ON EA CH OF THE FIXED DATES ADJOURNMENT APPLICATIONS WERE FILED ON BEHALF OF TH E ASSESSEE. THE CASE OF THE A.O IS THAT SINCE M/S. MALPANI & ASSOCIATES DID NOT PRO DUCE LETTER OF AUTHORITY, THOSE APPLICATIONS COULD NOT BE CONSIDERED TO BE FILED BY THE ASSESSEE. HOWEVER, THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT SAID M/S. MA LPANI & ASSOCIATES DID NOT FILE ADJOURNMENT APPLICATION WITHOUT THE CONSENT OF THE ASSESSEE. LD. CIT(A) WHILE . / ITA NO.606, 608 TO 613/MUM/2011 ! ! ! ! / A.YS. 2003-04 TO 2008-09 5 UPHOLDING THE PENALTY IS RELYING UPON THE DECISIONS RENDERED FOR LEVY OF CONCEALMENT PENALTY. HOWEVER IN THE PRESENT CASE W HAT HAS TO BE CONSIDERED IS LEVY OF PENALTY UNDER SECTION 271(1)(B) WHICH IS NO THING TO DO WITH LEVY OF CONCEALMENT PENALTY FOR WHICH STRICT LAW IS APPLICA BLE. ON THE PENALTY LEVIABLE UNDER SECTION 271(1)(B) THE DECISION OF HONBLE SUP REME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (SUPRA) IS APPLICABLE. ACCORDING TO THE RATIO OF THIS DECISION, PENALTY SHOULD NOT BE IMPOS ED UNLESS THE PARTY OBLIGED, EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. IN OUR OPINION THERE IS NO MATERIAL ON RECORD ACCORDING TO WHICH I T CAN BE SAID THAT ASSESSEE HAS EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR IS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR HAS ACTED IN CONSCIOUS DISREGARD OF HE R OBLIGATION. ON EACH AND EVERY DATE AN ADJOURNMENT APPLICATION HAS BEEN FILED ON B EHALF OF THE ASSESSEE WHICH IN ITSELF CANNOT BE SAID THAT THIS WAS A DELIBERATE AC T OF THE ASSESSEE IN DEFIANCE OF LAW. LEVY OF PENALTY IS QUASI CRIMINAL IN NATURE A ND THERE SHOULD BE A MATERIAL ON RECORD TO PROVE THAT THE ASSESSEES ACT IN DEFIAN CE OF LAW WAS DELIBERATE, CONTUMACIOUS OR DISHONEST. THERE IS COMPLETE ABSEN CE OF SUCH MATERIAL. THEREFORE, WE HOLD THAT LEVY OF PENALTY IN THE PRES ENT CASE IS NOT JUSTIFIED. THE LEVY OF PENALTY IN RESPECT OF ALL THE YEARS IS DELE TED. 8. IN THE RESULT ALL THE APPEALS FILED BY THE ASSES SEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/04/2013 - ) +,! / 0 1 25 /04/2013 , ) 2 3 SD/- SD /- ( . / D.KARUNAKAR RAO ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 0 DATED 25 /04/2013 . / ITA NO.606, 608 TO 613/MUM/2011 ! ! ! ! / A.YS. 2003-04 TO 2008-09 6 - - - - ) )) ) &*45 &*45 &*45 &*45 65!* 65!* 65!* 65!* / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 582 &* , , / DR, ITAT, MUMBAI 6. 2 9 / GUARD FILE. - - - - / BY ORDER, '5* &* //TRUE COPY// : :: : / ; ; ; ; # # # # (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS