Shri Rajeshsingh Khadak Bahadur, Ahmedabad V. The Income Tax Officer, Ward-12(1), Ahmedabad

ITA 616/AHD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89663 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 28-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: PRASHANT B SHAH
• Keywords: Opportunity of being heard; Additional evidence; Condonation of delay; Revised return
• Section: 142(1); 145; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD BEFORE S/SHRI G. D. AGARWAL, VP & RAJPAL YADAV, J M. ITA NOS.615 & 616/AHD/2014 ASST. YEARS 2008-09 .RAJESHSINGH KHADAK BAHADUR, G/2, SWETA FLATS, OPP. GANGA MAIYA SOCIETY, KHOKHRA, AHMEDABAD. VS INCOME-TAX OFFICER, WARD -12(1), AHMEDABAD. (APPELLANT) (RESPONDENT) PA NO.ABMPR 6442E APPELLANT BY SHRI PRASHANT B. SHAH, AR RESPONDENT BY SMT. SONIA KUMAR, SR. DR DATE OF HEARING: 18.06.2015 DATE OF PRONOUNCEMENT: 25/06/2015 O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER. THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTAN CE OF ASSESSEE AGAINST THE SEPARATE ORDERS OF EVEN DATED 26.12.2013 PASSED BY THE LD. CIT(A) IN AY 2008-09. ITA NO.615/ AHD/2014 HAS ARISEN OUT OF AN ASSESSMENT ORDER PASSED UNDER SECT ION 144 R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (HEREIN AFTER THE A CT), DATED 28.12.2011 WHEREAS ITA NO.616/AHD/2014 HAS ARISEN F ROM A PENALTY ORDER UNDER SECTION 271(1)(C) OF THE ACT DATED 13.6 .2012. WE HEARD ITA NOS.615 & 616/AHD/2014 ASST. YEAR 2008-09 2 BOTH THE APPEALS TOGETHER AND DEEM IT APPROPRIATE T O DISPOSE OF THEM BY THIS COMMON ORDER. 2. THE FIRST COMMON GRIEVANCE OF THE ASSESSEE IN BO TH THE APPEALS IS THAT LD. CIT(A) HAS ERRED IN NOT CONDONI NG THE DELAY IN FILING THE APPEALS AND DECIDING THE APPEALS ON MERITS. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN THE BUSINESS OF PROVIDING SECURITY SERVI CES. ACCORDING TO THE AO ASSESSEE DID NOT FILE HIS ORIGINAL RETURN OF INCOME AS REQUIRED UNDER SECTION 139(1) OF THE ACT. ON THE BASIS OF TD S DATA AVAILABLE WITH THE DEPARTMENT IT CAME TO THE NOTICE OF AO THA T TDS OF RS.1,74,323/- WAS DEDUCTED IN RESPECT OF PAYMENT OF RS.71,88,548 RECEIVED BY THE ASSESSEE. THE LD. AO HAD ISSUED NOT ICE UNDER SECTION 148 ON 19.10.2010 WHICH WAS DULY SERVED UPO N THE ASSESSEE. IN RESPONSE TO THE NOTICE RECEIVED UNDER SECTION 148 ASSESSEE HAD FILED RETURN ON 28 TH JULY, 2011 DECLARING TOTAL INCOME OF RS.3,98,550/- UNDER SECTION 44AF OF THE ACT. THE AS SESSEE DID NOT SUBMIT ANY OTHER DETAIL AND CLAIMED THAT AS PER SEC TION 44AF THE DEEMED PROFIT @ 5% IS TO BE CALCULATED ON THE GROSS RECEIPT OF RS.79,23,772/-. THE LD. AO HAD ISSUED NOTICE UNDER SECTION 142(1) ON ITA NOS.615 & 616/AHD/2014 ASST. YEAR 2008-09 3 11.1.2011 BUT ASSESSEE DID NOT COMPLY WITH THE NOTI CE. THEREAFTER THE AO ISSUED 11 MORE NOTICES WHICH REMAINED UNCOMPLIED WITH. UNDER THE COMPELLING CIRCUMSTANCES THE LD. AO HAS PASSED THE ASSESSMENT ORDER, ACCORDING TO HIS BEST JUDGMENT UNDER SECTION 144 OF THE ACT. THE LD. AO HAS DETERMINED THE TAXABLE INCOME OF THE ASSESSEE AT RS.75,87,098/-. THIS ORDER HAS BEEN PASSED ON 28.12 .2011. THE AO HAS ADDED THE GROSS RECEIPTS IN THE HANDS OF THE AS SESSEE. 4. DISSATISFIED WITH THE ASSESSMENT ORDER ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) ON 16.8.2012. THE OFFI CE OF THE CIT(A) CONFRONTED THE ASSESSEE THAT HIS APPEAL IS TIME BAR RED BY 199 DAYS. THE ASSESSEE FILED AN APPLICATION FOR CONDONATION O F DELAY AND FILED HIS AFFIDAVIT IN SUPPORT OF HIS APPLICATION. 5. THE LD. A.O. HAS INITIATED PENALTY PROCEEDINGS U NDER SECTION 271(1). HE ISSUED A SHOW CAUSE NOTICE ON 28.12.201 1 WHICH WAS SERVED ON THE ASSESSEE BUT SINCE HE DID NOT COMPLY WITH THE NOTICES IN THE ASSESSMENT PROCEEDINGS, HE DID NOT COMPLY WI TH THE NOTICES IN THE PENAL PROCEEDINGS ALSO. THE LD. AO HAS IMPOSED A PENALTY OF RS.24,50,449/- IN AN EX PARTE ORDER PASSED ON 12 TH JUNE, 2012. AGAINST THIS ORDER, ASSESSEE HAS FILED AN APPEAL ON 16 TH AUGUST, 2012 ITA NOS.615 & 616/AHD/2014 ASST. YEAR 2008-09 4 I.E. ALONG WITH THE QUANTUM APPEAL. THIS APPEAL WAS STATED TO BE TIME BARRED BY 32 DAYS. THE ASSESSEE FILED AN APPLICATIO N FOR CONDONATION OF DELAY ALONG WITH HIS AFFIDAVIT. 6. THE LD. FIRST APPELLATE AUTHORITY REFUSED TO CON DONE THE DELAY IN BOTH THE APPEALS BASICALLY FOR THE REASON THAT COND UCT OF THE ASSESSEE WAS VERY NEGLIGENT BEFORE THE AO. HE DID N OT BOTHER TO RESPOND TO ANY NOTICE FROM INCOME-TAX DEPARTMENT. I N THE OPINION OF THE LD. CIT(A) THE DELAY CAUSED BY THE ASSESSEE WAS A DELIBERATE DELAY AND, THEREFORE, ASSESSEE DOES NOT DESERVE ANY LENIENCY. 7. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVES W E HAVE GONE THROUGH THE RECORD CAREFULLY. THE EXPLANATION OF TH E ASSESSEE FOR CONDONATION OF DELAY IS THAT WHEN HE RECEIVED NOTIC ES FROM THE AO, HE APPOINTED A TAX CONSULTANT NAMELY MR. SUBHASH S INGH RAJPUT TO ATTEND THE PROCEEDINGS BEFORE THE AO. THE ASSESSMEN T ORDER WAS ALSO SUPPLIED TO HIM FOR FILING AN APPEAL. THE ASSE SSEE CAME TO KNOW ABOUT THE NON-FILING OF THE APPEAL ONLY WHEN DEMAND NOTICE WAS SERVED UPON HIM AND THE AO HAS PUT PRESSURE FOR REC OVERY OF THE DEMAND. HE ALSO CONTENDED THAT BEING NON CONVERSANT WITH THE INCOME-TAX LAW HE AVAILED OF THE SERVICES OF TAX-CO NSULTANT BUT ITA NOS.615 & 616/AHD/2014 ASST. YEAR 2008-09 5 SOMEHOW LD. TAX CONSULTANT FAILED TO PERFORM THE DU TIES PROPERLY ON HIS BEHALF. HE PRAYED FOR CONDONATION OF DELAY AND ADJUDICATION OF THE CONTROVERSY ON MERIT. 8. THE LD. DR ON THE OTHER HAND CONTENDED THAT ONE CAN APPRECIATE THE CONTENTION OF AN ASSESSEE AVAILING S ERVICES OF TAX EXPERT BEING NOT CONVERSANT WITH THE INCOME-TAX LAW S BUT WHEN THE ASSESSEE KEPT ON RECEIVING 12 NOTICES IN A ROW FROM THE AO THEN AT LEAST HE SHOULD VERIFY WHY PROCEEDINGS ARE NOT BEIN G ATTENDED BEFORE THE AO. THIS CONDUCT OF THE ASSESSEE REFLECT AN ARR OGANCE NOT NEGLIGENCE. HE HAS NO RESPECT FOR THE LAW AND, THER EFORE, EQUITY DOES NOT DEMAND ANY SYMPATHY FOR SUCH A NEGLIGENT PERSON . SHE SUBMITTED THAT LD. CIT(A) HAS RIGHTLY REFUSED TO CO NDONE THE DELAY. 9. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. SUB-SECTION (3) OF SE CTION 249 EMPOWERS THE CIT(A) TO ADMIT AN APPEAL AFTER THE EX PIRY OF LIMITATION IF HE IS SATISFIED THAT APPELLANT HAD SUFFICIENT CA USE FOR NOT PRESENTING THE APPEAL WITHIN TIME LIMIT. THE EXPRESSION SUFF ICIENT CAUSE HAS FALLEN FOR CONSIDERATION BEFORE THE HONBLE SUPREME COURT AS WELL AS OF HONBLE HIGH COURTS. THE HONBLE COURTS ARE UNAN IMOUS ON THE ITA NOS.615 & 616/AHD/2014 ASST. YEAR 2008-09 6 POINT THAT THIS EXPRESSION TO BE CONSTRUED LIBERALL Y. THE QUESTION BEFORE US IS WHETHER ASSESSEE WAS ACTUALLY PROHIBIT ED BY SUFFICIENT REASONS FOR NOT PRESENTING THE APPEAL OR HE HAS MAD E A DELIBERATE ATTEMPT OF NOT PROPERLY HANDLING THE INCOME-TAX PRO CEEDINGS. AT THIS STAGE, WE WOULD LIKE TO REFER THE ASSESSMENT PROCEE DING ALSO. IT IS PERTINENT TO NOTE THAT WHERE NO BOOKS OF ACCOUNTS A RE AVAILABLE THERE SUB-SECTION (3) OF SECTION 145 CONTEMPLATES THAT AO WILL PASS ASSESSMENT ORDER IN THE MANNER PROVIDED IN SECTION 144 OF THE IT ACT. THIS SECTION READS AS UNDER :- SECTION 144 144. BEST JUDGMENT ASSESSMENT (1) 1 ] IF ANY PERSON- (A) FAILS TO MAKE THE RETURN REQUIRED 2 UNDER SUB- SECTION (1) OF SECTION 139] AND HAS NOT MADE A RETURN OR A REVISED RETURN UNDER SUBSECT ION (4) OR SUB- SECTION (5) OF THAT SECTION,] OR (B) FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISS UED UNDER SUBSECTION (1) OF SECTION 142 3 OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER S UB- SECTION (2A) OF THAT SECTION], OR (C) HAVING MADE A RETURN, FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISSUED UNDER SUB- SECTION (2) OF SECTION 143, THE 4 ASSESSING] OFFICER, AFTER TAKING INTO ACCOUNT ALL RELEVANT MATERIAL WHICH THE 5 ASSESSING] OFFICER HAS GATHERED, 6 SHALL, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, MAKE THE AS SESSMENT] OF THE TOTAL INCOME OR LOSS TO THE BEST OF HIS JUDGMENT AND DETERMINE THE SUM PAYABLE BY THE ASSESSEE 7 ] ON THE BASIS OF SUCH ASSESSMENT: 8 PROVIDED THAT SUCH OPPORTUNITY SHALL BE GIVEN BY T HE ASSESSING OFFICER BY SERVING A NOTICE CALLING UPON THE ASSESSEE TO SHOW CAUSE, ON A DATE AND TIME TO BE SPECIFIED IN THE NOTICE, WHY TH E ASSESSMENT SHOULD NOT BE COMPLETED TO THE BEST OF HIS JUDGMENT: PROVIDED FUR THER THAT IT SHALL NOT BE NECESSARY TO GIVE SUCH OPPORTUNITY IN A CASE WHERE A NOTICE U NDER SUB- SECTION (1) OF SECTION 142 HAS BEEN ISSUED PRIOR TO THE MAKING OF AN ASSESSMEN T UNDER THIS SECTION.] ITA NOS.615 & 616/AHD/2014 ASST. YEAR 2008-09 7 (2) 9 THE PROVISIONS OF THIS SECTION AS THEY STOOD IMMED IATELY BEFORE THEIR AMENDMENT BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1 987 (4 OF 1988 ), SHALL APPLY TO AND IN RELATION TO ANY ASSESSMENT FOR THE ASSESS MENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1988 , OR ANY EARLIER ASSESSMENT YEAR AND REFERENCES IN THIS SECTION TO THE OTHER PROVISIONS OF THIS ACT SHALL BE CONSTRUED AS REFERENCES TO THOSE PROVISIONS AS FOR THE TIME BEING IN FORCE AND APPLICABLE TO THE R ELEVANT ASSESSMENT YEAR.] 10. A BARE PERUSAL OF THIS SECTION WOULD SUGGEST TH AT IN ORDER TO ESTIMATE INCOME, LD. AO HAS TO EXERCISE HIS DISCRET ION WHICH SHOULD BE IN CONSONANCE WITH BEST OF HIS JUDGMENT. WE ARE CONSCIOUS OF THE FACT THAT IN VARIOUS AUTHORITATIVE PRONOUNCEMENTS, IT HAS BEEN PROPOUNDED THAT IN MAKING A BEST JUDGMENT ASSESSMEN T, THE AO MUST NOT ACT DISHONESTLY OR VINDICTIVELY OR CAPRICI OUSLY. HE MUST MAKE WHAT HE HONESTLY BELIEVES TO BE A FAIR ESTIMATE OF THE PROPER FIGURE OF ASSESSMENT AND FOR THIS PURPOSE HE MUST BE ABLE TO TAKE INTO CONSIDERATION, LOCAL KNOWLEDGE, REPUTATION OF THE A SSESSEE ABOUT HIS BUSINESS, THE PREVIOUS HISTORY OF THE ASSESSEE OR T HE SIMILARLY SITUATED ASSESSEE. IT IS ALSO PERTINENT TO MENTION THAT JUDGMENT IS A FACULTY TO DECIDE THE MATTER WITH WISDOM, TRULY AND LEGALLY. JUDGMENT DOES NOT DEPEND UPON THE ARBITRARY, CAPRICE OF AN A DJUDICATOR, BUT ON SETTLED AND INVARIABLY PRINCIPLES OF JUSTICE. THUS, IN A BEST JUDGMENT, EVEN IF, THERE IS AN ELEMENT OF GUESS WORK, IT SHOU LD NOT BE A WILD ONE, BUT SHALL HAVE REASONABLE NEXUS TO THE AVAILABLE MA TERIAL AND CIRCUMSTANCES OF EACH ASSESSEE. IN THE LIGHT OF THE ABOVE, LET US ITA NOS.615 & 616/AHD/2014 ASST. YEAR 2008-09 8 VISUALIZE THE ROLE OF THE AO ALSO. FOR THE SAKE OF ARGUMENT, LET US ASSUME THE ASSESSEE IS NEGLIGENT PERSON, WOULD THAT NEGLIGENCE AUTHORIZE THE AO TO TREAT THE GROSS RECEIPTS AS INC OME OF THE ASSESSEE ? THIS ACTION OF THE AO HAS BEEN UPHELD BY THE CIT(A) WHO APPRECIATED THE ALLEGED CONDUCT OF THE ASSESSEE OF NOT APPEARING BEFORE THE AO. THE QUASI JUDICIAL AUTHORITIES ARE B EING RESPECTED NOT ON ACCOUNT OF THEIR POWER TO LEGALISE THE INJUSTICE ON TECHNICAL GROUND BUT BECAUSE, THEY ARE CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. THE CONTENTION OF THE ASSESSEE IS THAT HE BEING A LAY MAN HAS HANDED OVER THE PAPERS TO TAX CONSULTANT WHO DI D NOT FILE APPEALS IN TIME. THIS BELIEF IS TO BE TESTED ON CONSEQUENTI AL RESULT I.E. BY MAKING THE APPEAL TIME BARRED WHAT THE ASSESSEE WIL L ACHIEVE. HE CANNOT ADOPT A DILATORY TACTICS BY FILING THE APPEA L LATE BECAUSE THAT WILL ULTIMATELY HARM HIM. THEREFORE, LOOKING TO THE FACTS AND CIRCUMSTANCES AND THE PUNISHMENT IN THE SHAPE OF TA X LIABILITY OF RS.48,86,903/- INCLUDING INTEREST AS WELL AS PENALT Y OF MORE THAN RS.24 LACS, WE ARE OF THE VIEW THAT THE PUNISHMENT IS DISPROPORTIONATE TO THE ULTIMATE NEGLIGENCE OF THE ASSESSEE. THEREFO RE, WE CONDONE THE DELAY IN FILING THE APPEALS BEFORE THE CIT(A). ITA NOS.615 & 616/AHD/2014 ASST. YEAR 2008-09 9 11. ON MERIT CIT(A) HAS NOT ADJUDICATED THE ISSUES, PROCEDURALLY, WHENEVER WE FIND ANY FAULT IN A PROCEEDING AND THE IMPUGNED ORDER IS SET ASIDE THEN THE PROCEEDINGS ARE REQUIRED TO BE S TARTED FROM THAT STAGE, IN OTHER WORDS, THE TRIBUNAL OUGHT TO HAVE S ET ASIDE THE ISSUES TO THE FILE OF CIT(A) FOR ADJUDICATION ON MERITS BU T THIS STEP WOULD ONLY RESULT MULTIPLICATION OF THE LITIGATION. THE ASSESS MENT ORDER AND THE PENALTY ORDER ARE EX PARTE ORDERS. THE MOMENT, THE ASSESSEE WILL FILE ANY APPLICATION FOR PERMISSION TO ADDUCE ADDITIONAL EVIDENCES THEN, AS PER SUB-RULE -3 OF RULE 46A OF IT RULES, 1962, T HE LD. FIRST APPELLATE AUTHORITY WILL HAVE TO CALL FOR A REMAND REPORT FRO M THE AO. THE SECOND PROCEEDING WOULD COMMENCE AT THE LEVEL OF AO . THEREFORE, WITH A VIEW TO AVOID MULTIPLE PROCEEDINGS, WE DEEM IT APPROPRIATE TO SET ASIDE THE ORDERS OF CIT(A) AS WELL AS THE ORDER S OF AO AND REMIT THE ISSUES IN QUANTUM APPEAL TO THE FILE OF AO FOR RE-ADJUDICATION. AS OBSERVED EARLIER WE DO NOT APPRECIATE THE CONDUCT O F ASSESSEE ALSO. HE IS DIRECTED TO CO-OPERATE WITH THE AO AND APPEAR BEFORE HIM. HE SHALL FILE ALL NECESSARY DETAILS FOR THE ASSESSMENT OF HIS INCOME. THE OBSERVATIONS MADE BY US WILL NOT IMPAIR OR INJURE T HE CASE OF AO AND WILL NOT CAUSE ANY PREJUDICE TO THE DEFENCE/EXPLANA TION OF THE ASSESSEE. THE LD. AO SHALL PROVIDE DUE OPPORTUNITY OF HEARING. ITA NOS.615 & 616/AHD/2014 ASST. YEAR 2008-09 10 12. AS FAR AS PENALTY APPEAL IS CONCERNED, SINCE WE HAVE SET ASIDE THE ASSESSMENT ORDER, THERE ARE NO ADDITIONS ON WHI CH IT CAN BE ALLEGED THAT ASSESSEE HAS EVADED THE TAXES. AFTER P ASSING THE ASSESSMENT ORDER, IT IS FOR THE AO TO ASSESS WHETHE R PENALTY PROCEEDINGS ARE TO BE INITIATED AGAINST THE ASSESSE E OR NOT. THIS FACTOR WOULD COME OUT AFTER COMPLETION OF THE ASSES SMENT PROCEEDINGS. THEREFORE, THE PENALTY APPEAL IS ALLOW ED AND THE PENALTY ORDER IS QUASHED. THE AO WILL BE AT LIBERTY TO INIT IATE OR NOT TO INITIATE PENALTY AFTER PASSING OF THE ASSESSMENT ORDER AFRES H. THIS APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25/6/2015 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (RAJPAL YADAV) JUDICIAL MEMBER DATED 25/6/2015 MAHATA/- ITA NOS.615 & 616/AHD/2014 ASST. YEAR 2008-09 11 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 18/06/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 19/06/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK:2 5/6/2015 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: