M/S. RISHIRAJ MEMORIAL EDUCATION & WELFARE SOCIETY, Bhopal V. THE ACIT-2(1), Bhopal

ITA 658/IND/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5766 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 18-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: YESHWANT SHARMA; VINEET MATTHA
• Keywords: Reasonable cause; Non compliance
• Section: 143(3); 142(1); 153A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO. 657 TO 663/IND/2015 A.Y. : 2004-05 TO 2010-11 M/S.RISHIRAJ MEMORIAL EDUCATION & WELFARE SOCIETY, ACIT, 2(1), BHOPAL BHOPAL VS. APPELLANT RESPONDENT PAN NO. AAAAR5568F A PPELLANT S BY : SHRI YESHWANT SHARMA AND SHRI VINEET MATTHA, CA RESPONDENT BY : SHRI R.A.VERMA, DR O R D E R THESE SEVEN APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE ORDER OF CIT(A)-I, BHOPAL, DATED 24.08. 2015 AGAINST IMPOSITION OF PENALTY U/S 271(1)(B) OF THE INCOME-T AX ACT, 1961, FOR THE ASSESSMENT YEARS 2004-05 TO 2010-11. SINCE THE DATE OF HEARING : 08.02.2016 DATE OF PRONOUNCEMENT : 08.02.2016 M/S.RISHIRAJ MEMORIAL EDUCATION AND WELFARE SOCIETY VS. ACIT, 2(1), I.T.A.NOS.657 TO 663/IND/2015 A.YS. 2004-05 TO 20 10-11 2 2 COMMON ISSUES ARE INVOLVED, ALL THESE APPEALS ARE D ISPOSED OF BY THIS COMMON ORDER. 2. THE BRIEF FACTS OF THE CASE ARE THAT IN THE PENALTY ORDERS OF THE ASSESSEE FOR ALL THESE ASSESSMENT YEA RS FROM ASSESSMENT YEAR 2004-05 TO 2010-11, THE ASSESSMENT U/S 153A READ WITH SECTION 143(3) OF THE ACT WAS COMPLE TED ON 13.08.2012. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE AO ISSUED NOTICE U/S 143(2) OF THE ACT DATED 22.12. 2011, NOTICES U/S 142(1) OF THE ACT DATED 9.11.2011, 28.1 1.2011 & 20.12.2011. THE AO ISSUED A NOTICE U/S 142(2A) OF T HE ACT DATED 28.12.2011, BUT THE AO STATED THAT IN RESPONS E TO THE NOTICES, THERE WAS NO COMPLIANCE BY THE ASSESSEE. T HEREFORE, THE AO HELD THAT THE ASSESSEE HAD COMMITTED DEFAULT WITHIN THE MEANING OF PROVISIONS OF SECTION 271(1)(B) OF T HE ACT FOR EACH NON-COMPLIANCE/DEFAULT BY ISSUING SHOW-CAUSE N OTICES. THE AO STATED THAT IN RESPONSE TO THE SHOW-CAUSE NO TICES FOR PENALTY, THE ASSESSEE FILED REPLY REQUESTING TO KEE P THE PENALTY PROCEEDINGS IN ABEYANCE TILL THE DECISION OF THE CI T(A) BUT HAD NOT FURNISHED ANY REPLY ON MERITS AS TO WHY THE PEN ALTY U/S M/S.RISHIRAJ MEMORIAL EDUCATION AND WELFARE SOCIETY VS. ACIT, 2(1), I.T.A.NOS.657 TO 663/IND/2015 A.YS. 2004-05 TO 20 10-11 3 3 271(1)(B) OF THE ACT SHOULD NOT BE LEVIED. THEREFOR E, THE ASSESSEE WAS PROVIDED ANOTHER OPPORTUNITY TO FURNIS H EXPLANATION/JUSTIFICATION AS TO WHY PENALTY PROCEED INGS SHOULD NOT BE LEVIED. IN RESPONSE, THE ASSESSEE FILED A LE TTER ON 02.11.2012 AGAIN REQUESTING TO KEEP THE PENALTY PRO CEEDINGS IN ABEYANCE TILL THE DECISION OF THE CIT(A) BUT HAD NOT FURNISHED ANY REPLY ON MERITS. THE AO OBSERVED THAT THE ASSESSEE HAD NOT TAKEN THE GROUND REGARDING PENALTY PROCEEDINGS U/S 271(1)(B) OF THE ACT BEFORE THE APP ELLATE AUTHORITY AND, THEREFORE, IT WAS NOT RATIONAL TO KE EP THE PENALTY PROCEEDINGS IN ABEYANCE. THEREFORE, THE AO CONCLUDED THAT THE ASSESSEE FAILED TO COMPLY WITH THE STATUTO RY NOTICES ISSUED WITHOUT ANY REASONABLE CAUSE AND WAS LIABLE FOR PENALTY U/S 271(1)(B) OF THE ACT. THE AO LEVIED PEN ALTY OF RS. 10,000/- FOR EACH FAILURE OF NON-COMPLIANCE OF NOTI CE U/S 143(2) OF THE ACT DATED 22.12.2011, NOTICES U/S 142 (1) OF THE ACT DATED 9.11.2011, 28.11.2011 AND 20.12.2011 AND NOTICE U/S 142(2A) OF THE ACT DATED 28.12.2011 FOR EACH AS SESSMENT YEAR FROM ASSESSMENT YEAR 2004-05 TO 2010-11. M/S.RISHIRAJ MEMORIAL EDUCATION AND WELFARE SOCIETY VS. ACIT, 2(1), I.T.A.NOS.657 TO 663/IND/2015 A.YS. 2004-05 TO 20 10-11 4 4 3. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS DISMISSED THE APPEALS. THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE ME. 4. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. AUTHORIZED REPRESENTATIVE HAS FIRSTLY SUBMITTED THA T THE ASSESSEE HAS REASONABLE CAUSE AND ASSESSEE HAD ALSO REQUESTED TO KEEP THE PENALTY PROCEEDINGS IN ABEYAN CE, BUT THE AO HAS IMPOSED THE PENALTY AND THE ASSESSMENT O RDER HAS BEEN PASSED U/S 143(3) OF THE ACT AND NOT U/S 144 O F THE ACT. THEREFORE, IT SHOWS THAT SUBSEQUENT COMPLIANCE WAS TREATED AS NON COMPLIANCE AND DEFAULT COMMITTED HAS TO BE IGNO RED BY THE ASSESSING OFFICER AND THE PENALTY CANNOT BE LEV IED. SIMILARLY, HE HAS ALSO CONTENDED THAT THE ASSESSEE HAD TO PREPARE REPLY FOR ALL THE 27000 PAGES AND THEREFORE , IT TOOK TIME AND THE ASSESSEE REQUESTED FOR TIME TO THE AO FOR COMPLYING NOTICES. LASTLY, HE HAS SUBMITTED THAT AS PER THE DECISION OF INDORE TRIBUNAL IN THE CASE OF SHANKARL AL SONI VS. ACIT, (2009) 13 ITJ 96 (TRIBUNAL) AND SUBMITTED THA T THE PENALTY CANNOT BE LEVIED. SIMILARLY, HE HAS ALSO RE LIED ON THE M/S.RISHIRAJ MEMORIAL EDUCATION AND WELFARE SOCIETY VS. ACIT, 2(1), I.T.A.NOS.657 TO 663/IND/2015 A.YS. 2004-05 TO 20 10-11 5 5 DECISION OF SWARNABEN M.KHANNA & OTHERS VS. DY. CIT , (2010) 132 TTJ 1, I.T.A.T., AHMEDABAD BENCH, AND SUBMITTED THAT THE PENALTY CANNOT BE LEVIED. LASTLY, THE LD. AUTHO RIZED REPRESENTATIVE CONCEDED THAT AS PER THE DECISION OF DELHI TRIBUNAL IN THE CASE OF REKHA RANI VS. DY. CIT, (2 015) 154 ITD 0617, WHEREIN IT IS HELD BY THE TRIBUNAL THAT I F THE ASSESSEE DID NOT REMAIN PRESENT FOR THE NOTICES ISS UED, THEN PENALTY CANNOT BE IMPOSED FOR EACH DEFAULT AND THE PENALTY IMPOSED WAS ONLY RESTRICTED TO FIRST NOTICE AND NOT EACH AND EVERY NOTICE ISSUED BY THE ASSESSEE. THE LD. AUTHOR IZED REPRESENTATIVE CONCEDED BEFORE ME THAT AS PER THE D ECISION IF THE PENALTY IS IMPOSED ONLY TO THE FIRST NOTICE, TH EN HE HAD NO OBJECTION AS PER THE DECISION OF DELHI TRIBUNAL. 5. THE LD. DR OBJECTED TO IT AND LD. DR SUBMITTED THAT AS PER THIS DECISION OF DELHI TRIBUNAL, THE NOTICE WAS ISSUED U/S 143(2), WHILE IN ALL THESE CASES, THE AO HAS IS SUED THE NOTICES FOR VARIOUS NON-COMPLIANCE I.E. THE ASSESSE E FAILED TO COMPLY ALL NOTICES U/S 143(2), 142(1) AND 142(2A) O N VARIOUS DATES. THEREFORE, THE PENALTY CANNOT BE IMPOSED FOR THE FIRST M/S.RISHIRAJ MEMORIAL EDUCATION AND WELFARE SOCIETY VS. ACIT, 2(1), I.T.A.NOS.657 TO 663/IND/2015 A.YS. 2004-05 TO 20 10-11 6 6 NOTICE. PENALTY HAS TO BE IMPOSED ATLEAST NOTICES O N DIFFERENT SECTIONS AND PENALTY MAY BE RESTRICTED TO ATLEAST N OTICE OF EACH SECTION. 6. HAVING HEARD BOTH THE PARTIES AND LOOKING TO THE FA CTS AND CIRCUMSTANCES OF THE CASE, I CONSIDER THAT THE ISSUE IN CONTROVERSY IS COVERED BY THE DECISION OF DELHI TRI BUNAL IN THE CASE OF REKHA RANI VS. DY. CIT, (SUPRA), WHEREIN TH E HON'BLE TRIBUNAL HAS HELD AS UNDER :- THERE WAS NO REASONABLE CAUSE ON THE PART OF THE ASSESSEE FOR NON APPEARING ON THE DIFFERENT DATES O F HEARING BEFORE THE AO IN RESPONSE TO NOTICE ISSUED U/S 143(2) OF THE ACT. HOWEVER, I.T.A.T. FIND THAT THE DEFAULT IS SAME AND, THEREFORE, PENALTY OF RS. 10,000/- COULD BE IMPOSED FOR THE FIRST DEFAULT MAD E BY THE ASSESSEE IN THIS REGARD. THE PENALTY U/S 271(1)(B) COULD NOT BE IMPOSED FOR EACH AND EVERY NOTICE ISSUED U/S 143(2), WHICH REMAINED NOT COMPLIED WITH ON THE PART OF THE ASSESSEE. THE PROVISION OF SECTION 271(1)(B) IS OF DETERRENT NATU RE M/S.RISHIRAJ MEMORIAL EDUCATION AND WELFARE SOCIETY VS. ACIT, 2(1), I.T.A.NOS.657 TO 663/IND/2015 A.YS. 2004-05 TO 20 10-11 7 7 AND NOT FOR EARNING REVENUE. ANY OTHER VIEW TAKEN SHALL LEAD TO THE IMPOSITION OF PENALTY FOR ANY NUM BER OF TIMES (WITHOUT LIMITS) FOR THE SAME DEFAULT OF N OT APPEARING IN RESPONSE TO THE NOTICE U/S 43(2) OF TH E ACT. THIS DOES NOT SEEM TO BE THE INTENTION OF THE LEGISLATURE IN ENACTING THE PROVISIONS OF SECTION 271(1)(B) OF THE ACT. IN CASE OF FAILURE OF THE ASS ESSEE TO COMPLY WITH THE NOTICE U/S 143(2) OF THE ACT, TH E REMEDY WITH THE AO LIES WITH FRAMING OF BEST JUDGEMENT ASSESSMENT UNDER THE PROVISIONS OF SECTION 144 OF THE ACT AND NOT TO IMPOSE PENALTY U/ S 271(1)(B) OF THE ACT AGAIN AND AGAIN. IN THIS VIEW OF THE MATTER, I.T.A.T. RESTRICTED THE PENALTY LEVIED U/S 271(1)(B) OF THE ACT TO THE FIRST DEFAULT OF THE AS SESSEE IN NOT COMPLYING WITH THE NOTICE U/S 143(2) OF THE ACT. ACCORDINGLY, THE PENALTY IMPOSED IS RESTRICTED TO R S. 10,000/- AS AGAINST RS. 50,000/- CONFIRMED BY THE LD. CIT(A). THE GROUNDS OF APPEAL OF THE ASSESSEE A RE THUS PARTLY ALLOWED. M/S.RISHIRAJ MEMORIAL EDUCATION AND WELFARE SOCIETY VS. ACIT, 2(1), I.T.A.NOS.657 TO 663/IND/2015 A.YS. 2004-05 TO 20 10-11 8 8 7. I RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUN AL HOLD THAT IN ALL THESE APPEALS, THE ASSESSEE FAILED TO COMPLY WITH THE NOTICES U/S 143(2) OF THE ACT DATED 22.12. 2011, THEREAFTER, THE NOTICES U/S 142(1) OF THE ACT DATED 9.11.2011, 28.11.2011 AND 20.12.2011 AND THE AO HAS ALSO ISSUE D THE NOTICE U/S 142(2A) OF THE ACT DATED 28.12.2011. THE ASSESSEE DID NOT COMPLY TO THE NOTICES, BUT THE ASSESSEE HAS REQUESTED THE AO TO KEEP THE PENALTY PROCEEDINGS IN ABEYANCE TILL THE DECISION OF THE LD. CIT(A), BUT THE AO HAS IMPOSED THE PENALTY. I FIND THAT THE AO HAS GIVEN SEVERAL NOTICES UNDER VARIOUS SECTIONS, BUT THE PENALTY HAS BEEN LEVIED ONLY FOR THE ASSESSMENT U/S 153A READ WITH SECTION 143(3) OF TH E ACT AND IT WAS COMPLETED ON 13.8.2012. I FIND THAT DURING T HE ASSESSMENT PROCEEDINGS, THE PENALTY CANNOT BE IMPOS ED FOR EACH DEFAULT, BUT THE PENALTY CAN BE IMPOSED ONLY F OR THE FIRST DEFAULT. THEREFORE, LOOKING TO THE FACTS AND CIRCUM STANCES OF THE CASE, I AM OF THE OPINION THAT IN THESE CASES I F THE ASSESSEE FAILED TO COMPLY WITH THE NOTICES, THE REMEDY WITH THE AO WAS TO FRAME BEST JUDGEMENT ASSESSMENT U/S 144 AND NO T TO M/S.RISHIRAJ MEMORIAL EDUCATION AND WELFARE SOCIETY VS. ACIT, 2(1), I.T.A.NOS.657 TO 663/IND/2015 A.YS. 2004-05 TO 20 10-11 9 9 IMPOSE PENALTY U/S 271(1)(B) AGAIN AND AGAIN. THERE FORE, I MODIFY THE ORDER OF AO AND CIT(A) AND I RESTRICT TH E PENALTY FOR THE FIRST DEFAULT OF THE ASSESSEE IN NOT COMPLYING WITH THE NOTICE U/S 143(2). ACCORDINGLY, THE PENALTY IMPOSED WAS RESTRICTED TO RS. 10,000/- AS AGAINST RS. 50,000/- CONFIRMED BY THE LD. CIT(A). 8. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PART LY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 8TH FEBRUARY, 2016. SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 8 TH FEBRUARY, 2016. CPU* 8.2