RAJENDRA G PRIKH, MUMBAI V. DCIT CC 44, MUMBAI

ITA 6944/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3072 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 13-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Non compliance
• Section: 143(3); 142(1)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NOS.6944 TO 6950/MUM/2014 ASSESSMENT YEARS: 2005-06 TO 2011-12 MR. RAJENDRA G. PARIKH, YOGESH BHAVAN, 1 ST FLOOR, 31, N.S. PATKAR ROAD, MUMBAI-400007 / VS. DCIT, CENTRAL CIRCLE-4, ROOM NO.656, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400007 ( ! /ASSESSEE) ( ' / REVENUE) PAN. NO. AACPP4545K ! / ASSESSEE BY SHRI NEEL KHANDELWAL ' / REVENUE BY SHRI B.S. BIST-DR # '$ % ! & / DATE OF HEARING : 20/06/2016 % ! & / DATE OF ORDER: 20/06/2016 ITA NO. 6944 TO 6950/MUM/2014 RAJENDRA G. PARIKH 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THIS BUNCH OF SEVEN APPEALS IS BY THE ASSESSEE AGAI NST THE IMPUGNED ORDERS ALL DATED 17/09/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI, CHALLENGING THE LEVY OF PENALTY U/S 271(1)(B) OF THE INCOME TAX ACT, 1961 (HEREINAF TER THE ACT). 2. DURING HEARING OF THIS APPEAL, SHRI NEEL KHANDELWAL, LD. COUNSEL FOR THE ASSESSEE, CONTENDED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF TRIBUNAL IN M/S J.K. INDUSTRIES LTD. (ITA NO.4759 T O 4765/MUM/2014), ORDER DATED 18/02/2016. THIS ASSERT ION OF THE ASSESSEE WAS NOT CONTROVERTED BY THE LD. DR, SHRI B.S. BIST. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE CO MING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RE LEVANT PORTION FROM THE ORDER OF THE TRIBUNAL DATED 18/02/ 2016 FOR READY REFERENCE AND ANALYSIS:- THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-38, MUM BAI {(IN SHORT CIT(A)}, DATED 30.05.2014 FOR THE ASSESSMEN T YEARS 2005- 06 TO 2011-12, PASSED AGAINST THE PENALTY ORDER PAS SED BY THE ASSESSING OFFICER (IN SHORT AO) U/S 271(1)(B) OF THE ACT, INVOLVING COMMON ISSUE OF LEVY OF PENALTY ON THE FOLLOWING GR OUNDS: 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE COMMISSIONER OF INCOME TAX,(APPEALS)-38, MUMBAI ERR ED IN ITA NO. 6944 TO 6950/MUM/2014 RAJENDRA G. PARIKH 3 UPHOLDING THE ACTION OF THE ASSESSING OFFICER, MUMB AI IN LEVYING THE PENALTY UNDER SECTION 271(1)(B) OF THE INCOME T AX ACT, 1961. 2. THE APPELLANT CARVES TO LEAVE TO ADD, TO ALTER, TO AMEND, TO MODIFY AND TO SUBSTITUTE THE GROUNDS OF APPEAL AT A NY TIME BEFORE OR AT ANY TIME OF HEARING OF THE APPEAL. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MAD E BY MS. NIDHI PATEL, AUTHORISED REPRESENTATIVE (AR) ON BEHA LF OFTHE ASSESSEE AND BY SHRI K MOHANDAS, SENIOR DEPARTMENTA L REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3. SINCE, COMMON ISSUE IS INVOLVED IN THESE APPEALS , THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED TO GETHER BY THIS ORDER. 3.1. DURING THE COURSE OF HEARING DETAILED ARGUMENT S HAVE BEEN MADE BY MS. NIDHI PATEL, LEARNED COUNSEL OF THE ASS ESSEE, ASSAILING THE ORDER OF THE AO IN LEVYING THE PENALT Y U/S 271(1)(B) FOR ALLEGED NON-COMPLIANCE OF NOTICE U/S 142(1) DAT ED 04.09.2012, ISSUED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT HAS BEEN SUBMITTED THAT ASSESSEE WAS SICK COMPANY AND APPROV ED BY BIFR VIDE ORDER DATED 26.08.2008. THE ASSESSEE HAS TWO D IRECTORS AND BOTH ARE ABOVE THE AGE OF 60 YEARS. THE CHEMICAL RE CYCLING UNIT OF THE ASSESSEE WAS BADLY AFFECTED DUE TO FIRE IN JULY , 2004 AND OPERATION HAD TO BE DISCONTINUED. FURTHER, DUE TO N EGATIVE NET WORTH THE COMPANY HAD TO SURRENDER ITS LICENSE TO R ESERVE BANK OF INDIA. IT WAS FURTHER SUBMITTED THAT INCOME TAX SEA RCH HAD TAKEN PLACE IN THE CASE OF COMPANY AND IN PURSUANCE TO TH E SAME ASSESSMENT PROCEEDINGS OF SEVEN YEARS HAD BEEN COMM ENCED BY THE INCOME TAX DEPARTMENT, AND THE ASSESSEE COMPANY HAD NO STAFF OR INFRASTRUCTURE TO TAKE CARE OF SUCH A VOLU MINOUS WORK OF COLLECTION OF HUGE DETAILS AND DOCUMENTS FOR SEVEN YEARS AND MAKING REPRESENTATION BEFORE THE AO. THE FINANCIAL CONDITION OF THE COMPANY WAS ALSO VERY BAD. UNDER THESE CIRCUMST ANCES THE AO CLAIMED TO HAVE ISSUE NOTICE U/S 142(1) DATED 04 .09.2012 FIXING THE DATE OF HEARING ON 10TH SEPTEMBER, 2012. SHE SUBMITTED ITA NO. 6944 TO 6950/MUM/2014 RAJENDRA G. PARIKH 4 THAT IT HAS NOT BEEN STATED BY THE AO BEFORE LEVYIN G THE PENALTY THAT THE NOTICE WAS DULY SERVED UPON THE ASSESSEE. SHE FURTHER SUBMITTED THAT IN ANY CASE, THE TIME GIVEN WAS TOO SHORT, AND AFTER EXCLUDING SATURDAY AND SUNDAY AND TIME TAKEN FOR DI SPATCH AND DELIVERY, THERE WERE HARDLY TWO OR THREE DAYS AVAIL ABLE WITH THE ASSESSEE TO RESPOND. UNDER SUCH CIRCUMSTANCES THE A O DID NOT GIVE PROPER OPPORTUNITY OF HEARING. FURTHER, IN ANY CASE, SUBSEQUENTLY, THE ASSESSEE HAD SINCERELY ATTENDED A ND SUBMITTED WHATEVER DETAILS AND DOCUMENTS WERE AVAILABLE WITH THE ASSESSEE, WHICH IS EVIDENT FROM THIS FACT THAT ASSESSMENT ORD ER WAS FRAMED U/S 143(3) AND NOT U/S 144, AND THEREFORE, IT WAS N OT A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(B). IN SUPPORT OF HER A RGUMENTS, SHE RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT I N THE CASE OF M/S. HINDUSTAN STEEL LTD. 83 ITR 26 AND JUDGMENT OF HONBLE DELHI BENCH ITAT IN THE CASE OF AKHIL BHARTIYA PRATHMIK S HIKSHAK SANGH BHAVAN TRUST VS. ADIT 115 TTJ 419 (DEL.) IN N UTSHELL SHE SUBMITTED THAT THE PENALTY ORDER PASSED BY THE AO W AS UNFAIR AND FACTUALLY INCORRECT, UNJUSTIFIED AND CONTRARY TO LA W AND FACTS, AND THEREFORE, PENALTY LEVIED BY THE AO SHOULD BE DELET ED. 3.2. PER CONTRA LD. DR RELIED UPON THE ORDERS OF TH E LOWER AUTHORITIES AND SUBMITTED THAT SINCE THERE WAS NONC OMPLIANCE ON THE PART OF THE ASSESSEE, THEREFORE, PENALTY WAS RI GHTLY LEVIED BY THE AO AND CONFIRMED BY LD. CIT(A). 3.3. WE HAVE GONE THROUGH THE FACTS OF THE CASE BRO UGHT BEFORE US. IT IS NOTED THAT IN PURSUANCE TO THE SEARCH, TH E ASSESSMENT PROCEEDINGS OF SEVEN YEARS WERE COMMENCED BY THE IN COME TAX DEPARTMENT. THE ADMITTED FACTS ON RECORD ARE THAT T HE ASSESSEE COMPANY WAS A SICK COMPANY, AND WAS UNDER THE SCHEM E OF BIFR. WE HAVE FURTHER NOTED THAT IT HAS BEEN STATED BY THE AO WHILE LEVYING THE PENALTY THAT HE HAD ISSUED NOTICE U/S 142(1) DATED 04.09.2012 FIXING THE HEARING FOR 10.09.2012, AND SINCE NON- COMPLIANCE WAS MADE BY THE ASSESSEE ON 10.09.2012, AND ITA NO. 6944 TO 6950/MUM/2014 RAJENDRA G. PARIKH 5 THEREFORE, IT WAS A FIT CASE FOR LEVY OF PENALTY, A ND ACCORDINGLY, PENALTY WAS LEVIED. WE ARE SURPRISED TO NOTE THAT T HE AO HAS NO WHERE MENTIONED IN THE ASSESSMENT OR PENALTY ORDER THAT WHETHER THE IMPUGNED NOTICE WAS SERVED AT ALL UPON THE ASSE SSEE. IT IS FURTHER NOTED THAT IMPUGNED NOTICE CLAIM TO BE ISSU ED ON 04.09.2012, FIXED THE DATE FOR HEARING ON 10.09.201 2. IF, WE EXCLUDE SATURDAY AND SUNDAY AND THE TIME TAKEN FOR DISPATCH AND DELIVERY OF THE NOTICE, THE ASSESSEE WAS LEFT WITH HARDLY TWO OR THREE DAY TIME, EVEN IF THE NOTICE WAS DULY AND EXP EDIENTLY SERVED UPON THE ASSESSEE. FURTHER THERE IS NO CASE MADE OU T BY THE AO OF ANY OTHER NON-COMPLIANCE ON THE PART OF THE ASSE SSEE. RATHER, IT IS NOTED THAT SUBSEQUENTLY DETAILS AND DOCUMENTS WERE FILED BY THE ASSESSEE TO THE AO ON THE BASIS OF WHICH ASSESS MENT PROCEEDINGS WERE COMPLETED AND ASSESSMENT ORDER WAS PASSED U/S 143(3) AND NOT U/S 144. THUS, IT SHOWS THAT SUB SEQUENTLY, COMPLIANCE HAS BEEN MADE BY THE ASSESSEE. UNDER SUC H CIRCUMSTANCES, IN OUR CONSIDERED OPINION WITHOUT GI VING ADEQUATE TIME AND WITHOUT MAKING OUT A CASE OF SUBSTANTIVE N ON-COMPLIANCE BY THE ASSESSEE, IT WAS UNFAIR AND UNJUSTIFIED ON T HE PART OF THE AO IN LEVYING THE PENALTY U/S 271(1)(B). IN THE TOTALI TY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT LEVY OF PEN ALTY WAS NOT JUSTIFIED. THE ACTION OF THE AO IS UNSUSTAINABLE IN THE EYES OF LAW, AND THEREFORE, WE DIRECT THE AO TO DELETE THE PENAL TY. 4. IN THE RESULT, ALL ABOVE SEVEN APPEALS FILED BY THE ASSESSEE ARE ALLOWED. 2.1. WE FIND THAT WHILE LEVYING THE PENALTY U/S 271(1)(B) OF THE ACT (AS IS OOZING OUT FROM PARA-2 OF THE PENALTY ORDER), THE ASSESSEE WAS ISSUED NOTICE U/S 142(1) OF THE ACT ON 04/09/2012, FIXING THE COMPLIANCE BY THE ASSESSEE ON 10/09/2012. IT HAS NOT BEEN MENTIONED A S TO WHEN THE NOTICE WAS SERVED UPON THE ASSESSEE. IT IS ALSO ITA NO. 6944 TO 6950/MUM/2014 RAJENDRA G. PARIKH 6 NOTED THAT DURING THAT PERIOD, AS EXPLAINED BEFORE US, THE ASSESSEE WAS SUFFERING FROM AILMENT, MEANING THEREB Y, SUFFICIENT TIME/OPPORTUNITY FOR COMPLIANCE WAS NOT PROVIDED TO THE ASSESSEE. THIS IS CLEARLY VIOLATION OF PRINC IPLE OF NATURAL JUSTICE ON THE PART OF THE REVENUE. IT IS NOTED THA T THE TRIBUNAL IN THE AFORESAID ORDER DATED 18/02/2016 HA S MADE AN ELABORATE DISCUSSION ON IDENTICAL FACT INCLUDING THE DECISION FROM HONBLE APEX COURT IN M/S HINDUSTAN S TEEL LTD. 83 ITR 26 AND THE CASE OF THE ASSESSEE DELHI B ENCH OF THE TRIBUNAL IN AKHIL BHARTIYA PRATHMIK SHIKSHAK SA NGH BHAWAN TRUST VS ADIT 115 TTJ 419 (DEL.). IF WE EXCL UDE THE SATURDAY AND SUNDAY, FALLING WITHIN THE GIVEN TIME IN THE NOTICE, TIME TAKEN FOR DISPATCH AND DELIVERY OF THE NOTICE HARDLY TWO OR THREE DAYS LEFT WITH THE ASSESSEE. IT IS NOTED THAT THE LD. ASSESSING OFFICER HAS NOT MADE A GOOD CASE FOR NON COMPLIANCE ON THE PART OF THE ASSESSEE. CONSIDE RING THE TOTALITY OF FACTS AND THE CIRCUMSTANCES NARRATED BE FORE US, WE DIRECT THE LD. ASSESSING OFFICER TO DELETE THE PENA LTY, IMPOSED UPON THE ASSESSEE. THUS, THE IMPUGNED APPEALS ARE A LLOWED. FINALLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 20/06/2016. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; ( DATED : 20/06/2016 ITA NO. 6944 TO 6950/MUM/2014 RAJENDRA G. PARIKH 7 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 # 1! ( *+ ) / THE CIT, MUMBAI. 4. 0 0 # 1! / CIT(A)- , MUMBAI 5. 3'4 .! , 0 *+& * 5 , # $ / DR, ITAT, MUMBAI 6. 6$ / GUARD FILE. / BY ORDER, /3+! .! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI