M/S M.P. STATE CIVIL SUPPLIES CORPORATION LTD., Bhopal V. THE ACIT-2(1), Bhopal

ITA 713/IND/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5898 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 04-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Keywords: Reasonable cause
• Section: 273B; 143(3); 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER M/S.M.P.STATE CIVIL SUPPLIES CORPORATION LIMITED, PARYAVAS BHAWAN, JAIL ROAD, BHOPAL PAN: AACCM5763B VS. ACIT, 2(1), BHOPAL APPELLANT RESPONDENT APPELLANT BY WRITTEN SUBMISSIONS RESPONDENT BY SHRI MOHD. JAVED, SR. DR DATE OF HEARING 02.08.2016 DATE OF PRONOUNCEMENT 02.08.2016 O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-I, BHOPAL [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 19.08 .2015 AND PERTAINS TO ASSESSMENT YEAR 2005-06 AS AGAINST APPE AL I.T.A. NO.713/IND/2015 ASSESSMENT YEAR: 2005-06 M.P.STATE CIVIL SUPPLIES CORPN.LTD. VS. ACIT, BHOPA I.T.A.NO. 713/IND/2015 A.Y. 2005-06 PAGE 2 OF 11 2 DECIDED IN ASSESSMENT ORDER DATED 28.03.2013 OF AC IT, 2(1), BHOPAL [HEREINAFTER REFERRED TO AS THE AO]. 2. THE EFFECTIVE GROUND OF APPEAL TAKEN BY THE ASSESSE E READS AS UNDER :- THAT LOOKING TO THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIA(A)-I ERRED IN UPHOLDING TH E PENALTY ORDER PASSED U/S 271(1)(B) OF THE INCOME- TAX ACT OF RS. 10,000/- WITHOUT CONSIDERING THE FULL FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A GOVERNMENT OF M.P. UNDERTAKING. AS PER THE PENALTY ORDER PASSED BY THE A.O FOR THE A. Y 2005-06, IT WAS STATED THAT D URING THE COURSE OF ASSESSMENT PROCEEDING U/S 143(3) R.W.S. 14 7 OF THE INCOME-TAX ACT, 1961, FOR THE A. Y. 2005-06, A NOTICE U/S 142(1) OF THE ACT ALONG WITH DETAILED QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE ON 19.11.2012 REQUIRING THE ASSESSEE TO FURNISH IN WRITING SOME SPECIFIED INFORMATION ON OR BEFORE 29.1 1.2012. THE SAME NOTICE WAS DULY SERVED UPON THE ASSESSEE ON 22. 11.2012. THE ASSESSEE WAS ALSO INTIMATED THAT ANY FAILURE TO COMPLY WITH THE NOTICE U/S 142(1) SHALL LEAD TO IMPOSITION OF PENAL TY OF RS. 10,000/- M.P.STATE CIVIL SUPPLIES CORPN.LTD. VS. ACIT, BHOPA I.T.A.NO. 713/IND/2015 A.Y. 2005-06 PAGE 3 OF 11 3 U/S 271(1)(B) OF THE ACT. HOWEVER, NEITHER ANYBODY A PPEARED ON BEHALF OF THE ASSESSEE NOR ANY REPLY WAS FURNISHED B Y THE ASSESSEE ON OR BEFORE THE ABOVE MENTIONED DATE. ALSO, THE AS SESSEE DID NOT F URNISH ANY REASON/EXPLANATION FOR NON-ATTENDANCE/NON- COMPLIANCE ON THE SAID DATE. THEREAFTER, A SHOW CAU SE NOTICE FOR PENALTY/S 271(1)(B) OF THE ACT DATED 01.02.2013 WAS ISSUED TO THE ASSESSEE REQUIRING THE ASSESSEE TO SHOW CAUSE ON OR BEFORE 11.02.2013 AS TO WHY PENALTY OF RS. 20,000/- SHOULD NOT BE LEVIED UPON THE ASSESSEE FOR THE NON-COMPLIANCE OF A STATU TORY NOTICE U/S 142(1) OF THE INCOME-TAX ACT, 1961. AGAIN NONE ATTE NDED NOR ANY REPLY WAS FILED ON OR BEFORE THE SPECIFIED DATE I.E. 11.02.2013. IT IS IMPORTANT HERE TO MENTION THAT THE ASSESSEE HAS NEI THER FILED ANY REPLY TO THE SHOW CAUSE NOTICE FOR PENALTY U/S 271(1 )(B) NOR TO THE NOTICE U/S 142(1) MEANING THEREBY THAT THE ASSESSEE HAD NO EXPLANATION /JUSTIFICATION FOR THE NON-COMPLIANCE O F THE NOTICE U/S 142(1) OF THE I.T.ACT. IN VIEW OF THE ABOVE FACTS AN D CIRCUMSTANCES OF THE CASE, THE AO WAS SATISFIED THAT THE ASSESSEE, IN THE COURSE OF ASSESSMENT PROCEEDINGS, HAS FAILED TO COMPLY WITH TH E NOTICE UNDER SUB-SECTION (1) OF SECTION 142 OF THE INCOME-TAX AC T, 1961. THEREFORE, THE AO DIRECTED THE ASSESSEE TO PAY BY WA Y OF PENALTY A SUM OF TEN THOUSAND RUPEES FOR ASSESSMENT YEAR 2005 -06. M.P.STATE CIVIL SUPPLIES CORPN.LTD. VS. ACIT, BHOPA I.T.A.NO. 713/IND/2015 A.Y. 2005-06 PAGE 4 OF 11 4 4. AGGRIEVED BY IMPOSITION OF PENALTY, THE ASSESSEE PR EFERRED APPEAL BEFORE THE LD. CIT(A), WHEREIN THE LD. AUTHOR IZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE RETURN OF INCOME WAS SUBMITTED ON 29TH OCTOBER, 2005 WITH AUDITED ACCO UNTS AND TAX AUDIT REPORT SHOWING TOTAL INCOME OF RS. 36,20, 59,300/-, TAX ON WHICH WAS FULLY PAID. THE CASE WAS SELECTED UNDER S CRUTINY. ALL THE INFORMATION ASKED BY THE ASSESSING OFFICER WAS SUBMITTED GIVING THE DETAILED EXPLANATION WITH ALL DOCUMENTS AND EVIDENCE FROM TIME TO TIME. THE CASE WAS RE-OPENED U/S 147 ON CERTAIN QUERIES AND POINTS FOR WHICH NOTICE U/S 148 DATED 23 RD MARCH 2012, WAS RECEIVED ON 28 TH MARCH 2012 WHICH WAS DULY REPLIED ON 24TH APRIL 2012. IN COMPLIANCE TO THE SAID NOTICE, IT WAS SUBMITTED THAT THE COPY OF THE RETURN AND OTHER ENCLOSURES WIT H THE RETURN MAY BE TREATED AS THE RETURN FILED IN COMPLIANCE TO THE SAID NOTICE. A LETTER FROM THE ASSESSING OFFICER DATED 19TH NOVE MBER 2012, GIVING INFORMATION REGARDING APPROVAL, NOTICE U/S 1 42(1), NOTICE U/S 143(2) WITH THE REASONS FOR RE-OPENING OF THE CASE FROM THE FILE DATED 23 RD MARCH 2012, WAS RECEIVED ONLY ON 27TH NOVEMBER, 2012, FIXING THE DATE ON 29 1H NOVEMBER 2012. THE COUNSEL AND THE PERSON INCHARGE WERE PRESENT ON THE SAID DATE AND IT WAS PE RSONALLY REQUESTED TO THE ASSESSING OFFICER TO GIVE AN ADJOU RNMENT TO M.P.STATE CIVIL SUPPLIES CORPN.LTD. VS. ACIT, BHOPA I.T.A.NO. 713/IND/2015 A.Y. 2005-06 PAGE 5 OF 11 5 SUBMIT THE DETAILED REPLY. AS THE DETAILS WERE TO BE TAKEN OUT FROM THE OLD RECORDS, WHICH THE LEARNED AO HAD AGREED TO. ANOTHER NOTICE A SHOW CAUSE DATED 1 ST FEBRUARY 2013, FIXING THE DATE ON 11 TH FEBRUARY, 2013, WAS RECEIVED. ON THE SAID DATE THE COUNSEL WAS NOT AVAILABLE AS HE HAD GONE TO I.T.A.T., INDORE BENCH, INDORE, FOR HEARING AND MOREOVER THE DETAILS WERE STILL AWAI TED TO BE TAKEN OUT FORM THE RECORDS WHICH WERE TO BE SUBMITTED BEFOR E THE AO. THE ASSESSEE BEING A GOVERNMENT OF M.P. UNDERTAKING AND HAS BEEN REGULAR IN ATTENDING ALL THE MATTERS WITH THE I NCOME TAX DEPARTMENT. THE LD. AO HAS NOT GIVEN SATISFACTION S O AS TO STATE THAT THE ASSESSEE HAD WITHOUT REASONABLE CAUSE FAILE D TO COMPLY WITH THE SAID NOTICE WHEREAS OUR CORPORATION IS REGUL ARLY COMPLYING WITH ALL THE REQUIREMENT OF THE INCOME-TAX ACT, 1961 , BEFORE THE DEPARTMENT REGULARLY. THERE WAS NO SUCH DEFAULT IN T HIS REGARDS IN THE PAST. HOWEVER, THE LD. CIT(A) AFTER DISCUSSING THE REASONS IN THE ORDERS HAS CONFIRMED THE PENALTY AS IMPOSED BY THE AO. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5. THOUGH THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WAS NOT PRESENT AT THE TIME OF HEARING, BUT SENT THE WRITTEN SUBMISSIONS BEFORE THE BENCH, WHICH ARE TAKEN ON RECORD AND HAVE BEEN CONSIDERED. M.P.STATE CIVIL SUPPLIES CORPN.LTD. VS. ACIT, BHOPA I.T.A.NO. 713/IND/2015 A.Y. 2005-06 PAGE 6 OF 11 6 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES AS WELL AS THE WRITTEN SUBMISSION SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. WE FIND THAT SECTION 273B PROVIDES THAT NO PENALTY SHALL BE IMPO SED UNDER VARIOUS PROVISIONS OF SECTIONS OF THE INCOME-TAX AC T, 1961, IF ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR FAILURE. THE WORD REASONABLE CAUSE HAS NOT BEEN DEFINED UN DER THE INCOME-TAX ACT, 1961. HOWEVER, IT HAS BEEN INTERPR ETED BY THE VARIOUS COURTS. WHAT WOULD CONSTITUTE REASONABLE CAU SE, CANNOT BE LAID DOWN WITH PRECISION AND EACH CASE WOULD HAVE TO BE TESTED ON ITS MERIT BY THE AUTHORITIES CONCER NED OR THE COURT, AS THE CASE MAY BE, FOR COMING TO A CONCLUSI ON THAT SUFFICIENT GROUND IN THE CONTEXT TO SECTION 273B HA VE BEEN MADE OUT FOR NOT IMPOSING PENALTY FOR THE FAILURE. THE TAXATION LAW HAS INTRODUCED SIGNIFICANT AMENDMENT TO THE PENA LTY PROVISIONS BY DELETING THE EXPRESSION WITHOUT REASO NABLE CAUSE FROM THE SECTION 273B AND OTHER SECTIONS. TH E M.P.STATE CIVIL SUPPLIES CORPN.LTD. VS. ACIT, BHOPA I.T.A.NO. 713/IND/2015 A.Y. 2005-06 PAGE 7 OF 11 7 AMENDMENT HAS INTRODUCED NEW SECTION 273B SHIFTING B URDEN OF THE ASSESSEE TO PROVE THAT FAILURE, OMISSION OR COMMISSION, IS WITH REASONABLE CAUSE OR EXCUSE OR THERE IS ABSEN CE OF CULPABLE MENTAL STATE BY THIS AMENDMENT IN 1986, TH E ONUS OF PROVING THE EXISTENCE OF REASONABLE CAUSE FOR THE D EFAULT SHIFTED TO TAX PAYER. AS PER SECTION 273B OF THE IN COME-TAX ACT, 1961, NOTWITHSTANDING ANYTHING CONTAINED IN TH E PROVISIONS OF SUB CLAUSE (B) OF SUB SECTION (1) OF SECTION 271, 271-B,SECTION 271BB, SECTION 271C, SECTION 271D, .., NO PENALTY SHALL BE IMPOSED ON THE PERSON OR THE ASSES SEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE ABO VE PROVISIONS, IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. 8. THE HON'BLE DELHI HIGH COURT HAS ENUNCIATED THE MEANING OF REASONABLE CAUSE IN THE CASE OF AZADI BACHAO ANDOLAN VS. UNION OF INDIA, (2001) 252 ITR 471. IT WAS HELD THAT THE REASONABLE CAUSE CAN BE REASONABLY SAID TO BE A CAUSE WHICH PREVENTS A MAN OF AVERAGE INTELLIGENCE A ND ORDINARY PRUDENCE, ACTING UNDER NORMAL CIRCUMSTANCE S, WITHOUT NEGLIGENCE OR INACTION OR WANT OF BONA FIDES. IN THE M.P.STATE CIVIL SUPPLIES CORPN.LTD. VS. ACIT, BHOPA I.T.A.NO. 713/IND/2015 A.Y. 2005-06 PAGE 8 OF 11 8 CASE OF WOODWARD GOVERNORS INDIA PRIVATE LIMITED VS. CIT, (2001)118 TAXMAN,433 (DEL). THE HON'BLE DELHI HIGH COURT HAS EXPRESSED EXPRESSION SUFFICIENT CAUSE. THEREF ORE, IN THE CONTEXT OF PENALTY PROVISIONS, THE WORDS REASONABLE CAUSE WOULD MEAN A CAUSE THAT IS BEYOND THE CONTROL OF ASS ESSEE. IN CWT VS. JAGDISH PRASAD CHOWDHARY, AIR 58, IT WAS HEL D THAT THE REASONABLE CAUSE MEANS A CAUSE WHICH IS BEYOND T HE CONTROL OF THE ASSESSEE; REASONABLE CAUSE OBVIOUS LY MEANS A CAUSE WHICH PREVENTS A REASONABLE MAN OF ORDINARY PR UDENCE ACTING UNDER NORMAL CIRCUMSTANCES WITHOUT NEGLIGENCE OR INACTION FOR WANT OF BONA FIDES FROM FURNISHING THE RETURN IN TIME. SECTION 271(1)(B) IS THE PENALTY FOR NON-COMP LIANCE WITH THE NOTICE U/S 142(1) TO FILE THE RETURN OR TO PROD UCE THE DOCUMENTS REQUIRED BY THE AO OR U/S 143(2) TO PRODU CE THE EVIDENCE ON WHICH THE ASSESSEE RELIES OR U/S 142A TO GET ITS ACCOUNT AUDITED. WE FIND THAT THE HON'BLE SUPREME C OURT IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA, 83 ITR 26 (S.C.) HAS LAID DOWN THE FOLLOWING CONDITIONS FOR IMP OSING THE PENALTY. PENALTY CAN BE LEVIED ONLY IF THE ASSESSEE ACTED DELIBERATELY. POWER TO LEVY THE PENALTY IS DISCRETI ONARY AND M.P.STATE CIVIL SUPPLIES CORPN.LTD. VS. ACIT, BHOPA I.T.A.NO. 713/IND/2015 A.Y. 2005-06 PAGE 9 OF 11 9 PENALTY CANNOT BE LEVIED MERELY BECAUSE IT IS LAWFUL TO DO SO. NO PENALTY CAN BE LEVIED FOR TECHNICAL AND VENIAL B REACH OF PROVISIONS AND NO PENALTY CAN BE LEVIED WHERE THE BR EACH OF PROVISIONS FLOWS FROM BONA FIDE BELIEF OF THE ASSESS EE. 9. NOW COMING TO FACTS OF THIS CASE, IN THIS CASE, THE ASSESSEE WAS GIVEN SHOW CAUSE NOTICE U/S 142(1) WAS IS SUED ALONGWITH DETAILED QUESTIONNAIRE ON 19.11.2012, REQU IRING THE ASSESSEE TO FURNISH IN WRITING SOME SPECIFIED INFOR MATION ON OR BEFORE 29.11.2012. ON THE SAID DATE, THE ASSESSEE D ID NOT ATTEND THE PROCEEDINGS NOR FILED THE REQUEST OF ADJ OURNMENT. THE AO HAS GIVEN SHOW CAUSE NOTICE ON 01.02.2013, AS TO WHY THE PENALTY OF RS. 20,000/- SHOULD NOT BE LEVIED UP ON THE ASSESSEE FOR NON-COMPLIANCE OF STATUTORY NOTICE U/S 142(1) OF THE INCOME-TAX ACT, 1961. AS PER THE ASSESSEES VER SION BEFORE THE APPELLATE AUTHORITY AND ALSO IN THE WRITTEN SUBM ISSION THAT ON THE SAID DATE THE ASSESSEES COUNSEL WAS NOT AVAI LABLE AS HE HAD GONE TO I.T.A.T., INDORE BENCH, INDORE, FOR HEA RING AND MOREOVER, THE DETAILS WERE STILL AWAITED TO BE TAKEN OUT FROM THE RECORDS, WHICH WERE TO BE SUBMITTED BEFORE THE AO AND WHICH WAS TO BE RECEIVED FROM 50 DISTRICT OFFICES ALL OVER M.P.STATE CIVIL SUPPLIES CORPN.LTD. VS. ACIT, BHOPA I.T.A.NO. 713/IND/2015 A.Y. 2005-06 PAGE 10 OF 11 10 MADHYA PRADESH. THE OFFICER INCHARGE MR. LALIT CHAT URVEDI HAD VERBALLY INFORMED THE AO AND REQUESTED FOR ADJO URNMENT. THUS, IT IS SEEN THAT THE COUNSEL OF THE ASSESSEE WA S PREOCCUPIED WITH HEARING BEFORE TRIBUNAL, HENCE, THE ASSESSEE COULD NOT APPEAR BEFORE THE AO ON SPECIFIED DATE. F URTHER, THE INFORMATION WAS TO BE COLLECTED FROM 50 LOCATIONS SP READ ALL OVER M.P. STATE, HENCE, IT COULD NOT BE PRODUCED ON THE STIPULATED DATE. IT IS ALSO NOTICED THAT IN SUBSEQU ENT HEARING THE ASSESSEE HAS FURNISHED ALL INFORMATION AS REQUI RED AND ASSESSMENT WAS TO BE FRAMED U/S 143(3) OF THE ACT. T HEREFORE, FOLLOWING THE PRINCIPLE ENUNCIATED IN THE DECISION O F APEX COURT IN THE CASE OF HINDUSTAN STEEL LIMITED VS. ST ATE OF ORISSA, 83 ITR 26 ( S.C.), WE ARE OF THE VIEW THAT TH ERE WAS NO DELIBERATE DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DIS REGARD OF ITS OBLIGATION. IN THE LIGHT OF THESE FACTS AND CIR CUMSTANCES, THE FAILURE OF THE ASSESSEE TO COMPLY WITH SUCH NOTI CE CANNOT BE SAID TO BE A DEFAULT WHICH MAY JUSTIFY THE LEVY O F PENALTY M.P.STATE CIVIL SUPPLIES CORPN.LTD. VS. ACIT, BHOPA I.T.A.NO. 713/IND/2015 A.Y. 2005-06 PAGE 11 OF 11 11 U/S 271(1)(B) OF THE ACT. THEREFORE, WE SET-ASIDE T HE ORDER OF THE LD. CIT(A) AND DELETE THE SAID PENALTY. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT O N 2 ND AUGUST, 2016. SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED : 2ND AUGUST, 2016. CPU* COPY TO: 1. THE ASSESSEE. 2. THE A.O. CONCERNED. 3. THE LD. PCIT CONCERNED 4. THE LD. CIT(A) 5. THE D.R., INDORE 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., INDORE