Neeraj Mittal, Karnal V. DCIT, Central Circle, Karnal

ITA 7513/DEL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5687 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 14-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: RINKY SHARMA ITP
• Keywords: Search and seizure; Document seized; Opportunity of being heard; Assessment record; Documents seized
• Section: 142(1)

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NOS. 7513 TO 7515/DEL/2017 A.YRS. : 2008-09 TO 2010-11 NEERAJ MITTAL, VS. DCIT, CENTRAL CIRCLE, KARNAL C/O VINOD KUMAR BINDAL & CO., CHARTERED ACCOUNTANTS, SHIV SUSHIL BHAWAN, D-219, VIVEK VIHAR, PHASE-I, DELHI -95 PAN: APQPS4647J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. VINOD KUMAR BINDAL, CA & RINKY SHARMA, ITP DEPARTMENT BY : MS. ASHIMA NEB, SR. DR. ORDER THESE 03 APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINS T THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS-2), GUR GAON DATED 18.10.2017 PERTAINING TO ASSESSMENT YEARS 2008-09 TO 20 10-11. SINCE THE GROUNDS RAISED IN THESE APPEALS ARE COMMON AND IDENTICAL, HENCE, THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE BY DEALING WITH ITA NO. 7513/DEL/2017 (AY 2008-09). 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GROUNDS IN ALL THE APPEALS:- 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY OF RS. 10,000/- LEVIED U/S 27L(L)(B) OF THE ACT IGNORING THAT THERE WAS NO NON- COMPLIANCE AND THE APPELLANT WAS REGULARLY APPEARING BEFORE THE ASSESSING OFFICER AND COMPLYING WITH THE REQUIREMENTS OF THE ASSESSING OFFICER THEREAFTER. 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS BY IGNORING THAT NECESSARY PHOTOCOPIES OF-THE SEIZED MATERIAL WERE GIVEN TO THE APPELLANT IN JANUARY 201 6 WHEREAS THE ALLEGED NON-COMPLIANCE IN JULY 2015 WAS ONLY IN RESPECT OF THE INFORMATION RELATING TO TH E SAID SEIZED MATERIAL AND MOST OF WHICH DID NOT PERTAIN / BELONG-TO THE APPELLANT. 3. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING THAT PHOTOCOPIES OF THE SEIZED MATERIAL WERE GIVEN TO THE APPELLANT BY THE INVESTIGATION UNIT OF THE DEPARTMENT PRIOR TO THE SAME GIVEN BY THE AO, A FACT DENIED BY THE INVESTIGATION UNIT IN REPLY DATED 3 05/12/2017 TO AN RTI APPLICATION BY THE ASSESSEE GROUP. 4. THE CIT(A) ERRED IN LAW AND ON FACTS WHILE CONFIRMING THE PENALTY EVEN THOUGH THERE WAS NO ADDITION OF ANY UNDISCLOSED INCOME IN THE ASSESSMENT ORDER OR NO INCRIMINATING MATERIAL WAS FOUND IN RESPECT OF THE ADDITION MADE BUT ONLY ON TH E BASIS OF ALREADY DECLARED ACCOUNTS. 5. THE CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY WITHOUT ASCERTAINING FROM THE ASSESSMENT RECORDS THAT THE APPELLANT NEVER COMMITTED ANY DEFAULT TO ATTRACT THE IMPUGNED PENALTY AS THE ASSESSING OFFICER HIMSELF GRANTED TIME TO SUBMIT THE INFORMATION. 6. THAT THE PENALTY HAS BEEN IMPOSED WITHOUT IDENTIFYING THE DATE OF DEFAULT FOR NON-COMPLIANCE BY THE ASSESSING OFFICER. 7. THUS, THE IMPUGNED PENALTY LEVIED SHOULD BE DELETED. 8. THE APPELLANT CRAVES THE LEAVE TO ADD, SUBSTITUTE, MODIFY, DELETE OR AMEND ALL OR ANY 4 GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING. 3. BRIEF FACTS ARE THAT, A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON 17.01.2014 ON THE BUSINESS/OFFICE AND RESIDENTIAL PREMI SES OF THE ASSESSES GROUP OF CASES. THE RESIDENTIAL PREMISE OF THE ASSESSEE WAS A LSO COVERED UNDER SEARCH. NOTICE U/S L53A(1) OF THE I.T. ACT, 1961 WAS ISSUED ON 18.09.2014 FOR FILING OF RETURN WITHIN 30 DAYS OF RE CEIPT OF THIS NOTICE. BUT, THE ASSESSES FAILED TO COMPLY. NOTICE U/S 142(1) DATED 14.0 5.2015 WAS ISSUED FOR COMPLIANCE ON 26.05.2015, BUT THE ASSESSES AGAIN FAILED TO MAKE COMPLIANCE, BUT THE ASSESSES AGAIN FAILED TO MAKE COMPLIANCE . LATER ON, NOTICE U/S. 271F OF THE I. T. ACT, 1961 WAS ISSUED ON 10. 6.2015 OR COMPLIANCE ON 17.06.2015 TO SHOW CAUSE AS TO WHY AN ORDE R IMPOSING A PENALTY MAY NOT BE PASSED. ON DUE DATE NEITHER ANYBOD Y APPEARED NOR ANY WRITTEN REPLY WAS FILED BY THE ASSESSEE. AS THE ASSESSEE FAIL ED TO FILE RETURN OF INCOME AND MAKE COMPLIANCE OF NOTICES, A PENALTY U/S. 271F OF THE I.T. ACT, 1961 AMOUNTING TO RS. 5,000/- WAS LEVIED VIDE O RDER DATED 14.9.2015. QUESTIONNAIRE ON THE BASIS OF SEIZED DOCUMENTS ALONGWITH NOTICE U/S. 142(1) DATED 01.07.2015 WERE ISSUED AND DULY SERVED UPON THE ASSESSEE FIXING THE CASE FOR 20.07.15. ON THE DATE OF HEARING, NEITHER ASSE SSEE ATTENDED NOR ANY WRITTEN SUBMISSION FILED. SUBSEQUENTLY, SHOW CAUSE NOTICE U/S. 271(1)(B) OF THE I.T. ACT, 1961 WAS ISSUED ON 16.09.2 015 FOR COMPLIANCE ON 24.09.2015 FOR FAILING TO FILE REPLY TO QUESTIONNAIR E DATED 1.7.2015. ON 5 24.9.2015 NEITHER ANYBODY ATTENDED NOR ANY WRITTEN SUBMISSION WERE FILED. AGAIN SHOW CAUSE NOTICE U/S. 271(1)(B) WERE ISSUED ON 28 .9.2015 & 09.10.2015 FOR COMPLIANCE ON 6.1.2015 AND 15.10.2015 RESPECTIVELY. AFTER THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 19.10.20 15. THEREAFTER, QUESTIONNAIRE ALONGWITH NOTICE U/S. 142(1)/143(2) DATE D 30.10.2015 WERE ISSUED AND DULY SERVED UPON THE ASSESSEE FIXING THE CASE FO R 16.11.2015. ON THE DATE OF HEARING, NEITHER ANYBODY ATTENDED NOR A NY WRITTEN SUBMISSION WAS FILED BY THE ASSESSEE. FURTHER, SHOW CAUSE NOTICES/LETT ERS WERE ISSUED ON DIFFERENT DATES AS TO WHY PENALTY U/S. 271(1)(B) MA Y NOT BE LEVIED UPON YOU, THE DETAIL OF WHICH IS MENTIONED AT PAGE NO. 2 O F THE PENALTY ORDER. AO NOTED THAT AS PER PROVISIONS OF SECTION 271(1)(B) 'IF TH E ASSESSING 0FFICER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED T HAT ANY PERSON HAS FAILED TO COMPLY WITH A NOTICE UNDER SUB-SECTION OF SECTI ON 142 OR SUBSECTION (2) OF SECTION 143 HE MAY DIRECT THAT SUCH PERSON SHALL PA Y BY WAY OF PENALTY A SUM OF RS. 10,000/- FOR EACH SUCH FAILURE. IN THE ABOVE CIRCUMSTANCES, IT BECAME CRYSTAL CLEAR THAT THE ASSESSEE FAILED TO FURNISH REPLY IN RESPONSE TO NOTICE U/S 142(1)/143(2) & QUESTION NAIRE DATED 01.07.2015 & 30.10.2015, IN SPITE OF A NUMBER OF OPP ORTUNITIES AFFORDED BY THE DEPARTMENT. AO FURTHER OBSERVED THAT THE ASSESSEE FA ILED TO ADDUCE ANY PLAUSIBLE EXPLANATION FOR NON-COMPLIANCE OF THIS OFFICE LETTER/NOTICES. THESE FACTS SHOW THAT THE ASSESSEE IS NON-COOPERATIVE WITH ASSESSMENT PROCEEDINGS. SO, THIS BECAME A FIT CASE FOR LEVY OF PENA LTY U/S 271(1)(B) OF 6 THE LT. ACT, 1961. THEREFORE, THE DEPUTY COMMISSIONE R OF INCOME TAX, CENTRAL CIRCLE, KARNAL IMPOSED A PENALTY OF RS. 10,000 /- U/S. 271(L)(B) OF THE I.T. ACT, 1961 VIDE ORDER DATED 25.2.2016. AGA INST THE PENALTY ORDER, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE H IS IMPUGNED ORDER DATED 18.10.2017 HAS CONFIRMED THE PENALTY. AGGRIEVE D WITH THE IMPUGNED ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE TRI BUNAL. 4. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSESSEE HAS STATED NO STATUTORY NOTICE U/S. 274(1) OF THE I.T. ACT WAS EVER I SSUED TO THE ASSESSEE TO BE HEARD BEFORE IMPOSING THE PENALTY AND THUS, NO MANDATORY REASONABLE OPPORTUNITY OF BEING HEARD WAS EVER GIVEN TO THE ASSESSE E BEFORE IMPOSING THE PENALTY U/S. 271(1)(B) OF THE I.T. ACT. IT WAS FUR THER SUBMITTED THAT FROM ALL THE SHOW CAUSE NOTICES ISSUED BY THE AO FOR SUBMISSION OF THE DETAILS AS IS MENTIONED IN THE PENALTY ORDERS, IT WOULD BE SEEN THAT THOSE STATE THAT IN CASE OF ANY FAILURE TO SUBMIT DESIRED DETAILS, PENALTY WOULD BE LEVIED BUT THE NECESSARY STATUTORY SATISFACTION U/S. 271(1) OF THE I .T. ACT THAT THE ASSESSEE HAS FAILED TO COMPLY WITH THE NOTICES AND THE AO W AS SATISFIED TO INITIATE THE PENALTY PROCEEDINGS HAS NOT BEEN RECORDED ANYWHERE. IT WAS FURTHER SUBMITTED THAT A PROPOSAL TO INITIATE PENALTY PROCEEDINGS IS NOT EQUIVALENT TO RECORDING A SATISFACTION WHICH IS THE POST FAILURE AND NOT WITH THE A PREPOSITION IF FAILED TO. HE FURTHER SUBMITTED THAT THE ORDER SHEETS ENTRIES DO NOW SHOW ISSUANCE OF ANY NOTICE U/S. 274 READ W ITH SECTION 271(1) OF THE ACT OR OF RECORDING OF ANY SUCH SATISFACTI ON. THEREFORE, HE 7 STATED THAT THE PENALTY IMPOSED IS LIABLE TO BE QUASH ED AS THE ISSUE IS SQUARELY COVERED BY THE FOLLOWING DECISIONS.: - HONBLE KARNATAKA HIGH COURT DECISION IN THE CASE OF CIT & ORS. VS. M/S MANJUNATHA COTTON AND GINNIG FACTORY & ORS. (2013) 359 ITR 565 - APEX COURT DECISION IN THE CASE OF CIT & ANR. VS. M/S SSAS EMERALD MEADOWS IN CC NO. 11485/2016 DATED 05.8.2016. 6. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELE VANT RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES ALONG WITH THE PROVISIONS OF LAW AS WELL AS THE CASE LAW CITED BY THE LD. COUNSEL OF THE ASSESSEE AND THE PHOTOCOPIES OF THE ORDER SHEETS FILED WITH THE PAPER BO OK. I FIND CONSIDERABLE COGENCY IN THE CONTENTION OF THE LD. COUNSE L OF THE ASSESSEE THAT NO STATUTORY NOTICE U/S. 274(1) OF THE I.T. ACT WAS EVER ISSUED TO THE ASSESSEE TO BE HEARD BEFORE IMPOSING THE PENALTY AND TH US, NO MANDATORY REASONABLE OPPORTUNITY OF BEING HEARD WAS EVER GIVEN TO THE ASSESSEE BEFORE IMPOSING THE PENALTY U/S. 271(1)(B) OF THE I.T. ACT, WHICH IS VERY ESSENTIAL. ON GOING THROUGH ALL THE SHOW CAUSE NOTICES ISSUED BY THE AO IT WAS FOUND THAT FOR SUBMISSION OF THE DETAILS AS IS MENTIONED IN THE PENALTY ORDERS, IT WOULD BE SEEN THAT IN CASE OF ANY FAILURE TO SUBMIT DE SIRED DETAILS, PENALTY WOULD BE LEVIED BUT THE NECESSARY STATUTORY SATISFACTIO N U/S. 271(1) OF THE I.T. ACT THAT THE ASSESSEE HAS FAILED TO COMPLY WITH THE NOTICES AND THE AO 8 WAS SATISFIED TO INITIATE THE PENALTY PROCEEDINGS HAS NO T BEEN RECORDED ANYWHERE. I FURTHER NOTE THAT IT WAS FURTHER SUBMITT ED THAT A PROPOSAL TO INITIATE PENALTY PROCEEDINGS IS NOT EQUIVALENT TO RECO RDING A SATISFACTION WHICH IS THE POST FAILURE AND NOT WITH THE A PREPOSITIO N IF FAILED TO. ALSO ON PERUSING THE ORDER SHEETS ENTRIES DO NOT SHOW ISSUANCE OF ANY NOTICE U/S. 274 READ WITH SECTION 271(1) OF THE ACT OR OF RECORDIN G OF ANY SUCH SATISFACTION. IN VIEW OF ABOVE DISCUSSIONS, THE PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS NOT SUSTAINABLE IN T HE EYES OF LAW, HENCE, THE SAME IS DELETED AND APPEAL OF THE ASSESSEE STANDS ALLOW ED. 8. FOLLOWING THE CONSISTENT VIEW TAKEN IN ASSESSMENT YEAR 2008-09 AS AFORESAID, THE PENALTY INVOLVED IN OTHER APPEALS IN RESPECT OF ASSESSMENT YEARS 2009-10 TO 2010-11 ALSO STAND DELETED AND ACCORDI NGLY THE OTHER APPEALS ALSO STAND ALLOWED. 9. IN THE RESULT, ALL THE 03 APPEALS FILED BY THE ASSESSEE STAND ALLOWED. ORDER PRONOUNCED 22/06/2018. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE: 22/06/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR , ITAT ASSISTANT REGISTRAR, ITAT, DELHI BENCHES