ZEENAT P. SANGHVI, MUMBAI V. D.C.I.T. C.C.38, MUMBAI

ITA 8656/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62365 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-05-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 22-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS KU SUM INGALE
• Keywords: Search and seizure
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS.8656 TO 8658/MUM/2011 (ASSESSMENT YEARS: 2002-03, 2004-05 AND 2006-07) ITA NOS.8660 TO 8661/MUM/2011 (ASSESSMENT YEARS: 2008-09, 2003-04) SMT. ZEENAT P. SANGHVI, 2203, WINDSOR TOWER, SHASTRI NAGAR, ANDEHRI (W), MUMBAI -400 0053 ...... APPELLANT VS DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE -38, MUMBAI ..... RESPONDENT PAN: AVNOS 6416 H ITA NOS.8663 TO 8665/MUM/2011 (ASSESSMENT YEARS: 2004-05, 2007-08 TO 2008-09) SMT. SARLA M. SANGHVI, 2203, WINDSOR TOWER, SHASTRI NAGAR, ANDEHRI (W), MUMBAI -400 0053 ...... APPELLANT VS DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE -38, MUMBAI ..... RESPONDENT PAN: CBSPS 9523 H ITA NOS.8666 TO 8667/MUM/2011 (ASSESSMENT YEARS: 2002-03 TO 2003-04) ITA NO.8672/MUM/2011 (ASSESSMENT YEARS: 2008-09) SHRI PARAG M. SANGHVI, 2203, WINDSOR TOWER, SHASTRI NAGAR, ANDEHRI (W), MUMBAI -400 0053 ...... APPELLANT VS DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE -38, ITAS.8656-8658 AND 8660 -8661/M/2011 ITAS.185-186, 246-247 AND 268-269/M/2010 SMT. ZEENAT P. SANGHVI, SMT. SARLA M. SANGHVI & SHRI PARAG M. SANGHVI 2 MUMBAI ..... RESPONDENT PAN: ATYPS 3041 A APPELLANT BY: SHRI SASHI TULSIYAN RESPONDENT-REVENUE BY: MRS. KUSUM INGALE DATE OF HEARING: 01.05.2012 DATE OF PRONOUNCEMENT: 09.05.2012 O R D E R R.S. PADVEKAR, JM: THIS BATH OF ELEVEN APPEALS ARE FILED BY THE DIFFER ENT ASSESSEES CHALLENGING THE RESPECTIVE IMPUGNED ORDERS OF THE L D. CIT (A)-37, MUMBAI DATED 04.10.2011 IN WHICH THE PENALTY LEVIED BY THE A.O. U/S.271(1)(B) HAS BEEN CONFIRMED. ALL THE PENALTY ORDERS, WHICH ARE SUBJECT MATTER OF THESE APPEALS ARE IDENTICAL. MOR EOVER, THE FACTS ARE ALSO IDENTICAL, HENCE, THIS BATCH OF APPEALS ARE DI SPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. TH E GROUNDS TAKEN BY ALL THESE ASSESSEES ARE VERBATIM IN ALL THE APPEALS WHICH ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) ERRED IN CONFIRMING THE PENALTY ORDER U/S.2 71(1)(B) BY LEARNED DY. COMMISSIONER OF INCOME-TAX CENTRAL C IRCLE - 38. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) ERRED IN CONFIRMING THE PENALTY AS THERE WA S NO DEFAULT COMMITTED BY THE APPELLANT UNDER THE PROVIS IONS OF SEC.271(1)(B). 3. WITHOUT PREJUDICE TO THE ABOVE GROUNDS THE LD. CIT (A) ERRED IN CONFIRMING THE PENALTY WHEN THE DEFAULT WA S FOR GOOD AND SUFFICIENT REASONS. ITAS.8656-8658 AND 8660 -8661/M/2011 ITAS.185-186, 246-247 AND 268-269/M/2010 SMT. ZEENAT P. SANGHVI, SMT. SARLA M. SANGHVI & SHRI PARAG M. SANGHVI 3 4. THE APPELLANT CRAVES TO ADD, ALTER OR DELETE AL L OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 2. THERE WAS SEARCH AND SEIZURE ACTION U/S.132 OF T HE INCOME-TAX ACT, 1961 ON 12.09.2007 IN THE CASE OF K. SERA PROD UCTION LTD. IN THE SEARCH AND SEIZURE OPERATION THESE ASSESSEES WERE A LSO COVERED. IN CONSEQUENCE OF SEARCH AND SEIZURE OPERATIONS ALL TH ESE ASSESSEES HAVE FILED THEIR RETURNS OF INCOME IN PURSUANCE OF THE N OTICES ISSUED U/S.153A OF THE INCOME-TAX ACT. THE ASSESSMENT IN THE CASE OF THE ASSESSEES WERE COMPLETED U/S.143(3) R.W.S. 153A DET ERMINING THE TOTAL INCOME AS UNDER: SR. NO. ITA NO. NAME OF THE ASSESSEE A.Y. TOTAL INCOME AS DETERMINED BY THE AO 1 8656/M/2011 SMT. ZEENAT P. SANGHVI 2002-03 1,55,0 00 2 8661/M/2011 ..DO.. 2003-04 1,89,000 3 8657/M/2011 ..DO.. 2004-05 1,80,000 4 8658/M/2011 ..DO.. 2006-07 2,33,495 5 8660/M/2011 ..DO.. 2008-09 4,03,738 6 8663/M/2011 SMT. SARLA M. SANGHVI 2004-05 90,600 7 8664/M/2011 ..DO.. 2007-08 3,57,520 8 8665/M/2011 ..DO.. 2008-09 2,45,225 9 8666/M/2011 SHRI PARAG M. SANGHVI 2002-03 1,50,00 0 10 8667/M/2011 ..DO.. 2003-04 1,90,000 11 8668/M/2011 ..DO.. 2008-09 1,14,164 3. IT IS PERTINENT TO NOTE HERE THAT IN SOME OF THE ASSESSMENT YEARS EVEN IF THESE ARE ASSESSMENT ARISING OUT OF THE SEA RCH AND SEIZURE ACTION, THE RETURNS OF INCOME FILED BY THE ASSESSEE S ARE ACCEPTED. 4. SO FAR AS THE ISSUE OF THE LEVY OF THE PENALTY U /S.271(1)(B) IS CONCERNED, THE A.O. HAS LEVIED THE PENALTY AT ` 10,000/- PER ASSESSMENT YEAR BEFORE US FOR FAILURE TO COMPLY TO ATTEND THE HEARING ON 20.10.2009. IN ALL THESE CASES THE REASONS GIVE N BY THE A.O. FOR THE LEVY OF THE PENALTY IS VERBATIM WHICH IS AS UND ER: 5. THE A.O. HAS OBSERVED THAT DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, SHRI RAJESH SHAH, C.A., ASS ESSEES AUTHORISED REPRESENTATIVE (AR) WAS ASKED TO FILE TH E DETAILS VIDE ORDER- ITAS.8656-8658 AND 8660 -8661/M/2011 ITAS.185-186, 246-247 AND 268-269/M/2010 SMT. ZEENAT P. SANGHVI, SMT. SARLA M. SANGHVI & SHRI PARAG M. SANGHVI 4 SHEET NOTING DATED 14.10.2009. THE COMPLIANCE WAS TO BE MADE ON 20.10.2009. THERE WAS NO COMPLIANCE ON THAT DATE A ND HENCE, THE A.O. ISSUED THE LETTER ON 22.10.2009 CALLING FOR TH E REASONS WHY THE PENALTY PROCEEDINGS SHOULD NOT BE INITIATED U/S.271 (1)(B) OF THE ACT. IN SUM AND SUBSTANCE, AS THE ASSESSEES CHARTERED A CCOUNTANT DID NOT COMPLY THE REQUISITE DETAILS ASKED BY THE A.O. ON 14.10.2009 THE A.O. LEVIED THE PENALTY OF ` 10,000/- EACH IN EACH ASSESSMENT YEARS OF THESE ASSESSEES U/S.271(1)(B) OF THE ACT. ALL THES E ASSESSEES CHALLENGED THE PENALTIES LEVIED BY THE A.O. U/S.271 (1)(B) OF THE ACT BEFORE THE LD. CIT (A) WHO BY REJECTING THE EXPLANA TIONS OF THE ASSESSEES AND CONFIRMED THE PENALTY LEVIED BY THE A .O. THE LD. CIT (A) HAS OBSERVED THAT THE PROVISIONS FOR IMPOSITION OF THE PENALTY U/S.271(1)(B) IS FOR ENSURE FOR COMPLIANCE OF NOTIC ES UNDER VARIOUS SECTIONS OF THE INCOME-TAX ACT. NOW, ASSESSEES ARE IN APPEAL BEFORE THE TRIBUNAL. 6. I HAVE HARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORDS. AS PER THE FACT REVEALED FROM ASSESSMENT ORDERS, THE PENALTY OF ` 10,000/- IS LEVIED IN CASE OF ALL THESE ASSESSEES FOR EACH ASSESSMENT FOR ONLY ONE REASON THAT THE ASSESSEES CHARTERED ACCOUNTANT SHRI RAJESH SHAH, WAS ASKED TO FILE CERT AIN DETAILS VIDE ORDER SHEET NOTING DATED 14.10.2009 AND THE SAID DE TAILS WERE ASKED TO BE FILED ON 20.10.2009, BUT, IT APPEARS THAT THE RE WAS NO COMPLIANCE AND HENCE, THE A.O. INVOKED SEC.271(1)(B ) AND LEVIED THE PENALTY. 7. RELEVANT PART SECTION 271(1)(B) READS AS UNDER: 271 (1) IF THE ASSESSING OFFICER OR THE COMMISSIO NER (APPEALS)] OR THE COMMISSIONER] IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) (B) HAS FAILED TO COMPLY WITH A NOTICE [UNDER SUB -SECTION (2) OF SECTION 115WD OR UNDER SUB-SECTION (2) OF SECTION 1 15WE OR ITAS.8656-8658 AND 8660 -8661/M/2011 ITAS.185-186, 246-247 AND 268-269/M/2010 SMT. ZEENAT P. SANGHVI, SMT. SARLA M. SANGHVI & SHRI PARAG M. SANGHVI 5 UNDER SUB-SECTION (1) OF SECTION 142 OR SUB-SECTION (2) OF SECTION 143 OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDE R SUB-SECTION (2A) OF SECTION 142, OR. 8. SO FAR AS THE ASSESSMENT ORDERS IN ALL RESPECT O F THESE ASSESSEES ARE CONCERNED, I FIND THAT THERE IS NOT A SINGLE WH ISPER BY THE A.O. THAT THERE WAS DEFAULT ON THE PART OF THE ASSESSEES TO M AKE COMPLIANCE OF ANY NOTICES ISSUED U/S.142(1) OR 143(2) OF THE ACT OTHER THAN NOTICE DT 14.10.09. IN FACT, ON THE PERUSAL OF THE ASSESSMEN T ORDER, I FIND THAT THE ASSESSEES CHARTERED ACCOUNTANT SHRI RAJESH SHA H WHO WAS AUTHORISED TO REPRESENT THE ASSESSEE ATTENDED THE A SSESSMENT PROCEEDINGS FROM TIME TO TIME AND FILED THE DETAILS CALLED FOR BY THE A.O. THESE ARE OBSERVATIONS OF THE A.O. IN THE ASS ESSMENT ORDERS IN ALL THESE ASSESSEES. THE A.O. HAS ALSO DISCUSSED T HE EXPLANATION FILED BY THE ASSESSEES IN RESPECT OF CERTAIN TRANSACTION S AND HAS FINALLY PASSED THE ASSESSMENT ORDERS U/S.143(3) R.W.S. 153A OF THE ACT. IT IS INTERESTING TO NOTE HERE THAT IN SOME OF THE ASSESS MENT YEARS THE RETURNS OF INCOME FILED BY THESE ASSESSEES HAVE BEE N ACCEPTED. IN FACT, ON THE CAREFUL PERUSAL OF THE ASSESSMENT ORDE R IT IS SEEN THAT NOWHERE ANY GRIEVANCE IS RAISED BY THE A.O. THAT TH E ASSESSEES OR THEIR CHARTERED ACCOUNTANT WERE NON-COOPERATIVE OR MADE ANY CONSCIOUS DEFIANCE OF NOTING DT. 14.10.09. AS STATED ABOVE, IN FACT, IT IS SEEN THAT THE ASSESSEES RESPONDED ON ALL THE DATES AS REQUIR ED BY THE A.O. MERELY BECAUSE ON 20.10.2009 THE CHARTERED ACCOUNTA NT OF THESE ASSESSEES HAS NOT APPEARED OR FILED SOME DETAILS AS ASKED BY THE A.O., THE EXTREME STEP IS TAKEN TO PENALISE THESE ASSESSE ES BY LEVYING THE PENALTY U/S.271(1)(B). IN THE CASE OF HINDUSTAN ST EEL LTD. VS STATE OF ORISSA 83 ITR 26 THE HONBLE SUPREME COURT HAS HELD AS UNDER: AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEE DING, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE P ARTY OBLIGED, EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONS CIOUS ITAS.8656-8658 AND 8660 -8661/M/2011 ITAS.185-186, 246-247 AND 268-269/M/2010 SMT. ZEENAT P. SANGHVI, SMT. SARLA M. SANGHVI & SHRI PARAG M. SANGHVI 6 DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENAL TY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATI ON IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIA LLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EV EN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPET ENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVIS IONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY TH E STATUTE. 9. IN THE PRESENT CASES, NOWHERE IT IS ALLEGED THAT THE CONDUCT OF THE ASSESSEES OR THEIR CHARTERED ACCOUNTANT IN THE PROCEEDINGS WAS DELIBERATE DEFIANCE OF LAW ON THEIR PART. 10. IN MY OPINION THERE WAS NO JUSTIFICATION ON THE PART OF THE A.O. TO LEVY PENALTY ON ALL THESE ASSESSEES FOR THE NON- COMPLIANCE BY FILING THE DETAILS ON 20.10.2009. I, THEREFORE, ALLOW ALL THESE APPEALS FILED BY THE ASSESSEES AND DELETE ALL THE PENALTIES LEVIED B Y THE A.O. U/S.271(1)(B) OF THE ACT. 11. IN THE RESULT, ALL THE ELEVEN APPEALS OF THESE THREE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 9 TH MAY, 2012. SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 9TH MAY, 2012 . COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-37, MUMBAI. 4) THE CIT CENTRAL-I, MUMBAI. ITAS.8656-8658 AND 8660 -8661/M/2011 ITAS.185-186, 246-247 AND 268-269/M/2010 SMT. ZEENAT P. SANGHVI, SMT. SARLA M. SANGHVI & SHRI PARAG M. SANGHVI 7 5) THE D.R. SMC BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN