RAJENDRA NANDKUMAR KALE, MUMBAI V. ACIT CC 32, MUMBAI

ITA 931/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3276 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 13-06-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 10-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R C JAIN; S MAHESHWARI
• Keywords: Search and seizure; Loose papers; Period of limitation; Reasonable cause; Time period of passing order
• Section: 142(1); 153A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 928 TO 934/MUM/2012 (ASSESSMENT YEARS: 2002-03 TO 2008-09) SHRI RAJENDRA NANDKUMAR KALE AICT, CENTRAL CIRCLE 3 2 8, NANDADEEP, KAILASHPURI MUMBAI UPPER GOVIND NAGAR, MALAD (E) VS. MUMBAI 400097 PAN - AAQPK8909A APPELLANT RESPONDENT ITA NO. 1023 TO 1029/MUM/2012 (ASSESSMENT YEARS: 2002-03 TO 2008-09) SMT. RASHMIKALE AICT, CENTRAL CIRCLE 32 8, NANDADEEP, KAILASHPURI MUMBAI UPPER GOVIND NAGAR, MALAD (E) VS. MUMBAI 400097 PAN - AGTPK3426B APPELLANT RESPONDENT APPELLANT BY: SHRI R.C. JAIN & SHRI S. MAHESHWARI RESPONDENT BY: SHRI RAJARSHI DWIVEDY DATE OF HEARING: 18.06.2013 DATE OF PRONOUNCEMENT: 03.07.2013 O R D E R PER BENCH THESE APPEALS ARE DIRECTED AGAINST THE ORDERS PASSE D BY THE CIT(A) CONFIRMING THE PENALTY OF ` 20,000/- (IN EACH CASE) LEVIED UNDER SECTION 271(1)(B) OF THE I.T. ACT, 1961. BOTH THE PARTIES A DMITTED THAT THE DATES OF ISSUE OF NOTICES, NATURE OF DEFAULT, ETC. ARE IDENT ICAL IN THE CASE OF BOTH THE ASSESSEES AND IN RESPECT OF ALL THE YEARS UNDER CO NSIDERATION AND IT WAS SUGGESTED THAT THE FACTS MENTIONED IN THE ORDER PAS SED FOR A.Y. 2002-03 IN THE CASE OF SHRI RAJENDRA NANDKUMAR KALE WOULD GUID E US TO THE ISSUE IN DISPUTE AND THE DECISION TAKEN THEREIN CAN BE APPLI ED TO ALL THE CASES; FACTS AND CIRCUMSTANCES BEING IDENTICAL. WE, THEREFORE, P ROCEED ACCORDINGLY. ITA NO. 928 +13/MUM/2012 SHRI RAJENDRA N. KALE & SMT. RASHMI KALE 2 2. A SEARCH AND SEIZURE ACTION, UNDER SECTION 132A OF THE INCOME TAX ACT, WAS CARRIED OUT ON 26.11.2007 IN THE CASE OF MR. RA JENDRA NANDKUMAR KALE AND GROUP. DURING THE COURSE OF SEARCH CERTAIN DOCU MENTS BELONGING TO THE ASSESSEE AND THE FAMILY MEMBERS WERE FOUND FROM THE IR RESIDENTIAL PREMISES. NOTICE UNDER SECTION 153A WAS ISSUED ON 24.11.2008 AND A REMINDER WAS ALSO SENT TO THE ASSESSEE ON 29.06.2009 AND FINALLY THE ASSESSEE HEREIN FILED RETURN OF INCOME UNDER SECTION 153A OF THE ACT ON 2 8.10.2009. SINCE THE ASSESSMENT WAS GOING TO BE BARRED BY LIMITATION ON 31.12.2009 THE AO ISSUED NOTICE UNDER SECTION 142(1) OF THE ACT ALONG WITH A QUESTIONNAIRE ON 30.10.2009 I.E. IMMEDIATELY AFTER THE DATE OF FILIN G THE RETURN, REQUIRING THE ASSESSEE TO FILE REPLY AND TO APPEAR ON 05.11.2009. THE AO ALSO INFORMED THAT IN THE EVENT OF NOT FURNISHING THE DETAILS THE ASSE SSMENT WOULD BE COMPLETED EXPARTE UNDER SECTION 144 OF THE ACT. SUBSEQUENTLY NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 08.12.2009 CALLING UPON THE ASSESSEE TO FURNISH THE DETAILS WITHIN FIVE DAYS. AGAIN, ANOTHE R NOTICE UNDER SECTION 142(1) WAS ISSUED ON 10.12.2009. SINCE THE ASSESSEE DID NOT RESPOND TO THE NOTICES WITHIN THE TIME FRAME MENTIONED IN THE SAID NOTICES, THE AO INITIATED PROCEEDINGS UNDER SECTION 271(1)(B) OF THE ACT. 3. THE CASE OF THE ASSESSEE BEFORE THE AO WAS THAT THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE REGULARLY ATTENDED B EFORE THE AO AND MADE PERSONAL REQUESTS TO GRANT SOME MORE TIME ON THE GR OUND THAT NECESSARY RECORDS NEED TO BE VERIFIED AND ONLY AFTER CONSULTI NG THE RECORDS EXPLANATION CAN BE FILED; SINCE THE ASSESSEE FILED AN EXPLANATI ON, IT IS NOT A FIT CASE FOR LEVY OF PENALTY. 4. THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND LEVIED PENALTY OF ` 20,000/-, REFERABLE TO THE FAILURE TO RESPOND TO TH E NOTICES ISSUED ON 08.12.2009 AND 10.12.2009. THE CASE OF THE AO WAS T HAT THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNT AND SUPPORTING DOCUMENT S ON THE DATES FIXED FOR HEARING. THE ASSESSEES CLAIM OF ATTENDANCE WAS NOT PROVED FROM RECORD AS THERE WAS NO ENTRY IN THE ORDER SHEET. IT WAS ALSO STATED THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN SUPPORT OF HIS CLAIM T HAT HIS A.R. ATTENDED THE OFFICE IN COMPLIANCE OF THE NOTICES ISSUED UNDER SE CTION 143(2)/142(1) OF THE ACT. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A ) THAT THE ASSESSEE WAS NOT GIVEN SUFFICIENT TIME TO FURNISH THE DETAILS AN D THUS IT WAS NOT POSSIBLE ITA NO. 928 +13/MUM/2012 SHRI RAJENDRA N. KALE & SMT. RASHMI KALE 3 FOR THE ASSESSEE TO COMPLY WITH THE NOTICES, WHICH, IN ITSELF, IS A REASONABLE CAUSE. THE LEARNED CIT(A) OBSERVED THAT THE SEARCH ACTION HAD TAKEN PLACE ON 5 TH OCTOBER, 2007 AND THE LAST AUTHORISATION WAS EXECU TED ON 26 TH NOVEMBER, 2007 AND THE ASSESSEE WAS CALLED UPON TO SUBMIT THE RETURN OF INCOME VIDE NOTICE DATED 25 TH NOVEMBER, 2008. DUE TO THE PROBLEMS CONSEQUENT TO THE SEARCH ACTION, ON THE ENTIRE GROU P, THE ASSESSEE COULD NOT FILE THE RETURN BEFORE 28 TH OCTOBER, 2009. IT WAS ALSO CONTENDED THAT THE AO, FOR THE REASONS BEST KNOWN TO HIM, INITIATED THE AS SESSMENT PROCEEDINGS ALMOST AFTER ONE YEAR OF THE SEARCH, WHICH SHOWS TH E INACTION ON THE PART OF THE DEPARTMENT FOR ONE YEAR. IT WAS ALSO SUBMITTED THAT VIDE NOTICE DATED 8 TH DECEMBER, 2009 THE ASSESSEE WAS ASKED TO ATTEND HEA RING AND FURNISH THE DETAILS BY 15 TH DECEMBER, 2009 AND BEFORE COMPLYING WITH THE SAME NOTICE ANOTHER SHOW CAUSE NOTICE DATED 16 TH DECEMBER, 2009 WAS ISSUED REQUIRING THE ASSESSEE TO PRODUCE THE DETAILS AS PER ANNEXURE - A1 TO THE SHOW CAUSE NOTICE AND ONLY FIVE DAYS TIME WAS GRANTED. IT WAS ALSO SUBMITTED THAT THE ASSESSEES CHARTERED ACCOUNTANT APPEARED FROM TIME TO TIME AND REQUESTED FOR TIME. IT WAS ALSO SUBMITTED THAT THE AO WAS HOL DING TWO CHARGES AT THAT POINT OF TIME AND HENCE HE WAS OVER BURDENED WITH T HE WORK SINCE THE ASSESSMENTS IN RESPECT OF BOTH THE CHARGES WERE TO BE COMPLETED BY 31 ST DECEMBER, 2009 AND HENCE RECORDS OF THE PROCEEDINGS WERE NOT MAINTAINED BUT THE FACT REMAINS THAT THE ASSESSEES CHARTERED ACCOUNTANT APPEARED. IT WAS ALSO CONTENDED THAT THE DETAILS REQUIRED FOR CO MPLIANCE TO THE SHOW CAUSE NOTICE WAS VOLUMINOUS AND THE SAME COULD BE C OLLECTED AND COMPILED BY 26 TH DECEMBER, 2009. IT WAS FURTHER CONTENDED THAT THE ASSESSEE HAD SUFFICIENT REASONS FOR NON-APPEARANCE IN RESPONSE T O THE IMPUGNED NOTICES. 5. THE LEARNED CIT(A) REJECTED THE CONTENTION OF THE A SSESSEE. HE OBSERVED THAT THE ASSESSEE FILED THE RETURN UNDER S ECTION 153A ONLY ON 28.10.2009 DESPITE THE FACT THAT THE ASSESSMENT HAS TO BE COMPLETED BY 31.12.2009 WHICH IN ITSELF SHOWS THAT THE ASSESSEE HAD NOT IMMEDIATELY COMPLIED WITH THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT. IT WAS ALSO STATED THAT THE ASSESSEE IMMEDIATELY RECEIVED THE N OTICES EXCEPT FOR A.Y. 2008-09. FURTHER, THE PROOF OF PERSONAL APPEARANCE IS LACKING. HENCE IT WAS CONCLUDED THAT THE ASSESSEE DID NOT COMPLY WITH THE NOTICES ISSUED UNDER SECTION 142(1)/143(2) OF THE ACT AND, THEREFORE, IT IS A FIT CASE FOR LEVY OF ITA NO. 928 +13/MUM/2012 SHRI RAJENDRA N. KALE & SMT. RASHMI KALE 4 PENALTY FOR ASSESSMENT YEARS 2002-03 TO 2007-08. AS FAR AS A.Y. 2008-09 IS CONCERNED NOTICE UNDER SECTION 142(1) DATED 10.12.2 009 WAS STATED TO HAVE NOT BEEN SERVED AND HENCE THE PENALTY LEVIED ON THA T DEFAULT WAS CANCELLED. HOWEVER, PENALTY OF ` 10,000/- REFERABLE TO FAILURE TO FURNISHING OF DETA ILS IN RESPONSE TO NOTICE UNDER SECTION 143(2) OF THE ACT IS SUSTAINED. 6. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DE CISION IN THE CASE OF MR. SAMEER NANDKUMAR KALE AND MRS. SONIYA SAMEER KALE ( ITA NO. 1009 TO 1015/MUM/2012) IN SUPPORT OF HIS CONTENTION THAT ON IDENTICAL CIRCUMSTANCES IN THE CASE OF HIS BROTHER AND SISTER -IN-LAW THE TRIBUNAL OBSERVED THAT THOUGH THE AO WAS CONSTRAINED TO FRAM E THE ASSESSMENT ON OR BEFORE 31 ST DECEMBER, 2009 AND THERE WAS NO SCOPE FOR GRANTING TIME TO THE ASSESSEE, THE FACT REMAINS THAT THE TIME PERIOD GIV EN BY THE AO TO COMPLY WITH THE NOTICES WAS VERY SHORT AND FAILURE ON THE PART OF THE ASSESSEE TO COMPLY WITH THESE NOTICES, DUE TO SHORTAGE OF TIME, CAN BE SAID TO BE DUE TO BONAFIDE REASONS AND IT CAN CONSTITUTE A REASONABLE CAUSE IN WHICH EVENT PENALTY OUGHT NOT HAVE BEEN LEVIED. THE TRIBUNAL, T HEREFORE, CANCELLED THE PENALTY LEVIED ON THE SAID ASSESSEES. THE LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FACTS BEING IDENTICAL, IN THE IN STANT CASES ALSO THE PENALTY LEVIED BY THE AO DESERVES TO BE DELETED. 7. ON THE OTHER HAND, THE LEARNED D.R. SUBMITTED THAT THE ASSESSEE IS A HABITUAL DEFAULTER AND HENCE THE BACKGROUND OF THE CASE HAS TO BE TAKEN INTO CONSIDERATION INSTEAD OF TAKING THE SHORT NOTI CES (TIME GIVEN TO RESPOND), IN THE PRESENT CASE, IN ISOLATION. IN THIS REGARD H E SUBMITTED THAT THE NOTICE UNDER SECTION 153A WAS ISSUED ON 24.11.2008 BUT THE ASSESSEE HAD TAKEN ALMOST ONE YEAR TO FILE THE RETURN KNOWING FULLY WE LL THAT THE ASSESSMENT WOULD BE BARRED BY LIMITATION ON 31.12.2009. THERE WERE ALSO MANY LAPSES ON THE PART OF THE ASSESSEE. NO DOUBT, THERE WERE M ANY LOOSE PAPERS FOUND AT THE TIME OF SEARCH AND THE ASSESSEE REQUESTED FO R FURNISHING COPIES OF THE DOCUMENT TO ENABLE HIM TO FILE THE RETURN BUT IT CA NNOT BE IGNORED THAT THE CONTENTS OF THE DOCUMENTS ARE WITHIN THE KNOWLEDGE OF THE ASSESSEE AND IT CANNOT BE SAID THAT ANY DELAY IN FILING THE RETURN WAS ONLY ON ACCOUNT OF NON-AVAILABILITY OF SUCH PAPERS. SINCE THE ASSESSME NT HAS TO BE MADE ON OR BEFORE 31.12.2009, PARTICULARLY HAVING REGARD TO TH E FACT THAT IT IS A SEARCH ITA NO. 928 +13/MUM/2012 SHRI RAJENDRA N. KALE & SMT. RASHMI KALE 5 AND SEIZURE MATTER, THE AO PURSUED THE MATTER BY IS SUING REMINDERS TO THE ASSESSEE. IN FACT ON 29.07.2009 A REMINDER WAS ISSU ED TO THE ASSESSEE CALLING UPON HIM TO FILE THE RETURN. KEEPING IN MIN D THAT IF THERE IS A DELAY IN FILING THE RETURN FURTHER DETAILS CANNOT BE COLLECT ED FOR MAKING A PROPER ASSESSMENT, NOTICE UNDER SECTION 142(1) WAS ISSUED ALONGWITH A QUESTIONNAIRE ON 28.10.2009 AND ALSO A SHOW CAUSE N OTICE CALLING UPON THE ASSESSEE AS TO WHY PROSECUTION PROCEEDINGS SHOULD N OT BE INITIATED WAS ISSUED AND FINALLY SHOW CAUSE NOTICE UNDER SECTION 144 WAS ALSO ISSUED ON 30.10.2009 FIXING THE CASE FOR HEARING ON 05.11.200 9. THUS THE ASSESSEE WAS VERY MUCH AWARE THAT THE ASSESSMENT WAS GETTING BARRED BY LIMITATION AND HENCE HE OUGHT TO HAVE TAKEN SWIFT ACTION AND C OULD HAVE FURNISHED THE REQUIRED INFORMATION. LOOKING AT FROM THIS BACKDROP THE AO WAS REASONABLE IN GIVING FIVE DAYS TIME TO ENABLE THE ASSESSEE TO FURNISH THE DETAILS AND HE IS ALSO JUSTIFIED IN LEVYING PENALTY FOR NON-COMPLI ANCE TO THE NOTICES ISSUED UNDER SECTION 142(1) AND 143(2) OF THE ACT. HE THUS STRONGLY SUPPORTED THE ORDERS PASSED BY THE TAX AUTHORITIES. 8. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSE SSEE ADVERTED OUR ATTENTION TO THE DETAILED SUBMISSIONS MADE BEFORE T HE AO AS WELL AS THE CIT(A) AND IN PARTICULAR TO PAGE NO. 30 OF THE PAPER BOOK TO SUBMIT THAT DUE TO THE HUGE DEMAND RAISED IN THE ASSESSMENT PROCEEDINGS PE RTAINING TO A.Y. 2001-02 THE FAMILY MEMBERS WERE IN A STATE OF SHOCK. THERE WAS A FURTHER CALAMITY IN THE FORM OF ROBBERY AT THE RESIDENCE OF THE KALES, WHICH CREATED FURTHER LIQUIDITY CRUNCH. THE MATTER PERTAINS TO A.Y. 2002- 03 TO 2008-09 AND CONSIDERABLE TIME HAD TO BE SPENT ON ACCUMULATION O F EVIDENCE FROM VERY OLD DOCUMENTS. HAVING REGARD TO THE CIRCUMSTANCES NON-C OMPLIANCE TO THE NOTICES, ISSUED ON 08.12.2009 AND 10.12.2009 TO APPEAR WITHI N SUCH A SHORT SPAN OF TIME, IS ON ACCOUNT OF BONAFIDE REASONS. SINCE THER E WAS REASONABLE CAUSE FOR NON-APPEARANCE, IN THE LIGHT OF THE DECISION OF THE ITAT E BENCH MUMBAI RENDERED UNDER IDENTICAL CIRCUMSTANCES, IT IS NOT A FIT CASE FOR LEVY OF PENALTY. HE THUS STRONGLY RELIED UPON THE ORDER PASSED BY TH E ITAT E BENCH MUMBAI. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IT IS WELL SETTLED THAT EACH NOTICE HAS TO BE CONSIDERED INDEPENDENTLY. THERE IS NO YARDSTICK TO PRESCRIBE AS TO WHAT IS TH E LENGTH OF TIME WHICH COULD BE CONSIDERED AS REASONABLE TIME BUT BEARING IN MIND THE FACT THAT THE ITA NO. 928 +13/MUM/2012 SHRI RAJENDRA N. KALE & SMT. RASHMI KALE 6 ASSESSEE HAD TO COLLECT COMPLETE DETAILS OF SEVERAL ASSESSMENT YEARS, THAT TOO FROM OLD RECORDS, FIVE DAYS TIME CANNOT BE CONSIDER ED TO BE SUFFICIENT. AT ANY RATE, WE ARE CONCERNED HEREIN WITH THE ISSUE AS TO WHETHER NON-COMPLIANCE TO THE NOTICES IS ON ACCOUNT OF BONAFIDE CAUSE OR N OT AND WE ARE NOT DECIDING HERE AS TO WHETHER THE ASSESSEE COULD GET AWAY UNDE R GUISE OF SHORTAGE OF TIME BY FILING THE RETURN BELATEDLY AND ALSO BY FUR NISHING THE DETAILS AT THE FAG END OF THE LIMITATION PERIOD. SUFFICE TO SAY TH AT THE ITAT E BENCH MUMBAI HAVING DEALT WITH A CASE UNDER IDENTICAL FAC TS AND CIRCUMSTANCE TO HOLD THAT NON-COMPLIANCE TO THE NOTICES IS SUPPORTE D BY REASONABLE CAUSE, WE DEEM IT FAIR AND REASONABLE TO FOLLOW THE PRECED ENT. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT N ON-COMPLIANCE TO THE IMPUGNED NOTICES IS SUPPORTED BY A REASONABLE CAUSE AND HENCE PENALTY UNDER SECTION 271(1)(B) OF THE ACT DESERVES TO BE D ELETED. WE DIRECT THE AO ACCORDINGLY. FOR THE SAME REASONS WE ALLOW THE APPE ALS FILED BY BOTH THE ASSESSEES HEREIN. 10. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEES H EREIN ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JULY, 2013. SD/- SD/- (D. KARUNAKARA RAO) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 3 RD JULY, 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 37, MUMBAI 4. THE CIT CENTRAL-1, MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.