Sub Registrar Narapally, Hyderabad, Hyderabad V. DIT (I&CI), Hydeabad, Hyderabad

ITA 936/HYD/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2487 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 29-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K. SRINIVAS REDDY
• Keywords: Right to appeal
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 936/HYD/2017 ASSESSMENT YEAR: 2015-16 SUB-REGISTRAR, NARAPALLY, HYD. PAN AAALS 6418 G VS. DIRECTOR OF INCOME-TAX (INTELLIGENCE & CRIMINAL INVESTIGATION), HYD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SHRI DR. K. SRINIVAS REDDY DATE OF HEARING 20/02/2018 DATE OF PRONOUNCEMENT 28/02/2018 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 10/03/2017 PASSED U/S 271FA OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) BY DIT (INTELLIGENCE & CRIMINAL INVESTIG ATION), HYDERABAD RELATING TO AY 2015-16. 2. BRIEFLY THE FACTS OF THE CASE ARE, ACCORDING TO THE DIT (INTELLIGENCE & CRIMINAL INVESTIGATION)THE ASSESSEE APPOINTED UNDER SECTION 6 OF THE REGISTRATION ACT, 1908 IS PERSON RESPONSIBLE WITHIN THE MEANING OF SECTION 285BA OF THE ACT, ACCORDING TO WHICH, HE IS REQUIRED TO FILE ANNUAL INFORMATION RETURN (AIR) IN FORM NO. 61A TO THE DIT (INTELLIGENCE & CRIMINAL INVESTIGATION) BY 31 ST AUGUST, 2014 IN RESPECT OF THE SPECIFIED FINANCIAL TRANSACTIONS FOR THE FY 2014-15. AS PER THE DIT (INTELLIGENCE & CRIMINAL INVESTIGATION) , THE RETURN FILED BY THE ASSESSEE IS FOUND TO BE DEFECTIVE INASMUCH AS T HE INFORMATION 2 ITA NO. 936 /HYD/2017 SUB REGISTRAR NARAPALLY, HYD. FOUND IS INACCURATE/INCOMPLETE. ACCORDINGLY, NOTICE U/S 285BA(4) WAS ISSUED TO THE ASSESSEE ON 29/01/2016 REQUIRING THE ASSESSEE TO RECTIFY THE DEFECTS POINTED OUT WITHIN ONE MONTH OF ISSUE OF NOTICE. AS THERE WAS NO COMPLIANCE BY THE ASSESSEE TO THE SAID NOTICE, THE DIT (INTELLIGENCE & CRIMINAL INVESTIGATION) ISSUED A NO TICE U/S 271FA ON 31/10/206 TO THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY SHOULD NOT BE IMPOSED. SINCE THE ASSESSEE FAILED TO COMPLY /FURNISH ANY REPLY TO THE SAID NOTICE, DIT (INTELLIGENCE & CRIMINAL IN VESTIGATION), LEVIED A PENALTY OF RS. 55,700/- FOR THE PERIOD OF 557 DAYS DURING WHICH THE FAILURE CONTINUED. 3. AGGRIEVED BY THE SAID ORDER, THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1 ) THE ORDER OF THE LEARNED DIRECTOR OF INCOME-TAX ( INTELLIGENCE & CRIMINAL INVESTIGATION) IS ERRONEOUS BOTH ON FACT S AND IN LAW. 2) THE LEARNED DIRECTOR OF INCOME-TAX (INTELLIGENCE & CRIMINAL INVESTIGATION) OUGHT TO HAVE SEEN THAT THE APPELLAN T COMPLIED WITH ALL THE PROVISIONS OF SEC.285BA OF THE I.T. AC T AND THAT, THEREFORE, PENALTY U/S 271FA OF THE I.T.ACT IS NOT LEVIABLE. 3) THE LEARNED DIRECTOR OF INCOME-TAX (INTELLIGENCE & CRIMINAL INVESTIGATION) OUGHT TO HAVE CONSIDERED THE FACT TH AT ALL THE INFORMATION NECESSARY U/S 285BA WAS FURNISHED BY TH E APPELLANT AND WHEN CLARIFICATION WAS SOUGHT REVISED STATEMENT S WERE FURNISHED AND, THEREFORE, NO PENALTY IS LEVIABLE. 4) WITHOUT PREJUDICE, THE LEARNED DIRECTOR OF INCOM E-TAX (INTELLIGENCE & CRIMINAL INVESTIGATION) ERRED IN LE VYING PENALTY AGAINST THE SUB REGISTRAR. 5) ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 4. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON PERUSAL OF RECORD, WE FIND THAT THE ISSU E IN DISPUTE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISI ON OF THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF THE CI TIZEN COOPERATIVE SOCIETY LTD. IN ITA NO. 687/HYD/2017 WHEREIN THE CO ORDINATE BENCH DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING A S UNDER: 3 ITA NO. 936 /HYD/2017 SUB REGISTRAR NARAPALLY, HYD. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE PROVISIONS OF THE ACT. SECTION 271FA IS A PENALTY WHICH IS LEVIABLE BY THE PRESCRIBED INCOME TAX AUTHORITY. THE ORDER OF THE DIT INDICATES THAT HE IS NOMINATED TO BE BY THE INCOME TAX AUTHORITY FOR ACCEPTING THE RETURNS TO BE FILED U/S. 285BA(1) . THEREFORE, IT SEEMS THE DIT HAS INVOKED THE POWERS OF 271FA FOR LEVYING OF PENALTY. EVEN THOUGH THERE IS NO SPECIFIC PROVISION FOR APPEAL BEFORE THIS FORUM, NOR BEFORE THE CIT(A), LD.DIT SPECIFICALLY GAVE THE OPTION TO ASSESSEE TO FILE THE APPEAL BEFORE TH E LD.CIT(A). ASSESSEE, HOWEVER TOOK ITS OWN OPINION, IN THE ABSENCE OF CLARIFICATION SO UGHT FROM DIT(I&CI) AND PREFERRED THE APPEAL BEFORE THIS FORUM. 5.1. IN THE COURSE OF ARG UMENTS, ASSESSEES COUNSEL WAS ADVISED TO PREFER AN APPEAL BEFORE THE LD.CIT(A) AS DIRECTED BY THE DIT(I&CI) AFTER LEVYING THE PENALTY IN THE DEMAND NOTICE. IF THE OR DER HAS BEEN PASSED BY THE LD.CIT(A), THIS FORUM CAN ENTERTAIN THE APPEAL ON SUCH AN ORDE R. OTHERWISE, ASSESSEE CAN CHOOSE TO FILE A WRIT PETITION BEFORE THE HON'BLE HIGH COU RT, AS THIS FORUM IS ONLY A STATUTORY AUTHORITY CONSTITUTED UNDER THE INCOME TAX ACT AND THE RIGHT OF APPEAL ON EVERY ORDER HAS TO BE STATUTORILY PROVIDED EITHER TO THE CIT(A) OR TO THE ITAT AS THE CASE MAY BE. SINCE A PENALTY ORDER U/S. 271FA IS NOT DIRECTLY AP PEALABLE ORDER BEFORE THIS FORUM, THE APPEAL PREFERRED BY ASSESSEE IS LIABLE TO BE DISMIS SED. 6. HOWEVER, BEFORE CONCLUDING IT IS NOT OUT OF PLAC E TO STATE THAT THE PAPER BOOK FURNISHED BEFORE THIS FORUM INDICATES THAT ASSESSEE DID IN FACT FILE STATEMENT U/S. 285BA(1) BEFORE THE INCOME TAX AUTHORITIES SO THE P ENALTY LEVIED FOR NOT FILING U/S 271FA DOES NOT ARISE. VIDE A LETTER DT.27-10-2016, THE ITO, HQRS., IN THE OFFICE OF DIT(I&CI) INFORMED THE ASSESSEE THAT IN ABOUT 120 N UMBER OF TRANSACTIONS, PAN WAS NOT MENTIONED. IT WAS FURTHER INFORMED THAT IT MAY BE NOTED THAT FURNISHING OF INCOMPLETE AND INCORRECT INFORMATION IS LIABLE FOR PENALTY U/S. 271FAA OF THE ACT. ASSESSEE WAS ASKED TO UPDATE THE DATA BY QUOTING PA N BY 04-11-2016. HOWEVER, THE DIT(I&CI) ISSUED A SHOW CAUSE NOTICE DT. 31-10-2016 (I.E., WITHIN THE TIME GIVEN TO ASSESSEE FOR RECTIFYING THE RETURN) AS TO WHY A PEN ALTY U/S. 271FA SHOULD NOT BE LEVIED. AS PLACED ON RECORD, AN EXPLANATION WAS INDEED FILE D BY ASSESSEE ON 06-12- 2016, ASKING FOR A FORTNIGHT TIME AND FURTHER ANOTHER LET TER WAS FILED ON 28-12-2016 EXPLAINING THE FACTUAL AND LEGAL POSITION WITH REFE RENCE TO LEVY OF PENALTY U/S. 271FA. THERE IS NO MENTION OF THESE REPLIES GIVEN BY ASSES SEE IN THE PENALTY ORDER PASSED BY THE DIT. NOT ONLY THAT THE PENALTY ORDER REFERS TO A SHOW CAUSE LETTER DT. 29-01-2016, WHEREAS SHOW CAUSE ISSUED BY THE ITO, HQRS., IS DT. 27-10-2016. THE FIRST SENTENCE OF THE PENALTY ORDER INDICATES THAT ASSESSEE IS A PER SON COVERED AS A REGISTRAR OR SUB- REGISTRAR APPOINTED U/S. 6 OF THE REGISTRATION ACT, 1908. HOWEVER, AS FROM THE FACTS, ASSESSEE IS NOT A REGISTRAR OR SUB-REGISTRAR APPOIN TED UNDER SUB-CLAUSE (6) OF THE REGISTRATION ACT, BUT CLAIMING STATUS OF A BANKING COMPANY, WHICH IS ALSO YET TO BE ADJUDICATED FINALLY, AS STATED IN REPLY BEFORE THIS FORUM. EVEN CALCULATION OF 557 DAYS FOR LEVY OF PENALTY AT RS. 100/- IS NOT VERIFIABLE, GIVEN THE DATES INVOLVED. IT SEEMS TO BE A CASE WHERE SHOW CAUSE NOTICE WAS ISSUED U/S. 271F AA (FOR FURNISHING INACCURATE STATEMENT) BUT PENALTY WAS LEVIED U/S. 271FA FOR NO NFILING OF STATEMENT. ASSESSEE DID INDEED FILE A RETURN/STATEMENT IN TIME AND IF THE D EFICIENCIES ARE NOT RECTIFIED, WITHIN THE TIME ALLOWED IT HAS TO BE TREATED AS INVALID R ETURN UNDER SECTION 285BA(4). NO SUCH ACTION SEEMS TO HAVE BEEN TAKEN BY THE INCOME TAX AUTHORITY BEFORE LEVY OF PENALTY U/S. 271FA. NOT ONLY TAKING THE STATUS OF A SSESSEE BUT ALSO THE DATES INVOLVED ALONG WITH THE FACT THAT ASSESSEE DID FILE A RETURN AS PER THE PROVISIONS INDICATES THAT THERE IS NO APPLICATION OF MIND BY THE DIT(I&CI) BE FORE LEVY OF PENALTY. THERE MAY BE MERIT IN ASSESSEES CONTENTIONS THAT PENALTY IS NOT WARRANTED ON THE FACTS OF THE CASE. HOWEVER, AS THIS FORUM CANNOT ENTERTAIN THE APPEAL ITSELF, WITHOUT CONSIDERING THE MERITS OF THE CONTENTIONS, APPEAL MEMO IS DISMISSED AS INFRUCTUOUS. 4 ITA NO. 936 /HYD/2017 SUB REGISTRAR NARAPALLY, HYD. 7. IN THE RESULT, MEMORANDUM OF APPEAL IS DISMISSED . AS THE ISSUE UNDER CONSIDERATION IS MATERIALLY IDEN TICAL TO THE SAID CASE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN, WE D ISMISS THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 28 TH FEBRUARY, 2018 KV COPY TO:- 1) SUB REGISTRAR NARAPALLY, H.NO. 11-29 OLD 3-85 NE W NARAPALLY, HYDERABAD 501 301 2) DIT (I & CI), AAYAKAR BHAVAN, BASHEERBAGH, HYD. 3) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 4) GUARD FILE /