Hareshkumar L. Udeshi, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-4(4), RAJKOT-GUJARAT

ITA 94/RJT/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80075 (ITAT-RAJKOT)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 30-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANT JHAVERI
• Assessee Lawyers: DR ADHIA
• Keywords: Principle of natural justice; Reasonable cause; Non compliance; Reassessment proceedings
• Section: 147; 27; 148; 144; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO.94/RJT/2014 ASSESSMENT YEAR : 2008-09 HARESHKUMAR L. UDESHI, LIC OF INDIA, PATTANI BUILDING, RAJKOT PAN : AAEPU 7869 F ( / APPELLANT) THE INCOME-TAX OFFICER, WARD 4(4), RAJKOT / RESPONDENT / ASSESSEE BY SHRI D.R. ADHIA, AR / REVENUE BY SHRI JAYANT JHAVERI, DR / DATE OF HEARING 23.04.2014 !'# / DATE OF PRONOUNCEMENT 09.05.2014 / ORDER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 20.12.2013 OF CIT (A)- III, RAJKOT CONFIRMING THE PENALTY OF RS.10,000/- L EVIED BY THE ASSESSING OFFICER U/S. 271(1)(B) OF THE INCOME-TAX ACT FOR THE ASSESSMENT YEAR 2008-09. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DOING JOB WITH LIC OF INDIA AS A DEVELOPMENT OFFICER. FOR THE ASSESSME NT YEAR UNDER APPEAL, HE FILED THE RETURN OF INCOME ON 17.02.2009 DECLARING TOTAL INCOME AT RS.5,88,170/-. THE RETURN OF INCOME WAS ACCEPTED U/S 143(1) OF THE ACT . THEREAFTER THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT ON THE GROUND THAT CERT AIN INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND ACCORDINGLY A NOTICE U/S 148 WAS ISSUED UPON TO THE ASSESSEE ON 04.08.2010 WHEREBY THE ASSESSEE WAS ASK ED TO FILE RETURN OF INCOME BY 19.08.2010. DURING THE COURSE OF RE-ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER ISSUED A NOTICE U/S 142(1) OF ACT ON 21.03.2011, FI XING THE DATE OF HEARING ON 29.04.2011, ASKING TO FURNISH THE REQUIRED INFORMAT ION. HOWEVER, NO COMPLIANCE WAS MADE; THEREFORE, THE ASSESSING OFFICER INITIATED PE NALTY PROCEEDINGS U/S 271(1)(B) R.W.S. 274 OF THE ACT AND ACCORDINGLY NOTICE U/S 27 4 DATED 05.12.2011 WAS SERVED UPON TO THE ASSESSEE 05.12.2011 ITSELF CALLING EXPL ANATION BY 13.12.2011. ON 15.12.2011, THE ASSESSEE FURNISHED A REPLY EXPLAINI NG THAT HE MISPLACED THE NOTICE U/S 142(1) OF THE ACT; THEREFORE HE COULD NOT COMPL Y WITH THE NOTICE ISSUED. THE SUBMISSION OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER ON THE 2 94-RJT-2014 HARESHKUMAR L UDESHI_PENALTY (SMC) GROUND THAT NUMBER OF NOTICES AND LETTERS, ASKING H IM TO PRODUCE THE SPECIFIC INFORMATION, WERE REMAINED UNATTENDED BY THE ASSESS EE. THEREFORE, THE ASSESSING OFFICER LEVIED PENALTY OF RS.10,000/- U/S 271(1)(B) OF THE INCOME-TAX ACT ON 14.06.2012. ON APPEAL, IN THE IMPUGNED ORDER, LD. C IT(A) CONFIRMED THE PENALTY OF RS.10,000/-, LEVIED BY THE ASSESSING OFFICER U/S. 2 71(1)(B) OF THE INCOME-TAX ACT, FOR THE DETAILED REASON GIVEN IN PARAGRAPH 4 OF THE IMP UGNED ORDER, WHICH READS AS UNDER:- 4. I HAVE CONSIDERED CAREFULLY THE PENALTY ORDER P ASSED U/S 271(1)(B) OF THE IT ACT 1961 BY THE ASSESSING OFFICER, AND THE A RGUMENTS OF THE AR. IT IS FOUND THAT THE APPELLANT IS HABITUALLY NON-COMPLAIN T TO THE NOTICES ISSUED DURING THE REASSESSMENT PROCEEDINGS AND THEREFORE, THE ASSESSMENT IS COMPLETED U/S 144 R.WS. 147 ON 16.12.2011 FOR THE A Y 2008-09. FURTHER, THE MEDICAL CERTIFICATE OF APPELLANTS WIFE FURNISHED D URING THE COURSE OF APPELLATE PROCEEDINGS DATED 11.09.2011 SHOWS PERIOD TO TAKE R EST FROM 23.08.2011 TO 11.09.2011, WHEREAS THE NOTICE WAS ISSUED U/S 142(1 ) OF THE IT ACT, 1961 DATED 21.03.2011 FIXING HEARING ON 29.04.2011. THER EFORE, THERE IS NO REASONABLE CAUSE FOR NON-COMPLIANCE TO NOTICE FIXIN G HEARING ON 29.04.2011, AS THE MEDICAL CERTIFICATE SUGGEST PERIOD TO TAKE R EST FROM 23.08.2011 TO 11.09.2011. HENCE, THIS IS A FIT CASE FOR LEVY OF P ENALTY U/S 271(1)(B). PENALTY LEVIED AT RS.10,000/- U/S 271(1)(B) FOR A.Y. 2008-0 9 STANDS CONFIRMED. AGGRIEVED WITH THE ORDER OF LD. CIT(A) CONFIRMING T HE PENALTY OF RS.10,000/-, THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 3. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E, SHRI D.R. ADHIA, AR, APPEARED AND FILED WRITTEN SUBMISSIONS, WHICH READ AS UNDER:- 1. THE LD. A.O. HAS LEVIED PENALTY FOR NON ATTENDA NCE AND NON COMPLIANCE OF NOTICES ISSUED U/S 142(1) ON THE FOLLOWING DATES : SR. NO. DATE OF NOTICE DATE OF HEARING FIXED REMAR KS 1. 21.03.2011 29.04.2011 NOTICE U/S 142(1) 2. THE ONLY DAUGHTER OF THE ASSESSEE WAS SUFFERING FROM TYPHOID FEVER AS PER MEDICAL CERTIFICATE DATED 01.05.2011 (COPY ENCL OSED) ATTACHED HEREWITH AND THEREFORE THE ASSESSEE WAS COMPLETELY NERVOUS A ND DEPRESSED SINCE FOR TAKING CARE OF THIS UNMARRIED DAUGHTER THERE IS NO ONE ELSE IN THE FAMILY EXCEPT HIS WIFE WHO IS ALSO SUFFERING FROM CHEST PROBLEM, TO LOOK AFTER SUCH MATTER AND THEREFORE THE ASSESSEE HAS TO ATTEND ALL SUCH RESPO NSIBILITIES. THE DOCTOR HAS ALSO ADVISED REST TO HIS DAUGHTER FROM 19.03.2011 T O 01.05.2011. THIS BEING THE REASONABLE CAUSE THE NON-COMPLIANCE MAY KINDLY BE CONDONED AS THE ASSESSEE WAS TOTALLY BEHIND THE MEDICAL TREATMENT O F HIS ONLY DAUGHTER. 3. MOREOVER, ALSO THE ASSESSMENT IS NOT COMPLETED U /S 144 ON THE DATE OF HEARING I.E. 29.04.2011 BUT COMPLETED ON 16.12.2011 . THE HON. ITAT (JODHPUR 3 94-RJT-2014 HARESHKUMAR L UDESHI_PENALTY (SMC) BENCH 92 TTJ 764) IN THE CASE OF PARMESHWARI TEXTIL E (COPY ENCLOSED) HAS BEEN PLEASED TO HOLD THAT WHEN ASSESSMENT IS NOT CO MPLETED U/S 144 ON THE DATE OF HEARING FIXED, NO PENALTY CAN BE LEVIED U/S 271(1)(B). 4. MOREOVER ALSO THE NON-COMPLIANCE IS NOT AT ALL I NTENTIONAL. IN VIEW OF DECISION OF THE HON. SUPREME COURT IN THE CASE OF H INDUSTAN STEEL LTD. (83 ITR 26) PENALTY IS NOT LEVIABLE. 5. IT IS THEREFORE STATE THAT PENALTY LEVIED OF RS. 10,000/- MAY KINDLY BE DELETED. APART FROM THE AFORESAID WRITTEN SUBMISSION, THE LD . COUNSEL OF THE ASSESSEE POINTED OUT THAT THE ASSESSING OFFICER FRAMED THE A SSESSMENT U/S 144 R.W.S. 147 ON 16.12.2011. NO NOTICE OF HEARING FIXING THE DATE OF HEARING ON 16.12.2011 WAS GIVEN. THEREFORE, KEEPING IN VIEW THE RATIO OF JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF S. VELU PALANDAR V. CIT, REPORTED IN (1972) 83 ITR 683 (MAD), NO PENALTY U/S 271(1)(B) CAN BE IMPOSED FOR NON-COMPLIANCE OF NOTI CE U/S 142(1) ISSUED ON 21.03.2011 FIXING THE DATE OF HEARING ON 29.04.2011 . WITHOUT PREJUDICE TO THIS, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FOR NON-COMPLIANCE WITH THE NOTICES ISSUED BY THE ASSESSING OFFICER AS HIS WIFE WAS NOT KEEPING WELL AS IS EVIDENT FROM THE MEDICAL CERTIFICATE FURNISHED. THE LD. CIT(A) REJECTED THE EXPLANATION OF THE ASSESSEE FOR NON-COMPLIANCE OF NOTICE ON DOUBT AND SUSPICION; THEREFORE, THE PENALTY OF RS.1 0,000/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(B) OF THE ACT BE CANCELLED. 4. ON THE OTHER HAND, SHRI JAYANT JHAVERI, LD. DEPA RTMENTAL REPRESENTATIVE, APPEARED ON BEHALF OF REVENUE VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. RIVAL SUBMISSIONS WERE CONSIDERED. THE HONBLE M ADRAS HIGH COURT IN THE CASE OF S. VELU PALANDAR V. CIT, REPORTED IN (1972) 83 ITR 683 (MAD) HELD AS UNDER:- I AM NOT INCLINED TO GO INTO THE MERITS, AS I AM F AIRLY SATISFIED THAT THE PETITIONER DID NOT HAVE AN EFFECTIVE OPPORTUNITY TO STATE HIS OBJECTIONS AND SUSTAIN HIS CASE THAT THE GOODS IN QUESTION CANNOT ON OVER BE SUBJECTED TO TAX, AS, IN LAW, THEY ARE LIABLE TO SALES TAX AT ONE SIN GLE POINT. THE MAIN CONTENTION OF THE LEARNED COUNSEL FOR THE PETITIONER IS THAT T HE FIXATION OF TIME-LIMIT DURING THE WORKING HOURS OF A NOTIFIED DATE IS BY ITSELF A METHOD WHICH MILITATES AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND FAIR HEARING. IF ANY QUASI-JUDICIAL TRIBUNAL GIVES A PARTY BEFORE IT AN OPPORTUNITY TO EXPLAIN HIMSELF OR HERSELF TO A 4 94-RJT-2014 HARESHKUMAR L UDESHI_PENALTY (SMC) PARTICULAR ACTION PROPOSED BY THE SAID AUTHORITY, T HEN, IT WOULD BE FUTILE TO TAKE A PARTICULAR HOUR OF A DAY AS THE OUTER LIMIT FOR M AKING SUCH SUBMISSIONS. IT WOULD BE NORMALLY DIFFICULT EVEN FOR SUCH AN AUTHOR ITY WHO FIXES SUCH AN OUTER LIMIT, TO OBEY IT ITSELF FOR ALL PURPOSES. THERE MA Y BE INSTANCES WHERE THE AUTHORITY MAY NOT BE IN A POSITION TO TAKE UP THE C ASE ON THAT DATE DUE TO OFFICIAL PRESSURE OR OTHERWISE. IF AN OPPORTUNITY I S GIVEN TO A PARTY TO EXPLAIN ITSELF OR SUBMIT ITS OBJECTIONS, SUCH AN OPPORTUNIT Y MUST BE REALISTIC AND NOT NOTIONAL. IF ANY TIME, SUCH AS THE ONE GIVEN IN THI S CASE, IS GIVEN, THE NORMAL PRESUMPTION IS THAT THE PERSON WHO IS TO STATE HIS OBJECTIONS CAN FILE THE SAME BEFORE THE EXPIRY OF THE WORKING HOURS OF THAT DATE . SUCH OUTER LIMIT MAY BE FIXED FOR ADMINISTRATIVE CONVENIENCE; BUT, IF IT CO MES TO THE QUESTION OF APPRECIATION OF RIGHTS AND OBLIGATIONS OF PARTIES, EQUITY AND JUSTICE INTERFERE AND COMPEL COURTS TO AFFORD A REASONABLE AND EFFECT IVE OPPORTUNITY TO PERSONS AGGRIEVED AND AFFECTED TO STATE THEIR OBJECTIONS BY THE END OF THE WORKING DAY IN QUESTION NOTWITHSTANDING THE FACT THAT AN HOUR, A MINUTE OR A SECOND OF THE DAY IS NOTED IN THAT ORDER. IN THE INSTANT CASE, THEREFORE, THE NORMAL PRESUMPT ION IS THAT THE PETITIONER WOULD BE ENTITLED TO FILE HIS OBJECTIONS ON OR BEFO RE 25TH MARCH, 1967, ITSELF AND THEREFORE THERE IS A VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, IN THAT THE PETITIONER DID NOT HAVE A REAL OPPORTUNITY TO STATE HIS CASE, AS THE ASSESSMENT ORDER WAS MADE ON THAT DAY ITSELF. ON THIS ONLY GRO UND, THE RULE NISI IS MADE ABSOLUTE AND THE WRIT PETITION IS ALLOWED. FROM THE PERUSAL OF THE DECISION OF OF HONBLE MAD RAS HIGH COURT IN THE CASE OF S. VELU PALANDAR V. CIT (SUPRA), IT CAN BE SEEN THAT IN CASE OF NON-COMPLIANCE OF NOTICE THE ASSESSMENT OUGHT TO HAVE COMPLETED ON TH E DATE OF HEARING ITSELF. ADMITTEDLY, THIS WAS NOT DONE BY THE ASSESSING OFFI CER IN THE PRESENT CASE. I AM, THEREFORE, OF THE VIEW THAT THIS IS NOT A FIT CASE TO LEVY PENALTY U/S 271(1)(B) OF THE ACT. WITHOUT PREJUDICE TO THIS, I AM ALSO CONVINCED THAT THE EXPLANATION OF THE ASSESSEE FOR NON-COMPLIANCE OF NOTICE U/S 142(1) IS REJECTED ON DOUBT AND SUSPICION. KEEPING IN VIEW OF THESE CONSPICUOUS FACTS OF THE CASE, THE PE NALTY OF RS.10,000/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(B) IS HEREBY CANCELLED . 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 09.05.2014 !$ /RAJKOT *BT 5 94-RJT-2014 HARESHKUMAR L UDESHI_PENALTY (SMC) / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- HARESHKUMAR L. UDESHI, LIC OF INDIA, PATTANI BUILDING, RAJKOT 2. / RESPONDENT- THE INCOME-TAX OFFICER, WARD 4(4), RAJKOT 3. ,0,1 * * 2 / CONCERNED CIT-II, RAJKOT 4. * * 2- / CIT(A)-III, RAJKOT 5 . 567 1, * 1#, !$ / DR, ITAT, RAJKOT 6 . 79 :; / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT