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Income Tax Appellate Tribunal, HYDERABAD BENCH “B”, HYDERABAD
Before: SMT. P. MADHAVI DEVI & SHRI A. MOHAN ALANKAMONY
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH “B”, HYDERABAD (Through Virtual Hearing) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER Assessment Year:2011-12 A. Vidya Sagar, Vs. Addl. CIT, Hyderabad. Range-1, PAN: AGAPA 6282 E Hyderabad. (Appellant) (Respondent) Assessee by: Shri P. Murali Mohana Rao Revenue by: Shri Rohit Mujumdar, DR Date of hearing: 17/12/2020 Date of pronouncement: 07/01/2021 ORDER PER A. MOHAN ALANKAMONY, AM.:
This appeal is filed by the assessee against the order of the ld. CIT (A)-1, Hyderabad in appeal No.0732/CIT(A)-1/Hyd/2011-12/2017-18, dated 19/05/2017 passed U/s. 272A(1)(c) r.w.s 250(6) of the Act for the AY: 2011-12.
The assessee has raised five grounds and fifteen additional grounds in his appeal however, the Ld. AR acknowledged that the sum and substance of the appeal is that the Ld. CIT (A) has erred in upholding the penalty levied by the Ld. AO for Rs. 20,000/- U/s. 272A(1)(c) of the Act.
The brief facts of the case are that the assessee is an individual employed as Managing Director of M/s. American Infoserv Private Limited. During the post survey proceeding in the case of the M/s. American Infoserv Private Limited summons were issued to the assessee on 25/05/2011 U/s. 131 of the Act by the Ld. DCIT, Hyderabad for personal appearance and production of books and accounts and other related documents on 30/5/2011. Though the assessee appeared on 31/5/2011 in response to the summons, he did not produce any materials requested for. He had stated before the Ld. DCIT that all the documents requested are with M/s. P. Murali & Co., Chartered Accountants. Again summons were issued on 7/6/2011 for appearance on 13/6/2011. However, the assessee did not comply with the summons. Thereafter the Ld. DCIT issued penalty proceedings U/s. 272A(1)(c) of the Act on 16/6/2011 and accordingly notice U/s. 272A(1)(c) was issued to the assessee on 17/6/2011 and the case was posted for hearing on 1/7/2011. Subsequently, the assessee appeared on 1/7/2011. However, none of the materials requested were produced. Further, on several occasions the assessee failed to cooperate before the Revenue as apparent from the order of the Ld. AO which is reproduced herein below for reference:-
“3. On 30-09-11, another notice was issued fixing the case for hearing on 11/10/2011. This notice was served on 4/10/2011. On 11/10/2011, Shri P. Murali Mohana Rao, FCA filed a letter stating that Shri Vidya Sagar is out of station and hence he is not in a position to attend the hearing. Ten days adjournment was sought for. It is pertinent to mention here that Shri P. Murali Mohana Rao does not hold power of attorney in the personal case of Shri Vidya Sagar nor did Shri Vidya Sagar adhere to the adjournment of ten days. On 14/10/11, the case was again posted for hearing on 21/10/11 and letter was sent to Shri P. Murali Mohana Rao, who filed letter on behalf of the assessee. This letter was issued on 14/10/2011 and served on 17/10/2011. The case was again posted for hearing on 09/12/2011 vide notice dated 01/12/2011 which was served on 03/12/2011.
On 09/12/2011, a letter was filed on behalf of M/s. American Infoserv Pvt Ltd (Whereas the notice is in case of Shri Vidya Sagar) stating that penalty is not automatic and when reasonable justification is given / submitted by the assessee for the same penalty may not be levied. It is also stated that the assessee has not made any deliberate defiance of law or a conscious disregard of the obligations. It is also stated that the authority to levy penalty must be exercised judicially.
Though the submissions are not filed in the specific case of the assessee, the same are considered because the survey is in the case of M/s. American Infoserv Pvt Ltd and the submissions are filed by the said concern.
6. In case of M/s. American Infoserv Pvt Ltd, Survey U/s. 133A was conducted by DCIT-1(1) on 25/05/2011. On the date of survey there was no cooperation. Thereafter, no responsible person appeared and explained the details. In fact, there was difficulty in opening the files on two PCs impounded from the assessee during the survey. Books of accounts are not produced. It is worthwhile to mention here that the assessee filed revised return reducing the book profits in artificial manner and after the survey only, the return was revised. But for the survey action, income of about Rs. 7 Cr would escaped taxation due to deliberate evasion on the part of the assessee, who is managing the affairs of M/s. American Infoserv Pvt Ltd. The material on the record clearly shows that Shri Vidya Sagar did not comply with the terms of summons U/s. 131 (hearing dated 31/5/2011) and did not appear in response to the summons issued and hearing posted on 13/06/2011. In fact, throughout the post survey proceedings there was non- appearance and non-cooperation. Even in the present proceedings, there is non-compliance.”
4. For the above stated reasons, the Ld. ACIT invoked penal provisions of section 272A(1)(c) of the Act for non-compliance of section 131 of the Act. On appeal, the ld. CIT (A) confirmed the order of the Ld. AO by observing as under:-
“5.6. On verification, I find that there are gaps in the submissions of the appellant. Firstly, the appellant submitted that he is out of country, so that he had not complied with the submissions U/s. 131. Appellant has not made any submission regarding his whereabouts when the summons U/s. 131 was issued. Notices for hearing were issued on 17/6/2011, 08/7/2011, 11/10/2011, 14/10/2011, 01/12/2011 and 09/12/2011, in these occasions the appellant neither appeared nor produced relevant documents. The appellant failed to prove that he is in out of station or not present in the city before the Assessing Officer, and also before me. The appellant did not submit any details of passport or otherwise, to show that appellant was not in the country or city. Hence, the contention of the appellant cited before me for non-appearance and non-responding to summons is not accepted. Secondly, in reference to producing of books of accounts, during the post-survey proceedings the management themselves given the statement that the books of accounts are in possession of the Chartered Accountant based in the city. However, the appellant made no efforts to bring the books of accounts for verification during and post- survey operations. It is shown that the appellant was aware of the situation i.e., survey was conducted, however did not comply with the directions issued by the Assessing Officer for production of books of accounts. Before me, no explanation was submitted, or evidence submitted to show the books of accounts were produced during or post-survey operations. Hence, the contention of the appellant that the books of accounts were produced, could not be sustained. Thirdly, in reference to the case laws referred by the appellant, have no relevance to the present case which is explained as under: a) Branch Manager (TDS), UCO Bank vs. ACIT (TDS) 35 Taxmann 45 dated 11/03/2013. This case is not applicable to the present case. In the referred case, the issue is non-filing of TDS returns within specified time. In the present case, the delay in filing of TDS return is not the question, hence the same is not considered. b) Branch Manager, SBI vs. ACIT (TDS) 41 Taxmann 268, Hon’ble ITAT, Cuttack Bench dated 10/10/2013: c) This case is not applicable to the present case. In the referred case, the issue was non-filing of TDS returns by the bank employee. The issue was whether it is wilful negligence on the part of the Branch Manager in delay in filing of return. In the present case, the delay in filing of TDS return is not the question, hence not considered. d) Kalakrithi vs. ITO (2002) 125 Taxmann 97 (Mad.) dated 08/12/2000: This case is not applicable to the present case. The issue in the referred case is assessee filed requisite return belatedly only after issuing show cause notice U/s. 272A. The assessee failed to file statement within time allowed by the law and statement whether in fact only after show cause notice U/s. 272A r.w.s 285B. Writ filed by the appellant was dismissed by the Hon’ble High Court of Madras. 5.7 It is pertinent to mention that under the provisions of section 272A(1)(c) of the Act, if any person falls to appear before the concerned officer or produce the books of accounts, penalty should be levied for each such default or failure of Rs. 10,000/-. I rely upon the following decisions: (a) Asoka Tile Works (P) Ltd vs. DCIT in (Coach.)/1994 dated 31/01/2000 (b) M/s. Decan Enterprises, Mumbai vs. Assessee in ITA No. 2179/Mum/2010 dated 20/6/2013. In view of the above, I uphold the penalty U/s. 272A(1)(c) levied by the Assessing Officer.”
5. Aggrieved by the order of the Ld. CIT (A) the assessee is now in appeal before us.
At the outset, from the above facts of the case, it is apparent that neither the assessee nor his Counsel co-operated before the Ld. Revenue Authorities promptly. This lethargic attitude of the assessee and his Counsel is not appreciable. In this situation, we cannot find much fault with the Ld. Revenue Authorities for invoking the penal provisions of section 272A(1)(c) of the Act. Further considering the facts of the case, it is apparent that the assessee was constantly under the guidance of his Counsel who has failed to advice the assessee in accordance with the provisions of the Act. In this situation, we are of the considered view that the assessee had a reasonable cause for not appearing before the Ld. Revenue Authorities at the appropriate time. Therefore, drawing strength from the provisions of section 273B of the Act, taking a lenient view, in the interest of justice, we hereby direct the Ld. AO to delete the penalty of Rs. 20,000/- levied on the assessee by invoking the penal provisions of section 272A(1)(c) of the Act.
In the result, the appeal of the assessee is allowed.
Pronounced in the open Court on the seventh January, 2021.