M/S. BHAGABATI AGENCY,JAGATSINGHPUR vs. JCIT, RANGE-1, CUTTACK

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ITA 372/CTK/2017Status: DisposedITAT Cuttack08 May 2018AY 2006-075 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the orders of the lower authorities and restored the matter to the Assessing Officer for re-adjudication. The assessee was directed to pay a penalty of Rs. 10,000/- for wasting the time of the authorities.

What were the facts?

The assessee failed to appear before the Assessing Officer and the CIT(A) despite multiple notices and opportunities. The CIT(A) passed an ex-parte order confirming the penalty. The assessee appealed to the Tribunal, seeking another opportunity.

What were the issues?

Whether the assessee is entitled to another opportunity to present its case, and if the penalty imposed under Section 271E is justified in the absence of a clear violation of Section 269T.

Which sections of the Income-tax Act were involved?

Section 271E,Section 269T

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK

Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE

For Appellant: Shri P.K.Jena, AR
For Respondent: Shri D.K.Pradhan, DR
Hearing: 14/05

1 ITA No .372/ CTK/ 2017 Asse ssment Year : 20 06- 07

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.372/CTK/2017 Assessment Year : 2006-07

M/s. Bhagabati Agency, Vs. JCIT, Range-1, Cuttack C/O. Dash & Dash Agency, Sanabazar, Jagatsinghpur. PAN/GIR No.AAHFB 2865 P (Appellant) .. ( Respondent)

Assessee by : Shri P.K.Jena, AR Revenue by : Shri D.K.Pradhan, DR

Date of Hearing : 14/05/ 2018 Date of Pronouncement : /05/ 2018

O R D E R Per N.S.Saini, AM This is an appeal filed by the assessee against the order of the

CIT(A)- Cuttack, dated 29.9.2014 for the assessment year 2006-07.

2.

The assessee has raised the following grounds of appeal:

“ 1. That the ex-parte first appeal order passed by the Commissioner of Income Tax (Appeals) in confirming the penalty as imposed U/s. 271 E of the IT Act, 1961 by the Joint Commissioner of Income Tax, Range-I Cuttack is arbitrary, excessive and bad in law.

2.

That there has been clear violation of the principles of natural justice in passing the first appeal order by the Commissioner of Income Tax (Appeals), Cuttack as the appellant has appeared through its advocate and had filed written submission and arguments, the Commissioner of Income 'fax (Appeals) should have passed the order on merit and should not have passed ex-parte order for non submission of documents asked for by the Commissioner of Income Tax (Appeals), Cuttack.

3.

That it is no more res Integra that the natural justice has been variously defined by different judges. The very important rule of natural justice contained in the oft-quoted phrase "justice should not only be

2 ITA No .372/ CTK/ 2017 Asse ssment Year : 20 06- 07 done, but should be seen to be done". In Sidon v. Baldwin (1963) 1 WB 539, 578, Harman L.J. , in the Court of Appeal countered natural justice with "fair-play in action", a phrase favoured by Bhagwati, J. in Maneka Gandhi v. Union of India (1978) 2 SCR 621, 676 (AIR 1978 SC 597 at pages 625-626). In re H.K. (An Infant (1967) 2 QB 617, 630 Lord Parker, C.J. preferred to describe natural justice as 'a duty to act fairly" and as such confirmation of order by the Commissioner of Income Tax (Appeals) without taking into consideration the arguments advanced and written note of submission filed before her is arbitrary, excessive and bad in law and is liable to be set aside.

4.

That the Commissioner of Income Tax (Appeals) could have gathered the information from the assessment record of the appellant and should not have passed ex-parte order in confirming the imposition of penalty U/s. 271 E of the Income Tax Act.

5.

That in the present appeal the following pure questions of law arises for consideration: i) Whether repayment of any loan or deposit of Rs.20,000.00 or more through set-off by journal entries violate Section 269T of the IT Act, 1961 if the same is a bonafide transaction ? ii) If it is a violation, whether the fact that the transaction is a bonafide would be reasonable cause, so as to exonerate the assessee from imposition of penalty.

6.

That it is not in dispute that the appellant has repaid loan/deposit by debiting the account through journal entries. The question is, whether such repayment of loan/deposit is in contravention of the modes of repayment set out in Section 269T of the Income Tax Act, 1961 ? But the bonafide transaction of repayment of loan/deposit by way of adjustment through book entries carried out in the ordinary course of business would not come within the mischief of Section 269T of the Income Tax Act, 1961, because, the section does not make any distinction between the bonafide and non-bonafide transactions and requires the entities specified therein not to make repayment of any loan/deposit together with the interest, if any otherwise than by an account payee cheque/bank draft if the amount of loan/deposit with interest, if any, exceeds the limits prescribed therein.

7.

That the invocation of provision of Section 271 E of the income Tax Act, 1961 in absence of violation of Section 269T of the Income Tax Act, 1961 and confirmed by the Commissioner of Income Tax (Appeals) is arbitrary, excessive and bad in law and is liable to be set aside.

8.

That the appellant having not violated the conditions of Section 269 T of the IT Act, the invocation of the same by the Joint Commissioner and confirmed by the Commissioner of Income Tax (Appeal), is arbitrary, excessive and bad in law and is liable to be set-aside.

9.

That the appeal be allowed on the above ground (s) or such other grounds if any will be urged at the time of hearing of the appeal.”

3 ITA No .372/ CTK/ 2017 Asse ssment Year : 20 06- 07 2. At the outset, ld A.R. of the assessee submitted that notice o

hearing was sent by RPAD on 2.9.2011, which was retuned unserved by

the postal authorities with the remarks “Now known”. Another show

cause notice was sent at the address of the partner of the assessee firm

Shri Bharat Kumar Dash, which was also returned back unserved by the

postal authorities with the remarks “Not known”. The Assessing Officer

thereafter served notice through ITO, Ward-1, Paradeep on the assessee

on 3.12.2011. The case was adjourned to 3.1.2012. On 3.1.2012, again

the assessee applied for time and hearing was adjourned to 7.2.2012.

Therefore, the Assessing Officer disposed of the proceedings u/s.271E of

the Act and levied penalty of Rs.28,91,029/-.

3.

Ld A.R. submitted that thereafter the assessee filed appeal before

the CIT(A). The CIT(A) fixed the appeal for hearing on the following

dates:

“ 21.8.2012, 10.9.2013, 7.10.2013, 28.10.2013, 8.11.2013, 13.12.2013, 15.1.2014, 23.1.2014, 15.7.2014, 20.8.2014 and 1.9.2014.”

4.

Before the CIT(A) also, the assessee did not appear and, therefore,

the appeal of the assessee was dismissed.

5.

The assessee has now filed appeal before the Tribunal.

6.

When questioned by the Bench what were the reasons for non-

compliance of notice of hearing before the Assessing Officer as well as the

CIT(A), ld A.R. could not give any satisfactory reply for the same. He

4 ITA No .372/ CTK/ 2017 Asse ssment Year : 20 06- 07 submitted that he was not the Counsel before the Assessing Officer as

well as the CIT(A) and prayed that one more opportunity should be

granted to the assessee to present its case before the Assessing Officer.

7.

Ld D.R. vehemently opposed to the granting of another opportunity

to the assessee before the Assessing Officer and submitted that sufficient

opportunities have been allowed both by the Assessing Officer as well as

the CIT(A) and the assessee has failed to comply with the same and,

therefore, no mercy should be shown to the assessee at this stage of

proceedings.

8.

After considering the rival submissions and perusing the materials

available on record, we find that in order to render substantial justice to

the assessee, all materials facts are required to be brought on record to

adjudicate the issue. For doing to, an opportunity has to be allowed to the

assessee. Further, we are alive to the fact that the assessee had been a

habitual defaulter in complying with the notices issued by the Assessing

Officer as well as the CIT(A).

9.

Ld A.R. of the assessee has undertaken before us that if one more

opportunity is granted to the assessee, the assessee will definitely appear

before the Assessing Officer and present his case. Keeping this

undertaking of ld A.R. of the assessee in view in the open court, we set

side the orders of lower authorities and restore the matter back to the file

of the Assessing Officer with a direction to re-adjudicate the issues

involved in the present appeal after allowing reasonable opportunity of

5 ITA No .372/ CTK/ 2017 Asse ssment Year : 20 06- 07 hearing to the assessee. Further, we are of the view that the penalty

should be levied on the assessee for wasting valuable time of the

Assessing Officer and the CIT(A) as well as that of the Tribunal. Keeping

in view this fact, we impose penalty of Rs.10,000/- on the assessee to be

deposited on or before 31.5.2018. The assessee shall present proof of

payment of penalty before the Assessing Officer as well as file a copy of

the same to the Tribunal for compliance to this order. With these

directions, the appeal of the assessee is allowed for statistical purposes.

10.

In the result, appeal is allowed for statistical purposes.

Order pronounced on 14 /05/2018.

Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 14 /05/2018 B.K.Parida, SPS Copy of the Order forwarded to : 1. The appellant: M/s. Bhagabati Agency, C/O. Dash & Dash Agency, Sanabazar, Jagatsinghpur. 2. The Respondent. JCIT, Range-1, Cuttack 3. The CIT(A)- Cuttack 4. Pr.CIT- Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack

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