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Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA
Before: Sri Rajpal Yadav & Sri Manish Borad
order
: May 24th, 2022 ORDER
Per Manish Borad, Accountant Member:
The captioned appeals filed by the assessee pertaining to the Assessment Year (in short “AY”) 2014-15 are directed against separate orders of ld. Commissioner of Income-tax (Appeals)-11, Kolkata [in short ld. “CIT(A)”] dated 30.11.2018 & 05.11.2018 arising out of the common assessment order framed u/s 144 of the Income Tax Act, 1961 (in short the “Act”) dated 28.12.2016.
When the case was called for, none appeared on behalf of the assessee. In past also the case has been fixed for hearing on almost fifteen occasions from 17.03.2020 onwards but no one has appeared. It seems that the assessee is not interested in pursuing the appeal. We, therefore, adjudicate the issue raised in the instant appeals based on the available records and submissions of ld. D/R. 3. We will first take up . The assessee is in appeal before the Tribunal raising the following grounds: “
The appellant — Assessee submitted his return of income for the assessment year 2014-2015 on 30-03-2015 electronically declaring total income of Rs.705766-/. The .: 519 & 520/Kol/2019 Assessment Year: 2014-15 Dilip Kumar Panja return was Selected for Scrutiny through CASS, but the appellant Assessee had not duly been intimated about the case falling either in “Limited Scrutiny” or “Complete Scrutiny” through notice issued Under Section 143(2) of the IT Act’61 by the Assessing Officer. Consequently, the applicant — Assessee raised objection to such invalid notice as it was not issued as per CBDT’s Circular. The Assessing Officer rejecting the objection completed the assessment u/s -144 of the IT Act at RS.12,15,034/-. Appeal was preferred against the assessment order before the Ld. CIT (Appeal)-11, Kolkata. In para 9.4 of the order dated 30/11/2018 the Ld. CIT (Appeal) himself has made his comment at first “The notice u/s-143(2) was defective”. But on the other hand, justified the action of the Assessing Officer and dismissed the Appeal. The order of the Ld. CIT (Appeal) itself is Contradictory and bad in law in the eye of Justice. Hence, 2nd Appeal is preferred against the order of the Ld. CIT (Appeal) before the ITAT, Kolkata.”
4. Brief facts of the case are that the assessee is an individual and engaged in wholesale/retail trading of fertilizers & pesticides. Income of Rs. 6,82,566/- declared in e-return of income filed on 10.09.2014. As per the assessment order, the case was selected for complete scrutiny through CASS for the reasons (i) mismatch in sales turnover as per audit report and ITR and (ii) cash deposits in savings bank account is more than the turnover. In most of the occasions the assessee failed to appear and once when the assessee appeared, a letter was filed requesting to drop the proceedings stating that the specific issues on the basis of which the case has been selected for scrutiny should be supplied. Ld. AO gave the complete details regarding the queries raised by the assessee. Thereafter, none appeared and ld. AO completed the assessment rejecting the book results and applying a net profit rate of 1.5% as against 0.75% shown by the assessee. After estimating the business income at Rs. 12,38,565/-, income assessed at Rs. 12,15,030/-.
5. Aggrieved, the assessee preferred appeal before ld. CIT(A) solely raising the ground that due to non-compliance of CBDT instruction against issue of notice u/s 143(2) of the Act, and assessment without prior written approval of ld. PCIT, assessment order deserves to be cancelled for the sake of justice. In the ground, the assessee also placed reliance on the judgment of Hon’ble Supreme Court in the case of UCO Bank vs. Commissioner of Income-tax reported in [1999] 237 ITR 889 (SC) and the case of M/s. Crystal Phosphate Ltd. vs. ACIT reported in ITA No. 3630/Del/2009. No ground on merit was taken by the assessee. When the matter was listed for adjudication before the .: 519 & 520/Kol/2019 Assessment Year: 2014-15 Dilip Kumar Panja ld. CIT(A), after examining the details filed by the assessee as well as the detailed observation of the ld. AO came to a conclusion that the assessee’s case was originally selected for complete scrutiny and not for limited scrutiny. Notice u/s 143(2) of the Act was rightly served upon the assessee and no defect was pointed out by the assessee during the course of assessment proceedings. Accordingly, the appeal of the assessee was dismissed by the ld. CIT(A).
6. Aggrieved, the assessee is now in appeal before this Tribunal challenging the finding of the ld. CIT(A). None appeared on behalf of the assessee. Ld. D/R vehemently argued supporting the order of both the authorities.
We have heard the ld. D/R and perused the records placed before us. On perusal of the grounds filed by the assessee, we note that no ground has been raised on merits of the case. The legality of the assessment proceedings has been challenged based on two contentions, firstly, the assessee was not intimated about the notice issued for selection of scrutiny as to whether the case of the assessee falls under limited scrutiny or complete scrutiny and secondly, the notice issued u/s 143(2) of the Act is defective as observed by ld. CIT(A) in the impugned order.
We find that ld. CIT(A) dealt with this legal issue of correctness of the scrutiny notice and the notice u/s 143(2) of the Act being not defective observing as follows:
“9. With the above narrated facts, the objections raised by the Ld. AR are now taken up for adjudication in the following paragraphs wherein, the objections of the td. AR would be presented in Italics and the decision/ reply to it shall be written against it. 9.1 The case was selected for scrutiny under CASS and hence it was for a ‘Limited Scrutiny’: As has been clarified by the CBDT, a case may be picked for scrutiny either for a ‘Limited’ or a ‘Complete Scrutiny’. The appellant’s case was selected by the CASS for ‘Complete Scrutiny’ and not for ‘Limited Scrutiny’. Hence the objection is found to be untenable. 9.2. The AO did not obtain a written approval from the Principal CIT for taking up the case under ‘Complete Scrutiny”: The case was originally selected by CASS itself for a “Complete Scrutiny”. In such a situation the AO was not required to seek .: 519 & 520/Kol/2019 Assessment Year: 2014-15 Dilip Kumar Panja written approval from the Principal CIT. Such approvals are required only when originally a case is selected for ‘Limited Scrutiny’ and if certain conditions, as clarified by the CBDT, exist and it is felt necessary to expand the ‘Limited Scrutiny’ by converting it into a ‘Complete Scrutiny’, the AO is mandatorily required to obtain such written approval from his Pr. CIT. In the appellant’s case this condition did not apply as it was not a case which was picked for ‘Limited Scrutiny’ that had to be converted into a ‘Complete Scrutiny’. His case was originally picked for ‘Complete Scrutiny’ itself. Hence, this objection does not hold good and accordingly, is rejected. 9.3 The AO did not intimate the reasons for taking the appellant’s case for scrutiny: The AO is required to inform the appellant the reasons for taking his case in scrutiny only if the case is picked up for ‘Limited Scrutiny’ on the basis of AIR/ CIB information and 26AS data mismatch. If a case is picked up for scrutiny for reasons other than these, the AO is not required to inform the appellant about the reasons for taking up his case under scrutiny. Since the appellant’s case was originally picked up by CASS for ‘Complete Scrutiny’ and for reasons other than AIR/CIB/26AS data mismatch, the compulsion of intimating the reasons for selection of the case for scrutiny, was not with him. Therefore, although the AO in the course of assessment proceedings did intimate the appellant the reason for which his case was selected for scrutiny, it was not necessary to do so. As such, there is no infirmity in his action. 9.4 The notice u/s 143(2) was defective: It was system generated notice under CASS. The AO did not create it. The Ld. AR has not pointed out what exactly was the defect in the said notice. Moreover, any specific detail that the Ld. AR might have wanted would be available only in cases of ‘Limited Scrutiny’. Therefore, the notice was not defective.” 8.1. On going through the above finding of the ld. CIT(A) so far as the contention raised by the assessee that ld. CIT(A) has himself mentioned in the impugned order that the notice u/s 143(2) of the Act is defective is devoid of any merit because in para 9.4 of the impugned order ld. CIT(A) has given his finding and before giving his finding he has mentioned the issue as the notice u/s 143(2) of the Act was defective. Nowhere ld. CIT(A) has stated that the notice u/s 143(2) of the Act was defective.
8.2. As far as the second issue is concerned that in the scrutiny notice it was not mentioned whether the case was fixed for scrutiny for limited scrutiny or a complete scrutiny. As rightly observed by the ld. CIT(A) that the Central Board of Direct Taxes has clarified that the case can be fixed for either a limited scrutiny or a complete scrutiny and in case it is for complete scrutiny then no written approval is required by the ld. AO from the ld. PCIT. From going through the assessment order containing 17 pages, we find that the ld. AO has specifically mentioned that the case of the assessee has been selected .: 519 & 520/Kol/2019 Assessment Year: 2014-15 Dilip Kumar Panja for complete scrutiny for two reasons i.e. mismatch in sales turnover reported in audit report and second is cash deposit in saving bank account is more than the turnover. Though it gives an impression that the assessee’s case has been selected for limited scrutiny specifically for two reasons but due to lack of any other contrary material we are inclined to find that the case of the assessee has been selected for complete scrutiny. Had the case been selected for limited scrutiny then while converting the same into complete scrutiny an approval is required. Ample opportunities were provided to the assessee but there was no compliance. A perusal of the assessment order shows that ld. AO confined his examination only to the extent of gross turnover and profit disclosed by the assessee. No other issue has been taken up nor any addition has been made which shows that ld. AO has not exercised his jurisdiction beyond the two reasons for which scrutiny notice was issued. Now, this being the case then there hardly remains any grievance of the assessee as to whether the scrutiny was complete or limited, and the fact remains undisputed that a valid notice u/s 143(2) of the Act dated 02.09.2014 was issued and duly served upon the assessee and since the additions made in the assessment order (which have not been challenged by the assessee) either before the first appellate authority nor before this Tribunal, there remains no reason for the assessee raising grievance about the limited/complete scrutiny. We, therefore, under the given facts and circumstances of the case find no reason to interfere into the finding of the ld. CIT(A). Thus, the appeal of the assessee in is dismissed.
Now, we take up ITA No. 520/Kol/2019. The assessee is in appeal before the Tribunal raising the following grounds:
“As Per Provision of Section -156 of the IT Act’61 “When any Tax, Interest, Penalty, Fine or any Other Sum is ‘Payable’ in Consequence of any order Passed under This Act, The Assessing Office Shall Serve upon the Assessee a notice of demand in the Prescribed form Specifying the sum so Payable. Assessing Officer has been defined in Sub-Section 7A of Section 2 of The IT Act’61. Under this Section Assessing Officer means the Assistant Commissioner or the Income Tax Officer who is Vested with the relevant Jurisdiction by virtue of directions or Orders issued Under Section 120(2) or any other Provision of This Act and The Joint Commissioner who is directed Under Section 120(4)(b) of The IT Act’61 .: 519 & 520/Kol/2019 Assessment Year: 2014-15 Dilip Kumar Panja to exercise or perform all or any of the power and functions’ Conferred or assigned to an Assessing Officer under The IT Act’61. In this case JCIT Circle-39, Midnapore, who was not directed u/s -120(4)(b) of The IT Act’61 to exercise or Perform all or any of the powers and functions conferred or assign to Assessing Officer Under the IT Act’61, issued the demand notice u/s 156 of the IT Act for Rs.10000/imposed u/s - 272A(1)(C) of the IT Act’61 for the Assessment year 2014-2015. Accordingly the demand notice under section 156 as well as penalty order is invalid under the IT Act and rules and deserves to be quashed. But the CIT (Appeal) has erred in justifying the demand notice which was not issued by the Assessing Officer ITO-39(3). Hence, 2nd appeal is preferred before the ITAT, Kolkata against the order of the CIT (Appeal)-11, Kolkata dated 05-11-2018. For soliciting justice.”
Through this appeal, the assessee has challenged the levy of penalty of Rs. 10,000/- u/s 272A(1)(C) of the Act. This penalty is leviable in case the assessee fails to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc. if the person fails to reply to the summons issue u/s 131(1) of the Act either to attend to give evidence or produce books of account or other documents at a certain place and time, omits to attend or produce books of account or documents at the place or time.
Since the assessee did not comply to the summon issued u/s 131(1) of the Act dated 05.12.2016 requiring his personal appearance on 08.12.2016 along with certain details and documents the ld. AO made the reference to Joint Commissioner of Income Tax, Range-39 for initiation of the penalty and accordingly penalty of Rs. 10,000/- levied on the assessee. Before ld. CIT(A) the assessee only challenged that the demand notice u/s 156 of the Act was issued under the signature of Joint Commissioner of Income Tax which rather should have been issued by ld. AO as provided in Section 156 of the Act. Ld. CIT(A) did not find any merit in this ground and dismissed the same. Now the assessee is before this Tribunal.
We have heard ld. D/R and also perused the records placed before us. The assessee has not denied the fact that summon u/s 131(1) of the Act dated 05.12.2016 was issued and he did not appear on the date of hearing i.e. on 08.12.2016 and did not furnish any application stating any reasonable cause I.T.A. Nos.: 519 & 520/Kol/2019 Assessment Year: 2014-15 Dilip Kumar Panja for not appearing on the given date nor requested any adjournment. Thus, there is a clear violation of provision of Section 131 of the Act and penalty u/s 272A(1)(C) of the Act is attracted. Further ld. AO has rightly acted as per the provision of sub-Section 3 of Section 272A of the Act by making a reference to Joint Commissioner of Income Tax for initiation of penalty and the same was levied at Rs. 10,000/- u/s 272A(1)(C) of the Act. The ground of the assessee that notice of demand u/s 156 of the Act should be under the signature of the ld. AO and not Joint Commissioner of Income Tax has no merit because the issue before us is the penalty levied u/s 272A(1)(C) of the Act. Therefore, under the given facts and circumstances of the case, we find no infirmity in the finding of the ld. CIT(A) and the same is confirmed. Thus, the assessee’s appeal in is dismissed.
In the result, both the appeals of the assessee are dismissed. Kolkata, the 24th May, 2022. Sd/- Sd/- [Rajpal Yadav] [Manish Borad] Vice President Accountant Member Dated: 24.05.2022 Bidhan (P.S.) Copy of the order forwarded to:
1. 1. Dilip Kumar Panja, Vill.-Madpur, Dist.-Paschim Medinipur, West Bengal-721 149.
2. ITO, Ward-39(3), Midnapore. 3. CIT(A)-11, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata.