SAHARA INDIA FINANCIAL CORPN. LTD.,LUCKNOW vs. ADDL. CIT, NEW DELHI

(A) For the sake of convenience and brevity, these two appeals are being disposed off by this consolidated order; as similar / interlinked issues are involved. Both These appeals are filed against separate orders each dated 02.04.2012 of the Ld. Commissioner of Income Tax (Appeals-I), New Delhi, [“Ld. CIT(A)”, for short] pertaining to Assessment Year 2005-06, on the following grounds: .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. ITA No.- 3510/Del/2012 “1. That on the facts and circumstances of the case as well as in law the Ld. CIT(A) is not justified in confirming the penalty of Rs. 10,000/- levied under section 272A(l)(c) of the Income Tax Act.

2. That the Ld. CIT(A) has failed to appreciate that there was no deliberate default on the part of the appellant in making compliance to the requirements of summon under section 131 of the Income Tax Act dated 12.09.2007 when each and every date of hearing was attended by the Authorised Representative and thereafter another modified summon was issued on 12.10.2007 in respect of same requirements thereby merging summon dated 12.09.2007 which had automatically become in-fructuous in light of the issuance of new summon dated 12.10.2007.

3. That without prejudice in any view of the matter the Ld. CIT(A) should have appreciated that the appellant was prevented by a reasonable cause within the meaning of section 273B of the Income Tax Act in alleged non-compliance of summon issued under section 131 of the Income Tax Act and, therefore, there was no justification in the levy of penalty under section 272A(l)(c) of the Income Tax Act.

4. That the appellant craves leave to add, alter, amend or withdraw any or all the grounds of appeal on or before the date of hearing.”

ITA No.- 3511/Del/2012 “1. That on the facts and circumstances of the case as well as in law the Ld. CIT(A) is not justified in confirming the penalty of Rs. 10,000/- levied under section 272A(l)(c) of the Income Tax Act.

2. That the Ld. CIT(A) has failed to appreciate that substantial information called for by the Ld. Assessing Officer in the summon under section 131 of the Income Tax Act was submitted by the appellant and, therefore, there was no non-compliance as the appellant was prevented by constraint of time in submitting the entire information called for in the summon issued under section 131 dated 12.10.2007.

3. That without prejudice in any view of the matter the Ld. CIT(A) should have appreciated that the appellant was prevented by a reasonable cause within the meaning of section 273B of the Income Tax Act in alleged non-compliance of summon issued under section 131 of the Income Tax Act and, therefore, there was no justification in the levy of penalty under section 272A(l)(c) of the Income Tax Act.

4. That the appellant craves leave to add, alter, amend or withdraw any or all the grounds of appeal on or before the date of hearing.”

.- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. (A.1) The Ld. Commissioner of Income Tax (Appeals-I), confirmed penalty levied by learned Additional Commissioner of Income Tax, Central Range-I, New Delhi (“Addl.CIT”, for short) vide two separate orders each dated 22.04.2009,under Section 272A(1)(c) of Income Tax Act, 1961 (“IT Act”, for short). In each of the aforesaid two orders dated 22.04.2009 of Ld. Addl.CIT levied penalty, amounting to Rs. 10,000/- under Section 272A(1)(c) of I.T. Act; on the ground that the assessee had failed to comply with summons dated 12.09.2007 and 12.10.2007. The relevant portions from the aforesaid orders, each dated 22.04.2009 are reproduced as under; in the following paragraphs (A.1.1) and (A.1.2), corresponding to the two appeals separately:

(A.1.1) Corresponding to ITA- 3510/Del/2012 .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. (A.1.2) Corresponding to ITA No. 3511/Del/2012 .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd.

(B) The assessee filed appeals against the aforesaid two orders each dated 22.04.2009 passed by Addl. CIT, before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee holding as under in the following paragraphs (B.1) and (B.2) corresponding to the two appeals separately:

(B.1) Corresponding to ITA No.- 3510/Del/2012

“4. The appellant has taken 7 grounds of appeal all of which except ground no. 2 are objecting to levy of penalty under section 272A(l)(c) of the Income Tax Act on the facts and circumstances of the case and also without prejudice relying on the provisions of section 273B of the Income Tax Act foi reasonable cause for the delay in complying with the requirements made by summon issued under section 131 of the Income Tax Act. In para 2.1 of the penalty order the Addl. Commissioner of Income Tax has set out the brief facts of the case as reported to him by the Assessing Officer. Thereafter in para 2.2 he has extracted the reply of the appellant submitted to him in response to his show cause notice dated 30.01.2009. Thereafter the para 3.1 to para 3.5, the Addl. Commissioner of Income Tax has reached to the conclusion that the appellant has failed to discharge his legal obligations and the non compliance of the assessee is visible on the record itself and thereafter he has proceeded to levy penalty of Rs. 10,000/- on the appellant for failure to comply with the requirements called for vide summon under section 131 of the Income Tax Act.

5. The appellant filed a written submissions. The relevant portion, setting out the facts of the case reads as follow:-

.- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. The brief facts of the case are that in this case during the course of the assessment proceedings summon under section 131 of the Income Tax Act was issued by the L’d Assessing Officer on 12.09.2007 calling for certain information with reference to deposits on CD format. The appellant objected to the calling for information on the CD format and, therefore, on 12.10.2007 another summon was issued calling for the same information in respect of collections and repayments of deposit in print out form. The appellant company is a Residuary Non Banking Company. During the year it has mobilized deposits to tune of Rs 6,391.65 crores through the services of its agent M/s Sahara India spread over 1500 branches and this amount represented collections made from about 3 crores depositors. The L’d Assessing Officer required the appellant to furnish branch-wise details of collections sorting out payments received in cash and by cheque: and similar details in respect of branch-wise repayment of deposits giving repayment by cheques and cash. The appellant, as already stated herein above, is operating through its Agent M/s Sahara India which, in turn is operating from 1500 branches spread all over the country. As far as the appellant is concerned, a consolidated statement is being submitted by the Agent on fortnightly basis in respect of deposits and maturities on the basis of which accounting entry in the books of account as well as deposit ledgers is passed by the appellant company. The information which was called for by the L’d Assessing Officer was available in the books of account of agent M/s Sahara India which was summoned from them. Similarly the L’d Assessing Officer called for details of 400 top depositors from each branch setting out the following particulars in respect of each depositors

1) Name and address of depositer 2) Number of accounts in his name 3) Opening balance as on 1.4.2005 4) Deposit received during the year ; (a) in cash (b) in cheque 5) Repayment made to depositor during the year ; (a) in cash (b) in cheque 6) Closing balance as on 31.03.2006.

.- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd.

6. The above mentioned details had to be collected collated and summoned through the services of the Agent as the particulars of acceptance and repayment of deposit viz. their break-up in cash or cheque was available with the Agent only and, therefore, in all the accounts the information which was called for had to be collected and assimilated which was not a easy task. Here it is necessary to bring on record that the assessment proceedings of the appellant were also in progress and in the intervening period between 12.10.2007 to 26.12.2007, i.e. the last date of hearing of the case various notices were issued by the L’d Assessing Officer including summon under section 131 of the Income Tax Act on 23.10.2007 and again on 04.12.2007 calling for further information required for the purposes of assessment and it will very well be appreciated that the preparation of details which were called for through summon of the L’d Assessing Officer on 12.10.2007, for non- compliance of which penalty has been levied, was not only the job which was entrusted with the appellant company and he had to look after all the aspects of the assessment and furnishing of the details which were called for from time to time, (copies of the notices and summon are enclosed herewith). Further, as regards calling for the information on print out mode, all along since the issue of the summon the appellant had asked the L’d Assessing Officer as whether he was prepared to accept the details in the print out for but he kept on insisting the same to be on CD format only. Because of the: reservations the appellant submitted the details which were called for by the L’d Assessing Officer in respect of 70 branches.

The L’d Assessing Officer thereafter treated the appellant to be in default i: respect of non-submission of details of the balance branches and has levied penalty under section 272A(l)(c) of the Income Tax Act.

Another factor which has to be taken in to consideration is that par compliance of the same has been made by the appellant and, therefore, the same cannot be equated with non-compliance and the appellant should not have been visited with the penalty under section 272A(l)(c) of the Income Tax Act on the facts and circumstances of the case.

In any view of the matter because of the circumstances narrated herein above, it will further be appreciated that there was a reasonable cause within the meaning of section 273B of the Income Tax Act with the appellant for not being able to make full compliance of the detail called for vide summon under section 131 of the Income Tax Act and, therefore, also the penalty deserves to be cancelled. In this connection, reliance is placed on the following cases :-

Hindustan Steel Ltd. v. State of Orissa 83 ITR 26 C.I.T. v. Eli Lilly & .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. Co. (India) (P) Ltd. 178 Taxman 505 (SC) `C.I.T. v. Superintending Engineer, P.W.D. 260 ITR 641 (Raj.) C.I.T. v. Jagdish Prasad Choudhary 211 ITR 472 (Pat.) (F.B.) Azadi Bachao Andolan v. Union of India 252 ITR 471 In all the above mentioned judgment, it has been held that the penalty is not automatic if there are good and sufficient reasons for any failure. There is no justification in levying penalty. The appellant would also like t place reliance on the decision of the Delhi High Court in the case of: C.I.T. v. Mitsui And Co. Ltd. And Another 272 ITR 545 (Del.) C.I.T. v. Raunaq & Co. (P.) Ltd. 140 ITR 407 pp 411 (Del.) 8. The L’d Counsel of the appellant stressed on the fact that in response to summon dated 12.10.2007 substantial information was furnished by the appellant but the entire information could not be furnished due to paucity o time. It was further stressed that post issue of summon dated 12.10.200' further more summons were issued by the Assessing Officer in the course o the assessment proceedings for compliance of various further details and the concerned staff was practically engaged in the preparation of the details which were called for by the Assessing Officer relating to the assessment proceedings which were getting barred by limitation on 31.12.2007 and also some time was required for preparation of the return for the A.Y. 2007-08 which was to be filed by 31st October and since the information which was called for by the Assessing Officer vide summon issued on 12.10.2007 was at a very late stage, assimilation of the information called for vide summon could not be made by the appellant due to paucity of time and, therefore, there was a reasonable cause within the meaning of section 273B of the Income Tax Act with the appellant in making only part compliance in respect of the information called for vide summon issued by the Assessing Officer.

9. In light of the above facts and circumstances, it was prayed by the appellant that this was not a fit case for levy of penalty under section 272A(l)(c) of the Income Tax Act and, therefore, the penalty should be cancelled.

10. I have considered the submission given by the appellant as well as the observation of the Assessing Officer. The contention of the appellant that the details asked by the Assessing Officer was voluminous and had to be collected and assimilated may be true but this does not absolve the appellant of the fact that it did not comply with the requirements made by the Assessing Office When the accounts are maintained on computer then the contention that the information was voluminous cannot be taken as an alibi for not furnishing the same. It hardly takes a few minutes to print the information and even if it is t be collected from various branches the same can be retrieved in few minute by receiving it through Emails. The Assessing Officer in the penalty order ha mentioned the various dates on which the appellant was required to furnish the information. Yet the appellant did not comply with the notices. It is further observed that the appellant did not submit the entire details in hard cop] which would have exhibited its sincerity in complying with the notices if it was not possible to submit in a CD as required by the Assessing Page 15 of 29 .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. Officer Considering these facts the penalty of Rs. 10,000/- imposed u/s 272A(l)(c) is upheld.

11. In result, the appeal is dismissed.”

(B.2) Corresponding to ITA No. – 3511/Del/2012

“4. The appellant has taken 7 grounds of appeal all of which except ground no. 2 are objecting to levy of penalty under section 272A(l)(c) of the Income Ta; Act on the facts and circumstances of the case and also without prejudice relying on the provisions of section 273B of the Income Tax Act for reasonable cause for the delay in complying with the requirements made b summon issued under section 131 of the Income Tax Act. In para 2.1 of the penalty order the Addl. Commissioner of Income Tax has set out the brief facts of the case as reported to him by the Assessing Office Thereafter in para 2.2 he has extracted the reply of the appellant submitted t him in response to his show cause notice dated 30.01.2009. Thereafter the para 3.1 to para 3.3, the Addl. Commissioner of Income Ta has reached to the conclusion that the appellant has failed to discharge hi legal obligations and the non compliance of the assessee is visible on the record itself and thereafter he has proceeded to levy penalty of Rs. 10,000/- on the appellant for failure to comply with the requirements called for vide summon under section 131 of the Income Tax Act.

5. The appellant filed a written submissions. The relevant portion, setting out the facts of the case reads as follows The brief facts of the case are that in this case during the course of the assessment proceedings summon under section 131 of the Income Tax Act was issued by the L’d Assessing Officer on 12.09.2007 calling for certain information with reference to deposits on CD format. The appellant objected to the calling for information on the CD format and, therefore, on 12.10.2007 another summon was issued calling for the same information in respect of collections and repayments of deposit in print out form. The appellant company is a Residuary Non Banking Company. During the year it has mobilized deposits to tune of Rs 6,391.65 crores through the services of its agent M/s Sahara India spread over 1500 branches and this amount represented collections made from about 3 crore depositors.

The L’d Assessing Officer required the appellant to furnish branch-wise details of collections sorting out payments received in cash and by cheque and similar details in respect of branch-wise repayment of deposits giving repayment by cheques and .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. cash. The appellant, as already stated herein above, is operating through its Agent M/s Sahara India which, in turn is operating from 1500 branches spread a over the country. As far as the appellant is concerned, a consolidated statement is being submitted by the Agent on fortnightly basis in respect of deposits and maturities on the basis of which accounting entry in the books of account a well as deposit ledgers is passed by the appellant company. The information which was called for by the L’d Assessing Officer was available in the book of account of agent M/s Sahara India which was summoned from them. Similarly the L’d Assessing Officer called for details of 400 top depositor from each branch setting out the following particulars in respect of each depositors:- 1) Name and address of depositor 2) Number of accounts in his name 3) Opening balance as on 1.4.2005 4) Deposit received during the year ; (a) in cash (b) in cheque 5) Repayment made to depositor during the year ; (a) in cash (b) in cheque 6) Closing balance as on 31.03.2006.

Hindustan Steel Ltd. v. State of Orissa 83 ITR 26 C.I.T. v. Eli Lilly & Co. (India) (P) Ltd. 178 Taxman 505 (SC) C.I.T. v. Superintending Engineer, P.W.D. 260 ITR 641 (Raj.) C.I.T. v. Jagdish Prasad Choudhary 211 ITR 472 (Pat.) (F.B.) Azadi Bachao Andolan v. Union of India 252 ITR 471 In all the above mentioned judgment, it has been held that the penalty is not automatic if there are good and sufficient reasons for any failure. There is no justification in levying penalty. The appellant would also like to place reliance on the decision of the Delhi High Court in the case of:

C.I.T. v. Mitsui And Co. Ltd. And Another 272 ITR 545 (Del.) C.I.T. v. Raunaq & Co. (P.) Ltd. 140 ITR 407 pp 411 (Del.) 8. The L’d Counsel of the appellant stressed on the fact that in response to summon dated 12.10.2007 substantial information was furnished by the appellant but the entire information could not be furnished due to paucity of time. It was further stressed that post issue of summon dated 12.10.200 further more summons were issued by the Assessing Officer in the course c the assessment proceedings for compliance of various further details and the concerned staff was practically engaged in the preparation of the details which were called for by the Assessing Officer relating to the assessment proceedings which were getting barred by limitation on 31.12.2007 and also some time was required for preparation of the return for the A.Y. 2007-0: which was to be filed by 31st October and since the information which was called for by the Assessing Officer vide summon issued on 12.10.2007 was at a very late stage, assimilation of the information called for vide summon could not be made by the appellant due to paucity of time and, therefore, Page 18 of 29 .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. then was a reasonable cause within the meaning of section 273B of the Income Ta? Act with the appellant in making only part compliance in respect of the information called for vide summon issued by the Assessing Officer.

9. In light of the above facts and circumstances, it was prayed by the appellant that this was not a fit case for levy of penalty under section 272A(l)(c) of the Income Tax Act and, therefore, the penalty should be cancelled.

11. In result, the appeal is dismissed.”

(C) The present appeals before us have been filed by the assessee against the aforesaid impugned two separate orders dated 02.04.2012 of the Ld. CIT(A). During the appellate proceedings in Income Tax Appellate Tribunal (“ITAT”, for short), the following written submissions were filed from assessee’s side by way of brief synopsis, which are reproduced below in the following paragraphs (C.1) and (C.2) corresponding to the two appeals separately: .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. (C.1) Corresponding to ITA No.- 3510/Del/2012: .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. (C.2) Corresponding to ITA No.- 3511/Del/2012 .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd.

(D) In the course of appellate proceedings in Income Tax Appellate Tribunal (“ITAT”, for short), a Paper Book was filed from assessee’s side, containing the following particulars: .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. 1. Notice u/s 143(2) dated 10.9.2007

6. Submissions dated 12.10.2007 filed before AO

7. Summons u/s 131 dated 12.10.2007

10. Submission dated 20.12.2007 filed before AO

1999-00, 2001-02 & 2002-03 (E) At the time of hearing before us, the Ld. Counsel for assessee submitted that summons U/s 131 dated 12.09.2007 required the assessee to file the details in a Compact Disk (“CD”). However, according to him, there was no statutory obligation on the part of the assessee to submit the information in the form of CD and that filing of the details in the form of printouts is sufficient compliance. However, he fairly admitted .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. that even in the form of printouts, no details were submitted by the assessee in respons to the aforesaid summons dated 12.09.2007. Regarding the summons dated 12.10.2007, the Ld. Counsel for assessee submitted that the same information which was earlier called for by the AO vide summon dated 12.09.2007 in the form of CD were now called for in the form of print outs vide summons dated 12.10.2007. The Ld. Counsel for assessee submitted that partial compliance was made to the aforesaid subsequent summons dated 12.10.2007. The Ld. Counsel for assessee also relied on order dated 23.05.2008 of Co-ordinate Bench of ITAT, Delhi, in 586 to 589/Del/2006 for Assessment Years 1999-00, 2001-02 & 2002-03 wherein Coordinate Bench of ITAT, Delhi had deleted penalty levied U/s 272A(1)(c) of I.T. Act. He also took us through the contents of the Paper Book; and contended that the penalties levied U/s 272A(1)(c) of I.T. Act for Assessment Year 2005-06, which are the subject matter of the present appeal before us should also be deleted. However, the Learned Departmental Representative (“Ld. DR”, for short) submitted that the aforesaid order dated 23.05.2008 of Co-ordinate Bench of ITAT, Delhi is distinguishable because in the facts and circumstances of the aforesaid order dated 23.05.2008 it was held by ITAT that the assessee had not omitted to produce the books of accounts or documents; whereas in the facts and circumstances of the appeals before us, the assessee had failed to file all the details, and details were only partially submitted in the form of printouts. The Ld. Counsel for assessee also admitted that the assessee had failed to ensure full compliance of the summons dated 12.09.2007 and 12.10.2007; and had in fact submitted only partial details in the form of printouts in response to summons .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. dated 12.10.2007 whereas no details were submitted (in the CD or in the form of printouts) in response to summons dated 12.09.2007. . He also relied on orders of Ld. Addl. CIT and Ld. CIT(A).

(F) We have heard both sides. We have perused the materials available on records.

We have also considered the precedents brought to our attention or referred to in the records. It is not in dispute that the assessee had submitted only partial details in the form of printouts in response to summons dated 12.10.2007 whereas no details were submitted (in the CD or in the form of printouts) in response to summons dated 12.09.2007. Thus, it is not in dispute that the assessee had failed to submit the full details required by the AO vide aforesaid summons dated 12.09.2007 and 12.10.2007 either in the form of CD or in the form of printouts. The perusal of the orders of the Ld. Addl. CIT and the Ld. CIT shows that the assessee had been provided several opportunities and despite that these required details were not submitted in entirety.

Even if it is the case of the assessee, that there was no requirement to submit details in CD, and that submission in form of printout was sufficient; even then, the fact remains that there was absence of full compliance even in the form of printouts, and only partial compliance by way of submission in the form of printouts, has been made. In view of the foregoing facts and circumstances; and considering that aforesaid order dated 23.03.2008 of Co-ordinate Bench of ITAT, Delhi is distinguishable, as mentioned in foregoing paragraph (E) of this order; we have find that the aforesaid penalty levied by Ld. Addl. CIT, and confirmed by the Ld. CIT(A); was just and proper in the facts and .- 3510 & 3511/Del/2012 Sahara India Financial Corpn. Ltd. circumstances of the appeals before us. Accordingly, penalties levied by the Addl. CIT and confirmed by the Ld. CIT(A) are hereby upheld.

(G) In the result, appeal filed by assessee is dismissed.

Order pronounced in the open court on 07/11/2019.