NAINA HARSHAD MEHTA,MUMBAI vs. ADDL CIT CEN RG 10, MUMBAI

The appeal in in the case of Ms. Priti Harshad Mehta is taken as the lead case, which is directed against the order of CIT(A)-50, Mumbai dated 16.03.2017 pertaining to the Assessment Year 2006-07, which in turn has arisen from the order passed by the Assessing Officer dated 29.08.2013 imposing penalty under section 272A(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’).

In this appeal, the grievance of the assessee is against the penalty of Rs.10,000/- imposed u/s 272A(1)(c) of the Act for not attending and furnishing the required documents as called for by the Assessing Officer in the summons issued u/s 131 of the Act dated 25.04.2013.

In brief, the relevant facts are that in the course of assessment proceedings for Assessment Years 2006-07 to 2012-13 before the ACIT, Central Circle-46, Mumbai, summons u/s 131 of the Act dated 25.04.2013 was issued, which was served on the assessee on 26.04.2013 directing the assessee to appear on 30.04.2013. Subsequently, the assessee was informed by way of a communication dated 24.07.2013 about the initiation of penalty proceedings u/s 272A(1)(c) of the Act for the failure of the assessee to comply with the summons issued by the Assessing Officer. In response to the above, assessee canvassed that on 29.04.2013 itself a request was made for adjournment on the ground that the assessee was travelling on the relevant date. Therefore, it was canvassed that assessee had made compliance to the summons issued u/s 131 of the Act dated 25.04.2013. The Addl. Commissioner of Income Tax, Central Range-10, Mumbai considered the explanation furnished by the assessee and noted that the said adjournment letter dated 29.04.2013 was filed in the ‘tapal’ of the Assessing Officer’s office and hence, could not be construed as a compliance of the summons u/s 131 of the Act. Notwithstanding the aforesaid, it is also noted by the Addl. Commissioner of Income Tax, Central Range-10, Mumbai that inspite of requiring the assessee to furnish the proof of travelling, the same was not furnished. Therefore, the Addl. Commissioner of Income Tax, Central Range-10, Mumbai was satisfied that assessee had omitted to attend and furnish the required documents as called for in the summons issued u/s 131 of the Act and hence he levied penalty of Rs.10,000/- in terms of Sec. 271A(1)(c) of the Act.

Before the CIT(A), assessee reiterated that it had complied with the summons inasmuch as vide letter dated 29.04.2013 it informed the Assessing Officer that assessee was travelling and would not be in a position to appear on the appointed date. Apart therefrom, another pertinent plea was made before the CIT(A) that the representative of the assessee, Shri P.P. Bhandari and Shri Samir Gaglani of M/s. M.M. Nissim & Co., CAs were appearing before the Assessing Officer in connection with the on-going assessments of the group assessees and were in regular contact with him. It was asserted by the assessee that M/s. M.M. Nissim & Co., CAs were informed by the ACIT, Central Circle- 46, Mumbai that a fresh date in the matter will be communicated in the due course.

The CIT(A) considered the submissions of the assessee and noted that the assessee had merely sought an adjournment and did not obtain the adjournment and, therefore, it was not a sufficient compliance to the summons. Accordingly, the CIT(A) has affirmed the penalty imposed by the ACIT, Central Circle-46, Mumbai. Not being satisfied with the order of the CIT(A), assessee is in further appeal before us.

Before us, the learned representative for the assessee vehemently pointed out that the assessee had duly informed vide communication dated 29.04.2013 that she was travelling and was not in a position to attend on 30.04.2013. By referring to page 4 of the Paper Book wherein is placed a copy of the communication dated 29.04.2013, the learned representative pointed out that the said communication was not filed in ‘tapal’, but was filed in the office of the ACIT, Central Circle-46, Mumbai and, therefore, it was a sufficient compliance. The learned representative also referred to the explanation filed by the assessee before the ACIT, Central Circle-46, Mumbai dated 26.07.2013, a copy of which is placed at page 6 of the Paper Book, pointing out that on the appointed date the assessee’s representative appeared before the DCIT, Central Circle-46, Mumbai and informed about the assessee being out of station and not in a position to attend personally on 30.04.2013. Again, in this submission, it has been asserted that the representatives of the assessee were informed by the DCIT, Central Circle-46, Mumbai that a new date, if any, will be intimated. Be that as it may, it is sought to be pointed out that there was compliance and no intention of defying the summons. The learned representative also referred to the summons issued, a copy of which is placed in the Paper Book at pages 1 to 3. The learned representative pointed out that the summon was dated 25.04.2013 and was served on 26.04.2013, which was a Friday and assessee was required to appear on 30.04.2013. Therefore, at the earliest, i.e., on Monday, 29.04.2013 an adjournment application was moved. The learned representative pointed out that the information required from the assessee related to a bank account maintained with HSBC Bank, Geneva. It was pointed out that, in any case, the said bank account was in the name of White Cedar Investments Limited, which was an independent entity and not in the name of the assessee. The learned representative explained that in the context of levy of penalty u/s 271(1)(b) of the Act for non-compliance of a notice u/s 142(1) dated 06.05.2013, the CIT(A) has noted in order dated 19.01.2015 that such bank account belonged to the Estate of late Ramniklal Rajmal Mehta (Estate) and not to the assessee. Therefore, it is sought to be pointed out that even assuming that there was non- compliance to the summons, it made no difference to the interests of the Revenue inasmuch as the bank account did not belong to the assessee. Furthermore, it is sought to be pointed out that subsequently assessments have been completed on the assessee on 31.03.2015 whereby the entire amount standing in the bank account has been assessed to tax, which of course has since been deleted by the CIT(A) in the quantum proceedings. It was, therefore, contended that no prejudice has been caused to the Revenue even if it is to be construed that there was non-compliance to the summons issued on 25.04.2013.

On the other hand, the ld. DR defended the orders of the lower authorities by pointing out that summons issued u/s 131 of the Act deserve to be appropriately dealt with by the assessee and, therefore, on account of default by the assessee, the penalty u/s 272A(1)(c) of the Act was rightly imposed.

We have carefully considered the rival submissions. In the instant case, we find that the factual matrix which has been consistently canvassed by the assessee is not negated at any stage. In fact, it is quite clear that assessee informed the Assessing Officer through her representative that she would not be able to personally appear on 30.04.2013. Though the Revenue does not dispute the said communication of the assessee dated 29.04.2013, but contends that no adjournment indeed was granted. At the same time, it is also evident that there is no denial to the plea of the assessee seeking adjournment, and thus, it cannot be construed as a non-compliance on part of the assessee. Be that as it may, assessee has been consistently asserting that her representatives were in touch with DCIT, Central Circle-46, Mumbai in view of the on-going group assessments. In any case, we find that the penalty u/s 272A(1)(c) of the Act has been imposed for the sake of imposition without bringing out any reason as to what substantive prejudice was caused by non-appearance of the assessee on the appointed date inasmuch as the representatives of the assessee were appearing, the assessments have been made thereafter assessing the entire amount in the hands of the assessee and, in any case, the Assessing Officer in the course of assessment proceedings in the case of Estate of late Ramniklal Rajmal Mehta for Assessment Year 2006-07 has held that the bank account in question did not belong to the assessee, but to the Estate. For all the above reasons, we, therefore, hold that there was no plausible reason to justify the imposition of penalty u/s 271A(1)(c) of the Act. Accordingly, the same is hereby directed to be deleted.

At the time of hearing, it was pointed out that the facts and circumstances in the other four appeals were more or less on similar footing. It was pointed out that so far as the case of Shri Russell Arunkumar Mehta in is concerned, summons in the said case were subsequently again issued and it was complied with and the necessary information furnished. Therefore, on this count also, penalty imposed u/s 272A(1)(c) of the Act is not merited.

In the case of Shri Viraj Russell Mehta and Shri Rihen Harshad Mehta in & 3553/Mum/2017 respectively, it was pointed out that the two individuals are non-residents and were not in the country at the relevant point of time on 30.04.2013. On this count also, the penalty is sought to be assailed.

Considering the entirety of the facts and circumstances, we direct that in all the captioned appeals, the penalty levied u/s 272A(1)(c) of the Act be deleted.

Resultantly, all the appeals of the assessees are allowed.