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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: Shri P.M. Jagtap & Shri A.T. Varkey
Per Bench: These seven appeals filed by the assessee are directed against seven separate orders passed by the ld. Commissioner of Income Tax (Appeals)-21, Kolkata, all dated 02.05.2016, whereby he confirmed the penalties imposed by the Assessing Officer under section 271(1)(b) of the Act for all the seven years under consideration, i.e. A.Y. 2006-07 to 2012- 13.
The assessee in the present case is a partnership firm, which belongs to Paul Group. A search and seizure action under section 132(1) of the Act was conducted in the cases belonging to Paul Group including the case of the assessee. Pursuant to the said action, notices under section 153A were issued by the Assessing Officer, in response to which, the returns of income for the years under consideration were filed by the assessee. During the course of assessment proceedings for all the seven years under consideration, notices under section 142(1) were issued by the Assessing Officer calling for the information from the assessee as required for the purpose of assessments. There was, however, no compliance on the part of the assessee to some of the notices issued by the Assessing Officer under section 142(1) and accordingly penalty under section 271(1)(b) was imposed by the Assessing Officer at the rate of Rs.10,000/- for each non-compliance for all the seven years under consideration aggregating as under:- Assessment Year Amount 2006-07 Rs.40,000/- 2007-08 Rs.40,000/- 2008-09 Rs.40,000/- 2009-10 Rs.40,000/- 2010-11 Rs.40,000/- 2011-12 Rs.40,000/- 2012-13 Rs.40,000/-
The penalties imposed by the Assessing Officer under section 271(1)(b) for all the years under consideration were challenged by the assessee in the appeals filed before the ld. CIT(Appeals) and since the explanation offered by the assessee during the course of appellate proceedings before him for non-compliance during the course of assessment proceedings before the Assessing Officer was not found acceptable by the ld. CIT(Appeals), he proceeded to confirm the penalties imposed by the Assessing Officer under section 271(1)(b) for all the seven years under consideration under section 271(1)(b). Aggrieved by the orders of the ld. CIT(Appeals), the assessee has preferred these appeals before the Tribunal.
We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the issue involved in the present case relating to the imposition of penalties under section 271(1)(b) is squarely covered in favour of the assessee by the decision of the Coordinate Bench of this Tribunal in the case of Ranjit Kumar Paul, an assessee belonging to the same Group rendered vide order dated December 13, 2017 passed in to 886/KOL/2016, wherein the similar penalties imposed by the Assessing Officer under section 271(1)(b) and confirmed by the ld. CIT(Appeals) were deleted by the Tribunal after dealing with and discussing all the relevant aspects including the arguments of both the sides vide paragraphs no. 6 to 8 of its order, which read as under:- “6. The ld. counsel for the assessee, at the outset, has submitted that the common issue involved in the case of the assessee in these appeals is squarely covered in favour of the assessee by the decision of the Tribunal rendered in the case of Smt. Shabari Paul, an assessee belonging to the same Group rendered vide its order dated 17.11.2017 passed in ITA Nos. 825-831/KOL/2016, whereby the similar penalties imposed under section 271(1)(b) for A.Ys. 2006-07 to 2012-13 have been cancelled by the Tribunal by relying on the order of its Bench at Delhi in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust –vs.- Assistant Director of Income Tax [115 TTJ (Del.) 419], wherein it was held that the fact that the assessment was finally completed by the Assessing Officer under section 143(3) was sufficient to show that there was substantial compliance made by the assessee. It was held that the default committed by the assessee thus could not be said to be wilful and the penalties imposed under section 271(1)(b) was liable to be cancelled.
The ld. CIT( D.R.) in this regard has relied on the decision of the Delhi Bench of this Tribunal rendered on 05.10.2017 in the case of Sanjay Dalmia (ITA Nos. 3795 to 3801/Del./2014) and submitted that the penalties imposed under section 271(1)(b) in the said case for A.Ys. 2006-07 to 2012-13 were confirmed by the Tribunal after taking into consideration its earlier decision rendered in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust (supra). A perusal of the order passed by the Tribunal in the said case, however, shows that although the decision in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust (supra) was referred to by the Tribunal in paragraph no. 17, as a part of the submissions made on behalf of the assessee, the same had not been dealt with or discussed in the operative portion of the order. There is thus no finding or observation recorded by the Tribunal in the order passed in the case of Sanjay Dalmia (supra) so as to say that the decision in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust was considered and distinguished. In any case, the facts involved in the case of Sanjay Dalmia (supra) were materially different from the facts involved in the case of the assessee as rightly pointed out by the ld. counsel for the assessee, inasmuch as, the assessee in the said case had failed to furnish the information required by the Assessing Officer with respect to his account with HSBC Bank, Geneva, Switzerland and he had also failed alternatively to furnish notarized consent letter confirming that he did not have any Bank account with HSBC Bank, Geneva, Switzerland. After taking note of this non-compliance on the part of the assessee, the Tribunal held that the assessee was making an attempt to forestall the enquiry of the Revenue and the penalties imposed under section 271(1)(b) were confirmed by the Tribunal. The facts involved in the present case, on the other hand, are materially different, inasmuch as, though there was non- compliance on the part of the assessee to two of the notices issued by the Assessing Officer under section 142(1), he complied with the other notices issued by the Assessing Officer under section 142(1) by furnishing information required by the Assessing Officer for the purpose of assessments. As pointed out by the ld. counsel for the assessee, the Assessing Officer found the said information furnished by the assessee as sufficient for the purpose of assessment as noted in paragraph no. 7 of the assessment orders and completed the assessments under section 153A/143(3) of the Act. The information required by the Assessing Officer for the purpose of assessments thus was duly furnished by the assessee in order to enable the Assessing Officer to complete the assessments under section 153A/143(3) of the Act and there was thus substantial compliance made by the assessee and it was not the case of wilful default committed by the assessee to justify the imposition of penalty under section 271(1)(b) as held by Hon’ble Delhi Bench of this Tribunal in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust (supra).
At the time of hearing before us, the ld. CIT(D.R.) has also relied on the decision of the Hon’ble Supreme Court in the case of Manmohad Das –vs.- Vishnu Das [AIR 1967 SC 643 in support of the Revenue’s case and contended that the ordinary rule of construction, as held by the Hon’ble Supreme Court, is that the provision of a statute must be construed in accordance with the language used therein unless there are compelling reasons, such as, where a literal construction would reduce the provision to absurdity or prevent manifest intention of the legislature from being carried out. However, as rightly pointed out by the ld. counsel for the assessee from the relevant provisions of section 271(1)(b), the language used therein “..................he may direct that such person shall pay by way of penalty..........” is such that the authorities are given discretion to impose penalty. Further, section 273B provides that no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the provisions of section 271(1)(b) if he proves that there was reasonable cause for the said failure. In this regard, it would
be useful to refer to the decision of the Hon’ble Supreme Court in the case of Hindustan Steel –vs.- State of Orissa 83 ITR 26, wherein it was held that even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act. As already noted by us, substantial compliance was made by the assessee during the course of assessment proceedings by furnishing the relevant details and information required by the Assessing Officer for the purpose of assessment, as is evident from the assessment completed by the Assessing Officer under section 153A/143(3) for all the years under consideration and therefore, the default on the part of the assessee in not complying with the two notices issued by the Assessing Officer under section 142(1) was merely of a technical or venial nature for which the imposition of penalties under section 271(1)(b) was not justified. As such, considering all the facts of the case, we hold that the penalties imposed by the Assessing Officer under section 271(1)(b) and confirmed by the ld. CIT(Appeals) for all the years under consideration are not sustainable and cancelling the same, we allow these appeals filed by the assessee”.
As the issue involved in the present case as well as all the material facts relevant thereto are similar to that of the case of Ranjit Kumar Paul (supra), we respectfully follow the decision of the Coordinate Bench of this Tribunal rendered in the said case and cancel the penalties imposed by the Assessing Officer under section 271(1)(b) and confirmed by the ld. CIT(Appeals) for all the years under consideration by holding the same to be unsustainable.
In the result, all the seven appeals filed by the assessee are allowed. Order pronounced in the open Court on 14th day of February, 2018.