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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
Before: SH. O.P. KANT & MS. SUCHITRA KAMBLE
ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 05/02/2014 of Ld. Commissioner of Income-tax (Appeals)-XXIII, New Delhi for assessment year 2012-13, raising following grounds:
1. The order of learned CIT(A) dated 05.02.2014 confirming the penalty levied u/s 272A(1)(c) is erroneous both on facts and in law.
2. That on the facts and in the circumstances of the case, the learned CIT(A) has grossly erred in dismissing the appeal filed by the assessee against penalty order u/s 272A(1)(c) of the Income Tax Act imposed on non-compliance of summons u/s 131 of the Act. 2.1 That the assessee sought adjournment in response to the notice dated 28.01.2014 fixing hearing on 05.02.2014. The order has been passed by the learned CIT(A) on 05.02.2014 itself despite the fact that a letter for adjournment was filed on the same date.
The appellant craves leave to add, alter, amend or modify any of the grounds of appeal before or at the time of hearing of the appeal.
The facts in brief are that a search action was carried out at the premises of the assessee on 24/02/2012. The learned Additional Director of Income- Tax (Investigation), Unit-II, New Delhi, (In short “Addl. DIT”) levied penalty of Rs.30,000/- under section 272A(1)(c) of the Income-tax Act, 1961 (in short “the Act”) on the ground that the assessee defied the summons issued by the Deputy Director of Investigation ( in short “the DDIT”) under section 131 of the Act on 25/04/2012, 30/05/2012 and 12/07/2012. The Addl. DIT in the order levying penalty has mentioned that in the course of search documents indicating on money payments in respect of property transactions, were seized any statement of the assessee was recorded under section 132(4) of the Act, however, the assessee could not explain the source of unaccounted cash transactions recorded in the documents seized. He further mentioned that most of the property transactions were done in cash and the recipient, namely, Sh. Gurmeet Singh, Director of M/s. S.S. Real Build Private Limited and M/s. Sapient Construction Private Limited accepted the fact of receiving cash from the assessee. The summons were issued by the DDIT for examination and verification of the transactions contained in seized documents. 3.1 The first summon dated 25/04/2012 was issued requiring the assessee to attend personally on 01/05/ 2012, however, the proceedings were adjourned to 11/05/2012 on the request of the assessee. On the stipulated date again the proceedings were adjourned to 18/05/2012 on the request of the assessee. On 18/05/2012, again the proceedings were adjourned to 24/05/2012 on the request of the assessee, however, neither anyone attended before the DDIT nor any compliance was made.
3.2 Consequently, the DDIT issued another summon under section 131 of the Act on 30/05/2012, requiring the personal attendance of the assessee on 06/06/2012. In response, the assessee filed a letter through the counsel, that the assessee planned to move a petition before the Income Tax Settlement Commission. 3.3 The assessee was informed that mere intention to move a petition before the Settlement Commission did not debar an income tax authority to initiate proceedings under section 131 of the Act and a fresh notice for summon under section 131 of the Act was issued on 12/07/2012, fixing the date for personal appearance by the assessee on 16/07/2012. In response, it was submitted by the assessee enclosing a medical certificate that his wife was not well and she was to be operated on 20/07/2012. No compliance of the summon proceeding was made on 16/07/2012.
In view of the above defaults of the assessee in not complying the summons issued by the DDIT under section 131 of the Act on three occasions, the Addl. DIT levied penalty of Rs. 30,000/- i.e. penalty of Rs.10,000 for each default, vide his order dated 17/07/2012 under section 272A(1)(c) of the Act. 4.1 Aggrieved, the assessee filed appeal before the learned Commissioner of Income-tax (Appeals), but due to non-appearance either by the assessee or his representative, the learned Commissioner of Income-tax (Appeals) upheld the penalty with following observations:
“4.2 As per the provisions of section 250 of the Act, notices posting the case for hearing were sent to the address of the appellant as per details given below: S.No. Notice Date of hearing Remarks dated/adjournment given 1. 06.01.2014 20.01.2014 Adjournment sought which 24.01.2014 2. - 24.01.2014 None appeared. 3. 28.01.2014 05.02.2012 Show cause issued for 05.02.2014 5. - 05.02.2012 None appeared 4.3 As mentioned above, several opportunities were given to the appellant to appear and make his submissions. However, the Authorized Representative of the appellant sought adjournment on one pretext or the other and even not filed written submissions before the undersigned and proceedings remained uncompleted with. 4.4 The Supreme Court in Titaghur Paper Mills Co. Ltd. Vs. State of Orissa: Pinaki Sengupta Vs. State of Orissa (1983) 142 ITR 663 (SC) held that “Merely because the assessing authority refused to grant any further adjournments and proceeded to assess to the best of his judgment, it could not be said that he acted in violation of the rules of natural justice.” In view of this, it can be said that principles of natural justice have been met when notices were issued on several occasions. 4.5 The laws aid those who are vigilant, not those who sleep upon their rights. This principle is embodied in well known dictum “vigilantibus et non dormientibus jura subveniunt.” 4.6 In the case of Vipul Logistic & Warehousing (P) Ltd. Vs. ITO (1TA NO. 5454/Del/10 for A.Y. 20006-07), the Hon'ble Delhi 1TAT confirmed the order of C1T(A) who dismissed the appeal of the taxpayer when there was no response to the notices issued. The observations and decision of the Hon'ble ITAT are as under: “We have heard rival submissions and have gone through the entire material available on record. In the grounds filed before us, assessee has not raised any such ground about the assessment being time barred. Therefore, since the plea raised by the assessee does not arise out of its grounds of appeal, the same is dismissed. We see no infirmity in the order of CTT (A) which is passed ex-parte due to deliberate non-cooperation of the assessee. Therefore, the assessee’s appeal is dismissed.” 4.7 Since more than enough opportunity was given and the appellant has chosen not to appear or to file any written submissions, it appears that he has been purposely avoiding attendance before the undersigned. Since the appellant or his Authorized Representative have not attended the appellate proceedings despite repeated opportunities provided to them. I am constrained to uphold the assessment order and to sustain the additions made by the Assessing Officer.”
5. Before us, the learned counsel of the assessee submitted that application filed for adjournment dated 05/02/2014 before the learned Commissioner of Income-tax (Appeals) was ignored and the learned Commissioner of Income-tax (Appeals) passed the impugned order without giving hearing to the assessee. He submitted that the assessee duly responded to the Assessing Officer in response to the summon issued that he was intending to file a petition before the Settlement Commission and thus there was no non-compliance on the part of the assessee. Further, he submitted without prejudice to the above arguments that for the same default, penalty of Rs.10,000/- each cannot be levied for three times. In this connection, he relied on the decision of the Tribunal, Delhi benches in the case of Smt. Rekha Rani Vs. DCIT, Central Circle-8, New Delhi in wherein the penalty levied under section 271(1)(b) was restricted to first default of the assessee, for not complying with notice under section 143(2) of the Act.
On the other hand, the learned Sr. Departmental Representative relying on the orders of the lower authorities submitted that summons were issued for the purpose of investigation of the transactions recorded in seized documents and due to non-compliance by the assessee of the summons issued, the investigation process was hindered and Department was deprived of gathering information in respect of the transactions from the assessee. He further submitted that non- compliance of summon under section 131 of the Act is a more serious offence as compared to non-compliance of notice under section 143(2)
142(1) of the Act and thus the ratio laid down in the case of Smt. Rekha Rani (supra) cannot be applied in the case of the assessee. Accordingly, he submitted that penalty levied of be 30,000 might be confirmed.
We have heard the rival submissions of the parties and perused the relevant material on record. To decide the issue of levy of penalty in its proper perspective, it is necessary to go through the relevant provisions of the section. Sec. 272A deals with penalty for failure to answer questions, sign statements, furnish information, return or statements, allow inspection etc. Sec. 272A(1) states :
272A(1) If any person,— (a) ........... (b) ………. (c) to whom a summons is issued under sub-s. (1) of s. 131 either to attend to give evidence or produce books of accounts or other documents at a certain place and time omits to attend or produce books or documents at the place or time; or ...................................................... he shall pay, by way of penalty, a sum of (ten thousand rupess) for every day during which the failure continues.
7.1 The Sec. 131 deals with power regarding discovery, production of evidence, etc. of Revenue authorities. It states that the AO shall, for the purposes of this Act, have the same powers as are vested in a Court under the CPC 1908 (5 of 1908), when trying a suit in respect of the following matters, namely:
(a) discovery and inspection; (b) enforcing the attendance of any person, including any officer of a banking company and examining him on oath; (c) compelling the production of books of account and other documents; and (d) issuing commissions. 7.2 Sec. 131 empowers the officers mentioned in section to exercise the powers vested in them for the purposes of the Act (I.T. Act). While so acting, the officers concerned are given, under this section, the same powers as a Court trying suits under the CPC would have in respect of, inter alia, discovery, production and inspection of documents. While exercising the jurisdiction invested in him for the purpose of the Act, the officer would apply his mind and this is a sine qua non for issue of notice for summon under Section 131 of the Act. If the officer has taken into due care and attention while exercising his jurisdiction, it is obligatory on the part of the assessee to respond and answer the queries made by the officer.
We find that the DDIT had provided sufficient opportunity to the assessee for compliance of summon under section 131 of the Act. Further, in our opinion, non-compliance of the summon on the ground that the assessee was intending to file the petition before the Settlement Commission was also not justified on the part of the assessee. The Settlement Commission acquire exclusive jurisdiction to exercise the power and perform the functions of an Income-tax Authority under the Act in relation to the case only after an application under section 245C of the Act has been allowed to be proceeded with under section 245D of the Act. In the present case, no such application was filed till the date of appearance in compliance to the summon issued by the DDIT. Further, no evidences were submitted in respect of medical exigencies of the wife of the assessee either before us or the lower authorities. Keeping in view the above, we do not find any reasonable cause for non-compliance of the summons by the assessee. Further, the assessee even did not comply to the various notices issued by learned Commissioner of Income-tax ( Appeals) providing opportunity of hearing to the assessee. The learned Commissioner of Income-tax (Appeals) in para-4.2 of the impugned order has mentioned the details of adjournments provided to the assessee. Looking to the non-compliance, he passed the impugned order on 05/02/2012. Before us, the assessee has filed copy of a adjournment application filed before the learned Commissioner of Income-tax (Appeals) on 05/02/2014. On perusal of the said application, we find that the same was filed at 5.25 PM on 05/02/2014 in the office of learned Commissioner of Income-tax (Appeals). We find that application has been filed just before closing hours of the office, on the day when the order was passed. We find that the assessee was provided sufficient opportunity but no compliance was made by the assessee. The assessee has not availed the opportunities provided and in such circumstances, the learned Commissioner of Income-tax (Appeals) cannot be held responsible for passing orders without hearing the assessee.
Keeping in view the above facts and circumstances of the case, we find that by not complying with the summon issued by the DDIT, the assessee has made default, liable for penalty under 272A(1)(C) of the Act.
However, with reference to the alternate prayer of the learned counsel that penalty for first default should only be levied, we find that the Tribunal in the case of Smt. Rekha Rani (supra) while deciding the levy of penalty under section 271(1)(b) of the Act for non-compliance of notice under section 143(2) of the Act observed as under:
5. We have considered the submissions of learned DR and have perused the order of the Assessing Officer and the learned CIT(A). We find that there was no reasonable cause on the part of the assessee for not appearing on the different dates of hearing before the Assessing Officer in response to notice issued under Section 143(2) of the Act. However, we find that the default is same and, therefore, penalty of `10,000/- could be imposed for the first default made by the assessee in this regard. The penalty under Section 271(1)(b) could not be imposed for each and every notice issued under Section 143(2), which remained not complied with on the part of the assessee. The provision of Section 271(1)(b) is of deterrent nature and not for earning revenue. Any other view taken shall lead to the imposition of penalty for any number of times (without limits) for the same default of not appearing in response to the notice under Section 143(2) of the Act. This does not seem to be the intention of the legislature in enacting the provisions of Section 271(1)(b) of the Act. In case of failure of the assessee to comply with the notice under Section 143(2) of the Act, the 3 ITA-6131/Del/2013 remedy with the Assessing Officer lies with framing of “best judgement assessment under the provisions of Section 144 of the Act and not to impose penalty under Section 271(1)(b) of the Act again and again. In this view of the matter, we restrict the penalty levied under Section 271(1)(b) of the Act to the first default of the assessee in not complying with the notice under Section 143(2) of the Act. Accordingly, the penalty imposed is restricted to `10,000/- as against `50,000/- confirmed by the learned CIT(A). The grounds of appeal of the assessee are thus partly allowed.”
11. We don’t agree with the contention of the learned Departmental Representative that offence of non-compliance of summon is more grave than non-compliance of notice under Section 143(2)/142(1) of the Act and, therefore, the decision in the case of Smt. Rekha Rani (supra) may not be followed. We observe that the quantum of levy of penalty in both offences of non-compliance of summon & non-compliance of notice under Section 143(2)/143(1) of the Act, prescribed by the legislature is same and thus, in our opinion, the legislature has not distinguished, both the offences as far as gravity of offence is concerned. In our opinion, the Smt. Rekha Rani (supra) is squarely applicable over the facts of the assessee.
12. Respectfully following the above decision of the Tribunal in the case of Smt. Rekha Rani (supra), we are of the view that same default of non-compliance of summon has been continued and, therefore, levy of penalty of Rs.10,000 for first default would be sufficient in the matter. We also observe that the provisions of section 272A(1)(c) of the Act are not a measure for earning revenue for the Department and for failure to comply with the summons, remedy has been provided in Civil Procedure Code and in case of repeated failure, the authorities should have resorted to the measures provided in the Civil Procedure Code. Keeping in view of the matter, we restrict the penalty levied under section 272A(1)(c) of the Act to the first default of the assessee for not complying with the summon under section 131 of the Act and accordingly, the penalty levied is restricted to Rs.10,000/- instead of Rs. 30,000/- confirmed by the learned Commissioner of Income-tax (Appeals). The grounds of the appeal are accordingly partly allowed. 13. In the result, the appeal of the assessee is allowed partly. The decision is pronounced in the open court on 19th January, 2017.