Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, : ‘D’ BENCH, KOLKATA
Before: Shri M. Balaganesh & Shri S.S.Viswanethra Ravi
PER BENCH:
These appeals by the Assessee are against the separate orders dt: 19-02-2016, of the CIT-A, 21, Kolkata for the A.Ys : 2006-07, 07- 08, 08-09, 09-10, 10-11,11-12 and 12-13, wherein he confirmed all the penalties of Rs.50,000/- each for all the A.Y’s under consideration.
The only effective issue is to be decided as to whether the CIT- A was justified in confirming the penalty of Rs.50,000/- each for all A.Ys under consideration imposed u/s. 271(1) (b) of the Act by the AO in the fact and circumstances of the case.
The brief facts of the case are that the assessee group is engaged in rice and flour milling business and supply of essential commodities to Govt. of W.B. However, a search & seizure operations u/s. 132(1) of the Act was conducted on 17-01-2012 in the Paul Group of cases at the residence of Shri Ranjit Kumar Paul, Smt. Shabari Paul and factory premises of the assessee. A survey u/s. 133A of the Act was also conducted on 17-01-2012 in the premises of to 819/Kol/16 2 M/s. Shiva Lokenath Rice Mill (P) Ltd.
M/s. Shri Brindaban Rice Mills and M/s. Baba Lokenath Rice Mills. During such operation, cash, jewellery, books of account, documents, papers and other electronic devices were found and seized. Notice u/s. 153A of the Act was issued on 22-02-2013 asking for the returns for the A.Ys 2006-07 to 2011-12. It is seen from assessment records that notice u/s. 142(1) of the Act was issued on 15/05, 28/05, 26/6/, 1/7 & 13/12/2013 requesting to furnish reply of the queries, but there was no compliance. Since the assessee had not submitted any reply/details in compliance of such notice issued u/s. 142(1) by invoking the provisions of section 271(1)(b) of the Act initiated the penalty proceedings and imposed Rs.50,000/- each for all the A.Ys under consideration.
This imposition of penalty u/s. 271(1)(b) of the Act Rs.50,000/- each for all the A.Ys under consideration was confirmed by the CIT-A.
The ld. AR submits that the issue in hand is covered by the order dt. 31-10-2017 of this Tribunal in the case of M/s. Shree Brindaban Rice Mill Vs. DCIT, Kolkata in for the A.Ys 2007-08 to 2011-12, copy of the same is on record and referred to paras 7 to 9 of the said order. He also argued that the assessment in this case was framed u/s. 143(3) of the Act, which shows that substantial compliances were made by the assessee during such assessment proceedings. The assessee filed a bonafide submission in the penalty proceedings. Thereby, the assessee cannot be held in default in not complying with the notice issued u/s. 142(1) of the Act as alleged by the AO, thereby, imposing the impugned penalty, which was cancelled by the said order dt.31-10-2017 by the Kolkata Tribunal. He also submits that the assessment in the present case was also completed u/s. 143(3) of the Act. Thereby, the penalty is not sustainable in the facts and circumstances of the present case to 819/Kol/16 3 M/s. Shiva Lokenath Rice Mill (P) Ltd.
and in view of above, he prayed to cancel the impugned penalty of Rs.50,000/- each for all the A.Ys under consideration.
On the other hand, the ld. DR argued that the assessee initially delayed in the assessment proceedings and to divert the attention of the AO in completing the assessment the assessee has taken advantage and referred to para 5 of the said order dt. 31-10-2017 of the Tribunal in the case of supra. The ld. DR also submits that the no plea was taken before the AO that the assessee was not in good health. He also submits that the best judgment can be passed u/s. 144 of the Act, when any person failed to comply with all the terms of notice issued under sub-clause(1) of section 142 of the Act, but non- compliance of notice issued u/s. 142(1) the penalty can be imposed on such failure. He also submits that the assessee did not comply with the same as proposed/questioned in the notice issued u/s. 142(1) of the Act by the AO. Thereby, the AO has rightly imposed the same for non-compliance of the notice issue u/s. 142(1) of the Act. The CIT-A was also justified in confirming the same. Thus, he relied on the orders of the AO & CIT-A on this issue.
Heard rival submissions and perused the material available on record including the case laws/order as relied on the assessee. We find there was a search & seizure operation conducted in the Paul Group cases on 17-01-2012, wherein the assessee itself is involved in. The assessee is a concerned party of the said group. We find that the order dt: 31-10-2017 in the case of M/s. Shree Brindaban Rice Mill-ITA Nos. 800-804/Kol/2016 for the A.Ys 2007-08 to 2011-12 as relied on by the assessee. We find that the identical issue on similar set of facts and circumstances has already been disposed by reversing the orders of the authorities below in favour of assessee, by following the orders of ITAT Delhi in the case of Akhil Bhartiya Praathmik Shishak Sangh Bhawan Trust reported in 115 TTJ 419 (Del) and the Hon’ble Apex Court in the case of Hindustan Steel to 819/Kol/16 4 M/s. Shiva Lokenath Rice Mill (P) Ltd.
reported in 83 ITR 26 (SC). Relevant finding of the order dt: 31-10- 2017 in the case of supra is reproduced herein below for better understanding:-
7. The ld. AR before us submitted that all the queries raised by the AO during assessment proceedings were duly replied by the assessee as evident from the order of AO paragraph number 8 which reads as under:-
"8.0 In course of assessment proceedings further queries was raised against which replies have been filed, looked into and placed on record. "
Accordingly the Id AR submitted that substantial compliances were made by the assessee during the course of assessment proceedings. Therefore no penalty in the instant case is called for. The Ld AR in this regard has relied on the order of Hon 'ble ITAT in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust Vs. Assistant Director of Income tax reported in 115 TTJ (Del) 419. The relevant extract reads as under:-
"2.5 We also find that finally the order was passed under s. 143(3) and not under s. 144 of the Act. This means that subsequent compliance in the assessment proceedings was considered as good compliance and the defaults committed earlier were ignored by the AO. Therefore, in such circumstances, there could have been no reason to come to the conclusion that the default was willful".
On the other hand, the Id. DR submitted that the medical certificates were not produced before the AO to justify that there was reasonable cause which prevented the assessee to response the notices issued under section 142(1) of the Act. The Id. DR also contended that the assessee in the instant case was intentionally delaying the proceedings to take the assessment at the fag-end in order to divert the attention of the AO. He vehemently supported the order of lower authorities.
8. In rejoinder, Ld AR submitted that all the medicals bills were duly produced before the Ld CIT(A) and he got co-terminus power to verify the same but he failed to do so. The Ld AR also submitted that the penalty cannot be imposed on account of technical ground. In this regard the learned AR relied on the judgement of Hon’ble Supreme Court in the case of Hindustan Steel ( supra).
9. We have heard the rival contentions of both the parties and perused and carefully considered the material on record; including the judicial pronouncements cited and placed reliance upon. At the outset it was observed that in the identical facts and circumstances the Hon 'ble Delhi Tribunal has decided the issue in favour of assessee in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust (Supra) by observing that the assessment was framed under section 143(3) of the Act which proves that substantial compliances were made by the assessee. Thus it cannot be held that the default committed by the assessee was willful. Thus, we are inclined not to uphold the order of lower authorities.
9.1 Similarly, we also find that the Hon'ble Apex Court in the case of Hindustan Steel (supra) has held that the penalty should not be imposed unless the assessee acted deliberately. The relevant extract reads as under :-
"Obligation is the result of a quasi- criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. 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 or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute.
As we have already decided the issue in favour of assessee in view of the above facts, therefore we are not inclined to comment on the contentions raised by the Ld DR at the time of hearing as well as observations made by the Ld CIT(A) in his order. Respectfully to 819/Kol/16 5 M/s. Shiva Lokenath Rice Mill (P) Ltd. following the aforesaid judgments we reverse the order of authorities below. Accordingly, AO is directed to delete the same.”
In view of the above, we cancel all the penalties of Rs.50,000/- imposed by the AO u/s. 271(1)(b) of the Act and confirmed by the CIT-A for all the A.Ys under consideration by reversing the orders of the authorities below .
In the result, all the appeals (ITA Nos. 813 to 819/Kol/2016) filed by the Assessee for the A.Ys 2006-07, ’07-08, 09-10, 10-11, 11- 12 & 12-13 are allowed. Order pronounced in the open court on 12 -01-2018 Sd/- Sd/- M. Balaganesh S.S. Viswanethra Ravi Accountant Member Judicial Member
Dated : 12-01-2018 PP(Sr.P.S.) Copy of the order forwarded to:
1. 1. Appellant/Assessee : M/s. Shiva Lokenath Rice Mill Pvt. Ltd, Thana Road, Gangarampur, Dakshin Dinajpur-733 124. 2 Respondent/Revenue : The DCIT, CC-XXVII, Aaykar Bhawan Purva, 110 Shanti Palli, EM Bye Pass, Kolkata-700 107.
3. The CIT(A), Kolkata 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata