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Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA
Before: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi
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 15.02.2016, 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 an individual, who 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
2 ITA Nos. 887-893/KOL/2016 Assessment Years: 2006-2007 to 2012-2013 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.20,000/- 2007-08 Rs.20,000/- 2008-09 Rs.20,000/- 2009-10 Rs.20,000/- 2010-11 Rs.20,000/- 2011-12 Rs.20,000/- 2012-13 Rs.20,000/-
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 the following submissions were made by the assessee before the ld. CIT(Appeals) in support of his case that the said penalties were liable to be cancelled being not sustainable on facts as well as in law:- “In the instant case, Shri Ranjan Kumar Paul, who is the son of Shri Anil Chandra Paul aged about 75 years, the assessee, is looking after the taxation matter of the assessee. It is humbly submitted that the health condition of the assessee, Shri Ranjit Kumar Paul, eider brother of Sri Ranjan Kurnar Paul was very critical due to severe illness. During the course of assessment proceedings, the ld. A.O, issued notices u/s. 142(1) on 05.07.2013 & 28,10.2013. It is humbly submitted that Shri Ranjan Kumar Paul, was busy in looking after his brother for his treatment during that period. For that reason, the director neither can attend the hearing on the
3 ITA Nos. 887-893/KOL/2016 Assessment Years: 2006-2007 to 2012-2013 specified dates nor could inform his consultant to comply such notices.
Details of his medical reports along with prescriptions are annexed herewith and marked as Annexure: 'A',
(b) It is humbly submitted that finally when there was a slight recovery in his brother's health, proper compliances were made before the ld. A.O. and the assessment was completed u/s 143(3)/153A, It is further submitted that the assessee was nowhere trying to avoid the proceedings and was always cooperating in every possible manner.
(c) It is further submitted that during the course of penalty proceedings u/s 271(1)(b), the A/R of the assessee filed a bonafide submission explaining the reason for non- appearance and also requested for dropping the penalty proceeding u/s 271(1)(b) of the Act. Copy of the same is annexed herewith and marked as Annexure B. However, the Ld. A.O. imposed penalty of Rs. 20,000/- for non compliance of notices u/s.142(1) issued on several elates without considering the facts that the assessee was prevented by reasonable cause for such failure of non compliances and there was no deliberate intention on the part of assessee for not complying with the said notice.
(d) In the case of Hindustan Steel Ltd. vs, State of Orissa 83 ITR 26, Hon'ble Supreme Court has held that penalty should not be imposed merely for the technical or the venial breach of law and the authorities may decline to uphold the penalty considering the nature of breach”.
The ld. CIT(Appeals) did not find merit in the submissions made on behalf of the assessee and proceeded to confirm the penalties imposed by the Assessing Officer under section 271(1)(b) for the following reasons given in his impugned orders, which are common for all the seven years under consideration:_ “The appellant has filed three grounds of appeal but all grounds are mainly regarding imposition of penalty u/s 271(1)(b) of the Act. In view of this the matter is discussed with the Ld. A/R and accordingly all the grounds are taken up together for adjudication. The Ld. Authorized Representative of the appellant appeared on 10.02.2016 and challenged the imposition of penalty u/s. 271(1)(b) of the Act, on the ground that the assessment was already completed on 28.03.2014 but penalty order u/s.271(I)(b) of the Act is passed on 15.09.2014, and therefore the A.O. is not justified. In course of discussion, it is explained as to why penalty proceeding is initiated at the time of the completion of assessment and the penalty proceeding has to be completed within prescribed time period. Then the Ld. A/R referred to the illness of Shri Ranjit
4 ITA Nos. 887-893/KOL/2016 Assessment Years: 2006-2007 to 2012-2013 Kumar Paul, a member of the family and argued that since Shri Ranjit Kumar Paul was not well, there were non-compliances in response to the notices u/s142(1) of the Act during assessment proceeding. This explanation has not been submitted till date. The copy of discharge summary of Shri Ranjit Kurnar Paul shows that he was operated in Appollo Hospital on 20.05.2011 and duly discharged on 06.06.2011. Later on he was hospitalized for two days in February/March, 2013.
5.1. The penalty u/s. 271(1)(b) of the Act is imposed on the assessee for the non-compliance to the notices issued u/s. 142(1) of the Act issued on 26.06.2013, 01.07.2013 and 13.12.2013 wherein request was made to the assessee to appear on 08.07.2013, 12.07.2013 and 20.02.2013. Reference is made to the operation of Shri Paul in 2011 and two days hospitalized in February/March, 2013.
5.2. It is seen that Shri Ranjit Kurnar Paul was not in the hospital during the period when non-compliance took place. It is also seen that the appellant, besides not informing the Assessing Officer about the said medical reason during the assessment proceeding or subsequently during the penalty proceeding, did not mention a word about it at the time of the filing of appeal or even later till 10.02.2016 The appeal in this case was filed on 14.11.2014. Even after that the appellant did not refer to this as the reason for the non-compliance during the assessment proceeding which resulted into the initiation and subsequently imposition of penalty u/s. 271(1)(b) of the Act. This is neither referred in the grounds of appeal nor in the statement of facts. Only curing the course of the instant appeal proceeding i.e. on 10.02.2014 the appellant has referred to the said excuse regarding illness of a member of the family due to which there were non-compliances but the A/R of the appellant failed to explain as to how did it stop the appellant's Ld. A/R from appearing before the Assessing Officer.
5.3. The ld. A/R submitted that "during the course of penalty proceedings u/s,271(1)(b), the A/R. of the assessee filed a bonafide submission explaining the reason for non-appearance and also requested for the dropping the penaltv proceeding u/s.271(1)(b) of the Act. It is pertinent to mention that the referred submission dt.23.05.2014 does not mention a word about the illness of Shri Ranjit Kumar Paul. The A.O. has only reproduced the entire submission in the relevant penalty order u/s. 271(1)(b) of the Act The said submission of the ld. AR dt. 23.05.2014 is reproduced below:-
“..............have been alleged to have failed to respond on few occasions on the given dates as per your notice served u/s. 142(1)/143(2) for A.Y, 2006-07 to A.Y. 2012-13, however, I had no intentions to defy or disobey the order, Further it is also a matter of fact that no penalty notice u/s.271(1)(b) was served from your end during the pendency of assessment proceedings and the same was served only at the time of completion of assessment u/s. 153A/143(3), that is on 28.03.2014, hence the alleged offence has
5 ITA Nos. 887-893/KOL/2016 Assessment Years: 2006-2007 to 2012-2013 already been exonerated by your honour and therefore no further action shall be sustained in the eye of law. Hence, I request your honour that the penalty proceedings u/s 271(1)(b) for AY 2006-07 to AY 2012-13 may please be dropped for the same of justice”.
It is apparent that no valid reason is mentioned and the illness of Shri Paul is certainly not mentioned as the reason for the referred non-compliances of the notices u/s.142(1) of the Act.
5.4. The Ld. A/R continued to argue that Shri Ranjit Kumar Paul's illness had prevented them from complying with the notices u/s.142(1) of the Act. However, it is seen that Shri Ranjit Kumar Paul was not representing before the department or for that matter associated with any income tax proceeding. The Ld A/R agreed with this but he insisted that the illness of Shri Paul was the only reason. It is seen that the appellant had made a plea while requesting for the condonation of delay in the filing of appeal. At that point of time the appellant has submitted that "the Cost Accountant Shri Gurudas Dey was on leave so the delay in the filing of appeal." Shri Gurudas Dey is the td. AIR of the appellant in this case. Thus it is seen that the said excuse, that one person in family was not well so no compliance, is not considered valid in course of appeal proceeding, the Ld A/R failed to explain as to why the illness of Shri Ranjit Kumar Paul, which is the only excuse for lion- compliance, was not brought to the knowledge of the Assessing Officer during assessment/penalty proceeding or later, at the time 'the filing of instant appeal, or for that matter till 10,02.2016? and secondly, how did the referred illness prevented the appellant in complying through any authorized representative?
5.5. The ld. A/R could not reply to the above but argued repeatedly that due to the illness of Shri Ranjit Kurnar Paul, the non-compliances took place, This is no reasonable explanation. The A/R was also requested to inform whether all activities of the appellant stopped due to the stated excuse or only the compliance before the Assessing Officer got affected. The A/R did not reply. The case law, (Hindustan Steel Ltd. –vs.- State of Orissa 83 ITR 26) cited by the appellant, has been referred but that is not applicable in the instant appeal matter. Thus it is seen that the assessee had deliberately not complied with the notices duly issued by the AO u/s 142(1) of the Act. Later on, the appellant has taken a plea regarding illness of one of the family member which is an apparent case of afterthought It is also seen that the referred non-compliances affected the assessment proceeding and the same gets reflected in the observation, in this regard, as made in the relevant assessment order. In view of that, the instant penalty proceeding was initiated. Every time the hearing is fixed, the assessing officer has to prepare and then without any prior intimation or request for adjournment, the assessee does not appear. Even afterwards the assessee does not submit any explanation. This type of deliberate non-compliance as done by the assessee in this case, adversely affects the process of assessment and the completion of the important assessment proceeding got delayed. As discussed the explanations of the ld.
6 ITA Nos. 887-893/KOL/2016 Assessment Years: 2006-2007 to 2012-2013 A/R dated 10.07.2016 does not substantiate the claims as made in the grounds of appeal. Thus in view of the facts and circumstances of the case, the Assessing Officer was justified in imposing penalty u/s 271(1)(b) of the Act and levy Rs.20,000/- for non-compliance of notices u/s.142(1) of the Act. Therefore, appeal on the referred grounds is dismissed”.
Aggrieved by the orders of the ld. CIT(Appeals) confirming the penalties imposed by the Assessing Officer under section 271(1)(b), 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.
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
7 ITA Nos. 887-893/KOL/2016 Assessment Years: 2006-2007 to 2012-2013 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
8 ITA Nos. 887-893/KOL/2016 Assessment Years: 2006-2007 to 2012-2013 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
9 ITA Nos. 887-893/KOL/2016 Assessment Years: 2006-2007 to 2012-2013 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.
In the result, all the seven appeals filed by the assessee are allowed. Order pronounced in the open Court on 13th day of December, 2017.
Sd/- Sd/- (S.S. Viswanethra Ravi) (P.M. Jagtap) Judicial Member Accountant Member Kolkata, the 13th day of December, 2017
Copies to : (1) Shri Anil Chandra Paul, Thana Road, Gangarampur, Dakshin Dinajpur-733 124 2) Deputy Commissioner of Income Tax, Central Circle-XXVII, Kolkata, Aayakar Bhawan Poorva, 110, Shanti Palli, E.M. Bye-Pass, Kolkata-700 107 (3) CIT(Appeals)-21, Kolkata, (4) CIT- , Kolkata, (5) The Departmental Representative (6) Guard File TRUE COPY By Order
Senior Private Secretary, Head of Office/DDO, Income Tax Appellate Tribunal Kolkata Benches, Kolkata Laha/Sr. P.S.