UNITY INFRAPORJECTS LTD,MUMBAI vs. ASST CIT CEN CIR 45, MUMBAI

(i) that the provisions of section 271(1)(b) of the Act empowers the AO to levy penalty in respect of each of the failures and the only ground on which an assessee can seek exception from levy of penalty is by offering an explanation with regard to any reasonable cause for not complying with the notices; (ii) that substantial details were not filed by the assessee over the period of two months; (iii) that heavy workload cannot be reasonable cause for not furnishing the information for more than two months; (iv) on the assessee’s averments that explanations in respect of seized material was submitted to the Investigation of the Department and would be in the possession of the AO, the learned CIT(A) stated that it is the AO who passes the assessment order and not the Investigating Wing of the Department and therefore the assessee ought to have submitted details pertaining to the explanation to seized material. (v) It is not the assessee who decides what information should be given first and what information can wait. Rather, it is the jurisdiction of the AO to prioritize such information.” 4.1 Aggrieved by the impugned orders of the CIT(A)-38, Mumbai dated 30.06.2014 for assessment years 2006-07 to 2012-2013, the assessee has raised the following common grounds of appeal for all the concerned seven assessment years: - “Ground No.

1. On the facts and in the circumstances of the case and in law the Hon'ble CIT(A) erred in confirming the penalty levied by the Assessing Officer u/s. 271(1)(b) of the Income Tax Act, 1961 amounting to `10,000/-. The appellant prays that the same be deleted.” 4.2.1 The learned A.R. for the assessee was heard in support of the grounds raised. It was submitted that search under section 132 of the Act was conducted on the premises of the Unity group and subsequent thereto 4 M/s. Unity Infraprojects Ltd. notices under section 153A/153C of the Act were issued in the case of 12 assessee’s of this group, of which the assessee is a part; and therefore for the 84 assessments in this group details were to be filed. According to the learned A.R. for the assessee the questionnaire annexed to the notice issued under section 142(1) of the Act dated 11.10.2013 calling for details to be filed by 17.10.2013, consisted of 26 queries for 7 years and certain details were to be furnished as per specific formats as mentioned in the notice (placed at pages 1 to 7 of the assessee’s paper book). The said notice was received by the assessee only on 17.10.2013, i.e. the date of hearing and therefore it was not possible to furnish by 17.10.2013, the details called for by the AO which were voluminous. It was argued that even otherwise the said notice was issued during the Diwali festival period when many staff are on vacation, article assistants on leave for examinations, finalizing and filing of returns of income for the assessee group and transfer pricing audits being simultaneously carried out, etc. In any case the assessee had filed partial details vide letter dated 18.10.2013. 4.2.2 The learned A.R. for the assessee drew the attention of the Bench to para 8 of the impugned order when the learned CIT(A) observed that the provisions of section 271(1)(b) of the Act empowers the AO to levy penalty for each of the failures to comply with the notice issued under section 142(1) and the only ground that the assessee can seek exception is by establishing reasonable cause for delay in submitting all the details within the stipulated time. In this regard, the learned A.R. for the assessee contends that the assessee received the notice under section 142(1) of the Act dated 12.10.2013, calling for voluminous details numbering 26 items for assessment years 2006-07 to 2012-13 to be furnished by 17.10.2013, only on 17.10.2013. Thus it was impossible for the assessee to comply by furnishing the details on the due date; since the notice itself was received on 17.10.2013. According to the learned A.R. for the assessee, the assessee brought this fact to the notice of the AO vide letter dated 18.10.2013 (placed at page 8 of the paper book). It is further submitted that such show cause notices were also issued in the cases of individuals of the Unity group, but no penalty was levied in those cases inspite of 5 M/s. Unity Infraprojects Ltd. entire details not being filed. It is submitted that in the case on hand, all details and explanations called for were completely filed for all the assessees of the group subsequently in the course of assessment proceedings that culminated in the finalization of the orders of assessment under section 143(3) of the Act and not exparte. 4.2.3 According to the learned A.R. for the assessee, the assessee had submitted many details to the AO before the issue of show cause notice under section 274 r.w.s. 271(1)(b) of the Act on 16.12.2013. In this regard, the learned A.R. for the assessee drew the attention of the Bench to the reply dated 17.12.2013 filed by the assessee in response to the aforesaid show cause notice (placed at pages 10 to 18 of the assessee’s paper book) which enclosed the list of various details filed from time to time before the AO between 18.10.2013; when the notice under section 142(1) of the Act was issued upto 16.12.2013; after which the show cause notice was issued. It is submitted that the assessee submitted major purchase details for the period relevant to assessment years 2006-07 to 2012-13 in order to enable smooth functioning of assessment proceedings, as it was understood that the main reason for the search was on account of the purchases made by the assessee’s group. It was, therefore, contended that it cannot be said that the assessee had not filed any details called for before the period 18.10.20123 to 16.12.2013. The learned A.R. for the assessee contends that this was a bona fide case wherein the assessee tried to submit as many details as early as possible; that the assessee had no intention to not comply with the notice issued under section 142(1) of the Act. In sum and substance it is a case of part compliance and not non- compliance to the notice under section 142(1) of the Act and since the facts of the case clearly demonstrate this, it is prayed that the penalty levied under section 271(1)(b) of the Act for assessment years 2006-07 to 2012- 13 be deleted. 4.3 Per contra, the learned D.R. for Revenue vehemently supported the orders of the authorities below.

4.4.1 We have heard the rival contentions of both the parties and perused and carefully considered the material on record. The facts of the matter as emanate from the record are that in the course of assessment proceedings, the AO issued a notice under section 142(1) of the Act dated 11.10.2013 for assessment years 2006-07 to 2012-13, calling upon the assessee to furnish the details, mentioned in the questionnaire annexed thereto, to be filed on 17.10.2013 at the hearing scheduled for 10.30 a.m. (copy of the same is placed at pages 2 to 7 of the assessee’s paper book). It is apparent that the penalty under section 271(1)(b) of the Act was levied on the assessee for the said seven assessment years, for failure on its part to comply with filing the requirements called in the questionnaire annexed to the notice under section 142(1) of the Act dated 11.10.2013. In our view, it is relevant to extract hereunder the questionnaire appended to the notice under section 142(1) of the Act dated 11.10.2013: - “QUESTIONNAIRE/A.Y.2006-07 TO 2012-13/UNITY INFRAPROJECTS LTD Please furnish the following details/documents as indicated with respect to hearings for A.Y. 2007-07 TO 2012-13 1. If you wish to be represented by an authorized representative, please furnish a letter of Authority in prescribed form. Without letter of authority no cognizance of his/her attendance shall be taken.

9 M/s. Unity Infraprojects Ltd.

I declare to the best of my knowledge and belief, the information furnished in the statements is correct and complete and other particulars shown therein are truly stated.

Details filed without verification shall not be accepted.