M/s R.S. Investment, New Delhi v. ITO, New Delhi

ITA 1341/DEL/2011 | 2002-2003
Pronouncement Date: 30-09-2011 | Result: Allowed

Appeal Details

RSA Number 134120114 RSA 2011
Assessee PAN AAIPG4533E
Bench Delhi
Appeal Number ITA 1341/DEL/2011
Duration Of Justice 6 month(s) 15 day(s)
Appellant M/s R.S. Investment, New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 30-09-2011
Date Of Final Hearing 29-09-2011
Next Hearing Date 29-09-2011
Assessment Year 2002-2003
Appeal Filed On 15-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I : NEW DELHI) SMT. DIVA SINGH JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA ACCOUNTANT MEMBER ITA NO.1338 TO 1343/DEL./2011 (ASSESSMENT YEARS : 1999-00 TO 2004-05) M/S. R.S. INVESTMENT VS. ITO WARD 30 (2) 22 ANSARI ROAD DARYA GANJ NEW DELHI. NEW DELHI 110 002. (PAN : AAIPG4533E) (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. RAKESH GUPTA ADVOCATE REVENUE BY : SHRI A.K. MONGA SENIOR DR ORDER PER BENCH : ALL THESE APPEALS ARISING OUT OF THE ORDER OF CIT (APPEALS)-XXV NEW DELHI DATED 22.02.2011 FOR THE SIX ASSESSMENT YEARS I.E. 1999-00 TO 2004-05. IN ALL THE ASSESSMENT YEARS THE ONLY ISSUE INVOLVED IS CONFIR MING THE PENALTY LEVIED U/S 271F OF INCOME-TAX ACT OF RS.5 000/- EACH. 2. THE GROUNDS OF APPEAL ARE COMMON IN ALL THESE AP PEALS WHICH READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE AUTHORITIES BELOW WERE INCORRECT AND UNJUSTIFIED IN LEVYING AND SUSTAINING THE PENALTY U/S 271F INCORRECTLY AND WRO NGLY LEVIED AND NOW WRONGLY CONFIRMED. ITA NOS.1338 TO 1343/DEL./2011 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE ORDER PASSED U/S 271F IS ILLEGAL INVALID AND VO ID AB INITIO. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE ORDER PASSED U/S 271F IS WITHOUT ANY JURISDICTI ON AND HENCE NOT APPLICABLE TO THE FACTS OF THE CASE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE AUTHORITIES BELOW WERE INCORRECT AND UNJUSTIFIED IN DISMISSING THE APPEAL OF THE ASSESSEE AN ALSO THEN INCORRECT IN CO NFIRMING THE PENALTY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME-TAX ACT WAS CONDUCTED ON 15.12.2004 IN T HE CASE OF SHRI BRIJ MOHAN GUPTA GALI HINGA BEG TILAK BAZAR DELHI. DURING THE SEARCH OPERATION AND POST SEARCH PROCEEDINGS STATEMENT OF SHRI BRIJ MOHAN GU PTA HIS SON SHRI RAJEEV GUPTA AND ACCOUNTANT SHRI RAM AVTAR SINGHAL WAS R ECORDED. SHRI BRIJ MOHAN GUPTA WAS ENGAGED IN THE BUSINESS OF HUNDI WHERE MO NEY WAS ARRANGED FROM VARIOUS PARTIES AND ADVANCED TO THE OTHER PARTIES A ND SHRI BRIJ MOHAN GUPTA WAS ACTING AS A MEDIATOR/BROKER. ON THE BASIS OF DISSE MINATION OF THE INFORMATION PERTAINING TO VARIOUS PERSONS THE PROCEEDING U/S 1 53C WAS INITIATED IN ASSESSEES CASE. THE AO HELD THAT EVEN AFTER ISSUING AND SERV ING THE NOTICE U/S 153C THE ASSESSEE HAS NOT FILED THE PROOF OF FILING THE INCO ME-TAX RETURN. ALTHOUGH AN AFFIDAVIT WAS FILED BY ONE OF THE PARTNERS STATING THAT THE FIRM WAS CLOSED DOWN AND THEY DO NOT HAVE ANY RECORD OF THE FIRM. IT WAS AL SO DEPOSED THAT REGULAR RETURNS WERE FILED IN THIS CASE. IN ABSENCE OF ANY EVIDENC E OR PROOF REGARDING FILING OF THE INCOME-TAX RETURN THE ASSESSMENT WAS FINALIZED U/S 144/153C/153A OF THE INCOME- TAX ACT AND PENALTY PROCEEDINGS WERE INITIATED U/S 271F OF THE INCOME-TAX ACT. ITA NOS.1338 TO 1343/DEL./2011 3 4. THE CIT (A) HAS CONFIRMED THE PENALTY BY HOLDING THAT DURING THE ASSESSMENT PROCEEDINGS BEFORE THE AO THE PARTNER OF THE ASSES SEE HAS FILED AN AFFIDAVIT DATED 26.12.2008 BY DEPOSING THAT ALL THE REGULAR RETURNS WERE FILED BUT EVIDENCE IN THIS REGARD WAS NOT SUBMITTED BEFORE THE AO. THE CIT (A ) CONFIRMED THE PENALTY U/S 271F AS THE ASSESSEE HAS NOT COMPLIED WITH THE NOTI CES U/S 153A/153C AND ALSO DID NOT COMPLY WITH THE PENALTY NOTICES U/S 271F ISSUED BY THE AO. ASSESSEE DID NOT SUBMIT ANY EXPLANATION IN RESPECT OF THE PENALTY NO TICES. CIT (A) TREATED THE ASSESSEES ACTION AS NON-COMPLYING AND NON-COOPERAT IVE IN THE ASSESSMENT AND PENALTY PROCEEDINGS. HE CONFIRMED THE PENALTIES IN THESE YEARS. 5. WHILE PLEADING ON BEHALF OF THE ASSESSEE THE LE ARNED AR SUBMITTED THAT THE LEVY OF PENALTY U/S 271F HAS BEEN WRONGLY LEVIED AN D THE SAME IS WRONGLY CONFIRMED BY THE CIT (A). THE ASSESSEE HAS FILED R EGULAR RETURNS AND IN THIS REGARD AN AFFIDAVIT OF ITS PARTNER SHRI RADHEY SHYAM GUPT A WAS FILED BEFORE THE AO. SINCE THE FIRM WAS CLOSED DOWN THE RECORDS RELATIN G TO THE FIRM WAS NOT AVAILABLE THE NECESSARY COPY COULD NOT BE MADE AVAILABLE. TH ERE IS NO TIME LIMIT TO FILE RETURN U/S 153A. HE FURTHER SUBMITTED THAT FOR NON-FILIN G OF THE RETURN U/S 153A THE PROVISIONS OF PENALTY U/S 271F SHALL NOT BE APPLICA BLE. THE PENALTY U/S 271F CAN BE LEVIED ONLY WHEN AN ASSESSEE IS REQUIRED TO FILE RE TURN UNDER SUB-SECTION (1) OF SECTION 139 OR BY THE PROVISO TO THAT SUB-SECTION O NLY. THESE PROVISIONS ARE FOR VIOLATION OF PROVISIONS OF SECTION 139 OF INCOME-TA X ACT. THE SECTION 271F WAS INSERTED W.E.F. 1.4.1997 BY FINANCE ACT 1997 WHIC H HAD BEEN AMENDED/SUBSTITUTED BY FINANCE (NO.2) ACT 1998 AND FINANCE ACT 2001. THE SECTION W.E.F. 1.4.2001 READ AS UNDER :- ITA NOS.1338 TO 1343/DEL./2011 4 271F PENALTY FOR FAILURE TO FURNISH RETURN OF INCO ME.-IF A PERSON WHO IS REQUIRED TO FURNISH A RETURN OF HIS INCOME AS REQUIRED UNDER SUB-SECTION (1) OF SECTION 139 FAILS TO FURNISH SU CH RETURN BEFORE THE END OF THE RELEVANT ASSESSMENT YEAR HE SHALL BE LI ABLE TO PAY BY WAY OF PENALTY A SUM OF FIVE THOUSAND RUPEES : PROVIDED THAT A PERSON WHO IS REQUIRED TO FURNISH A RETURN OF HIS INCOME AS REQUIRED BY THE PROVISO TO SUB-SECTION ( 1) OF SECTION 139 FAILS TO FURNISH SUCH RETURN ON OR BEFORE THE DUE D ATE HE SHALL BE LIABLE TO PAY BY WAY OF PENALTY A SUM OF FIVE THO USAND RUPEES. THUS AS PER THESE PROVISIONS A PERSON WHO IS REQU IRED TO FILE A RETURN OF INCOME AS REQUIRED SUB-SECTION (1) OF SECTION 139 FAILS TO F URNISH SUCH RETURN BEFORE THE END OF THE RELEVANT ASSESSMENT YEAR HE SHALL BE LIABLE TO PAY BY WAY OF PENALTY A SUM OF FIVE THOUSAND RUPEES. THE PENALTY CAN ALSO BE LEV IED WHEN A PERSON IS REQUIRED TO FURNISH A RETURN OF INCOME AS REQUIRED BY THE PROVI SO TO SUB-SECTION (1) OF SECTION 139. PRIOR TO 1.4.2006 THE FIRMS WERE NOT REQUIR ED TO BE FILED RETURN U/S 139(1) IF ITS TOTAL INCOME OR THE TOTAL INCOME OF ANY OTHER P ERSON IN RESPECT OF WHICH IT IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR DOES NOT EXCEED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX. THU S PRIOR TO 1.4.2006 ASSESSEE WAS NOT LIABLE TO FILE RETURN WHERE INCOME WAS NOT TAXABLE. THE ASSESSMENT ORDERS PASSED FOR THE YEARS 1999-00 2000-01 2003-04 AND 2004-05 SHOW THAT THE INCOME HAS BEEN ASSESSED AT NIL IN ALL THESE YEARS. IT WA S BELOW THE AMOUNT OF TAXABLE INCOME. THEREFORE THE ASSESSEE WAS NOT UNDER THE OBLIGATION TO FILE THE RETURN OF INCOME U/S 139(1) FOR WHICH THE PENALTY U/S 271F CO ULD BE LEVIED. FURTHER EVEN NON-FILING THE RETURN IN RESPONSE TO SECTION 153C PENALTY FOR FAILURE TO FURNISH THE RETURN OF INCOME CANNOT BE LEVIED U/S 271F. HE PLE ADED THAT PRIOR TO THE OMISSION OF SECTION 271(1)(A) BY THE DIRECT TAX LAWS ACT 19 89 THE PENALTY WAS LEVIABLE FOR ITA NOS.1338 TO 1343/DEL./2011 5 NON-FURNISHING THE RETURN AND THE PROVISIONS AT THA T RELEVANT TIME IN EXISTENCE ARE AS UNDER :- 271 FAILURE TO FURNISH RETURNS COMPLY WITH NOTICE S CONCEALMENT OF INCOME ETC.-(1) IF THE INCOME-TAX OFFICER OR THE A PPELLATE ASSISTANT COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT ANY PERSON (A) HAS WITHOUT REASONABLE CAUSE FAILED TO FURNISH THE RETURN OF HIS TOTAL INCOME WHICH HE WAS REQUIRED TO FURNISH UNDER SUB-SECTION (1) OF SECTION 139 OR BY NOTICE GIVEN UNDER SUB-SECTION (2) OF SECTION 139 OR SECTION 148 OR HAS WITHOUT REASONABLE CAUSE FAIL ED TO FURNISH IT WITHOUT THE TIME ALLOWED AND IN THE MANNER REQUIRED BY SUB-SECTION (1) OF SECTION 139 OR BY SUCH NOTICE AS THE CASE M AY BE OR. FOR INSERTING THE PENALTY PROVISIONS U/S 271F THE INTENTION OF THE LEGISLATURE WAS ONLY TO LEVY THE PENALTY U/S 271F ONLY WHEN A PERS ON IS REQUIRED TO FURNISH A RETURN OF HIS INCOME AS REQUIRED UNDER SUB-SECTION (1) OF SECTION 139 OR BY THE PROVISO TO THAT SUB-SECTION AND FAILS TO FURNISH THE RETURN UP TO THE END OF THE RELEVANT ASSESSMENT YEAR. ASSESSEE IS NOT FALLING UNDER THA T AS NO TIME LIMIT IS FIXED TO FILE THE RETURN U/S 153A. HE ALSO PLEADED THAT AS HELD BY THE VARIOUS COURTS THE PENALTY PROVISIONS MUST BE CONSTRUED STRICTLY. FOR THIS PR OPOSITION HE RELIED ON THE FOLLOWING DECISIONS :- (I) CIT VS. T.V. SUNDARAM IYENGRA & SONS (P) LTD. 101 ITR 764 (SC); (II) AC ASSESSMENT-II BANGALORE VS. VELLIAPPA TEXTILES LTD. & ANR. 263 ITR 550 (SC) (III) ENGINEERS IMPEX PVT. LTD. & ORS. 244 ITR 247 (DEL. ). FURTHER HE ALSO PLEADED THAT IF THE PENALTY IS LEVI ED FOR NOT FILING THE ORIGINAL RETURN IN TIME THEN ALSO IT CANNOT BE LEVIED AFTER SUCH A LONG PERIOD AS HELD IN THE VARIOUS ITA NOS.1338 TO 1343/DEL./2011 6 DECISIONS THAT PENALTY CANNOT BE LEVIED BEYOND A RE ASONABLE TIME. FOR THIS PROPOSITION HE RELIED ON THE FOLLOWING DECISIONS : - (I) KRISHNA BHATIA VS. AGRL. ITO 132 ITR 21; (II) GOVERNMENT OF INDIA VS. CITADEL FINE PHARMACEUTICAL & ORS. 184 ITR 447; (III) NOBLE PICTURES VS. JCIT 90 ITD 248 (COCHIN). 6. ON THE OTHER HAND THE LEARNED DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE PROVISIONS OF SECTION 153C UNDER WHICH THE ASSESSMENT HAS BEEN MADE PROVIDE IN RESPECT OF THE ASSESSMENT OF INCOME OF ANY OTHER PERSON IN ADDITION TO THE ASSES SMENT IN THE CASE OF SEARCH OR REQUISITION U/S 153A OF INCOME-TAX ACT. THE PROVIS IONS ITSELF PROVIDE THAT THE ASSESSMENTS UNDER THIS SECTION SHALL BE MADE BY THE AO OF SUCH PERSON BY ISSUING THE NOTICE AND ON THAT BASIS THE AO WILL ASSESS OR REASSESS THE TOTAL INCOME OF SUCH PERSON OR SUCH ASSESSMENT YEARS IN THE MANNER PROVI DED IN SECTION 153A. THUS THE ASSESSMENT AND REASSESSMENT HAS TO BE MADE IN THE M ANNER PROVIDED IN SECTION 153A. SECTION 153A PROVIDES THAT THE AO SHALL ISSU E THE NOTICE REQUIRING TO FURNISH RETURN OF INCOME WITHIN A PERIOD AS SPECIFIED IN TH E NOTICE. THE ASSESSEE WAS UNDER THE OBLIGATION TO FILE THE RETURN OF INCOME IN RESP ECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS IN A PRESCRIBED FORM AN D VERIFIED IN A PRESCRIBED MANNER ALONG WITH OTHER PARTICULARS AS MAY BE PRESC RIBED AND THE PROVISIONS OF INCOME-TAX ACT SHALL AS FAR AS MAY BE APPLY ACCO RDINGLY AS IF SUCH RETURN WAS A RETURN REQUIRED TO BE FURNISHED U/S 139. IN VIEW O F THESE WE ARE NOT IN AGREEMENT WITH THE PLEADINGS OF THE LEARNED AR THAT THE PROVI SIONS OF SECTION 271F CANNOT BE ITA NOS.1338 TO 1343/DEL./2011 7 APPLIED WHERE THE RETURN IS REQUIRED TO BE FURNISHE D U/S 153C READ WITH SECTION 153A OF THE INCOME-TAX ACT. ALTHOUGH THERE IS NO M INIMUM TIME REQUIRED TO BE GIVE IN THE NOTICE TO BE ISSUED U/S 153A FOR FILING THE RETURN AND ALSO NO SEPARATE FORM HAS BEEN PRESCRIBED HOWEVER ASSESSEE WAS UND ER LEGAL OBLIGATION TO FILE THE RETURN OF INCOME. THE PHRASE HAS BEEN USED SO FA R AS MAY BE IN SECTION 153A. IN OUR CONSIDERED VIEW THESE WORDS SO FAR AS MAY BE HAVE BEEN USED TO RESTRICT THE APPLICABILITY OF THOSE PROVISIONS WHICH ARE INCONSI STENT WITH THE PROVISIONS OF SECTION 153A. MEANING THEREBY THAT BY USING WORD SO FAR AS MAY BE IN SECTION 153A THE PROVISIONS AND REQUIREMENT OF SECTION 139 WHICH ARE NOT INCONSISTENT WITH PROVISIONS OF SECTION 153A SHALL BE APPLICABLE AND COMPLIANCE THEREOF SHALL BE AS MANDATORY. THE PROVISIONS IN RESPECT OF THE PEN ALTY FOR THE VIOLATION OF THE PROVISIONS OF SECTION 139 SHALL BE VERY MUCH APPLIC ABLE WHENEVER THERE IS A VIOLATION OF SECTION 153C READ WITH SECTION 153A IN RESPECT OF THE FILING THE RETURN OF INCOME. SINCE WE ARE HOLDING THAT THE PROVISION S OF SECTION 271F ARE APPLICABLE WHEN THERE IS A VIOLATION OF NON-FILING THE RETURN WHEN NOTICES U/S 153 READ WITH SECTION 153A ARE ISSUED THEREFORE THE CASE LAWS R ELIED UPON BY THE LEARNED AR WITH REGARD TO PROPOSITION THAT PENALTY PROVISIONS SHOUL D BE CONSTRUED STRICTLY HAS NO RELEVANCE ON THE ISSUE. FURTHER THE LEARNED ARS PLEADINGS THAT THE PENALTY FOR NOT FILING THE ORIGINAL RETURN OF INCOME CAN ALSO BE NO T LEVIED DUE TO BEYOND THE REASONABLE TIME. IN THIS REGARD WE ARE OF THE VIE W THAT REVENUE HAD NOT ESTABLISHED BEYOND DOUBT THAT RETURNS WHEREVER ASSESSEE WAS REQ UIRED TO BE FILED HAD NOT BEEN FILED BY THE ASSESSEE. AS WE HAVE SEEN THAT ASSESS EE WAS NOT HAVING TAXABLE INCOME AT LEAST IN FOUR ASSESSMENT YEARS. FURTHER THE AS SESSEE HAS ALSO FILED THE AFFIDAVIT ITA NOS.1338 TO 1343/DEL./2011 8 STATING THAT ORIGINAL RETURN OF INCOME WERE FILED. REVENUE HAD NOT DISPROVED/DISLODGED THE CONTENTS OF AFFIDAVIT. THE REFORE AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND VARIOUS PLEAD INGS MADE BEFORE US WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE DOES NOT DESERVE TO BE VISITED PENALTY U/S 271F OF THE INCOME-TAX ACT. IN VIEW OF THESE FACTS WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW. 8. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER 2011. SD/- SD/- (DIVA SINGH) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 30 TH DAY OF SEPTEMBER 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXV NEW DELHI. 5.CIT(ITAT) NEW DELHI. AR ITAT NEW DELHI.