M/s. NOBLE ELECTRIC CO., MUMBAI v. ITO Wd. - 20(2)-3,

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE S/SHRI RAJENDRA SINGH ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 1655/MUM/2007 (ASSESSMENT YEAR: 2001-02) M/S NOBLE ELECTRIC CO. SHRI BALRAJ RAJANI PLOT NO.5 ASHOKA BLDG 15 TH ROAD KHAR (W) MUMBAI-400052 PAN: AACFN4424C APPELLANT VS INCOME TAX OFFICER 20(2)-3- PIRAMAL CHAMBER LALBAUG MUMBAI-400012 . RE SPONDENT ASSESSEE BY : SHRI S C TIWARI REVENUE BY : SHRI PEEYUSH JA IN O R D E R PER VIJAY PAL RAO THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16.12.2006 OF THE CIT(A) ARISING FROM PENALTY ORDER PASSED UNDER SECTION 271 (1)(C) OF THE ACT. 2. THE ASSESSEE HAS RAISED VARIOUS GROUNDS OF APPEA L HOWEVER THE ONLY ISSUE ARISES FOR OUR CONSIDERATIO N AND ITA NO. 1655/MUM/2007 (ASSESSMENT YEAR: 2001-02) 2 ADJUDICATION IS WHETHER IN THE FACTS AND CIRCUMSTAN CES OF THE CASE THE LEARNED CIT(A) IS JUSTIFIED IN CONFIRMI NG THE PENALTY OF RS.1 81 35 071 LEVIED U/S 271(1)( C ). 3. THE ASSESSEE IS A PARTNERSHIP FIRM AND DID NOT F ILE RETURN OF INCOME U/S 139(1) WITHIN A PERIOD AS PRE SCRIBED UNDER THE ACT. THE NOTICE UNDER SECTION 142(1) WA S ISSUED ON 26.12.2001 REQUESTING THE ASSESSEE TO FILE ITS R ETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE AO PASSED THE ASSESSMENT U/S 144(3) OF THE ACT ES TIMATING THE TOTAL INCOME OF THE ASSESSEE AT RS.2 45 63 230/ - BEING THE SHORT TERM CAPITAL GAIN ON SALE OF IMMOVABLE P ROPERTY CONSISTING OF LAND AND BUILDING VIZ COOKWEL VIDE AGREEMENT DATED 28.9.2000 FOR A TOTAL CONSIDERATION OF RS.2 60 00 000/- . THE PENALTY PROCEEDINGS WERE INITIATED UNDER THE PROVISIONS OF SECTION 271(1)(C ) OF THE ACT AND A PENALTY OF RS.1 81 55 071/- WAS IMPOSED VIDE ORDER DATED 30. 3.2006. THE ASSESSEE CHALLENGED THE LEVY OF PENALTY BEFORE THE CIT(A) WHO HAS CONFIRMED THE PENALTY LEVIED BY TH E AO. 4. BEFORE US THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THERE WAS A DISPUTE BETWEEN THE PARTNERS OF THE FIRM AND THEREFORE THE RETURN OF INCOME COULD NOT BE FILED. HE HAS POINTED OUT THAT IN RESPONSE TO THE NOTICE U /S 142(1) ITA NO. 1655/MUM/2007 (ASSESSMENT YEAR: 2001-02) 3 ONE MR. BALRAJ H RAJANI FILED A LETTER DATED 1.1.2 002 BEFORE THE AO AND EXPLAINED ALL THE FACTS AND DEVELOPMEN T REGARDING THE DISPUTES BETWEEN THE PARTNERS OF THE FIRM AND LITIGATION WAS GOING ON IN THE COURT. THEREFORE DU E TO UNAVOIDABLE CIRCUMSTANCES THE RETURN COULD NOT BE FILED. HE HAS POINTED OUT THAT SO FAR AS THE TRANSACTIONS OF THE SALE OF THE LAND AND BUILDING IS CONCERNED THE ASSESSEE AP PLIED FOR CERTIFICATE U/S 269UL (3) OF THE ACT IN THE FORM NO .37(1) DATED 21.4.1999 AS WELL AS THE CERTIFICATE UNDER SECTION 230A(1) IN FORM NO.34A VIDE APPLICATION DATED 23.3.2000. T HE LEARNED AR HAS SUBMITTED THAT THE ASSESSEE HAD FI LED THE RETURN FOR THE ASSESSMENT YEARS 1996-97 TO 1999-200 0 BEFORE THE APPLICATION FOR CERTIFICATION UNDER SECTION 230 A (1) IN FORM NO.34A. HE HAS REFERRED THE ACKNOWLEDGEMENT OF F ILING OF RETURN OF INCOME FOR THESE ASSESSMENT YEARS AS WELL AS THE APPLICATION AND CERTIFICATE ISSUED U/S 230A ON 10. 5.2000. THE LEARNED AR HAS SUBMITTED THAT NO PENALTY U/S 2 71(1)( C ) CAN BE LEVIED WHEN THE ASSESSEE HAS ALREADY FILED T HE RETURN FOR THE EARLIER ASSESSMENT YEARS. HE HAS REFERRED THE EXPLANATION (3) TO SECTION 271(1)( C ) AND SUBMITT ED THAT THE AMENDMENT IN THE EXPLANATION HAS BEEN BROUGHT WITH EFFECT FROM 01.04.2003. THEREFORE UNDER THE UN-AMENDED EXPLANATION (3) TO SECTION 271(1) ( C ) THE FAILURE OF THE ASSESSEE TO FILE THE RETURN DEEMED TO HAVE CONCEALE D THE ITA NO. 1655/MUM/2007 (ASSESSMENT YEAR: 2001-02) 4 PARTICULARS OF INCOME OF A PERSON WHO HAS NOT PREVI OUSLY BEEN ASSESSED TO TAX UNDER THIS ACT. THE LD. AR H AS CONTENDED THAT IN VIEW OF THE EXPLANATION (3) AS S TANDS PRIOR TO 1.04.2003 NON-FILING OF THE RETURN DOES NOT CON STITUTES THE CONCEALMENT OF PARTICULARS OF INCOME IN RESPECT OF SUCH ASSESSMENT YEAR IF THE ASSESSEE HAS PREVIOUSLY AS SESSED UNDER THIS ACT. HE HAS RELIED UPON THE DECISION OF THE HON. JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S LA TA SHANTILAL SHAH REPORTED IN 323 ITR 297(BOM). HE HAS FURTHE R SUBMITTED THAT THE ASSESSEE HAS ACCEPTED THE INCOME ASSESSED FOR THIS ASSESSMENT YEAR AND PAID THE TAXE S. 5. ON THE OTHER HAND THE LEARNED DR HAS SUBMITTED THAT THE RETURN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 1996-97 TO 1999-2000 ARE NOT VALID RETURN OF INCOME . HE HAS SUBMITTED THAT THESE RETURNS OF INCOME ARE FILED IN SARAL FORM WHICH ARE NOT PROPERLY VERIFIED AND SIGNED B Y THE ASSESSEE. EVEN THE FULL PARTICULARS OF THE ASSESSEE WERE NOT FURNISHED IN THE SAID RETURN. THE LEARNED DR HAS SUBMITTED THAT NO DATE OF VERIFICATION HAS BEEN GIVEN IN THE RETURN EVEN THE NAME OF THE FATHER HAS ALSO NOT BEEN MENT IONED. THEREFORE WHEN THE RETURNS FILED BY THE ASSESSEE ARE NOT VALID THEN THE CONDITION PRESCRIBED IN THE EXPLANAT ION (3) TO SECTION 271(1)( C ) IS NOT FULFILLED. THE RETURN O F INCOME WERE OTHERWISE BELATEDLY FILED THEREFORE CANNOT BE CONS IDERED AS ITA NO. 1655/MUM/2007 (ASSESSMENT YEAR: 2001-02) 5 VALID RETURN FILED BY THE ASSESSEE. HE HAS RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT WHEN THE RETURNS FILED BY THE ASSESSEE ARE NOT VALID THE ASS ESSEE CANNOT CLAIMED THAT THE ASSESSEE IS ASSESSED TO TAX PREVIOUSLY. 6. IN REJOINDER/REBUTTAL THE LEARNED AR OF THE AS SESSEE SUBMITTED THAT THE RETURNS FILED BY THE ASSESSEE WERE WITHIN THE TIME AS PRESCRIBED U/S 139(4). HE HAS FURTHER CONTENDED THAT NO ORDER UNDER SECTION 139(9) HAS BEEN PASSED FOR DECLARING THE RETURN OF INCOME FILED BY THE ASSESSE E IS VALID RETURN. THEREFORE IT CANNOT BE PRESUMED THAT THE RETURNS FILED BY THE ASSESSEE ARE INVALID IN ABSENCE OF AN Y SUCH DECLARATION OR ORDER PASSED BY THE AO U/S 139. HE HAS POINTED OUT THAT THE ASSESSEE ITSELF DECLARED THE T RANSACTION OF TRANSFER OF THE PROPERTY IN THE APPLICATION FILE D UNDER SECTION 269(UL) AS WELL AS UNDER SECTION 230A AND T HEREFORE THESE INFORMATIONS WERE ALREADY WITH THE DEPARTMENT . THE ASSESSEE COULD NOT FILE RETURNS BECAUSE OF UNAVOID ABLE CIRCUMSTANCES SPECIFICALLY WHEN THERE WAS A DISPUT ES AND LITIGATION AMONGST THE PARTNERS OF THE FIRM AND IT WAS NOT DELIBERATE AND INTENTIONAL ACT ON THE PART OF THE ASSESSEE. ITA NO. 1655/MUM/2007 (ASSESSMENT YEAR: 2001-02) 6 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND REL EVANT RECORD. THE MOOT QUESTION ARISES IN THE PRESENT CA SE IS WHETHER AS PER THE EXPLANATION (3) TO SECTION 271( 1)( C ) AS EXISTS PRIOR TO 1.4.2003 THE ASSESSEES NON FILING OF THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WOULD BE DEEMED AS CONCEALMENT OF PARTICULARS OF INCOME. THE EXPLANATION (3) BEFOR E 1.4.2003 READS AS UNDER : FAILURE TO FURNISH RETURNS COMPLY WITH NOTICES C ONCEALMENT OF INCOME ETC. 271. (1) IF THE [ASSESSING] OFFICER OR THE [***] [COMM ISSIONER (APPEALS)] IN THE COURSE OF ANY PROCEEDINGS UNDER T HIS ACT IS SATISFIED THAT ANY PERSON (A) .. (B) (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR [* * *] FURNISHED INACCURATE PARTICULARS OF SUCH INCOME HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY (I) [* * *] [(II) . [(III) . [EXPLANATION 1. EXPLANATION 2 [EXPLANATION 3.WHERE ANY PERSON WHO HAS NOT PREVI OUSLY BEEN ASSESSED UNDER THIS ACT FAILS WITHOUT REASONABLE CAUSE TO FURNISH WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1) OF S ECTION 153 A RETURN OF HIS INCOME WHICH HE IS REQUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFT ER THE 1ST DAY OF APRIL 1989 AND UNTIL THE EXPIRY OF THE PERIOD AFORESAID NO NOTICE HAS BEEN ISSUED TO HIM UNDER CLAUSE (I) OF SUB-SECT ION (1) OF SECTION 142 OR SECTION 148 AND THE ASSESSING OFFICER OR THE [***] COMMISSIONER (APPEALS) IS SATISFIED THAT IN RESPECT OF SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INCOME THE N SUCH PERSON SHALL FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-S ECTION BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RES PECT OF SUCH ASSESSMENT YEAR NOTWITHSTANDING THAT SUCH PERSON F URNISHES A RETURN ITA NO. 1655/MUM/2007 (ASSESSMENT YEAR: 2001-02) 7 OF HIS INCOME AT ANY TIME AFTER THE EXPIRY OF THE P ERIOD AFORESAID IN PURSUANCE OF A NOTICE UNDER SECTION 148.] VIDE AMENDMENT BY THE FINANCE ACT 2002 WITH EFFE CT FROM 1.4.2003 THE WORDS WHO HAS NOT PREVIOUSLY BEEN ASSESSED UNDER THIS ACT HAVE BEEN OMITTED FROM THE EXPLANATION. THUS AFTER THE AMENDMENT W.E.F. 1.04.2003 IF THE RETURN HAS NOT BEEN FURNISHED IN RESPECT OF ANY OF THE AS SESSMENT YEAR WITHIN THE PERIOD PRESCRIBED UNDER THE PROVIS IONS OF THE ACT THEN SUCH PERSON SHALL BE DEEMED TO HAVE CON CEALED THE PARTICULARS OF INCOME IN RESPECT OF THAT ASSESS MENT YEAR. IN THE CASE IN HAND THE ASSESSEE HAS BROUGHT ON RE CORD THE RETURNS FILED FOR THE ASSESSMENT YEARS 1996-97 TO 1999 - 2000. THE DETAILS OF THESE RETURNS WERE ALSO MENTI ONED IN THE APPLICATION FILED IN FORM NO.34 FOR CERTIFICATE U/S 230A. THOUGH ALL THESE RETURNS WERE FILED FOR LOSSES AND ON THE SAME DATE WHEN THE APPLICATION I.E. IN FORM NO.34A FOR THE CERTIFICATE U/S 230 WAS FILED ON 21.3.2000 WHICH IS BEFORE THE APPLICATION U/S 34A FOR CERTIFICATE U/S 230A (1). SO FAR AS THE OBJECTION RAISED BY THE LEARNED DR THAT THESE RETUR NS ARE VALID RETURNS IT IS TO BE NOTED THAT THESE RETURN S WERE FILED ON BEHALF OF THE ASSESSEE FIRM AND SIGNED BY ONE S HRI PRAMOD K SHAH. THEREFORE WE DO NOT THINK THAT I F THE ITA NO. 1655/MUM/2007 (ASSESSMENT YEAR: 2001-02) 8 FATHERS NAME IS NOT MENTIONED IT IS A SERIOUS DEFE CT WHEN THE AUTHORITIES HAVE NOT DISPUTED THE IDENTIFY OF THE ASSESSEE FIRM. EVEN THE ASSESSMENT OF THE ASSESSM ENT YEARS UNDER CONSIDERATION WERE FRAMED ON THE SAME A DDRESS. SO FAR AS NOT WRITING THE DATE AT THE VERIFIED THE ASSESSMENT WHEN THE RETURN WAS FILED ON 21.3.2000 THE VERIFICATION IS DEEMED AS ON OR BEFORE 21.3.2000. EVEN OTHERWISE WHEN THE AO HAS NOT PASSED ANY ORDER FO R DECLARING THESE RETURNS AS INVALID UNDER SECTION 1 39(9) OF THE ACT THE SAME CAN NOT BE DEEMED AS INVALID RET URN. THE LEARNED AR HAS RELIED UPON THE DECISION OF THE HON . KERALA HIGH COURT IN THE CASE OF THOPPIL KUTTI EROOR V CI T REPORTED IN 34 ITR 850 (KER) AS WELL AS DECISION IN THE CASE OF S SANTHOSA NADAR V FIRST ADDL CIT REPORTED IN 46 I TR 411(MAD). THUS WHEN THE AO HAS NOT DECLARED THE RETURN IS INVALID IT CANNOT BE SAID THAT THIS RETURNS AR E INVALID. THE HON. HIGH COURT IN THE CASE OF CIT V/S LATA SHANTI LAL SHAH (SUPRA) HAD OCCASION TO DEAL WITH THE EXPLANATION ( 3) PRIOR TO ITS AMENDMENT W.E.F. 1.4.2003 IN PARA 3 TO 7 AS UND ER: 3. EXPLANATION 3 TO SECTION 271 READS AS UNDER : WHERE ANY PERSON WHO HAS NOT PREVIOUSLY BEEN ASSESSED UNDER THIS ACT FAILS WITHOUT REASONABLE CAUSE TO FURNISH WITHIN THE PERIOD SPECIFIED IN SUB-SECTI ON (1) OF SECTION 153 A RETURN OF HIS INCOME WHICH HE IS REQUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF ITA NO. 1655/MUM/2007 (ASSESSMENT YEAR: 2001-02) 9 APRIL 1989 AND UNTIL THE EXPIRY OF THE PERIOD AFO RESAID NO NOTICE HAS BEEN ISSUED TO HIM UNDER CLAUSE (I) 4. BY FINANCE ACT 2002 W.E.F 1 ST APRIL 2003 THE WORDS WHO HAS NOT PREVIOUSLY BEEN ASSESSED UNDER THIS ACT WERE OMITTED. 5. WE ARE CONCERNED WITH THE ASSESSMENT YEAR 1997-98. IN OTHER WORDS WHAT WE HAVE TO SEE IS THE PROVISIONS AS IT THEN STOOD PREVIOUS TO ITS AMENDMENT. THERE IS CATEGORICAL FINDING THAT THE ASSESSEE HAD EARLIER FILED RETURNS. PENALTY IS SOUG HT TO BE IMPOSED ON THE GROUND OF FAILURE TO FILE RETURNS. THE WORDING IN S.271(1)( C ) ARE IN CASE WHERE RETURNS HAVE NOT BEEN FILED OR FURNISHED INACCURATE PARTICULARS OF INCOME. CLEARLY THE ASSESSEES CASE WOULD NOT FALL UNDER SECTION 271(1)( C ). 6. THE TRIBUNAL BY ITS IMPUGNED ORDER HAS NOTED THAT THE SAID PROVISION WOULD NOT BE ATTRAC TED AS IN THE FACTS OF THIS CASE THE ASSESSEE IN FACT HAD EARLIER FILED RETURNS. 7. ON BEHALF OF THE REVENUE THE LEARNED COUNSEL SOUGHT TO IMPORT EXPLANATION 1 TO S.271. I N OUR OPINION THIS WAS NOT AN ISSUE EITHER BEFORE H E AO OR CIT(A) OR BEFORE THE TRIBUNAL. THE QUESTION MUST ARISE FROM THE ORDER OF THE TRIBUNAL. IN OUR OPINION THEREFORE THE QUESTION AS RAISED WOULD NO T ARISE. CONSEQUENTLY APPEAL DISMISSED. 8. IN VIEW OF THE ABOVE DECISION OF THE HON. JURISD ICTIONAL HIGH COURT WE ARE OF THE VIEW THAT THE ASSESSEE HA D ALREADY FILED THE RETURNS OF INCOME AND SOME OF THEM ARE DE FINITELY WITHIN THE TIME PRESCRIBED U/S 139(4) THEN NON FIL ING OF THE RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WOULD NOT BE DEEMED AS CONCEALMENT OF THE PARTICULARS OF THE INCOME ON THE PART OF THE ASSESSEE AS PER EXPLANATION (3 ) AS STOOD ITA NO. 1655/MUM/2007 (ASSESSMENT YEAR: 2001-02) 10 PRIOR TO 1.4.2003. ACCORDINGLY IN THE FACTS AND CI RCUMSTANCES OF THE CASE AND IN VIEW OF THE DECISION OF THE HON . JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S L ATA SHANTILAL SHAH. THE PENALTY IS LIABLE TO BE DELETED . . 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED.. PRONOUNCED IN THE OPEN COURT ON 11TH FEB 2011 SD SD ( SHRI RAJENDRA SINGH ) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 11 TH FEB 2011 SRL:1211 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A)XXXII 5. DR E BENCH BY ORDER TRUE COPY ASSTT. 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