Sahara India International Corporation Ltd, Noida v. DCIT, New Delhi

ITA 3352/DEL/2009 | 2003-2004
Pronouncement Date: 09-04-2010 | Result: Allowed

Appeal Details

RSA Number 335220114 RSA 2009
Assessee PAN AADCS6118F
Bench Delhi
Appeal Number ITA 3352/DEL/2009
Duration Of Justice 8 month(s) 13 day(s)
Appellant Sahara India International Corporation Ltd, Noida
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 09-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 09-04-2010
Date Of Final Hearing 06-04-2010
Next Hearing Date 06-04-2010
Assessment Year 2003-2004
Appeal Filed On 27-07-2009
Judgment Text
ITA NO. 3352/DEL/2009 A.Y. 2003-04 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 3352/DEL/2009 A.Y. 2003-04 SAHARA INDIA INTERNATIONAL CORPORATION LTD. VS. DY. COMMISSIONER OF INCOME TAX (NOW MERGED WITH M/S SAHARA INDIA CENTRAL CIRCLE -6 NEW DELHI COMMERCIAL CORPORATION LIMITED) C-2 C-3 C-4 SECTOR-XI NOIDA(UP) (PAN: AADCS6118F) [APPELLANT] (RESPONDENT) ASSESSEE BY : SHRI J.J. MEHROTRA CA & D.R. RAJAN DEPARTMENT BY : MR. KISHORE B. SR. DR ORDER PER SHAMIM YAHYA AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 8.5.200 9 AND PERTAINS TO ASSESSMENT YEAR 2003-04. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF I NCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY OF RS. 10 000/- U/S 271(1)(B) OF THE ACT. 3. IN THIS CASE IN THE PENALTY ORDER THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD BEEN DIRECTED TO GET ITS ACCOUNTS AUDI TED U/S 142(2A) OF THE IT ACT AND FURNISH A REPORT VIDE LETTER DATED 22.3.2006. THE ASSESSEE CHALLENGED THE ABOVE DIRECTIONS BEFORE THE HONBLE DELHI HIGH CO URT THROUGH A WRIT PETITION. IN ITA NO. 3352/DEL/2009 A.Y. 2003-04 2 THE MEANWHILE ON ASSESSEES REQUEST ASSESSING OFFIC ER EXTENDED THE TIME OF GETTING THE AUDIT COMPLETED BY 75 DAYS I.E. UPTO 1 8.9.2006. THE HONBLE COURT VIDE ITS ORDERS DATED 22.9.2006 DISMISSED THE WRIT PETITION. NOW THE ASSESSING OFFICER OPINED THAT ASSESSEE DID NOT GET ITS ACC OUNTS AUDITED AND FILE ANY REPORT U/S 142(2A) OF THE ACT. HENCE ACTION OF THE ASSE SSEE WAS FOUND TO BE ATTRACTING PENAL PROVISION OF SECTION 271(1)(B) OF THE IT ACT. THE ASSESSEE VIDE HIS REPLY DATED 6.11.2006 SUBMITTED THAT THE DELAY WHICH HAD LED TO THE EXPIRATION OF THE TIME AS PRESCRIBED UNDER SECTION 142(2A) TO GET TH E AUDIT COMPLETED HAS NOT BEEN CAUSED BECAUSE OF ANY DEFAULT ON THE PART OF T HE ASSESSEE BUT DUE TO DELAY IN FILING OF COUNTER AFFIDAVIT BY THE DEPARTMENT DU RING THE COURSE OF PENDENCY OF ITS WRIT PETITION BEFORE THE HIGH COURT. HENCE IT W AS CLAIMED THAT ASSESSEE WAS PREVENTED BY REASONABLE CAUSE IN NOT BEING ABLE TO GET THE AUDIT COMPLETED AND OBTAIN THE AUDIT REPORT. HOWEVER THE ASSESSING O FFICER DID NOT ACCEPT THESE CONTENTIONS. HE HELD THAT ASSESSEE WAS WELL AWARE OF THE TIME LIMIT PRESCRIBED UNDER SECTION 142(2A) OF THE IT ACT FOR GETTING ITS ACCOUNTS AUDITED. AND IF IT HAD CHOSEN TO CHALLENGE THE DIRECTIONS IN THIS REGARD IN THE ABSENCE OF ANY STAY FROM THE COURT FOR THE OPERATION OF THE TIME LIMIT IT W AS NECESSARY THAT SUITABLE ARRANGEMENTS WERE MADE BY IT TO COMPLY THE PROVISIO NS OF THE ACT. HENCE ASSESSING OFFICER REJECTED THE ASSESSEES CONTENTIO N AND IMPOSED THE PENALTY OF RS. 10 000/- U/S 271(1)(B) OF THE ACT. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCO ME TAX (APPEALS) CONFIRMED THE ADDITION. 5. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT UNDER SECTION 271(1)(B) UNDER WHICH PENALTY HAS BE EN IMPOSED IN THIS CASE READS ITA NO. 3352/DEL/2009 A.Y. 2003-04 3 AS UNDER:- IF THE ASSESSING OFFICER OR THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE COURSE OF ANY PROCEEDINGS IN THIS ACT IS SATISFIED THAT ANY PERSON HAS FAILED TO COMPLY WITH THE NOTICE U/S 115WD(2) OR 115WE(2) OR U/S 142(1) OR 143(2) OR FAILS TO COMPLY WITH THE DIRECTIONS ISSUED IN SUB-SECTION 142(2A) HE MAY DI RECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY IN ADDITION TO T HE TAX IF ANY PAYABLE BY HIM A SUM OF RS. 10 000/- FOR EACH SUCH FAILURE. 5.1 SECTION 273B OF THE IT ACT MANDATES THAT PENAL TY WILL NOT BE IMPOSED IN CERTAIN CASES INCLUDING U/S. 271(1)(B) IF THE ASSE SSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. 5.2 NOW IN THE PRESENT CASE ADMITTEDLY THERE HAS BEEN VIOLATION OF SECTION 271(1)(B) IN AS MUCH AS ASSESSEE HAS BEEN DIRECTED TO GET ITS ACCOUNTS AUDITED U/S 142(2A) AND THE ASSESSEE HAS FAILED TO COMPLY W ITH THE SAME. NOW WE HAVE TO EXAMINE WHETHER THERE WAS ANY REASONABLE CAUSE WITHIN THE AMBIT OF SECTION 273B OF THE IT ACT IN THIS REGARD WHICH CAN EXONERA TE THE ASSESSEE FROM THE RIGOURS OF PENALTY U/S 271(1)(B). FOR THIS IT WI LL BE WORTHWHILE TO RECAPITULATE THE FACTUAL MATRIX OF THIS CASE. 5.3 THE ASSESSEE WAS DIRECTED TO GET ITS ACCOUNTS A UDITED U/S 142(2A) VIDE LETTER DATED 20.3.2006. THE ASSESSEE HAD 105 DAYS TO COMPLY WITH THE DIRECTIONS. THE ASSESSEE HAD CHALLENGED THE ABOVE DIRECTIONS BEFORE THE HONBLE HIGH COURT THROUGH A WRIT PETITION AND HAD INFORMED THE ASSESSING OFFICER AND HAD SOUGHT EXTENSION OF TIME FOR COMPLIANCE. AFTER INITIAL REFUSAL ASSESSING OFFICER GRANTED THE ASSESSEE EXTENSION OF 75 DAYS I.E. UPTO 18.9.2006 BY LETTER DATED 4.9.2006. VIDE LETTER DATED 16.9.2006 THE ASSESSEE INTIMATED THE ASSESSING OFFICER THAT HEARING OF THE WRIT PETITION HAS BEEN ADJOURNED TO 22.9.2006 BY THE ITA NO. 3352/DEL/2009 A.Y. 2003-04 4 HONBLE COURT. ON 22.9.2006 THE HONBLE HIGH COUR T REJECTED THE WRIT PETITION OF THE ASSESSEE. IN THIS BACKGROUND SHOW CAUSE NOTICE U/S 271(1)(B) DATED 16.10.2006 WAS ISSUED AND FINALLY THE PENALTY WAS IMPOSED BY ORDER DATED 30.11.2006. 5.4 CONSIDERING THE ABOVE WE FIND THAT ASSESSEE HA S CHALLENGED THE DIRECTIONS TO GET THE ACCOUNTS AUDITED BEFORE THE HONBLE HIG H COURT. THIS FACT WAS DULY INTIMATED BY THE ASSESSEE AND FURTHER EXTENSION OF TIME IN THIS REGARD TO COMPLETE THE AUDIT WAS SOUGHT. AFTER INITIALLY D ECLINING ON THE SAME SET OF FACTS THE ASSESSING OFFICER EXTENDED THE TIME BY 75 DAYS I.E. UPTO 18.9.2006. HENCE WE ARE OF THE OPINION THAT ASSESSEE COULD BE SAID T O BE UNDER A REASONABLE AND BONAFIDE BELIEF THAT THE TIME TO GET THE ACCOUNTS AUDITED WILL BE EXTENDED AFTER THE FINAL DECISION OF THE HONBLE HIGH COURT. TH IS IS MORE SO WHEN ON THE VERY BASIS THAT ASSESSEE HAS FILED WRIT PETITION BEFORE THE HONBLE HIGH COURT ASSESSING OFFICER HAS EXTENDED THE TIME BY 75 DAYS. BUT THE TIME WAS NOT SO EXTENDED AND PENALTY U/S 271(1)(B) WAS IMPOSED. 5.5 IN OUR CONSIDERED OPINION THE PROVISION OF SEC TION 273B SHALL APPLY THIS CASE AS IT CAN BE SAID THAT THERE WAS REASONABLE CA USE FOR THE ASSESSEES FAILURE TO GET THE ACCOUNTS AUDITED. HENCE WE FIND THAT RIGOR US OF PENALTY U/S 271(1)(B) ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. IN THI S REGARD WE PLACE RELIANCE FROM THE APEX COURT DECISION RENDERED BY A LARGER BENC H COMPRISING OF THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEE DINGS AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITH ER ACTED DELIBERATELY IN DEFIANCE ITA NO. 3352/DEL/2009 A.Y. 2003-04 5 OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DIS HONEST 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 T HE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVAN T CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED THE AUTHORITY COMPET ENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHE N THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE B REACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN TH E MANNER PRESCRIBED BY THE STATUTE. 5.6 IN THE BACKGROUND OF THE AFORESAID DISCUSSION A ND PRECEDENT WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE LEVY OF PENALTY OF RS. 10 000/-. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/04/201 0. SD/- SD/- [C.L. SETHI] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 09/04/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES