Manjudevi Sethia, 6, New Cloth Market, Outside Raipur Gate

IN THE INCOME TAX APPELLATE TRIBUNAL
“C” BENCH, AHMEDABAD
BEFORE SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER AND
SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER
ITA Nos.2342/Ahd/2011
A.Ys.2008-09
Manjudevi Sethia,
6, New Cloth Market,
Outside Raipur Gate,
Ahmedabad.
PAN: AJZPS 5600A
Vs ITO Ward-11(4)
Ahmedabad.
(Appellant)
(Respondent)
ITA Nos.2343/Ahd/2011
A.Ys.2008-09
Shri Sanjay Kumar
Sethia,
6, New Cloth Market,
Outside Raipur Gate,
Ahmedabad.
PAN: ACWPS 4755J
Vs ITO Ward-11(4)
Ahmedabad.
(Appellant)
(Respondent)
ITA Nos.2344/Ahd/2011
A.Ys.2008-09
Shri Mahendra Kumar
Kanodia,
2, D.C. Cloth Market
Sarangpur, Ahmedabad.
PAN: AABHM 3612H
Vs ITO Ward-11(4)
Ahmedabad.
(Appellant)
Revenue by :
Assessee(s) by :
(Respondent)
Shri M.K. Singh, Sr.D.R..
None
सुनवाई क तार ख/ Date of Hea ring
:
घोषणा क तार ख /Date of P ronouncement:
12/03/2015
20/03/2015
ITA Nos.2342, 2343, 2344/Ahd/2011
Manjudevi Sethia, Shri Sanjay Kumar Sethia & Shri Mahendra Kumar Kanodia
for A.Ys.2008-09
-2आदेश /O R D E R
PER: MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER
All these three Appeals of three different appellants have been
filed against the separate orders of learned CIT(A)-XVI, Ahmedabad
identically dated 12th August, 2011. The appellant has challenged the
confirmation of penalty levied u/s.271(1)(b) of IT Act of Rs.20,000/- in
each case. All the Appellants have raised identically worded grounds as
reproduced below:
1.
The order was passed by the Id. AO u/s 143(3) and as was held by
ITAT Delhi branch in the case of Akhil Bhartiya Prathmik Siksha Bhawan
Trust vs. Asst, Director of income Tax (115 TTJ (Delhi) 491) and also relied
by ITAT Ahmedabad branch in the case of Swarnaben M Khanna and other
cases, if the assessment order is passed u/s 143(3) and not u/s 144 then non
compliance is deemed to have been waived.
2.
The order was passed u/s. 143(3) on the basis of required details
submitted during assessment proceeding from time to time. This shows that
there was no intention of non compliance and has held by the Ahmedabad
branch of ITAT in the case of Swarnaben M. Khanna, it should not be inferred
that there was a default which could invite penalty u/s.271(1)(b).
3. The AO has not exercised his discretion judicially. As held in the case of
M P Laxman vs. AGRl ITO (1986) 157 ITR 1, 9 (KARN). The discretion of
penalty is to be exercised judicially and not mechanically and with a due
regards to all the facts. It is not mandatory that penalty must be imposed in
every case. The word used in the section is, "May Direct" and the AO should
act judicially (CIT vs. Bangol Iron Galvanizing Works, (1987) 165.”
2.
An assessment was made u/s.143(3) respectively on 15.12.2010,
19.11.2010 and 26.11.2010. It was noted by the AO that notices
u/s.142(1) were issued on two dates but remained unattended. The dates
of non compliance on those two occasions were duly mentioned in the
impugned assessment orders. Thereafter, while levying the penalty
u/s.271(1)(b) vide three separate orders of dated 12.10.2010, the AO has
held that there was no reasonable cause explained for not attending the
ITA Nos.2342, 2343, 2344/Ahd/2011
Manjudevi Sethia, Shri Sanjay Kumar Sethia & Shri Mahendra Kumar Kanodia
for A.Ys.2008-09
-3proceedings on those two dates; therefore, for each default a penalty of
Rs.10,000/- was imposed on all the three appellants.
3.
On the date of hearing, no one has appeared from the side of the
appellants. However, considering the smallness of the issue, we have
decided to proceed ex-parte qua the Assessee. From the side of the
Revenue-Department, learned Sr.D.R., Mr. Nimesh Yadav appeared and
supported the action of the AO. He has also argued that such type of
penalty is introduced in the Act for the purpose to ensure the attendance
of the tax payers before the Tax Authorities.
13.
Having heard the submissions and after considering the totality of
the facts and circumstances of the case, we are of the view that in a
situation when finally an assessment order was made u/s.143(3) of IT
Act. The Assessee should not be held totally an irresponsible tax payer.
From the body of the assessment order, we have noted that learned A.R.
of the Assessee had appeared and also agreed for some of the proposed
addition. Because of the reason that the impugned assessment orders
were passed u/s.143(3) and not an ex-parte order u/s.144 of IT Act, the
ITAT Delhi Bench in the case of Akhil Bhartiya Prathmik Shiksha
Bhawan Trust, 115 TTJ 491 (Del.) has granted relief to the Assessee. But
side by side, we are also of the opinion that a message should be
conveyed to the tax payers that the notice of the Revenue Department
should be attended promptly. On this aspect, we have taken a view
recently in the case of Kanubhai Patel Vs. ACIT, Central Circle-3, Surat
bearing ITA Nos.2951, 2952, 2953, 2954, 2955 & 2956/Ahd/2011 order
dated 20.03.2015 wherein held as under:
ITA Nos.2342, 2343, 2344/Ahd/2011
Manjudevi Sethia, Shri Sanjay Kumar Sethia & Shri Mahendra Kumar Kanodia
for A.Ys.2008-09
-4“4.
We have also perused the order of learned CIT(A) in which the
Assessee has placed on record the summary of events. In the said summary,
the Assessee has tried to explain the date-wise compliance made during the
course of assessment proceedings before the First Appellate Authority, it was
thus pleaded that the Assessee has requested to grant an adjournment uptil
the finalization of time barring assessments. So the argument was that the
Chartered Accountant, legal representative of the Assessee, was preoccupied
with the time barring assessment upto December, 2009; therefore, time was
sought; hence, it was wrong on the part of the Revenue Department to allege
that there was no reasonable cause for seeking adjournment. Rather, from the
side of the Revenue-Department, learned Sr.D.R. has pleaded that the
Assessee was a habitual defaulter then the AO had no option but to levy
penalty. Considering the totality of the facts and circumstances as discussed
hereinabove, we are of the conscientious view that a tax payer should pay
respect to the show cause notice issued by the Revenue Department by
promptly complying the same. If there is a negligence or non compliance then
the provision of penal action has also been subscribed in the Act. Such type of
penalty is in the nature of deterrence to convey message that the notices of the
Revenue Department should be seriously complied with. But side by side there
is a provision of Section 273B of IT Act which says that no such penalty is
imposable on the Assessee on failure referred to in the said provisions if
proves that there was a reasonable cause for the said failure. In the present
case, although the Assessee has tried to demonstrate that there was a
reasonable cause but we are of the view that the Legal Representative of the
Assessee should have managed his affairs in such manner that all the legal
matters handled by him should be attended efficiently. Therefore, we hereby
hold that instead of deleting the entire penalty by taking the shelter of the
provisions of Section 273B of IT Act it is justifiable to reduce the fine imposed
of Rs.10,000/- to Rs.5,000/- each year. Resultantly, part relief is granted for
all the years involved. We order accordingly.”
13.1 Respectfully following the above decision of the Tribunal, we have
therefore hold that it shall be justifiable to reduce the penalty to
Rs.5,000/- in each case. Grounds raised are partly allowed.
14.
In the result, all the Appeals of the Assessee are partly allowed.
Sd/(ANIL CHATURVEDI)
ACCOUNTANT MEMBER
Ahmedabad; Dated 20/03/2015
Prabhat Kr. Kesarwani, Sr. P.S.s
Sd/(MUKUL Kr. SHRAWAT)
JUDICIAL MEMBER
ITA Nos.2342, 2343, 2344/Ahd/2011
Manjudevi Sethia, Shri Sanjay Kumar Sethia & Shri Mahendra Kumar Kanodia
for A.Ys.2008-09
-5आदेश क
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त ल प अ े षत/Copy of the Order forwarded to :
अपीलाथ / The Appellant
यथ / The Respondent.
संबं धत आयकर आयु त / Concerned CIT
आयकर आयु त(अपील) / The CIT(A)-III, Ahmedabad
वभागीय
त न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
गाड फाईल / Guard file.
आदेशानुस ार / BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt.Registrar)
आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad