Income Tax Appellate Tribunal - Delhi
J.N. Jewellery House Pvt. Ltd., New ... vs Ito, New Delhi on 9 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "SMC", NEW DELHI
BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER
ITA Nos.3652 to 3654/Del/2017
Assessment Years : 2009-10 to 2011-12
J. N. Jewellery House Pvt. Ltd., ITO, Ward- 13(1),
C- 4/B/309- A, Janak Puri, New Delhi.
Vs.
New Delhi.
PAN : AAACJ4345G
(Appellant) (Respondent)
Assessee by : Shri Varun Kaushal, ITP
Department by : Shri T. Vasanthan, Sr.DR
Date of hearing : 28-09-2017
Date of pronouncement : 09-10-2017
ORDER
PER R. K. PANDA, AM :
The above bunch of appeals filed by the assessee are directed against the common order dated 07.03.2017 of CIT(A)- 5, Delhi relating to assessment years 2009-10 to 2011-12 respectively. Since identical grounds have been taken by the assessee in all these appeals, therefore, these were heard together and are being disposed of by this common order.
2. First, we take up ITA No.3652/Del/2017 for assessment year 2009-10 as the lead case.
3. Facts of the case, in brief, are that the assessee is a company engaged in the retail business of trading in gold, silver and diamond ornaments. The registered office of the assessee company is C-4-B/309A, Janak Puri, New 2 ITA Nos.3652 to 3654/Del/2017 Delhi-110058. The retail show room is also located at this premises. Information was received that the assessee company had made cash deposit exceeding Rs.10,00,000/- in its bank account and had not filed its return of income with the PAN - AABCJ0458R used in the bank account. Therefore, a letter dated 23.07.2013 was issued to the assessee company, asking it to inform whether return of income had been filed and the same was sent through speed post number ED045286705IN with one copy of the same served upon one of the directors. The assessee did not reply to the same. Again, a letter dated 15.10.2013 was issued to the assessee company through speed post ED1005059421N for non filing of income tax return. Although this letter was served, however, there was no compliance or reply on the part of the assessee. In view of the non-compliances made by the assessee, the case of the assessee company was reopened by issued of notice u/s 148 dated 07.02.2014. This notice was sent by speed post ED0758832561N. In response to this notice u/s 148, the assessee company did not file the return of income. According to the Assessing Officer, this showed the callous and non-cooperative attitude of the assessee in completing its assessment despite giving sufficient opportunity in accordance with the principle of natural justice. In the light of the above facts and circumstances, the assessment was finally completed vide order u/s 147/144 of the I.T. Act dated 11.03.2015 on the basis of materials available on record. 3
ITA Nos.3652 to 3654/Del/2017
4. As the assessee was using two PANs, one for the filing of return of income and other for operating Axis Bank purpose, therefore, penalty proceedings u/s 272B(2) were also initiated while passing the assessment order. In order to finalize the above penalty proceedings, show cause notice was issued to the assessee. The assessee's AR filed reply vide letter dated 07.05.2015 stating that the penalty proceedings may kindly be kept in abeyance till the disposal of appeal. Vide show cause notice dated 18.06.2015, the assessee was informed by the Assessing Officer that the penalty proceedings u/s 272B(2) were not being considered for stay till the decision of CIT(A)'s order. The assessee was asked to file the explanation by 28.06.2015. The assessee did not file any explanation with regard to penalty proceedings u/s 272B(2) of the I.T. Act and hence it was presumed that the assessee had nothing to say in the matter. Moreover, the assessee company had not requested to delete the second PAN. In view of the above, the Assessing Officer came to the conclusion that assessee by non-complying the notices issued and duly served upon it, attracted the provisions of the section 272B(2) of the IT. Act. He accordingly levied penalty of Rs.10,000/- for assessment years 2009-10 to 2011-12 by passing a combined order.
5. The assessee filed appeal against the order passed by the Assessing Officer levying penalty of Rs.10,000/- u/s 272B(2). The ld. CIT(A) noted that the appeals were fixed for hearing on several occasions right from January, 4 ITA Nos.3652 to 3654/Del/2017 2016 and the AR was seeking repeated adjournments. In the meantime, the quantum appeals were decided wherein the facts relating to the use of two PANs by the assessee came to light. The CIT(A), therefore, issued an enhancement notice to the assessee asking as to why the penalty of Rs.10,000/- each for each assessment year should not be levied. The assessee in response to the same submitted that it was not using PAN AABCJ0858R and was using PAN AAACG4345G and filed the income-tax return with PAN AAACG4345G regularly. It was submitted that the Assessing Officer was requested to update the PAN record of the company and drop the income-tax proceedings of PAN AABCJ0858R. The assessee also filed a letter from the Axis Bank that it was using only PAN AAACG4345G. It was further stated that the assessee is bona- fide and has not concealed the income for the assessment year 2009-10 to 2011-12.
6. However, the ld. CIT(A) was not satisfied with the explanation given by the assessee and enhanced the penalty by Rs.20,000/- meaning thereby levied penalty of Rs.30,000/- for the above three impugned assessment years. The relevant observations of the ld. CIT(A) from para 3.4 onwards read as under :-
"3.4 I have considered the facts of the case, which need to be briefly reiterated at this stage. As per records, the appellant company was incorporated under Companies Act, 1956 on 09.03.1997 with the main object to carry on the business of sale, purchase of gold, silver and diamond ornaments and derived income from business of jewellery, being run under the name and style of J.N. Jewellery House (P) Ltd., a retail showroom at C-4B/309-A, Janak Puri, New Delhi-110058. The record shows that in response to an application, the appellant was allotted the PAN AAACJ4345G on 15.2.1999 as per the address furnished above and with the objectives of sale, purchase of gold, silver and diamond ornaments. Subsequently 5 ITA Nos.3652 to 3654/Del/2017 on another application, the PAN AABCJ0858R was allotted on 25.6.2002 as per the same premises and with the very same objectives. As a result, 2 PANs were allotted to the same assessee and both the PANs are valid as on date. From these facts it is clear that the appellant has been deliberately avoiding the use of the same PAN that was used for the cash transactions in its bank accounts (AABCJ0858R), to file the return of income and instead used a different PAN AAACG4345G. It is noted that the correct PAN is to be quoted in all documents pertaining to transactions prescribed in Rule 114B as these are transactions which need to be verified and that is the reason that the banks and other TIN providers (Tax Information Network) were required to report the details of these transactions to the I.T. Deptt. It is further seen that when an assessee is allotted a PAN under the new series, (in the appellant's case AABCJ0858R) the PAN allotted to him earlier (AAACG4345G) shall cease to have effect as per the provisions of Section 139A(4). However, the appellant has year after year continued to use the old series PAN AAACG4345G in filing the returns of income. From the year 2002 till 14.2.2017, that too when an incomplete application (without surrender of the relevant PAN card) has been made before the AO to deactivate the other PAN AABCJ0858R, the appellant has not taken any steps to get the same deactivated, despite knowing that this amounts to contravention of the provisions of section 139A(5) r.w. Rule 114B and Section 272B(2). As per information available, the assessee had deposited cash of Rs. 55,00,000/- in Axis Bank, Janak Puri, New Delhi in assessment year 2009-10. Similar cash deposits of Rs. 2,05,35,500/- and Rs.
45,07,500/- had been made into this bank account in A.Ys 2010-11 & 2011-12 respectively. The assessee company was holding two PANs and had used different PANs for different purposes. For the purpose of aforesaid bank account, it had used the PAN AABCJ0858R, whereas for filing ITRs it had used the PAN AAACG4345G. The assessee had been asked to explain the source of cash deposit in the bank account in the reopened assessments pertaining to the above years. In spite of many opportunities provided to the assessee, it had not explained the source of cash deposited nor produced complete books of account. Neither had the assessee furnished any documentary evidences in this regard, leading the AO to complete the assessment u/s 144. During appellate proceedings, the appellant claimed that the bank has been informed and had updated the correct PAN of the appellant as AAACJ4345G as on 3.11.2016. However, it was found that the veracity of this claim was to be doubted as the said letter of the bank did not mention the name and designation of person issuing the letter or indicate whether he had signed as the authorized signatory of the bank.
3.5 The facts discussed above demonstrate that the appellant has not discharged the onus cast upon him u/s 139A(5)(c) which enjoins an assessee to quote or intimate a Permanent Account Number, which is correct and true. By his act of furnishing a different PAN to the banking authorities vis-a-vis the PAN used for filing ITRs during the impugned years, it is held that the appellant, knowing under the circumstances, that such a PAN was incorrect, continued to default on his obligations u/s 139A. It is further noted that the appellant has not, till date, brought on record or proven that there was any reasonable cause provided u/s 273B for the said failure to comply with the provisions of section 139A(5)(c) r.w. Section 272B(2). In the circumstances, since there was a default on this account by the appellant for all the A.Ys 2009-10, 2010-11 & 2011-12, the penalty imposed by the AO at Rs.10,000/- is enhanced to Rs.10,000/- per year aggregating to 6 ITA Nos.3652 to 3654/Del/2017 Rs.30,000/-. The grounds taken in appeal are dismissed and the penalty is enhanced by Rs.20,000/-.
3.6 For statistical purposes the appeals are treated as dismissed and the penalty is enhanced by Rs.20,000/-.
7. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds of appeal :-
"1. That Ld. Income Tax Officer ward 13(1) New Delhi, imposed penalty of Rs.10,000/-U/s 272(B)(2) of the Income Tax Act, 1961, from 2009- 10 to 2011-12, without considering the facts and circumstances of the case. That Ld. Commissioner of Income Tax (Appeals) V New Delhi, Confirmed the Penalty of Rs. 10,000/- and enhanced to Rs. 10,000/-, per year aggregating to Rs. 30,000/- which is bad in law and beyond the interest on natural justice.
2. That Ld. Income Tax Officer ward 13(1) New Delhi, imposed penalty of Rs.10,000/- u/s 272(B) (2) of the Income Tax Act, 1961 arbitrarily and without considering the reply and evidences afforded by the appellant and the Ld. Commissioner of Income Tax (Appeals) V New Delhi, confirmed and enhanced to Rs.10,000/-, each year and upheld the order of Ld. Income Tax Officer without considering the Reply and Explanations filed by Appellant during the Appeal Proceedings and has not considering the facts and Circumstances of the Case.
3. That Ld. Commissioner of Income Tax (Appeals) V, has not considered the Explanations, Submissions filed with the Reply of Show Cause Notice dated 15.02.2017 for Enhancement of Penalty by a sum of Rs.20,000/- of the PAN AABCJ0858R, Appellant also filed a letter/certificate from his Banker, Axis Bank Ltd with Same Account Number 0207010200001847 under consideration, in which Bank Confirmed the Actual PAN AAACJ4345G used by company for operating Bank Account., but Ld. CIT (Appeal-V) simply rejecting the Certificate by stating" It is was found that the veracity of this claim was to be doubted as the said letter of the bank did not mentioned the name and designation of person issuing the letter or indicate whether he had signed as the authorized signatory of the bank, without considering the facts that Certificate is on the letter head of bank and authorized signatory has clearly mentioned his employee code with his signature.
4. That all the above action being arbitrary, erroneous, unjustified, untenable and unlawful and must be quashed with direction of appropriate relief.
5. That the appellant craves to leave, to add or alter, delete, amend, modify, rescind, supplement or alter any of the ground herein above, either before or at the time of the appeal.
PRAYER In View of the above submission, it is prayed before your honor to kindly set aside and delete the penalty order in the interest of natural justice."7
ITA Nos.3652 to 3654/Del/2017
8. Ld. counsel for the assessee reiterated the same arguments as made before the CIT(A) and submitted that the ld. CIT(A) has not considered the certificate issued by Axis Bank on the ground that the said certificate is doubtful as it does not mention the name and designation of the person issuing the letter or indicate whether he had signed as authorized signatory of the bank. He further submitted that the assessee was filing the return of income on the basis of the correct PAN i.e. AAACG4345G only. He accordingly submitted that the penalty so levied by the ld. CIT(A) should be deleted.
9. Ld. DR on the other hand heavily relied on the order of the CIT(A). He submitted that the assessee without any valid reason was using two PAN Numbers and, therefore, the CIT(A) was fully justified in enhancing the penalty.
10. I have considered the rival arguments made by both the sides, perused the orders of the ld. Assessing Officer and the CIT(A) and Paper Book filed on behalf of the assessee. The provisions of section 272B(2) read as under :-
"Penalty for failure to comply with the provisions of section 139A.
272B. (1) xxxxx
(2) If a person who is required to quote his permanent account number in
any document referred to in clause (c) of sub-section (5) of section 139A, or to intimate such number as required by sub-section (5A) or sub-section (5C) of that section, quotes or intimates a number which is false, and which he either knows or believes to be false or does not believe to be true, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees.
11. Similarly as per the provisions of section 273B no penalty shall be imposable on an assessee for any failure referred to in the provisions of section 8 ITA Nos.3652 to 3654/Del/2017 272B, if he proves that there was reasonable cause for the said failure. In the instant case, it is an admitted fact that the assessee was having two PANs. It is not discernable from the records as to whether the assessee has made transactions by using both PANs. It is also not discernable from the letter of Axis Bank filed by the assessee as to who had signed the said certificate. Although it is mentioned as authorized signatory, it is not understood as to under whose request the same has been issued. Before coming to the issue of reasonable cause, these things need proper verification which has not been done in the instant case. If the assessee can prove that he was making transactions only in one PAN and the other PAN has not at all been mis-utilized and the bank issued a certificate to the Assessing Officer to this effect that the assessee was not using AABCJ0858R then assessee may have a reasonable cause for non-levy of penalty under the provisions of section 272B(2) of the I.T. Act, 1961. Since these things are not coming out clearly from the submissions made before the lower authorities and since it is also not verifiable from the records as to whether any addition has been made by the Assessing Officer on the body of the assessment order on account of transactions made by the assessee in the second PAN Number, therefore, considering the totality of the facts and in the interest of justice, I deem it proper to restore the issue to the file of the Assessing Officer with a direction to give an opportunity to the assessee to substantiate his case. The Assessing Officer is directed to decided the issue 9 ITA Nos.3652 to 3654/Del/2017 afresh and in accordance with law and after giving due opportunity of being heard to the assessee. I hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
12. The grounds raised by the assessee in other two appeals are identical. Therefore, following the same reasoning, I restore the issue to the file of the Assessing Officer with a direction to decide the issue afresh in the light of my direction in the preceding paragraphs.
13. In the result, all the three appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open Court on this 09th day of October, 2017.
Sd/-
(R. K. PANDA) ACCOUNTANT MEMBER Dated: 09-10-2017.
Sujeet Copy of order to: -
1) The Appellant
2) The Respondent
3) The CIT
4) The CIT(A)
5) The DR, I.T.A.T., New Delhi
By Order
//True Copy//
Assistant Registrar
ITAT, New Delhi