Income Tax Appellate Tribunal - Indore
M/S. S.R. Formulation India Pvt. Ltd., ... vs The Dcit-Central (1), Bhopal on 4 May, 2017
Brijesh Sharma & Others ITA No.175/Ind/2017 Page 1 of 9 आयकर अपील य अ धकरण, इ दौर यायपीठ, इ दौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER आ.अ.सं./I.T.A. Nos. 175 to 181/Ind/2017 नधा रण वष /Assessment Years: 2007-08 to 2013-14 Shri Brajendra Sharma Jabua PAN - ASQPS1215H :: अपीलाथ /Appellant Vs. Dy. Commissioner of Income tax Central(I), Bhopal :: !यथ /Respondent आ.अ.सं./I.T.A. Nos. 182 to 188/Ind/2017 नधा रण वष /Assessment Years: 2007-08 to 2013-14 Shri Rajendra Singh Nayak Meghnagar PAN - ADDPN9696F :: अपीलाथ /Appellant Vs. Dy. Commissioner of Income tax Central(I), Bhopal :: !यथ /Respondent आ.अ.सं./I.T.A. Nos. 189 to 195/Ind/2017 नधा रण वष /Assessment Years: 2007-08 to 2013-14 Orchid Biotech Pvt. Ltd.
Roorki PAN - AAOCO07302C :: अपीलाथ /Appellant Vs. Dy. Commissioner of Income tax Central(I), Bhopal :: !यथ /Respondent Brijesh Sharma & Others ITA No.175/Ind/2017 Page 2 of 9 आ.अ.सं./I.T.A. Nos. 196 to 202/Ind/2017 नधा रण वष /Assessment Years: 2007-08 to 2013-14 M/s S.R. Formulation India Pvt. Ltd.
Bhopal PAN - AAPCS0102H :: अपीलाथ /Appellant Vs. Dy. Commissioner of Income tax Central(I), Bhopal :: !यथ /Respondent
आ.अ.सं./I.T.A. Nos. 212 to 218/Ind/2017 नधा रण वष /Assessment Years: 2007-08 to 2013-14 Nikita Multitrade Pvt. Ltd.
Mumbai PAN - AACCN-7334F :: अपीलाथ /Appellant Vs. Dy. Commissioner of Income tax Central(I), Bhopal :: !यथ /Respondent नधा "रती क$ ओर से/Assessee by Shri Pankaj Shah राज(व क$ ओर से/Revenue by Shri Mohd. Javed सन ु वाई क$ तार ख 1.5.2017 Date of hearing उ-घोषणा क$ तार ख 04.5.2017 Date of pronouncement आदे श /O R D E R PER BENCH These appeals are filed by the above-captioned assessees against different orders of ld. Commissioner of Income tax (Appeals)-2, Bhopal, [hereinafter referred to as the CIT (A)] all dated Brijesh Sharma & Others ITA No.175/Ind/2017 Page 3 of 9 19.10.2016. These appeals pertain to Assessment Years 2007-08 to 2013-14 as against appeals decided in respect of different penalty orders passed u/s. 271(1)(b) of the Income Tax Act, 1961 (hereinafter referred to as "the Act) by the DCIT, Central-1, Bhopal [hereinafter referred to as the AO]. Since in all these appeals, common ground of appeal is involved, we proceed to decide these appeals by this consolidated order for the sake of convenience.
2. In all these appeals, the sole issue involved is that the learned CIT(A) has erred in confirming the levy of penalty u/s 271(1)(b) of the I.T. Act in the cases of all these assessees.
3. Since the facts of the case involved in all these appeals are identical except dates, as a model, we would like to state the facts obtaining in the case of Shri Brajendra Sharma; ITA Nos. 175 to 181/Ind/2017.
4. Briefly stated, the facts of the case are that the search in the case of the assessee and group had taken place on 20.6.2012. After that notices were issued by the AO u/s 142(1) of the Act dated 23.9.2014 fixing the date of hearing for 8.10.2014 to submit the required information/documents as Brijesh Sharma & Others ITA No.175/Ind/2017 Page 4 of 9 per the questionnaire alongwith the books of accounts. It was specifically mentioned in the notice that failure to comply with the notice would lead to imposition of penalty u/s 271(1)(b) for Rs. 10,000/-. However, it was seen that on the date fixed for hearing i.e. on 20.10.2014 no submissions were filed with regard to the notice/questionnaire u/s 142(1) of the Act. Therefore, show cause notice for penalty was issued by the AO to the assessee on 09.12.2014 as to why penalty should not be levied u/s 271(1)(b) of the Act for non compliance to notice u/s 142(1) dated 23.09.2014. The date of hearing was fixed for 15.12.2015. However, on 15.12.014 the assessee requested for adjournment of 8 days and submitted that the reply will be filed on 20.12.2014 but no reply was filed till 20.1.2015. No reason/explanation was given by the assessee for non- compliance on the said date. Therefore, the AO levied penalty u/s 271(1)(b) of the Income-tax Act, 1961, for Rs. 10,000/- on 20.4.2015 for non compliance to notices u/s 142(1) dated 3.9.2014 for each assessment year from 2007-08 to 2013-14. Brijesh Sharma & Others ITA No.175/Ind/2017 Page 5 of 9
5. The ld. CIT(A) dismissed the appeal holding that the explanation of the assessee that Dr. Sudheer Sharma, Managing person, looking after was in police/judicial custody since July, 2014 is not acceptable as no such explanation was filed before the Assessing Officer. Hence, absence of Dr. Sudheer Sharma cannot be held sufficient reasonable cause.
6. Before us, the learned Counsel for the assessees submitted that in all these appeals, the facts and the issue involved are identical and, therefore, he will be arguing the facts in the case of Shri Brijendra Sharma. The learned AR submitted that Dr. Sudheer Sharma, who was a Director in the three companies i.e. Orchid Biotech, S.R. Formulations and Nikita Multitrade was a key person and was aware of all transactions also in respect of Brijendra Sharma and Rajendra Singh who were part of the group. He further submitted that the non-appearance was due to the fact that Dr. Sudheer Sharma was in police custoty since July, 2014 to June, 2016 and thus could not take cognizance of the hearings. The learned counsel for the assessee submittred that since the non- Brijesh Sharma & Others ITA No.175/Ind/2017 Page 6 of 9 appearance was prevented by reasonable cause being in police custody, no penalty under section 271(1)(b) of the Act was called for and the authorities below were not justified in levying and confirming the same. The learned counsel for the assessee submitted that it is held by the Delhi Bench of the Tribunal in the case of Akhil Bhartiya Prathmik Shmshak Sangh Bhawan Trust vs. Assistant Director of Income Tax; (2008) 115 TTJ 419(Del) that where the assessee had not complied with notice u/s 142(1) but assessment order was passed u/s 143(3) and not u/s 144, that meant that subsequent compliance in assessment proceedings was considered as good compliance and defaults committed earlier were ignored be Assessing Officer and therefore, levy of penalty u/s 271(1)(b) was not justified. The Learned Counsel further stated that very recently, this Bench of Tribunal in the cases of Hemant Kumar Soni and others in ITA Nos. 1361 to 1367/Ind/2016, etc. vide its order dated 16.1.2017 has deleted the penalties on the absolute identical facts.
Brijesh Sharma & Others ITA No.175/Ind/2017 Page 7 of 9
7. On the other hand, Ld. DR relied on the orders of the Revenue Authorities and cited some decisions of the Tribunals.
8. We have heard rival contentions of both the parties and perused the material available on record. We find that Dr. Sudheer Sharma, who was a Director in the three companies i.e. Orchid Biotech, S.R. Formulations and Nikita Multitrade, was the key person and was aware of all transactions also in respect of Brijendra Sharma and Rajendra Singh who were part of the group. We further find that the non-appearance of the assessee was due to the fact that Dr. Sudheer Sharma was in police custody since July, 2014 to June, 2016 and thus could not take cognizance of the hearings. We are of the view that the non-appearance of the assessee was prevented by reasonable cause, as the key person of the group was in police custody during the period under consideration and as such no penalty under section 271(1)(b) of the Act was called. However, an identical issue had come up before this Bench of the Tribunal and the Tribunal vide its order dated 16.1.2017 in the cases of Shri Hemant Kumar Soni, ITA Nos. 1361 to Brijesh Sharma & Others ITA No.175/Ind/2017 Page 8 of 9 1367/Ind/2016, and others, has held as under :-
"7. We have heard rival contentions of both the parties and perused the material available on record. We find the assessment orders in all these group appeals that the assessments have been completed u/ s 143(3) of the IT. Act. We find that the Assessing Officer has levied penalty 271(1)(b) for non-appearance on 15.10.2015. As per ld. Authorized Representative of the assessee, the assessees' counsel appeared and stated categorically that he appeared for seeking time. The counsel regularly attended the proceedings and the assessments have been framed u/ s 143(3) and not u/s 144. We find that this was the first notice for compliance and since the voluminous records and papers were required to be scrutinized and individually in each case, the appropriate replies were to be filed, the assessee prayed for the time to submit the reply and ultimately submitted all the necessary replies and cooperated with the Department. We are of the view that assessees had reasonable cause for non-appearance on that day. Therefore, there is no justification for levying the penalty u/s271(1)(b) of the Act. Secondly, in this matter, the assessments have been completed u/s 143(3) of the Act, therefore, no penalty can be levied if the assessments have been completed u/s 143(3) and there is subsequent compliances in the assessment proceedings was considered as good compliances and default committed earlier were ignored. Therefore, penalty u/s 271(1)(b) was deleted by various Tribunals. In the case of Akhil Bhartiya Parthmik Shmshak Sangh Bhawan Trust vs. ADIT (2008) 115 TTJ 419 (Del), it was held that where the assessee had not complied with notice u/s142(1) but assessment order was passed u/s143(3) and not u/s 144, that meant that subsequent compliance in assessment proceedings was considered as good compliance and defaults committed earlier were ignored by the Assessing Officer, therefore, levy of penalty u/s271(1)(b) of the Act was not justified. The case laws cited by ld. Departmental Representative are distinguishable on facts, hence, inapplicable to this case. We also noted that in the Vinit Chouhan group cases, an order is passed in a group in I.T.A.Nos. 1061 to 1181/Ind/2016 dated 23.11.2016, in which similar set of facts the penalty levied u/s 271(1)(b) was set aside. Therefore, respectfully following the said order and facts, we set aside the orders of the Revenue Brijesh Sharma & Others ITA No.175/Ind/2017 Page 9 of 9 Authorities and delete the levy of penalty u/s 271(1)(b) of the Act in all these appeals."
9. We, therefore, following the above order of the Tribunal, direct the Assessing Officer to delete the penalty levied under section 271(1)(b) of the Act in all these cases.
10. In the result, all the appeals of the assessee stand allowed.
The order has been pronounced in open Court on 04th May, 2017.
Sd/- sd/-
या यक सद(य ले खा सद(य
(C.M. Garg) (O.P.Meena)
Judicial Member Accountant Member
May 4, 2017
Dn/