Filing adjournment application at closing office hours. CIT(A) was justified in passing ex-parte order upholding penalty u/s 272A(1)(c) – ITAT
ABCAUS Case Law Citation:
ABCAUS 1111 (2017) (01) ITAT
Assessment Year : 2012-13
Date of Pronouncement: 19-01-2017
Important Case Laws Cited/relied upon:
Smt. Rekha Rani Vs. DCIT (ITAT Delhi)
Brief Facts of the Case:
The Additional Director of Income- Tax (Investigation), (“Addl. DIT”) had levied penalty of Rs. 30,000/- under section 272A(1)(c) of the Income-tax Act, 1961 ( “the Act”) on the ground that the assessee defied the summons issued by the Deputy Director of Investigation ( “the DDIT”) u/s 131 of the Act on three occasion.
The Addl. DIT in the order levying penalty had mentioned that in the course of search documents indicating on money payments in respect of property transactions, were seized any statement of the assessee was recorded under section 132(4) of the Act, however, the assessee could not explain the source of unaccounted cash transactions recorded in the documents seized.
Later, summon were issued by the DDIT requiring the assessee to attend personally for examination and verification of the transactions contained in seized documents. However, during a period of one month, three adjournments were taken by the assessee but neither anyone attended before the DDIT nor any compliance was made.
Consequently, the second summon u/s 131 was issued requiring the personal attendance of the assessee. In response, the assessee filed a letter through the counsel, that the assessee planned to move a petition before the Income Tax Settlement Commission.
The assessee was informed that mere intention to move a petition before the Settlement Commission did not debar an income tax authority to initiate proceedings u/s 131 and a fresh notice for summon u/s 131 was issued fixing the date for personal appearance by the assessee. In response, it was submitted by the assessee enclosing a medical certificate that his wife was not well and she was to be operated four days after the appointed date. Thus no compliance was made of the third summon issued.
In view of the above defaults of the assessee in not complying the summons on three occasions, the Addl. DIT levied penalty of Rs. 30,000/- i.e. penalty of Rs.10,000 for each default/s 272A(1)(c) of the Act.
The CIT(A) upheld the penalty.
Aggrieved, the assessee agitated the issue before the ITAT in the present appeal.
Contentions of the Assessee:
It was submitted that an application for adjournment was filed before the Commissioner of Income-tax (Appeals) which was ignored by the CIT(A) and order was passed without giving hearing to the assessee.
It was submitted that the assessee had duly responded to the summon issued by informing that he was intending to file a petition before the Settlement Commission and thus there was no non-compliance on the part of the assessee.
Further, it was also submitted that for the same default, penalty of Rs.10,000/- each cannot be levied for three times.
Observations made by the Tribunal:
The Tribunal observed that the DDIT had provided sufficient opportunity to the assessee for compliance of summon issued u/s 131 and there was no cause for non-compliance of summons issued.
Regarding the non-compliance of the summon on the ground that the assessee was intending to file the petition before the Settlement Commission, the Tribunal opined that it was not justified as the Commission acquire exclusive jurisdiction only after application u/s 245C is allowed u/s 245D.
Further, it was noted that no evidences were submitted in respect of medical exigencies of the wife.
The Tribunal observed that the assessee even did not comply to the various notices issued by CIT(A) providing opportunity of hearing to the assessee. Despite various adjournments provided to the assessee, due to the non-compliance, the impugned order was finally passed. It was noted that the assessee filed copy of a adjournment application filed in the office of the CIT(A) at 5.25 PM i.e. on the date he passed the order. The ITAT observed that the application had been filed just before closing hours of the office, on the day when the order was passed. The ITAT opined that the assessee was provided sufficient opportunity but no compliance was made by the assessee. The assessee had not availed the opportunities provided and in such circumstances, the CIT(Appeals) could be held responsible for passing orders without hearing the assessee.
The Tribunal observed that same default of non-compliance of summon was continued and, therefore, levy of penalty of Rs. 10,000 for first default would be sufficient. The Tribunnal clarified that the provisions of section 272A(1)(c) are not a measure for earning revenue for the Department and for failure to comply with the summons, remedy has been provided in Civil Procedure Code and in case of repeated failure, the authorities should have resorted to the measures provided in the Civil Procedure Code.
The assessee by not complying with the summon issued by the DDIT, had made default, liable for penalty under 272A(1)(c). However, the penalty was imposable on first default of the assessee for not complying with the summon u/s 131 and accordingly the penalty was restricted to Rs.10,000/- instead of Rs. 30,000/-.