Non furnishing information on apprehension of political misuse. ITAT upheld penalty u/s 272A(1)(c) for non compliance to summons 131(1A) which assessee claimed as purely witch-hunting
ABCAUS Case Law Citation:
ABCAUS 2503 (2018) 09 ITAT
Important Case Laws Cited/relied upon by the parties:
Jamnadas Madhavji & Co. vs. J.B. Panchal, ITO reported in 162 ITR 331
State of Haryana vs. State of Punjab (2004) 12 SCC 673
Bijaya Kumar Agarwala Etc vs. State of Orissa 1996 SCC (5) 1,
Kumar Jagdish Chandra Sinha vs. CIT reported in 220 ITR 6
Contemporary Enterprises Ltd. vs. DCIT (2004) 2 SOT 108,
The instant appeal was filed by the assessee namely, Young Indian, Herald House, Bahadur Shah Zafar Marg, New Delhi. The appeal was directed against the order of the CIT(A) upholding the levy of penalty u/s 272A(1)(c) of the Income Tax Act, 1961 (the Act).
A letter was issued by the Investigation Wing to the appellant u/s 133(6) of the Income Tax Act, seeking details of Share Holders, Directors and Members of the assessee. However, the details were not furnished and instead certain concerns were expressed. In view of the concerns raised by them, summons u/s 131(lA) of the Income Tax Act was issued directing them to furnish the details mentioned therein. Instead of furnishing the details called for, the assessee filed a letter raising concerns about misuse of the information furnished, by disclosure of information u/s 138 of the Act.
The DDIT (Inv) addressed their apprehension by intimating that they were unfounded and once again requested them to furnish the details called.
The assesseee submitted that the information regarding certain details requisitioned u/s 131(1A) of the Act were either before the assessing officer (AO) or irrelevant. Regarding other details it was submitted that they will arrange to submit it to the AO before whom the assessment proceedings were pending and thus refused to comply with the summons u/s 131(1A).
Part of the information called was furnished. However, no information was furnished in respect of various queries. The assessee questioned the jurisdiction of the office of the DDIT in seeking the said information on the ground that the said transaction had no bearing on any provision of the Income Tax Act.
DDIT(Inv) informed the assessee that the persistent refusal to provide the details/ documents may tantamount to abetting tax evasion and any further refusal to submit the requisite details/ documents shall be construed as an act of willful and conscious abetment and shall be visited by appropriate penal and other provisions of the Income Tax Act.
The assessee in turn sought a copy of the approval obtained by DDIT (Inv) from the Director of Income Tax in accordance with the provisions of Section 133(6) of the Income Tax Act whereas it was called upon to give evidence in exercise of powers under section 131 (1A) of the Income Tax Act in the matter of investigation in the cases of Share Holders, Directors and Members of the assessee.
One more opportunity was provided to the assessee and also a show cause was issued as to why penalty proceedings u/s 272A(1)(c) should not be initiated against it for not complying with all the terms of the summons issued u/s 131 (lA) of the Act.
However, the assessee vide its reply refrained that the motive behind seeking the information was purely witch – hunt.
During the penalty proceedings, regarding the contention of the assessee that the information sought was identical to the issues raised in the complaint filed by Dr. Swamy and was presently pending before the Hon’ble High Court of Delhi and any adjudication made by the Department in that regard will result in prejudging the issues pending in the Courts is concerned, the ADIT (Investigation) held that this contention is not tenable. According to him, the enquiries by the Income Tax Department were necessary to verify whether such transactions involve any income tax avoidance/evasion.
The ADIT(Inv) observed that it was the bounden duty of the Revenue to ascertain the facts when there are public allegations of revenue loss irrespective of the source of allegation as much as it was of the responsible assessee to share the details with the Revenue willingly. He further noted that waiting for the outcome of the court cases may render income tax cases fruitless due to limitation of time. Rejecting the explanation given by the assessee, the ADIT (Investigation) levied penalty of Rs.10,000/- u/s 272A(1)(c) of the Act.
The asssessee approached the CIT(A) and reiterated the submissions that the information called for lacks ‘relevance’ and expressed its outburst that the information called for is not for the purpose of Income Tax Act but in furtherance of certain proceedings initiated by political rivals of assessee’s shareholders outside the income tax law.
The CIT(A) being not satisfied with the arguments advanced by the assessee upheld the penalty.
Before the Tribunal, the assessee referring to the provisions of section 131(1) and the provisions of section 131(1A), he submitted that the penalty provisions under the above sections are different. As per the provisions of section 131(1), the power regarding discovery, production of evidence, etc can be exercised only when any proceedings are pending before the Income Tax Authorities. However, as per the provisions of section 131(1A), this power can be exercised even if no proceedings are pending before the Income Tax Authorities.
Referring to the provisions of section 272A(1)(c), it was submitted that the section provides penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspection, etc. u/s 131(1) of the I.T. Act. However, no penalty has been prescribed for non-compliance to provisions of section 131(1A) of the Act. Relying on various decisions, it was submitted that the provisions of section 131(1) and 131(1A) has been held to be different. Therefore, in absence of any provision for levy of penalty for non-compliance to the provisions of section 131(1A) penalty u/s 272A of the Act cannot be levied.
In his alternation contention, it was submitted that the assessee was a company u/s 25 of the Companies Act, 1956 and is a non-profit organization. The 12AA certificate issued to the assessee earlier was surrendered in assessment year 2016-17. The most of the information called for are available either in the records of the Department or available in the Website of the Ministry of Corporate Affairs. Therefore, there was no relevance of calling for the details again from the assessee. He submitted that calling for the information u/s 131(1A) itself is bad in law to the extent it is required for some other purpose is abuse of the provisions of law. Since the assessee had already intimated before the ADIT (Investigation) that most of the information called for by him are already available in the records of the Department or in the Website of the Ministry of Corporate Affairs, therefore, there was a reasonable cause on the part of the assessee for non-submissions of the same. Therefore, no penalty u/s 272A was leviable.
The Tribunal opined that so far as argument of the assessee that provisions of section 131(1) and 131(1A) are different, there is no dispute to the same. However, as per the provisions of section 131(1A) for the purpose of making any enquiry or investigation relating thereto it shall be competent for the officer to exercise the powers conferred under sub-section (1) on the Income Tax Authorities referred to in that sub-section. Therefore, the provisions of section 131(1A) has to be read along with the provisions of section 131(1) of the Act. Therefore, the consequences for failure to furnish the requisite details will be the same as prescribed u/s 272A(1)(c) of the Act.
The Tribunal observed that there was a deliberate defiance on the part of the assessee for non submission of the same under the pretext that some of the details are available in the records of the Income Tax Department or some of the details are available in the Website of the Ministry of Corporate Affairs.
The Tribunal opined that no prejudice would have been caused to the assessee by submitting the details as called for by the ADIT (Investigation), as per the summons u/s 131(1A) if those details were already available in the records of the I.T. Department or in the website of the Ministry of Corporate Affairs. The conduct of the assessee in the instant case, was not at all bona-fide.
The Tribunal upheld the order of the CIT(A) in confirming the penalty of Rs. 10,000/- levied u/s 272A(1)(c) of the Act.
