C. Najeeb v. The Income-tax officer, Ward-2(3), Kochi
[Citation -2016-LL-0926-27]

Citation 2016-LL-0926-27
Appellant Name C. Najeeb
Respondent Name The Income-tax officer, Ward-2(3), Kochi
Court ITAT-Cochin
Relevant Act Income-tax
Date of Order 26/09/2016
Assessment Year 2002-03
Judgment View Judgment
Keyword Tags search and seizure operation • memorandum of appeal • issue of notice • estimate basis
Bot Summary: The order of the Commissioner of Income Tax(Appeals)-II, Kochi in I.T.A. No.9 R-II E CIT(A)-II 08-09 dated 30 06 2014 confirming the levy of penalty u s. 272(1)(c) for 2002-03 is opposed to law, facts and circumstances of the case. At any rate, the CIT(A) should have followed the Order of the Appellate Tribunal in the appeal against the Order u s. 158BFA(2) in as much as the ingredients for levy of penalty u s. 271(1)(c) and 158BFA(2) are the same. The Assessing Officer in his order dated 31 03 2008 by which penalty u s. 271(1)(c) was imposed, further noticed that the assessee while appearing in connecting with some other matter on 25 01 2005, informed that he had not received the above notice for appearance on 24 01 2005. The Ld. CIT(A) accordingly directed the Assessing Officer to work out penalty u s. 271(1)(c) based on the final income for the year as determined in the quantum assessment proceedings and imposed penalty at three times of the tax sought to be evaded. In the Memorandum of Appeal vide Ground No. 4, the assessee has 5 ITA No.238 Coch 2015 referred to the penalty proceedings initiated u s. 153BFA(2) of the Income Tax Act, with respect to the Block Assessment that followed pursuant to a search and seizure operation conducted on 20 09 2001. We are not inclined to accept the case pleaded before us in view of the findings in the order levying penalty, which we have quoted above and the facts and findings on record confirming the penalty by the Ld. CIT(A). The assessee had also courted the penalty u s. 271B as well as the penalty u s. 271(1)(e) which were also appealed against before the Ld. CIT(A) who confirmed the same.


ITA No.238 Coch 2015 , IN INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN, BEFORE S SHRI B. P. JAIN, AM & GEORGE GEORGE K., JM . I.TA No.238 Coch 2015 ( Assessment Year : 2002-03) Shri C. Najeeb, Vs Income Tax officer, Ward-2(3), Proprietor, Kochi. M s. Najeeb Associates, 4th Floor, Chicago Plaza, Rajaji Road, Cochin-682 035 Assessee Appellant) ( ( Revenue -Respondent) . . . PAN No. AAOPN 2180L Assessee By Shri T.M. Sreedharan, Sr. Adv. Revenue By Shri A. Dhanaraj, Sr. DR. Date of Hearing 18 08 2016 Date of pronouncement 26 09 2016 ORDER PER B.P. JAIN, AM: This appeal filed by assessee is directed against order of Ld. CIT(A)-II, Kochi dated 30 06 2014 confirming penalty levied u s. 271(1)(c) of Income Tax Act, 1961, for assessment year 2002-03. 1 ITA No.238 Coch 2015 2. At outset, there is delay of 190 days in filing appeal. assessee has filed condonation petition alongwith affidavit stating reasons for delay in filing appeal. 3. Ld. DR opposed condonation petition. 4. We have heard rival contentions and perused facts of case. On perusal of affidavit, we find there is sufficient cause for delay in filing this appeal and hence, we condone delay and proceed to dispose of appeal on merits. 5. assessee has raised following grounds of appeal: 1. order of Commissioner of Income Tax(Appeals)-II, Kochi in I.T.A. No.9 R-II E CIT(A)-II 08-09 dated 30 06 2014 confirming levy of penalty u s. 272(1)(c) for 2002-03 is opposed to law, facts and circumstances of case. 2. CIT(A) went wrong in confirming levy of penalty under section 271(1)(c) of Income Tax Act, 1961 amounting to Rs.10,31,586 -. 3. CIT(A) should have found that as far as assessment for 2002-03 was concerned, part of assessment was covered by search period for search conducted on 20 09 2001 and block assessment was completed with respect to income upto date of search. 4. Penalty proceedings initiated u s. 158BFA(2) of Income Tax Act was set aside by Hon ble ITAT Cochin Bench. What is now considered for levy of penalty is assessment for broken period from 21 09 2001 to 31 03 2002 which was made on estimate basis and not with reference to any seized documents. 2 ITA No.238 Coch 2015 5. perusal of assessment records show that income was determined on estimate basis which has been modified more than once. 6. It is respectfully submitted that assessment made on estimate basis cannot provide basis for penalty proceedings u s. 271(1)(c). 7. At any rate, CIT(A) should have followed Order of Appellate Tribunal in appeal against Order u s. 158BFA(2) in as much as ingredients for levy of penalty u s. 271(1)(c) and 158BFA(2) are same. 8. Without prejudice to above, it is further submitted that quantum of penalty levied equal to 3 times of tax, is highly excessive and arbitrary. In any event penalty calls for reduction. 9. Without prejudice, it is also submitted that proceedings for levy of penalty are barred by limitation. 10. appellant humbly prays that grounds of appeal before CIT(A), may kindly be considered as part of these grounds. For these and other reasons that may be urged at time of hearing, it is humbly prayed that Hon ble Income Tax Appellate Tribunal, Cochin Bench may kindly be pleased to set aside Order of First Appellate Authority, cancel penalty, allow appeal and render justice. 6. brief facts of case are that assessee is Architect and proprietor of M s. Najeeb Associates. assessee is also engaged in business of civil construction as contractor and is also builder. assessee did not file return of income as required u s. 139(1) of Act. Notices u s. 142(1) of Act were issued on two occasions, viz. 27.12.2002 calling for return of income and on 02 12 2004 calling for return of income, books of account and other details. assessee did not respond to both notices. Therefore, notice under proviso to sub-Sec. (1) of sec. 144 of Income Tax Act, 1961 informing assessee that assessment was proposed to be 3 ITA No.238 Coch 2015 completed ex parte u s. 144 estimating total income at Rs.19,50,000 - and accordingly, notice was issued on 12 01 2005 for hearing on 24 01 2005. Assessing Officer in his order dated 31 03 2008 by which penalty u s. 271(1)(c) was imposed, further noticed that assessee while appearing in connecting with some other matter on 25 01 2005, informed that he had not received above notice for appearance on 24 01 2005. Therefore, case was re- posted for hearing on 14 02 2005 as requested. But assessee did not respond. However, assessee filed return of income declaring total income at Rs.2,58,500 - on 15 02 2005. subsequent notices were not responded by assessee and finally, assessment came to be completed u s. 144 on 03 03 2005, since assessee had failed to comply with provisions of Sec. 139, 142(1) & 143(2), by fixing total income at Rs.16,38,000 - 7. Proceedings for levy of penalty u s. 271(1)(c) was initiated separately by issue of notice u s. 274 r.w.s. 271(1)(c) dated 03 03 2005. order imposing penalty goes to show that there was no response to said show cause notice by assessee, either on appointed day or thereafter. Penalty proceedings were posted on subsequent occasions, but there was no proper compliance to any of these notices. Accordingly, Assessing Officer finalized penalty proceedings by order dated 31 03 2008 with following observations:- 4 ITA No.238 Coch 2015 As has ;abundantly clear and established, assessee has not co-operated with Department in completion of assessment proceedings also. In circumstances, I hold that mens-rea has been proved and that assessee had concealed particulars of income by not filing return of income u s. 139 and even in spite of notice u s. 142(1). I am satisfied that this is fit case for levy of penalty u s. 271(1)(c) as assessee had concealed particulars of income. assessee is liable for maximum liability leviable u s. 271(1)(c), which works out to Rs.10,31,586 - . Accordingly, penalty of Rs.10,31,586 - was levied after obtaining statutory approval from higher Authority. 8. assessee filed appeal against above order before Ld. CIT(A) and Ld. CIT(A) confirmed penalty levied by Assessing Officer vide detailed order dated 30 06 2014. Ld. CIT(A) in paragraph 4.3 of order has referred to quantum of income concealed as adopted by Assessing Officer at Rs. 12,10,400 - and final income that has been determined as result of subsequent Appellate proceedings in quantum appeal. Ld. CIT(A) accordingly directed Assessing Officer to work out penalty u s. 271(1)(c) based on final income for year as determined in quantum assessment proceedings and imposed penalty at three times of tax sought to be evaded. 9. Aggrieved by above Appellate Order, assessee has filed this second appeal. In Memorandum of Appeal vide Ground No. 4, assessee has 5 ITA No.238 Coch 2015 referred to penalty proceedings initiated u s. 153BFA(2) of Income Tax Act, with respect to Block Assessment that followed pursuant to search and seizure operation conducted on 20 09 2001. In course of hearing of appeal, Ld. Senior Counsel appearing for assessee pointed out that for assessment year 2002-03, previous year commences from 01 04 2001 and extends to 31 03 2002. search was carried out on 20 09 2001. Therefore, income of assessee upto 20 09 2001 relating to assessment year 2002-03 has already been included in Block assessment. Pursuant to Block assessment order u s. 153BC relatable to assessment year 2002-03, income upto 20 09 2001 had already been assessed in Block Assessment Order. consequential penalty proceedings initiated u s. 158BFA(2) of Act was set aside by ITAT, Cochin Bench, after having found that income was determined on estimate basis with reference to various documents found at time of search. It was pleaded that same facts and findings are relevant for period from 21 09 2001 to 31 03 2002, i.e., remaining part of previous year relevant to assessment year 2002-03. Ld. Senior Counsel further pleaded that in any event, penalty levied equal to three times of tax, is highly excessive and unreasonable and accordingly prayed for reduction. above submission was made without prejudice to case pleaded for total cancellation of penalty. 6 ITA No.238 Coch 2015 10. Ld. DR on other hand relied upon orders of both authorities below. 11. We have heard rival contentions and perused facts of case. We are not inclined to accept case pleaded before us in view of findings in order levying penalty, which we have quoted above and facts and findings on record confirming penalty by Ld. CIT(A). Admittedly, assessee has acted in total disregard of statutory obligations and has not co-operated in assessment proceedings and has driven Assessing Officer for making assessment u s. 144 of Act. assessee had also courted penalty u s. 271B as well as penalty u s. 271(1)(e) which were also appealed against before Ld. CIT(A) who confirmed same. Thus there is clear and categorical finding by both Assessing Officer as well as Ld. CIT(A) that assessee acted in total disregard of statutory obligations and was callous in his approach to statutory notices issued and there was failure to comply with such notices. In circumstances and facts of case, we are not inclined to interfere with orders of both Assessing Officer as well as of Ld. CIT(A) and accordingly, we uphold same as correct and in accordance with law. Thus all grounds of assessee are dismissed. It is ordered accordingly. 7 ITA No.238 Coch 2015 12. In result, appeal of assessee in I.T.A. No. 238 Coch 2015 is dismissed. Order pronounced in open court on 26 -09-2016. sd - sd -(GEORGE GEORGE K.) (B. P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER Place: Cochin Dated: 26th September, 2016 GJ copy to: 1. Shri C. Najeeb, Proprietor, M s. Najeeb Associates, 4th Floor, Chicago Plaza, Rajaji Road, Cochin-682 035. 2. Income Tax Officer, Ward-2(3), Kochi. 3. Commissioner of Income-tax(Appeals)-II, Kochi, 4. Commissioner of Income-tax, Kochi. 5. , DR ITAT, Cochin Bench. 6. Guard File. By Order Assistant Registrar , I.T.A.T., COCHIN 8 C. Najeeb v. Income-tax officer, Ward-2(3), Kochi
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