Chemo Pharma Laboratories Ltd. VS ITO - 1 (1)(2) - Penalty US 271(1)(C)

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI

BEFORE SHRI SANJAY ARORA, A. M. AND SHRI VIJAY PAL RAO, J. M.

आयकर अपील सं
./I.T.A. No. 2413/Mum/2012 (Assessment Year: 2003-04)

Chemo Pharma Laboratories Ltd. Empire House, 3rd Floor, 214, D. N. Road, Fort, Mumbai-400 001	/ Vs.	ITO-1(1)(2), Mumbai
�थायी लेखा सं./जीआइआर सं. / PAN/GIR No. AAACC 2056 A
(अपीलाथ� /Appellant)	:	(��यथ� / Respondent)

अपीलाथ� ओर से / Appellant by	:	Shri Ajay R. Singh
��यथ� क� ओर से/Respondent by	:	Shri T. Roumuan Paite

सुनवाई क� तार�ख Date of Hearing	:	02.07.2013
घोषणा क� तार�ख / Date of Pronouncement	:	05 .07.2013

आदेश / ORDER

Per Sanjay Arora, A. M.:

This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-1, Mumbai (‘CIT(A)’ for short) dated 08.02.2012, confirming the levy of penalty in the sum of Rs.60,47,659/-u/s. 271(1)(c) of the Income Tax Act, 1961 (‘the Act’ hereinafter) for the assessment year (A.Y.) 2003-04 by the Assessing Officer (A.O.) vide his order dated 23.03.2009.

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ITA No.2413/Mum/2012 (A.Y. 2003-04) Chemo Pharma Laboratories Ltd. vs. ITO

2.1 Opening the arguments for and on behalf of the assessee, it was submitted by the ld. AR, the assessee’s counsel, that the assessee’s appeal in quantum proceedings has been disposed of by the Tribunal by restoring its assessment back to the file of the first appellate authority. A copy of the said order (in ITA No.1469/Mum/2008 dated 14.06.213) was placed on record, adverting our attention to the relevant part of the order (para 3). In this view of the matter, it was urged by him, that the penalty proceedings could not be proceeded with and, therefore, the matter may be restored back to the file of the A.O. for fresh determination in the light of the appellate order. On an enquiry by the Bench, it was clarified by him that the assessee had agitated both the additions on which the impugned penalty stands levied.

1. The ld. DR would, on the other hand, submit that the penalty proceedings are independent proceedings and, therefore, would need to be adjudicated as such, i.e., independently.
2. We have heard the parties, and perused the material on record.

We firstly observe that the matter has been restored by the tribunal to the file of the first appellate authority and not to that of the A.O. Therefore, to say that the present proceedings cannot be proceeded with may not be legally correct. So however, without doubt the same represents a relevant consideration inasmuch the tribunal would only have set aside the quantum proceedings for a reason. As a perusal of its order shows that this was done by it only in the interest of justice; there having been no proper representation by the assessee before him, so that there was no proper consideration of the matter at the first appellate stage. The assessee, in view of its’ negligent behavior, leading to an ex parte order by the first appellate authority, was imposed upon a cost of Rs.15,000/-by the tribunal vide its order afore-referred.

Even in the penalty proceedings, as apparent from the perusal of the penalty order dated 23.03.2009, there has been no representation by the assessee, so that the penalty order is also an ex parte order. A set side in the quantum proceedings would normally warrant a like restoration of the penalty proceedings, i.e., to the file of the first appellate

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ITA No.2413/Mum/2012 (A.Y. 2003-04) Chemo Pharma Laboratories Ltd. vs. ITO

authority. This is as the proceedings have already got crystallized at the stage of the assessing authority. However, in the instant case, in the given circumstances, the interest of justice would be met by a set aside to the file of the A.O. inasmuch as the penalty stands levied in the first instance under the condition of absence of representation. Considerations of equity as well as fairness of procedure would therefore suggest an opportunity before the assessing authority. However, it is only the assessee who is responsible for its predicament. In fact, there has been no explanation for the non representation before either authority. It is this recalcitrance that led the tribunal, which is generally conservative and reserved in the matter, and loath to levy cost, to do so, signifying its displeasure at the assessee’s conduct.

Further, the ld. AR has not even, while seeking a restoration, implying a set aside of the penalty order, so that the entire proceedings in the matter stand nullified, shown the etiquette or regard in informing of the assessee’s conduct and non representation in the penalty proceedings, much less of the reasons for the same. Such conduct can only be depreciated. Non representation before the authorities below, while seeking a restoration on the grounds of justice and equity, amounts to a disregard and abuse of the process of law, and a dubiousness which we cannot but take a strict view of.

Under the circumstances, we only consider it fit and proper to set aside the penalty proceedings to the file of the assessing authority, so as to enable the assessee an opportunity to present its case before him, subject to a payment of cost of Rs.5,000/-(five thousand only) to the Department. Further, though such impositions are normally pronounced in the open court, informing the parties of the same, so that their objections, if any, are taken note of, we have been under the peculiar circumstances recounted above, constrained to award the cost to the Department. We decide accordingly.

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ITA No.2413/Mum/2012 (A.Y. 2003-04) Chemo Pharma Laboratories Ltd. vs. ITO

4. In the result, the assessee’s appeal is allowed for statistical purposes.
प�रणामतः िनधा� ं�यक�य उ��य कृ त क� जाती ह।
�रती क� अपील साेे िलए �वीक ै

Order pronounced in the open court on July 05, 2013

आदेश क� घोषणा खुले �यायालय म� �दनांकः जुलाई 05, 2013 को क� गई ।

Sd/- Sd/

(VIJAY PAL RAO) (SANJAY ARORA) �याियक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER मुंबई Mumbai; �दनांकDated : 05.07.2013 व.िन.स./Roshani, Sr. PS to :

/Copy of the Order forwarded

1. अपीलाथ� / The Appellant
2. ��यथ� / The Respondent

^3. आयकर आयु�(अपील) / The CIT(A)

^4. आयकर आयु� / CIT – concerned

1. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai
2. गाड� फाईल / Guard File BY ORDER,

(Dy./Asstt. Registrar)मुंबई / ITAT, Mumbai