Though penalty deleted but full justice not done by honorable Tribunal by ignoring some vital grounds, not awarding costs in case of Varun Finance P. Ltd.

[DEV KUMAR KOTHARI]

Earlier Article:

E-PROCEEDINGS OF APPEAL - MOCKERY EVEN AT LEVEL OF COMMISSIONER JUST TO DISMISS APPEAL IN ANY MANNER TO HARASS ASSESSEE – Why action is not taken against Erring officers? Will NAMO 2 government curtail power to harass public?

Dated:- July 13, 2019 By: - CA DEV KUMAR KOTHARI

And other articles on omnibus, vague and defective notices written by the same  learned author available on this website.

Judgment of ITAT on appeal of assessee against order of CIT(A), discussed in earlier article dated  July 13, 2019 referred above.

VARUN FINANCE PVT. LTD. VERSUS INCOME-TAX OFFICER, WD-5 (4) , KOLKATA [2020 (9) TMI 1015 - ITAT KOLKATA]

I.T.A. No. 510/Kol/2019  Dated: - 24 September 2020

In the earlier article learned author had discussed serious issue about mockery of e-proceeding even at level of CIT(A), who had dismissed appeal of assessee in totally unjust and unfair manner by ignoring appeal memo – statement of facts and grounds of appeal , submissions and  assessment records including the show cause notice issued u.s. 271 rws 271.1.c and judgments of the supreme Court and High Court on issue of jurisdiction and merits both.

In the case of Varun Finance disallowances were made u.s. 14A, which was partly allowed by CIT(A) and partly confirmed. The other issue was treatment as short term capital gains instead of long-term capital gains on  basis of finger counting of months including part of month in which capital asset was held. In this regard assessee had relied on judgments of ITAT in which view taken was that even part of a calendar month can be counted. Thus on merit also penalty was not justified.  However, Ld. AO imposed penalty and ld. CIT(A) deliberately dismissed appeal, hence assessee had to prefer appeal before Tribunal.

In the earlier article all relevant documents are available on this website by way of several attachments which opens and can be saved individually.

In this case the amount of penalty was petty just ₹ 10624/-   and e-proceeding was opted by assessee and submissions were made online. There were also threats of launching prosecution, therefore assessee was forced to prefer appeal, although the amount involved was small.

Particular   Ld. CIT(A) seems to have practice to dismiss most of appeals in one way or other and if there is no ground to dismiss appeal he would say no one appeared or filed submissions and dismiss appeal alleging that the appellant is not interested to pursue the appeal. This can only be described as  gross malpractice adopted by authorities including CIT(A) to harass tax payers. Strong action against such erring officers is desired.

Order of Tribunal:

Assessee was thus forced to indulge into further litigation to save itself from other penal and prosecution provisions. Assessee thus filed an appeal before ITAT and also filed written submission and paper book.

Honourable Tribunal has considered the same and allowed appeal of assessee. The order is reported as follows as per citation given earlier in cse of Varun Finance (supra.)

Grounds discussed , considered and decided and grounds not discussed and decided:

In the order honourable Tribunal has reproduced ground no. 1-6  but not ground no. 7 and 8. However discussed only ground nos. 1-3 and 6 . Tribunal  has in a very mild manner depreciated action of Ld. CIT(A) in ignoring e-proceeding and submissions in e-proceedings and dismissing appeal. In this regard paragraph 3 of the order is reproduced below with highlights added:

3. Thus, we note from perusal of ground no. 1 to 3 that assessee opted for e-proceedings and filed all documents along with written submission before Ld CIT(A) and since Ld. CIT(A) did not insist on the physical presence of assessee/AR, the action of Ld. CIT(A) to have dismissed ex parte without going into the merits of the ground and that too by blaming the assessee cannot be countenanced. Be that as it may, we note that before the Ld. CIT(A) as well as by preferring ground no. 6 the assessee has raised the legal issue of non-validity of penalty notice by relying on the decision of the Hon’ble Karnataka High Court in CIT Vs. SSA Emerald Medow (infra) and thereafter against the order, the SLP preferred by Revenue was dismissed by the Hon’ble Supreme Court. In order to adjudicate the legal issue, we have heard the learned DR and having carefully gone through the penalty notice dated 05.12.2008 issued u/s. 274 read with section 271 of the Act , which is reproduced as under for the sake of understanding:

Photo of notice u/s 271 read with S. 271  has been inserted in the order.

Thereafter honourable Tribunal has allowed appeal in view of judgments of SC and HC , on issue of invalid notice- lacking  specific of charge or say notice being omnibus notice.

Important grounds of appeal of  assessee ignored:

Although appeal was allowed and penalty was deleted. However this was a fit case for awarding costs also. This is because  due to illegally imposing penalty of ₹ 10624/- by Ld. AO  assessee had to indulge into litigation before CIT(A) and because ld. CIT (A) dismissed appeal in gross violation of law,  assessee had to approach ITAT by way of second appeal.

As noted earlier the assessee had preferred eight grounds out of which only six grounds have been reproduced. Again out of  those six grounds  ,  only 4 grounds ( grounds no. 1-3 and 6)  have been  discussed. And order has been passed only on ground no. 6 and appeal was allowed on ground of defective/ omnibus notice.

Ground no. 4 and 5 were also important and deserves a consideration and speaking order, so that illegal practices of lower authorities could be checked to some extent.

This was a fit case for deciding all grounds so that careless rather gross malpractices adopted by Ld. AO and Ld. CIT(A) could have some serious consideration. In fact this was a fit case to impose some damages payable personally by lower authorities so that a message is conveyed that such malpractices should not be repeated.

   Ground no. 7 was about costs of appeal and ground no. 8 was general  to seek permission to raise new contentions and grounds. Ground no. 7 reads as follows ( not reproduced by tribunal):

7. For that in view of facts and circumstances of the case honorable Tribunal may consider to grant cost of appeal in favor of appellant.

By not considering the above ground and by not awarding costs no action has been taken by honourable Tribunal against wrong rather gross malpractices  adopted by lower authorities in this case wherein penalty was imposed ignoring well settled principles by way of judgments of  the supreme Court on issue of jurisdiction and merits both.

Therefore, it appears that although penalty stood deleted, but full  justice was  rendered.