Carreen Builders & Developers Pvt. Ltd. Vs DCIT (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT) Delhi Bench has set aside a penalty of Rs. 10,000 imposed on Carreen Builders & Developers Pvt. Ltd. by the Deputy Commissioner of Income Tax (DCIT) for the Assessment Year 2012-13. The penalty, levied under Section 271(1)(b) of the Income Tax Act, 1961, was for alleged non-compliance during assessment proceedings. The ITAT’s decision, pronounced on September 20, 2017, hinged on the assessee’s cooperation throughout the assessment and the final completion of the assessment under Section 143(3) of the Act, rather than Section 144.
The appeal was filed by Carreen Builders against the order of the Commissioner of Income Tax (Appeals)-2, New Delhi, dated July 21, 2015, which had upheld the penalty. The assessee contended that the penalty was “bad in law and wrong on facts” and that the CIT(A) erred in upholding it.
During the hearing, the department sought an adjournment due to the absence of the Senior Departmental Representative, but the ITAT rejected the application and proceeded ex parte against the department.
The authorized representative for Carreen Builders argued that the company had regularly participated in the assessment proceedings, furnishing required details in a timely manner. It was submitted that any delays were minor and not indicative of a deliberate intention to avoid hearings, especially given the short intervals between assessment dates. The representative highlighted that the assessment was ultimately completed under Section 143(3) of the Act. This, it was argued, signified full cooperation from the assessee, as a Section 143(3) assessment implies the Assessing Officer was satisfied with the information provided, as opposed to a best judgment assessment under Section 144.
Judicial Precedents Cited
The assessee’s counsel relied on two key judicial precedents to support their arguments:
1.Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. ACIT (115 TTJ 419 (Del) / 5 DTR 429 (Delhi Tribunal)): This case, decided by an ITAT Delhi Bench, was presented as a direct precedent. The tribunal in that case had held that when an assessment order is finally passed under Section 143(3) of the Act and not Section 144, it indicates that subsequent compliance during the assessment proceedings was considered satisfactory, and any prior defaults were effectively overlooked by the Assessing Officer. The Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust case further emphasized that mere initiation of penalty proceedings does not amount to “satisfaction” for imposing a penalty, and the absence of recorded satisfaction in the assessment order itself would not confer jurisdiction on the Assessing Officer to levy the penalty. It specifically stated that if the final order is under Section 143(3), it implies no willful default.
2. Globus Inforcom Limited vs. DCIT (ITA No. 738/Del/2014): This was another ruling by an ITAT Delhi Bench that had followed the principle established in the Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust case, further strengthening the assessee’s position.
