2019 (6) TMI 1088 - AT - Income Tax

Tribunal upholds penalty under Income Tax Act, finds ITO had jurisdiction.

The Tribunal upheld the penalty imposed under section 272A(2)(c) of the Income Tax Act, dismissing the appeal. It found the ITO (Intelligence) had ... Power to call for information under section 133(6) - Jurisdiction of Income-tax Officer (Intelligence) to issue notice under section 133(6) - Penalty under section 272A(2)(c) - Limitation for imposition of penalty under section 275(1)(c) - Reasonable cause for non-compliance under section 273BJurisdiction of Income-tax Officer (Intelligence) to issue notice under section 133(6) - Power to call for information under section 133(6) - Validity of notice issued by ITO (Intelligence) under section 133(6). - HELD THAT: - The Tribunal applied binding authority holding that section 133(6), as amended, permits income-tax authorities to call for information useful for or relevant to an enquiry or proceeding and that an ITO (Intelligence) may issue such notices after obtaining the requisite prior approval of the Director/Commissioner. On identical facts the Cochin Bench and the Supreme Court decision relied upon sustain the power of the ITO (Intelligence) to issue the impugned notice where approval was obtained. Having regard to those findings, the notice issued to the assessee by the ITO (Intelligence) was held valid and within jurisdiction.Notice issued by the ITO (Intelligence) under section 133(6) (after obtaining requisite approval) is valid.Limitation for imposition of penalty under section 275(1)(c) - Penalty under section 272A(2)(c) - Whether the penalty under section 272A(2)(c) was time-barred under section 275(1)(c). - HELD THAT: - The Tribunal's reasoning, adopted by the bench, states that time-limit for imposing penalty runs from the date of initiation of penalty proceedings (i.e., issuance of notice under section 274). Penalty proceedings were initiated by notice under section 274 on 12.8.2014 and the order imposing penalty was passed within the period prescribed by section 275(1)(c). The contention that the earlier notice under section 133(6) should be reckoned for limitation was rejected as contrary to the scheme of section 275(1)(c).Penalty order under section 272A(2)(c) is within time and not barred by limitation under section 275(1)(c).Reasonable cause for non-compliance under section 273B - Penalty under section 272A(2)(c) - Whether the assessee had reasonable cause for not furnishing information called under section 133(6) so as to escape penalty under section 272A(2)(c). - HELD THAT: - The Tribunal found that the assessee failed to furnish any valid reason or show cooperation in response to multiple notices under section 133(6). Instances of non-response and alleged threats/lack of cooperation were considered insufficient to constitute reasonable cause within section 273B. On that basis the imposition of penalty was sustained.No reasonable cause was shown for non-furnishing of information; penalty under section 272A(2)(c) is sustainable.Final Conclusion: On facts identical to a previous Tribunal decision, the appeal is dismissed: the section 133(6) notice issued by the ITO (Intelligence) (with requisite approval) was valid, the penalty under section 272A(2)(c) was imposed within the limitation prescribed by section 275(1)(c), and no reasonable cause was shown to negate the penalty. Issues Involved:1. Jurisdiction of the ITO (Intelligence) to issue notice under section 133(6) of the Income Tax Act.2. Timeliness of the order passed under section 272A(2)(c) in relation to section 275(1)(c) of the Income Tax Act.3. Reasonable cause for non-furnishing of information sought under section 133(6) and the validity of the penalty imposed under section 272A(2)(c).Detailed Analysis:1. Jurisdiction of the ITO (Intelligence) to issue notice under section 133(6) of the Income Tax Act:The assessee contended that the ITO (Intelligence) did not have the jurisdiction to issue the notice under section 133(6) of the Income Tax Act. The Tribunal, referencing the Supreme Court's decision in Kathiroor Service Co-op Bank Ltd vs CIT, clarified that section 133(6) allows income tax authorities to call for information useful for any proceeding or enquiry under the Act, even if no proceeding is pending. The amendment introduced by the Finance Act 1995 expanded this power to include enquiries, provided prior approval from the Director or Commissioner was obtained. In this case, the ITO (Intelligence) issued the notice after obtaining the necessary approval, thus validating their jurisdiction.2. Timeliness of the order passed under section 272A(2)(c) in relation to section 275(1)(c) of the Income Tax Act:The assessee argued that the penalty order was time-barred under section 275(1)(c). Section 275(1)(c) prescribes that penalty must be imposed within six months from the end of the month in which the action for imposition of penalty is initiated. In this case, the penalty proceedings were initiated on 12.08.2014, and the order was passed on 19.09.2014, well within the prescribed time limit. The Tribunal found that the penalty order complied with the time limits set by section 275(1)(c), rendering the assessee's argument meritless.3. Reasonable cause for non-furnishing of information sought under section 133(6) and the validity of the penalty imposed under section 272A(2)(c):The assessee failed to provide any valid reason for not furnishing the requested information. The Tribunal noted that the assessee did not respond to many notices and exhibited a lack of cooperation. Section 273B provides that no penalty shall be imposed if the assessee proves that there was reasonable cause for the failure. However, in this case, the assessee did not demonstrate any reasonable cause for non-compliance. Consequently, the Tribunal upheld the penalty imposed under section 272A(2)(c).Conclusion:The Tribunal dismissed the appeal, affirming the CIT(A)'s decision to uphold the penalty under section 272A(2)(c) of the Income Tax Act. The Tribunal's decision was based on the jurisdictional validity of the notice issued under section 133(6), the timely imposition of the penalty, and the absence of a reasonable cause for non-compliance by the assessee. The appeal was dismissed in its entirety, consistent with the precedent set in similar cases adjudicated by the Cochin Bench of the Tribunal.