PER SHRI. S.B.DHUMAL - HON’BLE PRESIDENT :
1) Present dispute is as under –
The Complainant is a Private Limited Company registered under the Indian Companies Act, 1956 and is carrying on business of plastic files. Alleging deficiency in service on the part of Opposite Party No.1 & 2, the Complainant has filed this complaint. Opposite Party No.1 is a partnership firm carrying on and rendering professional services of Chartered Accountants to its clients. Opposite Party No.2 is a partner of Opposite Party No.1 firm and was entrusted work of Complainant on behalf of Opposite Party No.1. Opposite Party No.2 was looking after files of Complainant and was Complainant’s tax adviser for number of years.
2) Opposite Party No.1 had filed return of the income tax for the assessment year 2003-04 on behalf of Complainant on 21/11/03. The assessment under Sec.143(3) of the Income Tax Act, 1961 was completed on 23/11/05. Total income of the assessee i.e. the Complainant was assessed at Rs.Nil and book profit of computed at Rs.2,20,540/-. The Complainant’s claim of long term capital loss of Rs.9,45,013/- on the shares of M/s. Ecosafe Traps (India) Ltd. was passed under Sec.143(3) of the Income Tax Act, 1961.
3) It is submitted that separate penalty proceedings under Sec.271(1)(c) of the Income Tax Act, 1961 were initiated against the Complainant by the Income Tax Department as it was alleged that the Complainant had furnished inaccurate particulars of their income. The Income Tax Officers by his order dtd.30/05/06 came to the conclusion that the Complainant had allegedly concealed particulars of their income and had also allegedly filed inaccurate particulars of their income within the meaning of Sec.271(1)(c)(c) of the Income Tax Act, 1961 for the Assessment Year 2003-04. It was further held by the Income Tax Officer that the tax allegedly sought to be evaded was Rs.17,368/- + Rs.1,98,452/- (on long term capital loss) i.e. total Rs.2,15,820/-. According to the Complainant, maximum and minimum penalty leviable under Sec.271(1)(c) of the Income Tax Act, 1961 was Rs.2,15,820/- and Rs.6,47,460/- respectively. By order dtd.30/05/2006, the Income Tax Officer, levied minimum penalty of Rs.2,15,820/- under Sec.271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2003-04. Accordingly, demand notice and challan were issued to the Complainant. The Complainant had to pay Rs.2,15,820/- being amount of minimum penalty levied by Income Tax Department on 11/08/2007. It is submitted by the Complainant that Opposite Party No.2 on behalf of Opposite Party No.1 advised the Complainant to prefer an appeal before Commissioner of Income Tax (Appeal) – 1, Mumbai, challenging aforesaid order dtd.30/05/2006 passed by Income Tax Officer. Therefore, Complainant preferred an appeal before Commissioner of Income Tax (Appeal) -1, Mumbai challenging the order dtd.30/05/06 whereby penalty of Rs.2,15,820/- was levied upon the Complainant. The Commissioner of Income Tax (Appeals) -1, Mumbai, vide his notice dtd.09/01/07 addressed to the Complainant fixed the hearing of the Appeal No.218/2006-07 on 12/02/2007. Opposite Party No.1 through their Peon by name Mr. Santosh Dabade vide letter dtd.06/02/07 filed on 12/02/07 sought adjournment to the first week of March, 2007 as Opposite Party No.2 was out of station. On 12/02/07, the hearing of appeal adjourned to 12/03/2007.
4) On 12/03/2007, Opposite Party No.2 appeared before the Commissioner of Income Tax (Appeals) -1, Mumbai, and filed written arguments. Then appeal was adjourned to 17/04/07 so as to give opportunity to the Opposite Party No.2 to personally appear and explain and clarify as to why penalty levied by the Income Tax Officer should not be enhanced and consequently that the Appeal No.218/06-07 should be dismissed. It is submitted that inspite of being aware of next date of hearing on 17/04/07, Opposite Party No.2 did not attend the hearing. Neither Opposite Party No.1 or Opposite Party No.2 made any arrangements for their representative to attend the hearing nor filed any adjournment application. The Complainant was also not asked to remain present at the time of the hearing of this application. As Opposite Party No.2 failed and neglected to attend the hearing on 17/04/07, the Commissioner of Income Tax (Appeals) -1, Mumbai, vide his notice dtd.07/05/07 addressed to the Complainant fixed hearing of the Appeal No.218/2006-07 on 29/05/2007. The Complainant informed next date of hearing of appeal to the Opposite Party No.2 which was fixed on 29/05/07 and Opposite Party No.2 had assured to the Complainant the he would personally attend the said hearing on 29/05/07. However, on 29/05/07, Opposite Party No.2 did not attend the hearing before the Commissioner of Income Tax (Appeals) -1, Mumbai, nor Opposite Parties made any alternative arrangement. The conduct of Opposite Party No.2 was highly unprofessional and negligent. The Commissioner of Income Tax (Appeals)-1, Mumbai, vide his notice dtd.21/06/07 addressed to the Complainant to fixed hearing of Appeal No.218/06-07 on 03/07/07. The Complainant informed about the same to Opposite Party No.1. On 03/07/07, Opposite Party No.1 through their peon by the name One Mr.S.Dabade on 03/07/2007 requested the Commissioner of Income Tax (Appeals)-1, Mumbai, to decide appeal on the basis of their letter dtd.28/06/07. The Commissioner of Income Tax (Appeals)-1, Mumbai, by his order dtd.04/07/07 dismissed the Appeal No.218/06-07. Further the Assessing Officer was directed to work out the minimum penalty at the rate of 100% of the tax sought to be evaded. Accordingly, Income Tax Officer by his order dtd.09/08/07 levied minimum penalty of Rs.6,10,737/-. After receipt of aforesaid order the Complainant came to know that Opposite Party No.2 did not attend the hearings. The Complainant had to pay aforesaid penalty imposed by Commissioner of Income Tax. In fact, original penalty was of Rs.2,15,820/- but due to the deficiency in service and negligence on the part of Opposite Parties, Complainant has suffered huge financial loss and therefore, the Complainant has filed this complaint. The Complainant has requested to declare that Opposite Party No.1 & 2 are guilty and deficiency in service under Sec.2(1)(o) of the Consumer Protection Act, 1986. He has requested to direct Opposite Party No.1 & 2 jointly and/or severally to pay compensation of Rs.6,10,737/- with interest @ 18% p.a. from 04/07/2007. Further, the Complainant has requested to direct Opposite Party No.1 & 2 to pay to the Complainant Rs.5 Lacs as compensation for mental agony and Rs.25,000/- towards cost of this proceeding. The Complainant has produced documents as per list of document annexed to the complaint.
5) Opposite Party No.1 & 2 have filed their common written statement and thereby resisted claim of the Complainant contending interalia that the complaint is false, wrong, vexatious and deserves to be dismissed with cost. It is alleged that the Complainant has not approached this Forum with clean hands and the Complainant has deliberately suppressed material facts from this Forum to mislead the Forum.
6) It is submitted that Opposite Party had prepared return of the income tax for the assessment year 2003-04 of the Complainant Company after holding detailed consultation with the representatives of the Complainant and the then Directors of the Complainant Company has singed the return of the income tax. The Complainant had agreed upon taxable income. The return was prepared on the basis of Audited Accounts which was signed by the Managing Director alongwith other Directors of the Company. Audited Account was prepared by a qualified Chartered Accountant. The Complainant’s case was taken up for sample scrutiny assessment and in the course of assessment the Assessing Officer added certain items of expenditure claimed. It is contended that the Complainant has not joined their Auditor as a party to this complaint. Therefore, complaint is bad for non-joinder of necessary parties.
7) It is submitted by the Opposite Party that the Complainant’s are commercial undertakings and cannot be said to be ‘Consumers’, in the spirit of the Consumer Protection Act, 1986. The purported service alleged to have been engaged from the Opposite Parties is of commercial nature and in pursuit of profit making industries and therefore, compliant is not maintainable under the Consumer Protection Act, 1986.
8) It is alleged that the Complainant has made false, frivolous and vexatious allegations against the Opposite Party. It is submitted that there is no deficiency in service on the part of Opposite Party. The Complainant has made allegations of alleged deficiency in service with malafide intention and/or with ulterior motive of extorting money.
9) Opposite Party has denied each and every allegation made by the Complainant submitting that the Complainant has been client of the Opposite Party for over 40 years. Disputed return of the income tax for the assessment year 2003-04 was prepared by the Opposite Party after holding detailed consultation with the representatives of the Complainant. After assessment, concerned Income Tax Officer initiated penalty proceedings under Sec.271(1)(c). The Opposite Party made written and oral representation on behalf of the Complainant Company to the Assessing Officer in order to convince him of the facts of the case on both the accounts i.e. proceedings under Sec.143(3) and under Sec.271(1)(c). The Opposite Parties have denied allegations that they have advised the Complainant to prefer an appeal against the order of Assessing Officer. On the contrary, according to the Opposite Parties, the Complainant Company had decided to go in appeal to the Commissioner of Income Tax (Appeals)-1, Mumbai. The Opposite Parties had orally represented the Complainant’s case and also filed written argument before the Commissioner of Income Tax, (Appeals)-1 Mumbai. They have denied allegations that Opposite Parties failed to personally attend hearing of the appeal. Further they have denied allegations of hardship, inconvenience caused to the Complainant, contending that complaint deserves to be dismissed with heavy cost.
10) The Complainant has filed rejoinder and denied allegations made in the written version of the Opposite Party. The Complainant has filed affidavit in lieu of Commissioner-in-Chief, of Mr. K.R. Harish, Authorized Representative and produced copies of documents at Exh.‘A’ to ‘Q’. The Complainant has filed written argument. Opposite Parties have also filed their common written argument. Heard Ld.Advocate Mr. Ameya Tamhane,for the Complainant and Ld.Advocate Mr. Anand Gawand, for the Opposite Party. Opposite Party has raised contention that the Complainants are not a ‘Consumer’ as the Complainant are commercial undertakings and they had availed service of the Opposite Party for their commercial purpose and therefore, Complainants are not consumer. Further, they have denied allegations of deficiency in service.
11) Following points arises for our consideration and our findings thereon are as under -
Point No.1 : Whether the Complainant is a ‘Consumer’ as defined under Sec.2(1)(d)(ii) of the Consumer Protection Act,
1986 ?
Findings : No
Point No.2 : Whether the Complainant is entitled for reliefs as prayed for ?
Findings : No
Reasons :-
Point No.1 :- Following facts are undisputed facts that the Complainant M/s. Multichem Pvt. Ltd. Company, is registered under the Indian Companies Act,1956 and it is carrying on business of plastic files. Opposite Party No.1 is a partnership firm carrying on and rendering professional services of Chartered Accountants to its clients. Opposite Party No.2 is a partner of Opposite Party No.1. The Complainant Company had availed services of Opposite Parties as a Chartered Accountant for preparing their income tax returns. According to the Complainant, for the Assessment Year 2003/04, Opposite Party No.2 on behalf of Opposite Party No.1 prepared income tax return and submitted for assessment under Sec.143(3) of the Income Tax Act, 1961 on 23/11/05 to the concerned Income Tax Assessee Officer. The Opposite Parties have also admitted the said fact.
It is alleged by the Complainant that the Opposite Parties were negligent and rendered deficiency in services to the Complainant. Income tax return was not correctly prepared. By order dtd.30/05/06, Income Tax Officer levied minimum penalty of Rs.2,15,820/- under Sec.271(1)(c) of the Income Tax Act, on the Complainant for the Assessment Year2003-04. The Opposite Parties advised the Complainant to prefer an appeal against the said order to the Commissioner of Income Tax (Appeals)-1, Mumbai. Accordingly, appeal was preferred. However, the Opposite Parties failed and neglected to attend the hearing of the said appeal before the Commissioner of Income Tax (Appeals)-1, Mumbai, and due to the deficiency in service on the part of Opposite Parties, Commissioner of Income Tax (Appeals)-1, Mumbai, enhanced penalty to Rs.6,10,737/- and therefore, the Complainant have filed this complaint.
It is submitted on behalf of Opposite Party that M/s. Multichem Pvt. Ltd. is a Company, registered under the Companies Act, 1956 and carrying on business of plastic files. The Complainant Company had engaged services of the Opposite Party No.1 & 2 Chartered Account in connection with their business/commercial activities. Therefore, the Complainants is not consumer as defined under Sec.2(1)(d)(ii) of the Consumer Protection Act. It is submitted that as the Complainant Company is not a consumer as defined under Sec.2(1)(d)(ii) the present complaint is not maintainable under the provisions of Consumer Protection Act and is liable to be dismissed.
By the Amendment Act of 62/2002, provisions of Sections 2(1)(d)(ii) of the Consumer Protection Act, are amended w.e.f.15/03/2003. The Complainant had availed services of the Opposite Parties for preparing and submitting income tax return for the Assessment Year 2003-04. According to the Complainant, the Opposite Parties submitted return for year 2003-04 of the Complainant on 21/11/2003. The assessment under Sec.143(3) of the Income Tax Act, 1961 was completed on 23/11/2005. The concerned Income Tax Officer by order dtd.30/05/2006 levied minimum penalty of Rs.2,15,820/-. It is alleged that without proper application of mind and negligently Opposite Parties advised the Complainant to prefer an appeal against the said order. Relying upon the said advice of Opposite Parties, the Complainant preferred appeal before the Commissioner of Income Tax (Appeals)-1, Mumbai. However, in the said appeal instead of reducing the penalty, the penalty was increased upto Rs.6,10,737/-. From the averment made in the complaint it is clear that after the amendment of Sec.2(1)(d)(ii), the Complainant availed services of the Opposite Parties for preparing of income tax return for the Assessment Year 2003-04 and subsequently so called advice to prefer appeal against the order passed by the Assessment Officer. By the amendment in Sec.2(1)(d)(ii) “a person who availed services for commercial purpose is excluded from the definition of consumer.” It is clear from the fact stated in the complaint that the Complainant availed services of Opposite Party for commercial purpose after amendment in Section 2(1)(d)(ii) of the Consumer Protection Act, and therefore, Complainant is not a consumer as defined under amended Sec.2(1)(d)(ii) of the Consumer Protection Act, 1986. Hence, we answer point no.1 in the negative.
Point No.2 :- As discussed the Complainants Company is not a consumer as it availed services of the Opposite Party for commercial purpose. Therefore, present complaint is not maintainable under the provisions of Consumer Protection Act, 1986. As such, the Complainants Company is not entitled to claim any reliefs against the Opposite Party. Therefore, we answer point no.2 in the negative.
For the reasons discussed above, we hold that complaint is liable to be dismissed. In the result we pass following order -
O R D E R
i.Complaint No.202/2008 is hereby dismissed with no order as to cost
ii. Certified copies of this order be furnished to the parties.
