RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD., Jaipur V. ASSISTANT COMMISSIONER OF INCOME TAX, Jaipur

ITA 100/JPR/2018

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1985 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 29-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA
• Keywords: Reasonable cause; Revised return
• Section: 273B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA -@ ITA NO.100/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14 M/S RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD., VIDYUT BHAWAN, JAN PATH, JYOTI NAGAR, JAIPUR CUKE VS. ACIT, CIRCLE-06 JAIPUR LFKK;H YS[KK LA - @THVKBZVKJ LA - @ PAN/GIR NO.: AABCR7436B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. SEEMA MEENA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 27/03/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 28/03/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-2, JAIPUR DATED 21.11.2017 FOR ASSESSMENT YEAR 2013-14 WHEREIN THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF LEVY OF PENALTY OF RS. 1,50,000/- U/S 271B OF THE ACT. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A 100% STATE GOVERNMENT UNDERTAKING ENGAGED IN THE BUSINESS OF TRANSMISSION OF ELECTRICITY. THE ASSESSEE COMPANY HAS FILED ITS RETURN OF INCOME ON 27.09.2013 BASED ON UNAUDITED BOOKS OF ACCOUNTS WHICH WAS SUBSEQUENTLY REVISED ON 16.09.2014 ON THE BASIS OF AUDITED BOOKS OF ACCOUNTS. IN ITS ORIGINAL RETURN OF INCOME, THE ASSESSEE COMPANY HAS REPORTED NIL INCOME WHICH WAS REVISED TO A LOSS OF RS. 473,37,51,392/- AS PER THE REVISED RETURN OF INCOME WHICH WAS ITA NO. 100/JP/2018 M/S RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD., JAIPUR VS ACIT, JAIPUR 2 ACCEPTED DURING THE ASSESSMENT PROCEEDINGS EXCEPT FOR AN AMOUNT OF RS. 4,80,494/- IN RESPECT OF INTEREST ON INCOME TAX REFUND WHICH WAS BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON PERUSAL OF FORM NO. 3CA, THE ASSESSING OFFICER NOTICED THAT THE STATUTORY AUDIT OF THE ASSESSEE WAS CONDUCTED ON 15.07.2014 AND THE ASSESSEE HAS THEREFORE FAILED TO FURNISH AND GET HIS ACCOUNTS AUDITED AND FURNISHED THE REPORT ON OR BEFORE 30.09.2013, BEING THE SPECIFIED DUE DATE. IN VIEW OF THE SAME, PENALTY PROCEEDINGS U/S 271B OF THE ACT FOR FAILURE TO GET THE ACCOUNTS AUDITED AND FURNISHED THE AUDIT REPORT BEFORE THE SPECIFIED DUE DATE WAS INITIATED AGAINST THE ASSESSEE COMPANY BY WAY OF ISSUANCE OF PENALTY NOTICE DATED 15.03.2016. 3. DURING THE COURSE OF PENALTY PROCEEDINGS, THE ASSESSEE COMPANY SUBMITTED THAT DELAY IN GETTING THE TAX AUDIT REPORT IS DUE TO DELAY IN GETTING STATUTORY AUDIT AND AUDIT BY C&AG AND ALSO DUE TO INTRODUCTION OF NEW SCHEDULE VI OF COMPANIES ACT, 1961. IT WAS FURTHER SUBMITTED THAT THERE WAS DEMERGER OF GIRAL POWER PROJECT TO NEW COMPANY GIRAL LIGNITE POWER LTD AND ALLOCATION OF ASSETS AND LIABILITIES AND ITS VALUE TO GIRAL LIGNITE LTD. TOOK A LOT OF TIME WHICH HAS ALSO RESULTED IN DELAY IN FINALIZATION OF ACCOUNTS AND DELAY IN GETTING ACCOUNTS AUDITED FROM STATUTORY AUDITOR AS WELL AS THE TAX AUDITOR. THE SUBMISSION OF THE ASSESSEE COMPANY WAS HOWEVER NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER. AS PER THE ASSESSING OFFICER, THE ASESSEE COMPANY WAS REQUIRED U/S 44AB OF THE ACT TO GET ITS ACCOUNTS AUDITED AND FURNISHED THE AUDIT REPORT ON OR BEFORE 30.09.2013 AND IN THE INSTANT CASE, THE AUDIT HAS BEEN CONDUCTED AFTER DELAY OF 10 MONTHS ON 15.07.2014. FURTHER, THE REASONS FOR THE DELAY IN GETTING ACCOUNTS AUDITED WERE NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER. IT WAS ACCORDINGLY HELD THAT THE ASSESSEE COMPANY HAS BREACHED THE PROVISIONS OF SECTION 44AB WITHOUT ANY REASONABLE CAUSE. HENCE, PENALTY AMOUNTING TO RS. 1.5 LAKH WAS IMPOSED ON THE ASSESSEE COMPANY. ITA NO. 100/JP/2018 M/S RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD., JAIPUR VS ACIT, JAIPUR 3 4. AGAINST THE SAID LEVY OF PENALTY, THE ASSESSEE COMPANY FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD CIT(A) HELD THAT THE REASONS SUBMITTED BY THE ASSESSEE COMPANY FOR THE DELAY IN GETTING ITS ACCOUNTS AUDITED AND SUBMITTING THE AUDIT REPORT BEFORE THE SPECIFIED DUE DATE ARE NOT BACKED BY EVIDENCE. IT WAS FURTHER HELD BY THE LD CIT(A) THAT THE STATUTORY AUDITORS NOT AGREEING TO THE AUDIT FEES AND RESULTANT DELAY IS NOT A PLAUSIBLE REASON. IT WAS HELD BY THE LD CIT(A) THAT EFFORTS SHOULD HAVE MADE IN TIME TO GET THE AUDIT CONDUCTED WITHIN THE STIPULATED TIME. THE PENALTY LEVIED BY THE AO WAS ACCORDINGLY CONFIRMED BY THE LD. CIT(A). 5. DURING THE COURSE OF HEARING, THE LD. AR DRAWN A REFERENCE TO THE FOLLOWING TABLE:- STATEMENT SHOWING DATE OF STATUTORY AUDIT, C&AG AUDIT, TAX AUDIT FY AY STATUTORY AUDIT C&AG AUDIT TAX AUDIT DATE OF FILING OF RETURN/ REVISED RETURN 2010 - 11 2011 - 12 08.11.2012 22.04.2013 25.03.2013 27.09.2011/29.03.2013 2011 - 12 2012 - 13 28.11.2013 28.03.2014 26.03.2014 26.09.2012/29.03.2014 2012 - 13 2013 - 14 27.03.2014 19.08.2014 15.07.2014 27.09.2013/16.09.2014 THE LD. AR, DRAWING OUR REFERENCE TO ABOVE TABLE, SUBMITTED THAT THE DELAY IN OBTAINING THE TAX AUDIT REPORT U/S 44AB IS ON ACCOUNT OF DELAY IN CONDUCTING THE STATUTORY AUDIT/ C&AG AUDIT BECAUSE UNLESS THE STATUTORY AUDIT IS CONDUCTED, TAX AUDIT REPORT CANNOT BE ISSUED. THE STATUTORY AUDIT WAS DELAYED IN FY 2010-11 AS EVEN AFTER ALL THE EFFORTS, THE STATUTORY AUDIT REPORT WAS ISSUED BY CR MEHTA & CO. ON 08.11.2012 AND THEREAFTER, C&AG MADE COMMENTS ON THE ACCOUNTS ON 22.04.2013. THEREAFTER, THE STATUTORY AUDIT FOR FY 2011-12 COULD BE STARTED. THE STATUTORY AUDIT REPORT FOR FY 2011-12 WAS ISSUED BY P.C. MODI & CO. ON 28.11.2013 AND THEREAFTER, C&AG MADE COMMENTS ON THE ACCOUNTS ON 28.03.2014. AFTER THIS, THE STATUTORY AUDIT REPORT FOR FY 2012-13 WAS ISSUED ON 27.03.2014 AND THEREAFTER, C&AG MADE COMMENTS ON THE ACCOUNTS ON 19.08.2014. IT IS NOT THE CASE OF LOWER ITA NO. 100/JP/2018 M/S RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD., JAIPUR VS ACIT, JAIPUR 4 AUTHORITIES THAT DELAY IN THE STATUTORY AUDIT IS BECAUSE OF THE FAULT OF THE ASSESSEE. THUS, DELAY IN OBTAINING THE TAX AUDIT REPORT IS BECAUSE OF A REASONABLE CAUSE AS ENVISAGED U/S 273B AND THEREFORE, THE PENALTY LEVIED U/S 271B BE DELETED. 5.1 THE LD. CIT(A) HAS CONFIRMED THE LEVY OF PENALTY ONLY ON THE GROUND THAT THE REASONS FORWARDED BY THE ASSESSEE ARE NOT BACKED BY EVIDENCE IGNORING THAT ALL THESE DATES ARE MENTIONED IN THE PRINTED BALANCE SHEET AVAILABLE ON THE RECORD OF AO. THE FURTHER OBSERVATION OF LD. CIT(A) THAT STATUTORY AUDITOR HAVE NOT AGREED TO THE AUDIT FEES AND HENCE, THERE IS A DELAY IS NOT THE CLAIM OF ASSESSEE AS IS EVIDENT FROM THE SUBMISSION EXTRACTED AT PARA 2.2 OF THE ORDER. THUS, LD. CIT(A) HAS CONFIRMED THE LEVY OF PENALTY WITHOUT APPLICATION OF MIND. 5.2 THE LD AR FURTHER PLACED RELIANCE ON THE FOLLOWING CASES:- HINDUSTAN STEEL LTD. VS. STATE OF ORISSA 83 ITR 26 (SC) CIT VS. PUNJAB STATE LEATHER DEVELOPMENT CORPORATION LTD. (2001) 119 TAXMAN 258 (P&H) (HC) APL INDIA PVT. LTD. VS. JCIT (2014) 62 SOT 91 (MUM.) (TRIB.) IN VIEW OF ABOVE, IT WAS SUBMITTED THAT THE PENALTY IMPOSED BY AO AND CONFIRMED BY LD. CIT(A) BE DIRECTED TO BE DELETED. 6. THE LD DR HAS VEHEMENTLY ARGUED THE MATTER AND RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE LIMITED ISSUE FOR CONSIDERATION IS WHETHER THERE IS A REASONABLE CAUSE FOR THE DELAY IN COMPLETING THE TAX AUDIT AND SUBMITTING THE REPORT OF THE TAX AUDITOR WITHIN THE SPECIFIED DUE DATE. UNDER ITA NO. 100/JP/2018 M/S RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD., JAIPUR VS ACIT, JAIPUR 5 SECTION 273B, NO PENALTY SHALL BE IMPOSABLE ON THE ASSESSEE FOR ANY FAILURE WHICH INTERALIA INCLUDE THE DEFAULTS MENTIONED IN SECTION 271B, IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. IN THE PRESENT CASE, THE REASON FOR THE DELAY HAS BEEN STATED TO BE THE DELAY IN COMPLETING THE STATUTORY AUDIT FOR THE EARLIER YEARS WHICH HAS RESULTED IN DELAY IN COMPLETION OF STATUTORY AUDIT FOR THE YEAR UNDER CONSIDERATION AND THE RESULTANT DELAY IN COMPLETING THE TAX AUDIT AND SUBMITTING THE REPORT THEREOF. IT WAS SUBMITTED THAT WITHOUT COMPLETING THE STATUTORY AUDIT, THE TAX AUDIT COULD NOT HAVE BEEN COMPLETED. WE FIND THAT THE STATUTORY AUDITORS ARE APPOINTED BY THE COMPTROLLER & AUDITOR GENERAL OF INDIA UNDER SECTION 619(2) OF THE COMPANIES ACT, 1956 AND THEY HAVE COMPLETED THE STATUTORY AUDIT AND SUBMITTED THEIR AUDIT REPORT DATED 27.03.2014. THEREAFTER, THE TAX AUDIT HAS BEEN COMPLETED ON 15.07.2014 AND THE REVISED RETURN WAS FILED ON 16.9.2014. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. PUNJAB STATE LEATHER DEVELOPMENT CORPN. LTD. [2001] 119 TAXMAN 258 HAS HELD THAT DELAY IN COMPLETION OF STATUTORY AUDIT WAS A REASONABLE CAUSE FOR NON-COMPLIANCE WITH SECTION 44AB AND IT WAS HELD THAT THE TRIBUNAL WAS RIGHT IN CANCELLING PENALTY LEVIED UNDER SECTION 271B. RESPECTFULLY FOLLOWING THE SAME, WE ARE OF THE VIEW THAT IN THE INSTANT CASE, WHERE THERE HAS BEEN A DELAY IN COMPLETION OF STATUTORY AUDIT, THERE EXIST A REASONABLE CAUSE FOR THE DELAY IN COMPLETION AND SUBMISSION OF THE TAX AUDIT REPORT UNDER SECTION 44AB OF THE ACT. THE PENALTY LEVIED UNDER SECTION 271B IS THEREFORE DELETED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/03/2018. SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER ITA NO. 100/JP/2018 M/S RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD., JAIPUR VS ACIT, JAIPUR 6 JAIPUR DATED:- 28/03/2018 *GANESH KR VKNS'K DH IZFRFYFI VXZSF'KR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT - M/S RAJASTHAN RAJYA VIDYUT UTPADAN ` NIGAM LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT - ACIT, CIRCLE-6, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 100/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.