Mayfair Builders & Developers, Pune V. Dy. CIT,Circle 2, Pune

ITA 1010/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3123 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 21-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Assessee Lawyers: K SRINIVASAN
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NOS. 1009, 1010, 1011, & 1012/PN/2009 ASSESSMENT YEARS: 2003-04, 2004-05, 2005-06, & 2006 -07 MAYFAIR BUILDERS & DEVELOPERS, APPELLANT 1027, NEW NANA PETH, PUNE 411 002. (PAN AACFM1312R) VS. DY. COMMISSIONER OF INCOME-TAX, RESPONDENT CIRCLE 2, PUNE. APPELLANT BY : MR. K. SRINIVASAN RESPONDENT BY : MR. ABHAY DAMLE ORDER PER G.S. PANNU, A.M.: THESE ARE FOUR APPEALS PREFERRED BY THE ASSESSEE A GAINST A COMMON ORDER OF CIT(A) DATED 29/06/09 PERTAINING TO ASSESSMENT YEARS 2003-04 TO 2006-07. IN ALL THE APPEALS THE ON LY ISSUE RELATES TO IMPOSITION OF PENALTY U/S 271B OF THE INCOME TAX ACT (IN SHORT THE ACT). 2. THE ASSESSING OFFICER AND THEREAFTER THE CIT(A) FOUND THAT THE ASSESSEE HAD FAILED TO GET ITS ACCOUNTS AUDITED BEF ORE THE SPECIFIED DATE AND FURNISH THE SAME ALONGWITH THE RETURN OF I NCOME AS MANDATED U/S 44AB OF THE ACT. FOR THE AFORESAID DEF AULT, THE AUTHORITIES BELOW WERE NOT SATISFIED WITH THE CAUS E CANVASSED BY THE ASSESSEE FOR SUCH DEFAULT AND, THEREFORE, PENAL TY AMOUNTING TO ITA NO. 1009 TO 1012/PN/09 MAYFAIR BUILDERS & DEVELOPERS 2 RS. 1.00 LAKH FOR EACH OF THE CAPTIONED ASSESSMENT YEAR HAS BEEN LEVIED IN TERMS OF SECTION 271B OF THE ACT. 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY SUBMITTED THAT THE ASSESSEE WAS PREVENTED BY A REAS ONABLE CAUSE FROM GETTING THE ACCOUNTS AUDITED AND FURNISHING SU CH AUDIT REPORT ALONGWITH THE RETURN OF INCOME AND, THEREFORE, PENA LTY U/S 271B READ WITH SECTION 273B OF THE ACT IS NOT TENABLE. I N THIS CONNECTION, RELIANCE HAS BEEN PLACED ON THE FOLLOWING PRECEDENT S: 1. CIT VS. TEAKING, 158 CTR 413 (GUJ.) 2. ACIT VS. KAMLESH R. AGARWAL, 99 ITD 27 (AHD)(TM ) 4. ACIT VS. MANDAVALLI VENKATESWARA RAO, 44 TTJ 40 0 (HYD.) 5. ALELI & CO. VS. DCIT, 7 SOT 639 (MUM.) 4. THE REASONABLE CAUSE CANVASSED IS TO THE EFFECT THAT THE AUDIT FOR THE PRECEDING YEAR WAS INCOMPLETE AND, TH EREFORE, THE BOOKS OF ACCOUNT FOR THE SUBSEQUENT YEAR COULD NOT BE AUDITED IN TIME. IN THIS CONNECTION, THE FOLLOWING DATE-WISE C HART HAS BEEN FURNISHED:- S.NO. ASST. YEAR RETURN FILED ON INCOME DECLARED ASSTT. 1. 03-04 15.2.07 (-)94,794 NO. ASSTT. 2. 04-05 15.2.07 NIL 3. 05-06 7.3.07 9,63,836 4. 06-07 27.3.08 2,38,740 2,38,740 24.12.08 ITA NO. 1009 TO 1012/PN/09 MAYFAIR BUILDERS & DEVELOPERS 3 5. ACCORDING TO THE LEARNED COUNSEL, THE AFORESAID CONSTITUTED A REASONABLE CAUSE FOR THE DELAY IN GETTING THE AC COUNTS AUDITED FOR ALL THE YEARS UNDER CONSIDERATION. 6. ON THE OTHER HAND, LEARNED DR HAS DEFENDED THE ORDERS OF THE LOWER AUTHORITIES BY POINTING TO THE DISCUSSION MADE BY THE CIT(A) IN HIS ORDER. AS PER THE CIT(A), OVER A PER IOD OF TEN YEARS FROM THE ASSESSMENT YEAR 1996-97 TO ASSESSMENT YEAR 2006-07, ASSESSEE IS A HABITUAL DEFAULTER ON SUCH MATTERS. I N PARA 7 OF THE IMPUGNED ORDER, IT HAS BEEN OBSERVED THAT THE A SSESSEE GAVE VARIOUS REASONS REGARDING DISPUTE AMONG PARTNERS, ABSENCE OF ACCOUNTANT/CHANGE OF STAFF ETC. FOR NOT COMPLYING W ITH THE PROVISIONS OF SECTION 44AB OF THE ACT IN TIME IN TH E EARLIER ASSESSMENT YEARS. THEREFORE, THE REASONS NOW CANVAS SED CANNOT BE SAID TO BE BONAFIDE AND ACCORDINGLY, IT WAS CONT ENDED BY THE LEARNED DR THAT THE ORDERS OF THE LOWER AUTHORITIES BE UPHELD. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. IN THIS CASE, IT IS NOT IN DISPUTE THAT A DEFAULT HAS OCCUR RED ON THE PART OF THE ASSESSEE IN COMPLYING WITH THE PROVISIONS OF SECTION 44AB OF THE ACT. SECTION 271B OF THE ACT PRESCRIBES IMPO SITION OF PENALTY FOR SUCH DEFAULT. SECTION 273B OF THE ACT I NDICATES THAT NO PENALTY SHALL BE IMPOSED FOR SUCH FAILURE IF THE ASSESSEE ITA NO. 1009 TO 1012/PN/09 MAYFAIR BUILDERS & DEVELOPERS 4 PROVES THAT THERE WAS A REASONABLE CAUSE FOR SUCH A FAILURE. THE CASE MADE OUT BY THE APPELLANT BEFORE US IS THAT IT HAS A REASONABLE CAUSE FOR NOT COMPLYING WITH THE PROVISI ONS OF SECTION 44AB OF THE ACT FOR EACH OF THE CAPTIONED ASSESSMEN T YEAR. ACCORDINGLY TO THE ASSESSEE, FAILURE TO GET THE ACC OUNTS AUDITED WITHIN THE SPECIFIED TIME IN SUCCESSIVE YEARS WAS O N ACCOUNT OF NON-AUDIT OF THE ACCOUNT BOOKS FOR THE PRECEDING YE AR. IN THIS CONTEXT, THE HONBLE GUJARAT HIGH COURT IN THE CASE OF TEA KING (SUPRA) HAS OPINED THAT SUCH A REASON CONSTITUTED A REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B READ WITH SECTION 271B OF THE ACT. THEREFORE, WE MAY EXAMINE THE FACT S OF THE PRESENT CASE IN SUCH LIGHT. 8. AS PER THE CHRONOLOGICAL CHART FURNISHED BY THE ASSESSEE, THE RETURN OF INCOME FOR THE ASSESSMENT YEARS 2003- 04 AND 2004-05 HAVE BEEN FILED ON 15/02/07 AND FOR THE ASS ESSMENT YEAR 2005-06 ON 07/03/07 AND FOR ASSESSMENT YEAR 20 06-07 ON 27/03/08. FOR THE ASSESSMENT YEAR 2004-05, THE ASSE SSING OFFICER HAS NOTED THAT THE ASSESSEE WAS REQUIRED TO FURNISH THE AUDIT REPORT U/S 44AB OF THE ACT BEFORE 31/12/04. O STENSIBLY, ON SUCH DATE THE ACCOUNTS OF THE PRECEDING ASSESSM ENT YEAR OF 2003-04 WERE NOT AUDITED AND, THEREFORE, THE AUDIT FOR THE SUBSEQUENT ASSESSMENT YEAR OF 2004-05 COULD NOT HAV E BEEN ITA NO. 1009 TO 1012/PN/09 MAYFAIR BUILDERS & DEVELOPERS 5 CARRIED OUT. SIMILARLY, FOR THE ASSESSMENT YEAR 200 5-06 THE DUE DATE FOR FURNISHING OF THE AUDIT REPORT HAS BEEN NO TED BY THE ASSESSING OFFICER AS 31/10/05. OSTENSIBLY, THE AUDI T FOR THE PRECEDING ASSESSMENT YEARS OF 2003-04 AND 2004-05 W AS NOT UNDERTAKEN AND, THEREFORE, AUDIT FOR THE SUBSEQUENT ASSESSMENT YEAR 2005-06 COULD NOT HAVE BEEN CARRIED OUT. THERE FORE, FOLLOWING THE PARITY OF REASONING LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF TEA KING (SUPRA) IN THE PRESENT CASE IN SO FAR AS THE ASSESSMENT YEARS 2004-05 AND 2005-06 ARE CONCERNED, THE ASSESSEE CAN BE SAID TO HAVE A REASO NABLE CAUSE FOR NOT COMPLYING WITH THE REQUIREMENT OF SECTION 4 4AB OF THE ACT WITHIN THE SPECIFIED DATE. ACCORDINGLY, THE PEN ALTY IMPOSED U/S 271B OF THE ACT IS DIRECTED TO BE DELETED FOR T HE ASSESSMENT YEARS 2004-05 AND 2005-06. 9. IN SO FAR AS THE ASSESSMENT YEAR 2006-07 IS CONC ERNED, THE DUE DATE WAS 31/10/07 WHEREAS THE ASSESSEE HAS FILE D ITS RETURN OF INCOME ON 27/03/08; THE AUDIT FOR THE PRECEDING ASSESSMENT YEARS WAS ALSO COMPLETE BY 07/03/07 AS THE RETURN O F INCOME FOR THE ASSESSMENT YEAR 2005-06 WAS FILED ON SUCH DATE. THE ASSESSING OFFICER HAS FURTHER NOTED THAT THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 HAS BEEN FILED BY THE A SSESSEE ON 27/03/08 ONLY IN RESPONSE TO NOTICES ISSUED U/S 142 (1) OF THE ITA NO. 1009 TO 1012/PN/09 MAYFAIR BUILDERS & DEVELOPERS 6 ACT. IN OUR VIEW THE REASONABLE CAUSE SOUGHT TO BE MADE OUT BY THE ASSESSEE CANNOT BE CONSIDERED AS BONAFIDE FOR T HE ASSESSMENT YEAR 2006-07 AND, THEREFORE, PENALTY LE VIED U/S 271B IS HEREBY CONFIRMED. 9. IN SO FAR AS ASSESSMENT YEAR 2003-04 IS CONCERNE D, THERE IS NO MATERIAL ON RECORD TO SHOW THE RELEVANCE OF THE REASONABLE CAUSE CANVASSED BY THE ASSESSEE AND, THEREFORE, PEN ALTY IMPOSED U/S 271B IS HEREBY CONFIRMED. 10. IN THE RESULT, ASSESSEE SUCCEEDS IN ITS APPEAL S FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06, WHEREAS IT FA ILS IN RELATION TO ASSESSMENT YEARS 2003-04 AND 2006-07. 11. RESULTANTLY, APPEALS IN ITA NOS. 1010 & 1011/PN /09 PERTAINING TO ASSESSMENT YEARS 2004-05 AND 2005-06 RESPECTIVELY ARE ALLOWED, WHEREAS THE APPEALS IN IT A NOS. 1009/PN/09 AND 1012/PN/09 FOR ASSESSMENT YEARS 2003 -04 AND 2006-07 RESPECTIVELY ARE DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOVEMBER, 2010. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT M EMBER PUNE, DATED:30 TH NOVEMBER, 2010 ITA NO. 1009 TO 1012/PN/09 MAYFAIR BUILDERS & DEVELOPERS 7 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, A BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., PUNE KV