Mohammed Abdur Razzak, Hyd, Hyderabad V. ITO, Ward-6(3), Hyderabad, Hyderabad

ITA 1083/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6105 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 12-08-2016
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: M FAKRUDDIN
• Keywords: Reasonable cause
• Section: 27

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ITA NO. 1083/HYD/2016 ASSESSMENT YEAR: 2011-12 SHRI MOHAMMED ABDUR RAZZAK, HYDERABAD PAN AEFPM2447G VS. THE ITO, WARD-6(3) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M. FAKRUDDIN REVENUE BY : SMT. SUMAN MALIK DATE OF HEARING : 23-02-2017 DATE OF PRONOUNCEMENT : 24 -02-2017 ORDER PER G. PAVAN KUMAR, J.M.: THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF THE CIT(A)-6, HYDERABAD IN ITA. NO. 1319/2014-15/CIT(A) -6/16- 17 DATED 17-05-2016 PASSED U/S 271B R.W.S 274 OF TH E IT ACT. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THE ORDER OF THE LD. CIT IS CONTRARY TO LAW AND FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT ERRED IN NOT APPRECIATING THE FACT T HAT THE LD. CIT OFFICER ERRED IN INVOKING THE PROVISIONS OF SECTION 271B OF THE IT ACT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE LD. CIT ERRED IN NOT APPRECIATING THE FACT T HAT THE APPELLANT WAS PREVENTED BY REASONABLE CAUSE IN NOT FILING THE AUDIT REPORT WITHIN THE TIME PRESCRIBED. ON THE FACTS AN D CIRCUMSTANCES OF THE CASE. 4. THE LD. CIT ERRED IN NOT APPRECIATING THE FACT T HAT THE APPELLANT WAS UNDER AN HONEST IMPRESSION THAT THE R EPORT HAS TO BE FILED ONLY AT THE TIME OF HEARING AND NOT BEFORE TI ME PRESCRIBED FOR FILING THE RETURN. 2 ITA NO. 1083/HYD/2016 SHRI MD. ABDUR RAZZAK, HYDERABAD. 5. THE LD. CIT ERRED IN NOT APPRECIATING THE FACT THAT THE APPELLANT COULD NOT HAVE FILED THE REPORT ELECTRONI CALLY AS NO SUCH PROVISIONS WAS MADE TILL THE A.Y. 2013-14. ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE LD. CIT ERRED IN CONFIRMING THE PENALTY OF R S. 71,619 LEVIED UNDER SECTION 271B OF THE IT ACT. ON THE FA CTS AND CIRCUMSTANCES OF THE CASE. 7. THE APPELLANT CRAVES LEAVE TO ADD TO ALTER OR AM END ANY OF THE AFORESAID GROUNDS AS ADVISED, ON OR BEFORE THE DATE OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF OPERATIN G TOURS TO HAJJ & UMRAH, OVERSEAS MANPOWER CONSULTANCY AND TRA VEL AGENCY. THE ASSESSEE FILED RETURN OF INCOME FOR TH E A.Y 2011- 12 ON 05-06-2012 WITH TOTAL INCOME OF RS.8,02,345/- AND THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE IT ACT. THE LD. A.O ALSO OBSERVED THAT THE ACCOUNTS ARE AUDITED U/S 44AB OF THE IT ACT BUT THE ASSESSEE HAS NOT FILED THE AU DIT REPORT WITHIN THE DUE DATE U/S 139(1) OF THE IT ACT AND AS SESSED INCOME OF RS. 10,95,740/- AND PASSED ORDER U/S 143( 3) DATED 11-01-2014. 2.1 SUBSEQUENTLY, THE LD. A.O INITIATED PENALTY PRO CEEDINGS AND ISSUED SHOW CAUSE NOTICE U/S 271B OF THE IT ACT DATED 22-01-2014. IN THE PENALTY PROCEEDINGS, THE LD. A.O FOUND THAT THE ASSESSEE HAS ADMITTED THE GROSS RECEIPTS O F 1,43,23,757/- AND UNDER THE PROVISIONS OF SEC 44AB OF THE IT ACT, THE ASSESSEES ACCOUNTS ARE REQUIRED TO BE AUD ITED AND OBTAIN AUDIT REPORT IN FORM 3CB AND 3CD AND SAME SHALL BE FILED ON OR BEFORE DUE DATE OF FILING OF RETURN OF INCOME FOR THE A.Y. 2011-12 BEING 30-09-2011. SINCE THE ASSESSEE HAS NOT 3 ITA NO. 1083/HYD/2016 SHRI MD. ABDUR RAZZAK, HYDERABAD. FILED THE AUDITED REPORT U/S 44AB OF THE IT ACT, A SHOW CAUSE NOTICE DATED 22/01/2014 WAS ISSUED AND SERVED ON TH E ASSESSEE. THE ASSESSEE FILED DETAILED REPLY ON 20- 02-2014 AND 21-02-2014 EXPLAINING THAT THE ACCOUNTS ARE AUDITED WITHIN THE DUE DATE AND DETAILS WERE FURNISHED IN THE INCO ME TAX RETURN AND FILED COPIES OF AUDITED PROFIT AND LOSS A/C, AND BALANCE SHEET AND TAX AUDIT REPORT IN FORM 3CB AND 3CD AND PRAYED FOR DROPPING OF PENALTY U/S 271 OF THE IT AC T. WHEREAS THE A.O FOUND THAT THE ASSESSEE HAS FILED THE RETU RN OF INCOME ON 05-06-2012 THOUGH THE DUE DATE OF FILING OF RETURN OF INCOME IS 30-09-2011 AND THE LD. A.O OBSERVED TH AT THE ASSESSEE HAS OBTAINED AUDIT REPORT BUT HAS NOT FURN ISHED THE SAME BEFORE THE DUE DATE UNDER PROVISIONS OF SEC. 1 39(1) OF THE IT ACT. THE ASSESSEE HAS FILED RETURN OF INCOM E ELECTRONICALLY U/S 139(4) OF THE INCOME TAX ACT AND STATED THE DATE OF AUDIT REPORT AS 29-09-2011. THOUGH THERE IS A DIFFERENCE IN DATE BUT THE AUDIT REPORT WAS NOT FI LED WITHIN THE DUE DATE I.E. ON 30-09-2011. THE A.O HAS OVERLOOKE D FACTS THAT THE ASSESSEE HAS FORGOTTEN TO FILE THE AUDIT R EPORT WITH THE RETURN OF INCOME CANNOT BE A VALID REASON AND A LSO NOT COMPLIED THE PROVISIONS FOR FILING OF AUDIT REPORT U/S 44B OF THE IT ACT BEFORE DUE DATE U/S 139(1). WITH THESE OBSERVATIONS, THE LD. A.O LEVIED PENALTY U/S 271B O F THE INCOME TAX ACT RS. 71,619/- AND PASSED ORDER U/S 27 1B R.W.S 274 OF THE IT ACT ON24-07-2014. AGGRIEVED THE ASSE SSEE HAS FILED THE APPEAL BEFORE THE CIT(A). 3. IN THE APPELLATE PROCEEDINGS THE LD. A.R ARGUED THE GROUNDS THAT THE A.O HAS ERRED IN INVOKING THE PROV ISIONS OF SECTION 271B OF THE IT ACT AND THE ASSESSEE HAS REA SONABLE 4 ITA NO. 1083/HYD/2016 SHRI MD. ABDUR RAZZAK, HYDERABAD. CAUSE IN NOT FILING THE REPORT WITHIN THE TIME AND THE PROVISION FOR FILING AUDIT REPORT ONLINE HAS COME INTO EFFECT FROM A.Y 2013-14 AND RELIED ON CIRCULAR. AFTER CON SIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) OBSERVE D THAT THE CBDT CIRCULAR ISSUED PERTAINS TO A.Y. 2009-10 AND I T IS MANDATORY FOR THE FIRMS AND COMPANIES TO FILE AUDIT ED REPORT. WHEREAS THE ASSESSEE IS A PROPRIETARY CONCERN AND T HE LD. CIT(A) CONCURRED WITH THE FINDINGS OF THE A.O IN LE VYING THE PENALTY AS THE ASSESSEE COULD NOT FURNISH AUDITED R EPORT U/S 44AB OF THE IT ACT WITHIN THE DUE DATE OF FILING OF RETURN FOR THE A.Y 2001-12 BEING 30-09-2011 AND UPHELD THE ACT ION OF THE A.O IN LEVYING THE PENALTY AND DISMISSED THE AS SESSEES APPEAL. AGGRIEVED BY THE ORDER OF THE CIT(A), THE A SSESSEE HAS FILED THE APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US THE LD. AR ARGUED THE GROUNDS AND REIT ERATED THE SUBMISSIONS MADE IN THE ASSESSMENT, PENALTY AND APPELLATE PROCEEDINGS. THE LD. AR SUBMITTED THAT T HE ASSESSEE HAS A REASONABLE CAUSE FOR NOT FILING THE AUDIT REPORT. HE GOT THE ACCOUNTS AUDITED BY CHARTERED A CCOUNTANT UNDER PROVISIONS OF SEC. 44AB OF THE IT ACT AND OBT AINED AUDIT REPORT BEFORE DUE DATE OF FILING OF RETURN U/S 139( 1) OF THE IT ACT AND EXPLAINED THAT IT IS NOT MANDATORY TO FILE AUDITED REPORT ELECTRONICALLY, AS THERE IS NO PROVISION TO FILE ELECTRONICALLY AUDITED REPORT ALONG WITH THE RETURN OF INCOME IN THE SAID ASSESSMENT YEAR AND THE LD. AR ARGUED THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AS SESSEE IN LEVYING PENALTY U/S 271B OF THE IT ACT. THE ASSESSE E IS ASSESSED TO INCOME TAX AND FILING THE INCOME TAX RE TURNS REGULARLY AND THE ASSESSMENT WAS COMPLETED U/S 143 (3) OF 5 ITA NO. 1083/HYD/2016 SHRI MD. ABDUR RAZZAK, HYDERABAD. THE IT ACT DATED 22-012-2014. BUT THE LD. A.O LEV IED PENALTY ON A SOLE GROUND THAT THE ASSESSEE HAS NOT FILED TH E AUDIT REPORT U/S 44AB OF THE IT ACT ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. THE LD. AR SUBMITTED T HAT THERE IS NO PROVISION TO FILE AUDIT REPORT ELECTRONICALLY IN THE SAID ASSESSMENT YEAR AND FILING OF AUDIT REPORT WAS MADE MANDATORY FROM THE A.Y 2013-14. THE LD. AR DREW OUR ATTENTION TO THE PAPER BOOK FILED AT PAGE 2 WHERE T HE COPY OF RULE 12 AS AMEND FROM 01-04-2011 WAS FILED AND THE LD. AR REFERRED TO THE CIRCULAR DATED 21-05-2009 AND PRAYE D THAT THE DELAY IN FILING THE AUDIT REPORT WAS NOT INTENTIONA L BUT CIRCUMSTANCES PREVAILED DURING THE TIME AND PRAYED FOR DELETION OF PENALTY. CONTRA, THE LD. DR RELIED ON THE ORDER OF THE CIT(A). 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. WE FOUND THAT THE LEVY OF PENALTY IS NOT AUTOMATIC AND THE FACTS HAS TO BE DISTINGUISHED AND THE LD. A.O SHALL USE THE DISCRETIONARY POWER IN LEVYING THE PENALTY. IN THE INSTANCE CASE, THERE IS NO DISPUTE THAT THE ACCOUNT S ARE AUDITED U/S 44AB OF THE IT ACT BUT AS THE ASSESSEE FILED THE RETURN OF INCOME BE LATELY U/S 139(4) OF THE IT ACT DUE TO VALID REASONS COULD NOT FILE THE AUDIT REPORT U/S 44AB OF THE IT ACT WITHIN THE TIME LIMIT U/S 139(1) OF THE IT ACT I.E 30-09-2011. BUT THE ASSESSEE HAS OBTAINED AUDIT REPORT ON 15-09 -2011. CONSIDERING THE APPARENT FACTS AND OBTAINING OF AUD IT REPORT WITHIN DUE DATE AND THE ASSESSEE HAS COMPLIED WITH THE PROVISION U/S 44AB OF THE IT ACT THOUGH RETURN OF I NCOME WAS FILED BELATEDLY AND AS SUBMITTED BY THE LD. AR THAT THERE IS NO PROVISION TO FILE AUDIT REPORT ELECTRONICALLY FOR T HE SAID 6 ITA NO. 1083/HYD/2016 SHRI MD. ABDUR RAZZAK, HYDERABAD. ASSESSMENT YEAR. WE FIND, THE ASSESSEE HAS SATISFI ED THE REASONABLE CAUSE AND ACCORDINGLY WE DIRECT THE A.O TO DELETE THE PENALTY AND ALLOW THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24 TH FEBRUARY, 2017. SD/ SD/- (B. RAMAKOTAIAH) (G. PAVAN KUMAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 24 TH FEBRUARY, 2017 KRK 1)SHRI MD. ABDUR RAZZAK C/O M/S M.A. MOHIADDINE & CO CA, 307, LENAINE ESTATE. 5-9-189, ABID ROAD, HYDERABAD. 2) ITO, WARD 6(3) HYDERABAD 3) CIT(A)-6, HYDERABD 4) PCIT-6, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. 6) GUARD FILE