Shri Munaf Musabhai Patel, Bharuch V. The Dy. CIT, Bharush Circle-1, Bharuch

ITA 12/AHD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9895 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 02-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Reasonable cause
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NOS.12 & 13/AHD/2014 ( / ASSESSMENT YEAR :2007-08 & 2008-09) SHRI MUNAF MUSABHAI PATEL MIRZA STREET AT & PO IKHAR TAL: AMOD, DIST: BHARUCH / VS. THE DY.CIT BHARUCH CIRCLE-1 BHARUCH # ./ ./ PAN/GIR NO. : AOWPP4819C ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) #%' / APPELLANT BY : NONE &#%(' / RESPONDENT BY : SHRI JAMES KURIAN, SR.DR )*(+ / DATE OF HEARING 09/11/2016 ,-./(+ / DATE OF PRONOUNCEMENT 25/11/2016 / O R D E R PER PRADIP KUMAR KEDIA, AM: BOTH THE APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS)-V I, BARODA [CITA(A) IN SHORT] IDENTICALLY DATED 11/09/2013 FOR IMPOSING PENALTY OF RS.65,770/- (AY 2007-08) AND RS.86,770/- (AY 2008-0 9) UNDER SECTION ITA NOS.12 & 13 /AHD/2014 MUNAF MUSABHAI PATEL VS. DCIT ASST.YEARS 2007-08 & 2008-09 - 2 - 271B OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFER RED TO AS 'THE ACT'). SINCE THE IDENTICAL ISSUES ARE INVOLVED IN BOTH THE YEARS IN THE CAPTIONED APPEALS, WE SHALL, FOR CONVENIENCE, TAKE UP ITA NO. 12/AHD/2014 RELEVANT TO ASSESSMENT YEAR (AY) 2007-08 AS A LEAD CASE FOR ADJUDICATION OF THE ISSUES INVOLVED. 2. THE ASSESSEE HAS SOUGHT TO ASSAIL THE ORDER OF THE CIT(A) BY RAISING FOLLOWING GROUNDS OF APPEAL:- 1.00 ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-VI, BARODA HAS ERRED IN CONFIRMING THE ORDER OF LD.AO F OR IMPOSING PENALTY U/S.271B OF THE ACT. 1.01 YOUR APPELLANT SUBMITS THAT LOOKING TO THE FACTS OF ITS CASE, THE LD. CIT(A) OUGHT TO HAVE HELD THAT THERE IS REA SONABLE CAUSE FOR NOT COMPLYING IN ITEM WITH THE PROVISION OF SECTION 44AB OF THE INCOME TAX ACT, 1961. 3. BRIEFLY STATED, RELEVANT FACTS ARE THAT THE ASSE SSEE FILED THE RETURN OF INCOME ON 28/02/2009 DECLARING TOTAL INCOME OF RS.1 ,35,34,848/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT ON 30/09/2009 WHERE THE RETURNED INCOME WAS ACCEPTED. 3.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, I T WAS NOTICED THAT EVEN THOUGH THE ASSESSEE HAD RECEIVED A TOTAL SUM O F RS.1,31,54,022/- ITA NOS.12 & 13 /AHD/2014 MUNAF MUSABHAI PATEL VS. DCIT ASST.YEARS 2007-08 & 2008-09 - 3 - DURING THE RELEVANT PERIOD, THE ACCOUNTS WERE NOT A UDITED BEFORE THE SPECIFIED DATE AS MANDATED IN SECTION 44AB OF THE A CT. THE ACCOUNTS WERE ONLY AUDITED ON 05/02/2009 WHILE THE SPECIFIED DATE FOR RELEVANT PERIOD WAS 15/11/2007. ACCORDINGLY, PENALTY PROCEE DINGS UNDER SECTION 271B OF THE ACT WERE INITIATED AND PENALTY UNDER SE CTION 271B WAS LEVIED BY THE ASSESSING OFFICER (AO) VIDE ORDER DAT ED 23/03/2010. 3.2. THE ASSESSEE IMPUGNED THE ORDER OF THE AO BE FORE THE CIT(A). HOWEVER, HE COULD NOT FIND ANY RELIEF FROM THE CIT( A) WHO UPHELD THE ORDER OF THE AO. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE FILED SECOND APPEAL AND SOUGHT REDRESSAL FROM TRIBUNAL. 5. WHEN THE MATTER WAS CALLED UP FOR HEARING, NONE APPEARED FOR THE ASSESSEE. HOWEVER, CONSIDERING THE PRIMA-FACIE CASE AND FACTS AVAILABLE ON RECORD, WE ARE INCLINED TO PROCEED WITH THE APP EAL OF THE ASSESSEE EX- PARTE AFTER TAKING COGNIZANCE OF THE ARGUMENTS ON BEHALF OF THE REVENUE. 6. THE LD.DR FOR THE REVENUE RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED THAT NO INTERFERENCE THEREOF IS CALLE D FOR. ITA NOS.12 & 13 /AHD/2014 MUNAF MUSABHAI PATEL VS. DCIT ASST.YEARS 2007-08 & 2008-09 - 4 - 7. WE HAVE HEARD THE LD.DR, PERUSED THE MATERIAL AV AILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE NOTE THE SUBMISSION OF THE ASSESSEE BEFORE THE AO REPRODUCED AT PAGE NOS.4 TO 6 OF THE CIT(A)S ORDER. THE SUM AND SUBSTANCE OF TH E SUBMISSION OF THE ASSESSEE IS THE ASSESSEE IS THAT A SON OF AN AGRICU LTURIST. THE ASSESSEE WAS SELECTED IN THE NATIONAL CRICKET TEAM AND STARTED P LAYING FOR THE COUNTRY DURING THE FINANCIAL YEARS 2006-07 ONWARDS. THE MA IN SOURCE OF INCOME IS SALARY RECEIVED FROM ONGC LTD. AND FEE FR OM BCCI. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE ASSESSEE HAS DULY COMPLIED WITH THE TAX PAYMENT OBLIGATIONS, NOTWITHSTANDING, LAPSE IN OBTAINING TAX AUDIT REPORT IN TIME. IT WAS SUBMITTED THAT OWING TO LACK OF UNDERSTANDING OF LAW AND ONGOING DEVELOPMENTS THEREIN, THE ASSESS EE WAS UNDER THE ERRONEOUS IMPRESSION THAT ANY SUM RECEIVED FROM BC CI OR ANY OTHER CORPORATE BODY IS NOT TAXABLE AND THEREFORE THE ASS ESSEE IS NOT LIABLE TO PAY INCOME-TAX AND NEED NOT GO THROUGH VARIOUS STAT UTORY FORMALITIES. COUPLED WITH THIS, THE ASSESSEE WAS CONTINUOUSLY TR AVELLING AND PLAYING CRICKET FOR THE COUNTRY WHICH NEVER ALLOWED HIM TO PONDER ON ANY SUCH ASPECT CONCERNING TAXATION COMPLIANCES. IN THE EAR LIER FINANCIAL YEARS, THE ASSESSEE WAS NOT COVERED UNDER THE TAX AUDIT AN D THE OBLIGATION OF THE TAX AUDIT WAS CAST UPON WAS HIM FOR THE FIRST TIME FOR THE IMPUGNED AY 2007-08. THE PAYMENTS ARE RECEIVED FROM KNOWN SOUR CES, I.E. FROM BCCI AND ONGC LTD. AFTER DEDUCTING TAX AND THEREFOR E THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT NO OTHER OBLIGATIONS WER E ATTRIBUTABLE TO THE ITA NOS.12 & 13 /AHD/2014 MUNAF MUSABHAI PATEL VS. DCIT ASST.YEARS 2007-08 & 2008-09 - 5 - ASSESSEE. THE COMPLIANCE WAS FINALLY MADE WHEN THE ASSESSEE LEARNT ABOUT THE DEFAULT. UNDER SUCH CIRCUMSTANCES, THERE WAS A REASONABLE CAUSE FOR NON-COMPLIANCE IN TIME. 8. ON CAREFUL CONSIDERATION OF THE FACTS AND TH E CIRCUMSTANCES OF THE CASE AS NOTED ABOVE, WE DO NOT FIND ANY TRACES OF M ALAFIDES IN DELAY IN OBTAINING THE TAX AUDIT REPORT. THE ASSESSEE ADMIT TEDLY HAD RECEIVED INCOME FROM REPUTED BODIES, LIKE BCCI AND ONGC LTD. , ETC. THE TAX HAS BEEN STATED TO BE DULY DEDUCTED AT SOURCE ON RECEIP TS. THE INCOME RETURNED HAS BEEN ASSESSED AT THE SAME AMOUNT UNDE R SECTION 143(3) OF THE ACT. NO PREJUDICE TO THE REVENUE HAS BEEN BROUG HT ON RECORD OWING TO NON-FILING OF TAX AUDIT REPORT UNDER SECTION 44AB I N TIME. THE ASSESSEE WAS A RENOWNED SPORTSMAN AND REPRESENTING THE COUNT RY IN THE GAME OF CRICKET AT THE RELEVANT TIME. BY VIRTUE OF HIS LEG ENDARY CRICKETING SKILLS, THE ASSESSEE HAS BROUGHT INCREDIBLE ESTEEM AND PRID E TO THE COUNTRY. WE CANNOT OMIT TO BEAR IN MIND THAT THE UNCANNY TALENT AND LEGENDARY CRICKETING SKILLS OF THE ASSESSEE HAS BROUGHT UNB OUNDED PLEASURE AND REJOICE TO THE PEOPLE OF THE COUNTRY. THIS APART, THE COMPLIANCE WAS FINALLY MADE AND TAX AUDIT REPORT WAS AVAILABLE BEF ORE THE COMPLETION OF THE ASSESSMENT WHICH TESTIFIES THE BONAFIDES OF THE ASSESSEE. THUS, IN THE BACKDROP OF THE TOTALITY OF THE FACTS AND CIRCU MSTANCES NARRATED ABOVE, THE ERROR COMMITTED BY THE ASSESSEE IS ONLY TRIFLE WITHOUT CAUSING ANY SERIOUS PREJUDICE TO THE REVENUE. THUS, IN OU R VIEW, THE CASE OF THE ITA NOS.12 & 13 /AHD/2014 MUNAF MUSABHAI PATEL VS. DCIT ASST.YEARS 2007-08 & 2008-09 - 6 - ASSESSEE FOR DROPPING PENALTY LEVIED UNDER SECTION 271B IS COMPELLING AND DOES NOT CALL FOR ANY HARSH MEASURE. AS A RESU LT, WE FIND CONSIDERABLE MERIT IN THE APPEAL OF THE ASSESSEE AN D THE ORDER OF THE CIT(A) IS THEREFORE REVERSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. RESULTANTLY, PENALTY IMPOSED UNDER SECTION 271B IS QUASHED. 10. ON THE SIMILAR FOOTING AS NOTED ABOVE, THE APPE AL OF THE ASSESSEE IN ITA NO.13/AHD/2014 FOR AY 2008-09 IMPOSING PENALTY OF RS.86,700/- BY THE AO UNDER SECTION 271B OF THE ACT IS ALSO QU ASHED. 11. IN THE COMBINED RESULT, BOTH THE APPEALS OF TH E ASSESSEE ARE ALLOWED EX-PARTE . THIS ORDER PRONOUNCED IN OPEN COURT ON 25 / 1 1 /2016 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 25/ 11 /2016 3..),.)../ T.C. NAIR, SR. PS ITA NOS.12 & 13 /AHD/2014 MUNAF MUSABHAI PATEL VS. DCIT ASST.YEARS 2007-08 & 2008-09 - 7 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT 4. 7+ ( ) / THE CIT(A)-VI, BARODA 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<* / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 22.11.2016 (DICTATION-PAD 1 3 PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 23.11.2016 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.25.11.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 25.11.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER