Shri. Abdul Wakeel Parvez, Nagpur V. Income Tax Officer,Ward-4(3), Nagpur

ITA 125/NAG/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3074 (ITAT-NAGPUR)
• Duration Of Justice: 7 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 29-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S BHATTI
• Keywords: Business income; Bonafide belief; Reasonable cause
• Section: 273B; 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR E-BENCH, NAGPUR (THROUGH VIDEO CONFERENCE AT MUMBAI) . . , . / , . . BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER /AND SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 125/NAG/2011 / ASSESSMENT YEAR 2004-05 . / ITA NO. 126/NAG/2011 / ASSESSMENT YEAR 2005-06 . / ITA NO. 127/NAG/2011 / ASSESSMENT YEAR 2005-06 SHRI ABDUL WAKEEL PARVEZ, C/O. T.S. RAWAL & CO., E 13-18, ANJUMANT COMPLEX, SADAR, NAGPUR-1. PAN: AANPP 7024 N VS. I.T.O. WARD 4(3), SARAF CHAMBERS, SADAR, NAGPUR. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI J.S. BHATTI ! /RESPONDENT BY : SHRI PRAKASH MANE ' ! #$% / DATE OF HEARING : 04-02-2013 &' ! #$% / DATE OF PRONOUNCEMENT : 13-02-2013 () / O R D E R PER RAJENDRA, AM CHALLENGING THE ORDERS OF THE CIT(A)-II, NAGPUR DT. 29-07-2011, ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL FOR BOTH THE YEARS. 1. THAT THE ORDER PASSED BY THE LEARNED CIT(A) IS BAD IN LAW & ON THE FACTS & CIRCUMSTANCES OF THE CASE. 2. THAT THE LEARNED CIT(A) ERRED IN LAW AND ON THE FAC TS AND CIRCUMSTANCES OF THE CASE BY LEVYING PENALTY U/S. 271B AGAINST THE APPEL LANT. ITA NOS. 125 126 127/NAG/2011 SHRI ABDUL WAKEEL PARVEZ 2 3. THAT THE LEARNED CIT(A) ERRED IN LAW AND ON THE FAC TS AND CIRCUMSTANCES OF THE CASE BY INITIATING PENALTY U/S. 271B OF THE ACT EST IMATING ASSETS SALES TURNOVER AND NET PROFIT WHICH IS NOT ACTUAL. 4. IT IS HEREBY SUBMITTED THAT THE PRESENT APPELLANT I N THIS INSTANT APPEAL HAD ALREADY SUBMITTED BEFORE THE AUTHORITY THAT HE HAS DISCLOSE D EACH AND EVERYTHING WHATEVER WAS POSSIBLE ON THE PART OF APPELLANT. 5. THAT ANY OTHER GROUNDS SHALL BE PRAYED AT THE TIME OF HEARING. 2. ASSESSEE, AN INDIVIDUAL, WAS RUNNING A RESTAURANT N AMED AS TANVEER AT MOMINPURA, NAGPUR. RETURNS OF INCOME WERE FILED ON 01-11-2004 & 30-03-2006 SHOWING INCOME OF RS. 94,580/- & 2,80,220/- FOR THE AYS 2004-05 & 2005-06 RESPECTIVELY. IN THIS CASE, SURVEY WAS CONDUCTED U/S. 133A OF THE ACT ON 22-02-2005 DURING WHICH BOOKS OF ACCOUNTS AND OTHER DOCUMENTS WERE IMPOUNDED BY THE OFFICERS OF THE DEPARTMENT. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOT ICED THAT ASSESSEE HAS SUPPRESSED THE SALES FOR BOTH THE AYS. ON THE BASI S OF IMPOUNDED MATERIAL, DETAILS OF TOTAL SALES WERE WORKED OUT AS UNDER: AYS TOTAL SALES WORKED OUT IN RESPECT OF RESTAURANT TOTAL SALES WORKED OUT IN RESPECT OF BY PRODUCT TOTAL SALES ESTIMATED SALES SHOWN BY ASSESSEE 2004-05 65,14,308/- 2,45,701/- 1,44,000/- 69,04,009/- 6,52,465/- 2005-06 83,76,528/- 3,42,612/- 3,83,850/- 91,02,993/- 20,00,000/- AO HELD THAT ASSESSEE WAS LIABLE FOR PENALTY U/S. 271B FOR FAILURE TO GET THE ACCOUNTS AUDITED AND HAVE NOT FURNISHED THE AUDITED REPORTS AS PER THE PROVISIONS OF SECTION 44AB OF THE ACT. ORDER OF THE AO FOR IMPOS ING PENALTY WAS CHALLENGED BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY ( FAA). 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, FAA HELD THAT DURING THE APPELLATE PROCEEDINGS RELATED TO QUANTUM, HIS PREDE CESSOR HAD GIVEN DIRECTION TO THE AO TO ADOPT SALE AT RS. 39.35 LAKHS AND 60.35 LAKHS FOR THE AY 2004-05 & 2005-06 RESPECTIVELY. HE FURTHER HELD THAT ASSESSEE HAD SU PPRESSED HIS TURN-OVER, THAT ASSESSEE HAD FULL KNOWLEDGE OF HIS STATE OF BUSINESS, THAT H E HAD NOT BROUGHT ANY REASONABLE DECISION FOR NOT GETTING THE BOOKS AUDITED, THAT AS SESSEE WAS NOT MAINTAINING PROPER BOOKS OF ACCOUNTS. FINALLY, HE HELD THAT ASSESSEE WAS LIABLE FOR PENALTY AS PER THE PROVISIONS OF SECTION 271B OF THE ACT AND HE UPHELD THE PENALTY IMPOSED BY THE AO AMOUNTING TO RS. 21,624/- AND 33,808/- FOR THE AYS 2004-05 & 2005-06 RESPECTIVELY. 5. BEFORE US, AUTHORISED REPRESENTATIVE (AR) SUBMITTE D THAT TURN-OVER OF THE ASSESSEE WAS LESS THAN PRESCRIBED LIMIT, THAT ADDIT IONS MADE BY THE AO AND CONFIRMED BY THE FAA WERE ON ESTIMATE BASIS ONLY, THAT ASSESS EE WAS UNDER THE BELIEF THAT BOOKS OF ACCOUNTS WERE NOT TO BE AUDITED, THAT FOR NOT MAINTAINING BOOKS OF ACCOUNTS, PENALTY U/S. 271B COULD NOT BE IMPOSED. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT ASSESSEE HAD NOT MAINTAINED BOO KS OF ACCOUNTS, THAT HAD NOT ITA NOS. 125 126 127/NAG/2011 SHRI ABDUL WAKEEL PARVEZ 3 DELIBERATELY GOT THE BOOKS OF ACCOUNTS AUDITED. HE STRONGLY SUPPORTED THE ORDER OF THE AO AND THE FAA. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL PUT BEFORE US. PENALTY U/S. 271B IS IMPOSED FOR FAILURE TO GET ACC OUNTS AUDITED AS PER THE PROVISIONS OF SEC. 44AB OF THE ACT. SEC. 273B PROVIDES THAT P ENALTY MAY NOT BE IMPOSED IF ANY DEFAULT ON THE PART OF THE ASSESSEE HAS CAUSED BECA USE OF SOME REASONABLE CAUSE. IN THE CASES UNDER CONSIDERATION, ASSESSEE HAD ESTIMAT ED HIS INCOME AND HIS ESTIMATED INCOME WAS DIFFERENT FROM THE ESTIMATE MADE BY THE AO THAT WAS CONFIRMED BY THE APPELLATE AUTHORITIES. IN OUR OPINION, IN THIS B ACKGROUND ADDITION TO THE TOTAL INCOME OF THE ASSESSEE WAS FULLY JUSTIFIED. BUT, F OR IMPOSING PENALTY U/S. 271B OF THE ACT, CONFIRMATION OF ADDITION IS ITSELF IS NOT SUFF ICIENT. TOTAL TURNOVER, AS PER THE ASSESSEE, FOR THE AYS UNDER CONSIDERATION WAS LESS THAN THE PRESCRIBED MONETARY LIMIT. IN THESE CIRCUMSTANCES, IF HE WAS UNDER BONAFIDE BE LIEF THAT HE WAS NOT REQUIRED TO GET HIS BOOKS OF ACCOUNTS AUDITED, IN OUR OPINION, IT I S A REASONABLE CAUSE FOR NOT IMPOSING PENALTY. THEREFORE CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASES UNDER CONSIDERATION, PENALTY IMPOSED/CONFIRMED US/. 271B OF THE ACT BY AO/FAA IS DELETED. APPEALS FILED BY THE ASSESSEE STAND ALLOWED. ITA NO. 127/NAG/2011 ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL AGAINST THE ORDER DT. 29-07-2011 OF THE CIT(A)-II, NAGPUR. 1. THAT THE ORDER PASSED IS BAD IN LAW AND ON THE FACT S AND CIRCUMSTANCES OF THE CASE. 2. THAT THE ORDER PASSED BY THE LEARNED CIT(A) IS BAD IN LAW AND ON THE FACTS & CIRCUMSTANCES OF THE CASE BY LEVYING PENALTY U/S. 2 71A OF THE ACT. 3. THAT THE LEARNED CIT(A) ERRED IN LAW AND ON THE FAC TS AND CIRCUMSTANCES OF THE CASE BY INITIATING PENALTY U/S. 271A OF THE ACT ESTIMATING ASSETS SALES TURNOVER AND NET PROFIT WHICH IS NOT ACTUAL. 4. IT IS HEREBY SUBMITTED THAT THE PRESENT APPELLANT I N THIS INSTANT APPEAL HAD ALREADY SUBMITTED BEFORE THE AUTHORITY THAT HE HAS DISCLOSED EACH AND EVERYTHING WHATEVER WAS POSSIBLE ON THE PART OF APP ELLANT. 5. THAT ANY OTHER GROUNDS SHALL BE PRAYED AT THE TIM E OF HEARING. 7. AFTER COMPLETING THE ASSESSMENT, AO ISSUED A NOTIC ED TO THE ASSESSEE AS WHY PENALTY U/S. 271A SHOULD NOT BE LEVIED AS HE HAD NO T MAINTAINED REGULAR BOOKS OF ACCOUNTS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HE HELD THAT INCOME OF THE ASSESSEE WAS COMPUTED ON THE BASIS OF THE IMPOU NDED MATERIAL, THAT INCOME WAS DETERMINED AT RS. 19.82 LAKHS, THAT ASSESSEES PROF IT WAS MUCH MORE THAN THE LIMIT SPECIFIED IN SECTION 44AA(2), THAT ASSESSEE HAD FAI LED TO COMPLY WITH THE PROVISIONS OF SECTION 44AA OF THE ACT. HE LEVIED A PENALTY OF RS. 25,000/- U/S. 271A OF THE AT FOR NOT MAINTAINING REGULAR BOOKS OF ACCOUNTS. ITA NOS. 125 126 127/NAG/2011 SHRI ABDUL WAKEEL PARVEZ 4 8. ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA. IN T HE APPELLATE PROCEEDINGS, FAA HELD THAT THE ASSESSEE HAD NOT ESTABLISHED ANY REASONABLE CAUSE FOR MAINTAINING THE BOOKS OF ACCOUNTS AND PRESCRIBED REGISTRATION U /S. 44AA OF THE ACT. FOLLOWING THE ORDERS OF THE AO, HE DISMISSED THE APPEAL FILED BY THE ASSESSEE. 9. AR SUBMITTED THE SAME DOCUMENTS WHICH WAS ADVANCED FOR THE PENALTY IMPOSED BY THE AO. U/S. 271(B) OF THE ACT, HE FUR THER SUBMITTED THAT ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT HIS TURN-OVER WAS AB OVE THE PRESCRIBED LIMIT THAT HE WAS NOT REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNTS. DR SUPPORTED THE ORDER OF THE REVENUE AUTHORITIES. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL PUT BEFORE US. AS STATED IN EARLIER PARAGRAPHS, ADDITION TO THE IN COME OF THE ASSESSEE WAS RESULT OF A SURVEY CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE. DOCUMENT IMPOUNDED FROM THE ASSESSEES PREMISES WERE SCRUTINIZED AND A O ESTIMATED THE INCOME OF THE ASSESSEE FOR THE AY UNDER CONSIDERATION. IN APPELL ATE PROCEEDINGS, CIT(A) PARTLY ALLOWED THE RELIEF OF THE ASSESSEE. FINALLY, ON ES TIMATED BASIS, INCOME WAS DETERMINED. AS FAR AS ADDITION TO THE INCOME OF TH E ASSESSEE IS CONCERNED, WE ARE OF THE OPINION THAT TRIBUNAL HAS ALREADY DECIDED THE I SSUE AGAINST THE ASSESSEE. FOR LEVYING PENALTY U/S. 271A OF THE ACT, AO SHOULD HAV E BROUGHT SOME MORE FACTS ON RECORD. AS STATED EARLIER, SECTION 273B STIPULATES THAT PENALTY CAN BE WAIVED IF REASONABLE CAUSE IS SUBMITTED. WE FIND THAT INCOM E RETURNED BY THE ASSESSEE WAS BELOW THE NET PROFIT LIMIT AND TURN-OVER PRESCRIBED U/S. 44AA(2)(I). IN OUR OPINION, THIS CAN BE CONSIDERED A REASONABLE CAUSE FOR NOT I MPOSING PENALTY. 11. CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, WE DELETE THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE FAA. AS A RESULT, APPEALS FILED BY THE ASSESSEE STAND A LLOWED. ORDER PRONOUNCED BY E-BENCH AT MUMBAI ON THIS 1 3 TH DAY OF FEBRUARY, 2013 *+' ,-# ' - +./ 0 13 1 $ , 2013 ' () &'2# 3 . SD/- SD/- ( . . / R.K. GUPTA ) ( / RAJENDRA ) (- / JUDICIAL MEMBER % (- / ACCOUNTANT MEMBER *+' MUMBAI, 3( DATE: 13 TH FEBRUARY, 2013 TNMM ITA NOS. 125 126 127/NAG/2011 SHRI ABDUL WAKEEL PARVEZ 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR, ITAT, NAGPUR 6. GUARD FILE 2# # //TRUE COPY// BY ORDER, ASST. REGISTRAR, ITAT