Chitvan Aggarwal, Ludhiana V. ITO, W-5(1), Ludhiana

ITA 1331/CHANDI/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6524 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 22-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Keywords: Reasonable cause; Set aside
• Section: 27; 274; 271B; 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT ITA NO.1331/CHD/2018 ASSESSMENT YEAR: 2015-16 CHITVAN AGGARWAL VS. THE ITO PROP. M/S BHUSHAN IMPEX, W-5(1), LUDHIANA 17, BERI MARK, PUNJAB VISHWAKARMA CHOWK, GILL ROAD, LUDHIANA, PUNJAB PAN NO. AENPA4246B (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. PARIKSHIT AGGARWAL,CA REVENUE BY : SMT. CHANDRAKANTA, SR. DR DATE OF HEARING : 21/02/2019 DATE OF PRONOUNCEMENT : 21/02/2019 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT. 20/09/2018 OF LD. CIT(A)-2, LUDHIANA. 2. IN THE PRESENT APPEAL ASSESSEE HAS RAISED THE FO LLOWING GROUNDS: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-2, LUDHIANA HAS ERRED IN CONFIRMING THE PENALTY ORDER PASSED U/S 27 1B OF THE INCOME TAX ACT, 1961, BY THE LEARNED ASSESSING OFFICER. THEREFORE, ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, LUDHIANA IS ILLEGAL AND BAD IN THE EYES OF LAW. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-2, LUDHIANA HAS ERRED IN CONFIRMING THE PENALTY OF RS. 1,50,000/- I MPOSED U/S 271B OF THE INCOME TAX ACT, 1961 BY THE LEARNED ASSESSING OFFICER, WIT HOUT GOING INTO THE FACTS OF THE CASE. THEREFORE, PENALTY IMPOSED BY THE LEARNED ASS ESSING OFFICER AND SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -2, LUDHIANA IS ILLEGAL, UNWARRANTED AND UNCALLED FOR AND NEEDS TO BE QUASHE D. 3. THAT THE APPELLANT CRAVES TO LEAVE OR TO AMEND THE GROUND OF APPEALS BEFORE OR AT THE TIME OF HEARING. FROM THE AFORESAID GROUNDS IT WOULD BE CLEAR THAT O NLY GRIEVANCE OF THE ASSESSEE RELATES TO THE CONFIRMATION OF THE PENALTY OF RS. 1,50,000/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271B OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESEE E-FILED HIS RETURN OF INCOME DECLARING LOSS OF RS. 30,79,880/- ON 05/11/2015. 2 4. THE ASSESSING OFFICER NOTICED THAT THE TURNOVER OF THE ASSESSEE EXCEEDED RS. 1,00,00,000/-, SO HE WAS REQUIRED TO GET HIS AC COUNT AUDITED UNDER SECTION 44AB OF THE ACT WHICH HE FAILED TO DO. THE ASSESSIN G OFFICER ISSUED SHOW CAUSE NOTICE UNDER SECTION 274 READ WITH SECTION 271B OF THE ACT TO THE ASSESSEE AND SINCE THERE WAS NO RESPONSE AGAINST SUCH NOTICE THE ASSESSING OFFICER LEVIED THE PENALTY OF RS. 1,50,000/- UNDER SECTION 271B OF THE ACT. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER : THAT THE PENALTY ORDER PASSED BY THE LEARNED ASSESS ING OFFICER IS ILLEGAL AND BAD IN LAW AND WAS PASSED WITHOUT GIVING ANY OPPORTUNIT Y TO THE APPELLANT. THAT THE LEARNED ASSESSING OFFICER HAS MENTIONED IN HIS ORDE R PASSED U/S 27IB OF THE INCOME TAX ACT, 1961 A SHOW CAUSE NOTICE U/S 274 R. W.S. 271B OF THE INCOME TAX ACT, 1961 DATED 05/06/2018 WAS SERVED UPON THE ASSE SSEE, WHEREAS NO SUCH NOTICE WAS EVER SERVED UPON THE ASSESSEE. THAT THE LEARNED ASSESSING OFFICER HAS NOT PROVIDE ANY OPPORTUNITY TO THE APPELLANT AND IM POSED THE PENALTY OF RS. 1,50,000/- U/S 27 IB OF THE INCOME TAX ACT, 1961 FO R THE ASSESSMENT YEAR 2015-16. FURTHER SUBMITTED THAT THE LEARNED ASSESSING OFFICE R HAS IMPOSED THE PENALTY ON THE GROUNDS THAT THE ASSESSEE WAS NOT GOT THE ACCOU NTS AUDITED AS PER THE PROVISIONS OF THE LAW, WHEREAS THE BOOKS OF ACCOUNT S OF THE ASSESSEE WERE DULY AUDITED AND THE SAME WERE SUBMITTED WITH THE DEPART MENT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SO IN VIEW OF ABOVE STATED FACTS IT IS REQUESTED BE FORE YOUR HONOR TO KINDLY ALLOW THE APPEAL OF ASSESSEE AND DELETE THE PENALTY IMPOS ED BY THE LEARNED ASSESSING OFFICER U/S 27 IB OF THE INCOME TAX ACT, 1961. KINDLY ACKNOWLEDGE THE REQUEST AND OBLIGE. 6. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE GOT HIS ACCOUNT AUDITED ONLY ON 0 4/11/2015 I.E BEYOND THE PRESCRIBED TIME LIMIT PROVIDED UNDER SECTION 44AB O F THE ACT, AND THAT NO REASONABLE CAUSE WAS ADVANCE FOR NOT GETTING THE AC COUNT AUDITED AND SUBMITTED THE AUDIT REPORT WITHIN THE PRESCRIBED TI ME LIMIT. LD. CIT(A) ACCORDINGLY CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFIC ER UNDER SECTION 271B OF THE ACT. 7. NOW THE ASSESSEE IS IN APPEAL. 8. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THER E WAS A DELAY OF ONLY FOUR DAYS NOT GETTING THE AUDIT REPORT FROM THE AUDITOR WHICH OCCURRED FOR THE REASONS THAT THE DETAILS PERTAINING TO AGARTALA (TR IPURA) BRANCH COULD NOT BE OBTAINED IN TIME. THEREFORE THE TAX AUDIT WAS COMPL ETED ON 04/11/2015. SO THERE WAS A REASONABLE CAUSE IN FURNISHING THE AUDI T REPORT BELATED BUT THE DELAY WAS ONLY OF FOUR DAYS THEREFORE THE PENALTY L EVIED BY THE ASSESSING OFFICER UNDER SECTION 271B OF THE ACT AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. THE RELIANCE WAS PLACED ON THE VARIOUS CASE LAWS: 3 P. SENTHIL KUMAR VS. PR. CIT-5 CHENNAI DT. 18/12/20 18 IN TAX CASE APPEAL NO. 604 OF 2018 (MADRAS HC) SHRI. T.T. KURUVILLA VS. THE ASST. CIT, C-1, ALAPPU ZHA DT. 22/01/2019 IN ITA NO. 504/COCH/2018(ITAT, COCHIN BENCH) SHRI BHARAT MIRPURI VS. THE ITO, C-9(1), CHENNAI IN ITA NO. 833/CHNY/2018 (ITAT, CHENNAI BENCH) M/S B.W.M INTERNATIONAL VS. I.T.O, W-44(4), KOLKATA IN ITA NO. 1006/KOL/2015 (ITAT, KOLKATA BENCH) VEDABAI ALIA VAIJAYANATABAI BABURAO PATIL VS. SHANT ARAM BABURAO PATIL (2002) 253 ITR 798(SC) 9. IN HER RIVAL SUBMISSIONS THE LD. SR. DR STRONGL Y SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT IT IS NOT THE CASE OF LATE FILING OF TAX AUDIT REPORT RATHER THE AUDIT ITSELF WAS NOT GOT DO NE WITHIN THE PRESCRIBED TIME LIMIT THEREFORE THE PENALTY LEVIED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) WAS JUSTIFIED. 10. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE I T IS AN ADMITTED FACT THAT THERE WAS FOUR DAYS DELAY IN GETTING THE TAX AUDIT REPORT. THE ASSESSEE FURNISHED THE CERTIFICATE FROM THE AUDITOR M/S VATS AND ASSOC IATES, LUDHIANA WHEREIN IT HAS BEEN STATED AS UNDER: THIS IS TO CERTIFY THAT MR. CHITVAN AGGARWAL (PAN: AENPA4246B) PROP. M/S BHUSHAN IMPEX APPROACHED US WITH ALL DOCUMENTS FOR TAX AUDI T OF HIS FINANCIAL STATEMENTS PERTAINING TO F.Y.2014-15 I.E. A.Y. 2015-16 ON 30.1 0.2015. FURTHER DETAILS WERE SOUGHT FOR COMPLETION OF AUDIT WHICH WERE PROVIDED BY ASSESSEE TO US IN 4-5 DAYS OWING TO CERTAIN DETAILS PERTAINING TO AGARTALA (TR IPURA) BRANCH. AFTER RECEIVING ALL THE DETAILS AND PROCESSING ALL THE DATA, TAX AUDIT WAS DULY COMPLETED AND SIGNED ON 04.11.2015 AND ACCORDINGLY TAX AUDIT REPORT WAS UPLOADED ONLINE. FROM THE AFORESAID EXPLANATION IT IS CLEAR THAT THE AUDIT COULD NOT BE COMPLETED WITHIN THE SPECIFIED TIME FOR WANT OF THE DETAILS W HICH COULD NOT BE OBTAINED FROM AGARTALA (TRIPURA) BRANCH, AND AFTER RECEIVING ALL THE DETAILS THE TAX AUDIT REPORT WAS COMPLETED AND SIGNED ON 04/11/2015 . SO THERE WAS A DELAY OF ONLY FOUR DAYS. 11. ON THE ISSUE RELATING TO DELAY OF FEW DAYS, THE HONBLE SUPREME COURT IN THE CASE OF VEDABAI ALIAS VAIJAYANATABAI BABURAO PATIL VS. SHANTARAM BABURAO PATIL [2002] 253 ITR 798 (SC) HELD AS UNDER: THE JUDGMENT UNDER APPEAL WAS DELIVERED ON 30-4-199 7. DURING THE PERIOD FROM 1-5-1997 TO 1-6-1997, THE APEX COURT WAS IN VACATIO N. THE FACT ESCAPED THE ATTENTION OF THE APPELLATE JUDGE. TO AVERT FURTHER DELAY IN FILING THE APPEAL AS SOON AS ASSESSEE FELT A LITTLE BETTER SHE FILED THE APPEAL. THAT DEPICTED HER ANXIETY TO MINIMISE THE DELAY RATHER THAN FALSIFY OF HER CA SE OR MALA FIDES. IN EXERCISING DISCRETION UNDER SECTION 5 OF THE LIM ITATION ACT, THE COURTS SHOULD ADOPT A PRAGMATIC APPROACH. A DISTINCTION MUST BE M ADE BETWEEN A CASE WHERE THE DELAY IS INORDINATE AND A CASE WHERE THE DELAY IS OF A FEW DAYS. WHEREAS IN THE FORMER CASE THE CONSIDERATION OF PRE JUDICE TO THE OTHER SIDE WILL BE A RELEVANT FACTOR SO THE CASE CALLS FOR A MORE C AUTIOUS APPROACH BUT IN THE LATTER CASE NO SUCH CONSIDERATION MAY ARISE AND SUC H A CASE DESERVES A LIBERAL 4 APPROACH. NO HARD AND FAST RULE CAN BE LAID DOWN IN THIS REGARD. THE COURT HAS TO EXERCISE THE DISCRETION ON THE FACTS OF EACH CASE K EEPING IN MIND THAT IN CONSTRUING THE EXPRESSION 'SUFFICIENT CAUSE', THE P RINCIPLE OF ADVANCING SUBSTANTIAL JUSTICE IS OF PRIME IMPORTANCE. IN THE INSTANT CASE , THE APPROACH OF THE CIVIL JUDGE WAS WHOLLY ERRONEOUS AND HIS ORDER WAS UNSUSTAINABL E. IT WAS EVIDENT THAT THE DISCRETION UNDER SECTION 5 WAS EXERCISED BY THE CIV IL JUDGE IN CONTRAVENTION OF THE LAW LAID DOWN BY THE APEX COURT, THAT THE EXPRESSIO N 'SUFFICIENT CAUSE' SHOULD RECEIVE LIBERAL CONSTRUCTION. THE HIGH COURT IN EXERCISING ITS JURISDICTION UNDER SECTION 115 OF THE CIVIL PROCEDURE CODE, FAILED TO CORRECT THE JURISDICTIONAL ERROR OF THE APPELLATE COURT. THEREFORE, THE IMPUGNED ORDER OF THE HIGH COURT AS WELL AS THA T OF CIVIL JUDGE WAS TO BE SET ASIDE. THE DELAY WAS TO BE CONDONED AND THE MATTER WAS REQUIRED TO BE RESTORED TO THE FILE OF THE CIVIL JUDGE TO DECIDE T HE APPEAL ON ITS MERITS. 12. THEREFORE, KEEPING IN VIEW THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE AFORESAID REFERRED TO CASE, I AM OF THE VIEW THAT T HE ASSESSING OFFICER OUGHT TO HAVE ADOPTED THE PRAGMATIC / LIBERAL APPROACH SINCE THE DELAY WAS ONLY OF FOUR DAYS AND THERE WAS A PLAUSIBLE EXPLANATION. IN VIEW OF THAT, THE PENALTY LEVIED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) UNDER SECTI ON 271B OF THE ACT FOR LATE FILING OF THE AUDIT REPORT BELATED BY FOUR DAYS ONLY, IS DELETED. 13. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . (ORDER PRONOUNCED IN THE OPEN COURT ON 21/02/2019.) SD/- (N.K. SAINI) VICE PRESIDENT PLACE: CHANDIGARH DATED : 21/02/2019 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR