Nallathambi Kasthuri, CHENNAI V. ITO, CHENNAI

ITA 1371/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8024 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 18-05-2016
• Court: TRIBUNAL
• Department Lawyers: CLEMENT RAMESH KUMAR CIT
• Assessee Lawyers: ANANTHA PADMANABHAM ALSE
• Keywords: Reasonable cause
• Section: 27

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , ' # BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 1371/MDS/2016 / ASSESSMENT YEAR : 2013-14 SMT. NALLATHAMBI KASTHURI, NO. 46, O.NO. 119, RAMANAICKEN STREET, ROYAPURAM, CHENNAI - 600 013. [PAN: AAIPK 7859B] VS. INCOME TAX OFFICE, NON-CORPORATE WARD -5(1), CHENNAI. ( / APPELLANT) ( / RESPONDENT) % & / APPELLANT BY : SHRI ANANTHA PADMANABHAM ALSE, CA )*% & / RESPONDENT BY : SHRI CLEMENT RAMESH KUMAR, ADDL. CIT & /DATE OF HEARING : 19.10.2016 & /DATE OF PRONOUNCEMENT : 16.01.2017 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS) -5, CHENNAI IT A NO. 137/CIT(A)-5/13-14, DATED 22.02.2016 PASSED U/S. 271B AND 250 OF THE IN COME TAX ACT. :-2-: I.T.A. NO. 1371/MDS/2016 2. THE ASSESSEE HAS RAISED ONLY ONE SUBSTANTIVE GRO UND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE PENALTY ORDER WITHOUT CONSIDERING THE FACTS AND GENUINENESS AND O VERLOOKED THE DIFFICULTIES AND HARDSHIP. 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE I S AN INDIVIDUAL AND FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 ON 09.10.2013 WITH TOTAL INCOME OF RS. 6,00,990/- AND THE ACCOUNTS OF THE AS SESSEE ARE AUDITED U/S. 44AB OF THE ACT. THE ASSESSEE HAS TURNOVER OF RS. 8,45, 51,710/- FOR THE FINANCIAL YEAR 2012-13 AND THE RETURN OF INCOME WAS FILED AFTER TH E DUE DATE OF RETURN U/S. 139(1). WHEREAS, THE ACTUAL DUE DATE OF FILING THE AUDIT REPORT WAS 30.09.2013, BUT, THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 09.10.2013. THE LD. AO INITIATED PENALTY PROCEEDINGS U/S. 271B OF THE ACT. IN THE PENALTY PROCEEDINGS, THE LD. AR SUBMITTED THAT THE ASSESSEE HAS GENUINE DIFFICULTIES IN UPLOADING THE TAX AUDIT REPORT ELECTRONICALLY AND RELIED ON THE C BDT INSTRUCTIONS, WHICH IS APPLICABLE FROM ASSESSMENT YEAR 2013-14, WHERE IT W AS HELD 'THE ASSESSEE FINDING IT DIFFICULT TO FILE TAX AUDIT REPORT ELECT RONICALLY MAY FURNISH MANUALLY WITH THE ASSESSING OFFICER BEFORE DUE DATE OF RETURN OF INCOME AND THE TAX AUDIT REPORT SHOULD BE FURNISHED ELECTRONICALLY ON OR BEF ORE 31.10.2013.' FURTHER, THE CBDT HAS MENTIONED THAT THE AUDIT REPORT IS DEEMED TO BE FILED ON OR BEFORE 30TH SEPTEMBER. THE LD. AO ISSUED NOTICE, AND IN C OMPLIANCE TO THE NOTICE THE ASSESSEE FILED EXPLANATIONS AND ALSO ASSESSEE'S AUD ITOR FILED REPLY VIDE LETTER DATED 09.10.2014 AND EXPLAINED THAT DUE TO HARD-DIS K CRASH IN THE COMPUTER AND :-3-: I.T.A. NO. 1371/MDS/2016 THE DATA WAS LOST AND THEREFORE TAX AUDITED REPORT WAS INADVERTENTLY COULD NOT BE FILED AND PROVIDED COPY OF TAX AUDIT REPORT AND FORM 3CD. THE ASSESSING OFFICER IS OF THE OPINION THAT THE ASSESSEE ACCOUNT S ARE AUDITED AND THE ASSESSEE HAS FILED MANUAL REPORT FOR THE ASSESSMENT YEAR 201 3-14 ON 09.10.2014. THEREFORE, ASSESSEE HAS VIOLATED THE PROVISIONS AND LD. AO LEVIED PENALTY U/S. 271B OF THE ACT OF RS. 1,50,000/-. 4. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE FIL ED AN APPEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE LD. AR A RGUED AND REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND C ONTROVERT THE ORDER OF LD. AO LEVYING PENALTY AS BAD IN LAW. THE LD. AR EXPLA INED THE CIRCUMSTANCES THAT THE ASSESSEE HAS DIFFICULTY IN UPLOADING THE TAX AU DIT REPORT DUE TO HARD DISK CRASH AND FILES WERE AFFECTED. THEREFORE, THE ASSE SSEE COULD NOT FILE THE TAX AUDIT REPORT WITHIN THE TIME PRESCRIBED U/S. 139(1) OF THE ACT. THE LD. CIT(A) CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AN D ALSO SUBMISSIONS MADE AT PAGE 5 AND 6 OF HIS ORDER AND IS OF THE OPINION THA T THE ASSESSEE SHOULD HAVE FILED TAX AUDIT REPORT BEFORE 30.09.2013 AND THE AS SESSING OFFICER HAS ISSUED NOTICE U/S. 271B ON 28.08.2014 AND THE ASSESSEE HAS FILED AUDIT REPORT MANUALLY ON 09.10.2014 AND WITH THESE OBSERVATIONS THE LD. C IT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN LEVY OF PENALTY U/S. 27 1B AND DISMISSED THE ASSESSEE APPEAL. :-4-: I.T.A. NO. 1371/MDS/2016 5. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE FILE D AN APPEAL WITH THE TRIBUNAL. BEFORE US, THE LD. AR REITERATED THE SUB MISSIONS MADE IN THE APPELLATE PROCEEDINGS AND PENALTY PROCEEDINGS AND THE CIRCUMS TANCES IN WHICH THE ASSESSEE HAS FACED DIFFICULTIES IN THE SAID FINANCI AL YEAR. THE LD. AR FURTHER SUBMITTED THAT THE HEALTH CONDITIONS OF THE AUDITOR WHO AUDITED THE BOOKS IS EFFECTED AND THERE WAS DELAY DUE TO SERIOUS ILL-HEA LTH PROBLEMS AND COULD NOT FILE THE TAX AUDIT REPORT. AFTER FILING THE RETURN OF I NCOME ON 09.10.2013 AND THE LD. AR SUBSTANTIATED THE HEALTH CONDITIONS OF THE AUDIT OR WITH THE MEDICAL REPORTS AND EXPLAINED THE PROBLEMS PASSED THROUGH DURING TH E EFFECTED PERIOD. FURTHER, THE AUDITOR WHO IS HANDLING THE CASE FOUND IN THE Y EAR 2013 DUE TO VIRUS IN COMPUTER, THE SAID INFORMATION COULD NOT BE UPLOADE D FOLLOWED BY HARD DISK CRASH AND DUE TO WHICH WORK WAS DELAYED BEING A ATT RIBUTABLE REASONABLE CAUSE. FURTHER, THE LD. AR RELIED ON THE DECISIONS OF GAYA THRI COAL SUPPLY CO-63-ITD- 237 (PATNA). WHERE, IT WAS HELD THAT THE PENALTY U /S. 271B OF THE ACT IS NOT MANDATORY AND COULD BE STOPPED IF THE ASSESSEE FURN ISH ANY REASONABLE CAUSE FOR OBTAINING AUDIT REPORT WITHIN THE SPECIFIED DATE AN D ILL-HEALTH OF THE AUDITOR. THE LD. AR ALSO RELIED ON TRIBUNAL AND THE JURISDICTION AL HIGH COURT DECISION IN THE CASE OF CIT VS. L.S. LAKSHMANASWAMY, WHERE THE REAS ONABLE CAUSE HAS BEEN CONSIDERED. THE LD. AR PRAYED THAT NON-FILING OF T HE TAX AUDIT REPORT ALONG WITH RETURN OF INCOME IS NOT A WILFUL ACT BUT DUE TO CIR CUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE BEING ILLNESS OF THE AUDITOR AND TE CHNICAL DIFFICULTIES, BUT THE ASSESSING OFFICER HAS LEVIED PENALTY OVERLOOKING TH E GENUINE HARDSHIP AND :-5-: I.T.A. NO. 1371/MDS/2016 PRAYED FOR SET ASIDE OF THE ORDER OF CIT(A). CONTR A, THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND OPPOSED TO THE GROUNDS. 6. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS CITED. THE ASSESSEE IS AN INDIV IDUAL AND IS ENGAGED IN THE BUSINESS AND HIS ACCOUNTS WAS AUDITED U/S. 44AB OF THE ACT. THE ASSESSEE IS REGULARLY FILING THE RETURN OF INCOME BUT FOR THE A SSESSMENT YEAR 2013-14, THE ACCOUNTS WERE AUDITED AND THE TAX AUDIT REPORT WAS NOT SUBMITTED ALONG WITH THE RETURN OF INCOME, BUT WAS SUBMITTED PRIOR TO TH E LEVY OF PENALTY. WE ON PERUSAL OF THE INFORMATION FILED AND THE ASSESSMENT DETAILS FOUND THE ASSESSING OFFICER HAS NOT PASSED ASSESSMENT ORDER TO INITIATE PENALTY PROCEEDINGS U/S. 271B OF THE ACT AND FURTHER, THE LD. AR SUPPORTED H IS ARGUMENTS WITH THE MEDICAL REPORTS OF THE HOSPITAL, WHERE THE CHARTERE D ACCOUNTANT OF THE ASSESSEE HAS UNDERGONE TREATMENT. WE, RELY ON THE DECISION OF TRIBUNAL IN ITD VS. GAYATHRI COAL SUPPLY COMPANY (SUPRA) AND JUDICIAL D ECISIONS, WHERE ASSESSEE SUBSTANTIATED REASONABLE CAUSE FOR NOT FILING THE A UDIT REPORT WITHIN THE SPECIFIED TIME. WE ARE OF THE OPINION THAT THERE IS A STATUT ORY DUTY CAST ON THE ASSESSEE TO FILE THE AUDIT REPORT U/S. 44AB OF THE ACT. BUT THE CIRCUMSTANCES WERE BEYOND THE CONTROL OF THE ASSESSEE THOUGH RETURN OF INCOME WAS FILED ON 09.10.2013, THE LD. AR EXPLAINED THAT DUE TO TECHNICAL DIFFICUL TIES AND HARD DISK CRASH THE INFORMATION COULD NOT BE FILED IMMEDIATELY AND THE CHARTERED ACCOUNTANT HANDLING THE CASE WAS PASSING THROUGH MAJOR ILLNESS . THEREFORE, WE FOUND THERE IS A REASONABLE CAUSE IN THE ACTION OF THE ASSESSEE FOR NOT FILING THE AUDIT REPORT :-6-: I.T.A. NO. 1371/MDS/2016 ALONG WITH THE RETURN OF INCOME AND THE ASSESSEE HA S FILED THE RETURN OF INCOME AND PAID THE INCOME TAX BEFORE FILING THE TAX AUDIT REPORT. CONSIDERING THE APPARENT FACTS AND THE REASONABLE CAUSE OF ILLNESS OF CHARTERED ACCOUNTANT AND TECHNICAL SOFTWARE PROBLEMS AND JUDICIAL DECISIONS, WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE T HE PENALTY AND THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON MONDAY, THE 16TH DAY OF JANUARY , 2017 AT CHENNAI. SD/- ( ' ) (CHANDRA POOJARI) $ / ACCOUNTANT MEMBER SD/- ( . ) ( G. PAVAN KUMAR ) ) $ /JUDICIAL MEMBER /CHENNAI, 0 /DATED: 16TH JANUARY, 2017 JPV & )'23 43 /COPY TO: 1. APPELLANT 2. )*% /RESPONDENT 3. 5 ( )/CIT(A) 4. 5 /CIT 5. 3 )'' /DR 6. 9 /GF