M/S GIRAL LIGNITE POWER LTD. , JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR

ITA 1388/JPR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1450 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 05-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MAHALA
• Keywords: Reasonable cause; Revised return
• Section: 273B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HE A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 1388/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2014-15 M/S GIRAL LIGNITE POWER LTD., ROOM NO. 412, VIDYUT BHAWAN, JANPATH, JYOTI NAGAR, JAIPUR CUKE VS. ACIT, CIRCLE-06, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCG7891A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI A. K. MAHALA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 05/03/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 18/03/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), AJMER DATED 16.10.2018 FOR AY 2014-15 WHEREIN THE S OLE GROUND OF APPEAL IS AS UNDER:- THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CO NFIRMING THE LEVY OF PENALTY OF RS. 1,50,000/- U/S 271B OF THE IT ACT, 1 961. 2. BRIEFLY STATED, THE FACTS OF CASE ARE THAT THE A SSESSEE IS A GOVERNMENT UNDERTAKING ENGAGED IN THE BUSINESS OF GENERATION O F ELECTRICITY AND A SUBSIDIARY COMPANY OF RAJASTHAN RAJYA VIDYUT UTPADA N NIGAM LIMITED. IT FILED ITS RETURN ON 25.09.2014 DECLARING LOSS OF RS.34.85 CRORES WHICH WAS REVISED ON 30.09.2015 DECLARING NIL INCOME. THE ASSESSING OFFI CER OBSERVED THAT TAX AUDIT OF THE ASSESSEE COMPANY WAS CONDUCTED ON 28.09.2015 . HENCE, ASSESSEE FAILED TO GET ITS ACCOUNTS AUDITED BY AN ACCOUNTANT AND FU RNISH THE AUDIT REPORT ITA NO. 1388/JP/2018 M/S GIRAL LIGNITE POWER LTD., JAIPUR VS. ACIT, CIRCLE-06, JAIPUR 2 BEFORE THE SPECIFIED DATE, I.E. 30.09.2014 AS REQUI RED U/S 44AB. HE THEREFORE, IMPOSED PENALTY OF RS.1.50 LACS U/S 271B OF THE IT ACT BY NOT ACCEPTING THE REASONS FOR DELAY IN OBTAINING THE TAX AUDIT REPORT SO SUBMITTED BY THE ASSESSEE. ON APPEAL, THE LD. CIT(A) CONFIRMED THE PENALTY BY HOLDING THAT THERE WAS NO REASONABLE CAUSE FOR NOT GETTING THE B OOKS OF ACCOUNTS AUDITED ON OR BEFORE THE SPECIFIED DATE. 3. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED, THE ASSESSEE BEING A GOVERNMENT COMPANY, STATUTORY AUDITOR IS APPOINTE D BY C&AG AND AFTER STATUTORY AUDIT ONLY, THE TAX AUDIT CAN BE CONDUCTE D. IT WAS SUBMITTED THAT THE REASON FOR DELAY IN GETTING THE ACCOUNTS AUDITED U/ S 44AB FOR THE YEAR UNDER CONSIDERATION IS DUE TO DELAY IN CONDUCTING THE STA TUTORY AUDIT FOR FY 2008-09 TO FY 2012-13. IN FACT, THE STATUTORY AUDIT FOR FY 2012-13 WAS COMPLETED ON 19.05.2014 AND THEREAFTER THE TAX AUDIT WAS COMPLET ED ON 11.02.2015 AND FOR FY 2012-13 (AY 2013-14), PENALTY PROCEEDINGS U/ S 271B WAS INITIATED BUT CONSIDERING THE SUBMISSION GIVEN BY THE ASSESSEE FO R DELAY IN CONDUCTING THE TAX AUDIT, THE PENALTY PROCEEDINGS WAS DROPPED BY T HE AO VIDE ORDER DT. 16.09.2016. 4. IT WAS FURTHER SUBMITTED THAT AFTER THE STATUTOR Y AUDIT FOR FY 2012-13 WAS COMPLETED ON 19.05.2014, THE ASSESSEE VIDE LETT ER DT. 22.07.2014 REQUESTED C&AG TO APPOINT STATUTORY AUDITOR FOR FY 2013-14. THE C&AG VIDE LETTER DT. 02.09.2014 APPOINTED M/S G.N. GUPTA & CO . AS THE STATUTORY AUDITOR OF THE COMPANY. THIS WAS CONSIDERED BY THE BOARD OF DIRECTORS IN ITS MEETING HELD ON 18.09.2014 IN WHICH REMUNERATION WAS ALSO F IXED. THE APPOINTMENT WAS COMMUNICATED TO M/S G.N. GUPTA & CO. VIDE LETTE R DT. 22.09.2014 WHO VIDE LETTER OF EVEN DATE ACCEPTED THE APPOINTMENT. THE STATUTORY AUDITOR ISSUED THE AUDIT REPORT ON 15.01.2015 AND THEREAFTER THE T AX AUDITOR COMPLETED THE TAX AUDIT ON 28.09.2015. FROM THE ABOVE FACTS, IT C AN BE NOTED THAT DELAY IN GETTING THE TAX AUDIT IN THE YEAR UNDER CONSIDERATI ON IS BECAUSE OF DELAY IN ITA NO. 1388/JP/2018 M/S GIRAL LIGNITE POWER LTD., JAIPUR VS. ACIT, CIRCLE-06, JAIPUR 3 CONDUCTING THE STATUTORY AUDIT OF EARLIER YEARS WHI CH HAS RESULTED INTO DELAY IN CONDUCTING OF THE STATUTORY AUDIT AND TAX AUDIT FOR THE YEAR UNDER CONSIDERATION AS WITHOUT CONDUCTING THE STATUTORY AUDIT AND TAX A UDIT FOR FY 2012-13, TAX AUDIT FOR FY 2013-14 COULD NOT HAVE BEEN CONDUCTED. THUS, THERE IS A REASONABLE CAUSE IN NOT OBTAINING THE TAX AUDIT REP ORT U/S 44AB WITHIN THE DUE DATE. 5. IT WAS FURTHER SUBMITTED THAT SECTION 273B OF TH E ACT PROVIDES THAT NO PENALTY U/S 271B SHALL BE IMPOSABLE ON THE ASSESSEE IF IT PROVES THAT THERE WAS REASONABLE CAUSE FOR THE FAILURE TO GET ACCOUNTS AU DITED WITHIN THE DUE DATE. IN THE PRESENT CASE THERE WAS A REASONABLE CAUSE FOR D ELAY IN CONDUCTING THE AUDIT U/S 44AB AS EXPLAINED ABOVE. HOWEVER, THE LD. CIT(A ) WITHOUT CONSIDERING THE SAME HAS INCORRECTLY HELD THAT THERE IS NO REASONAB LE CAUSE FOR DELAY IN GETTING THE TAX AUDIT CONDUCTED. ON SIMILAR FACTS, PENALTY IMPOSED U/S 271B WAS DELETED BY JAIPUR BENCH IN CASE OF M/S RRVUNL VS. A CIT (ITA NO.100/JP/18 ORDER DT. 28.03.2018) WHEREIN IT WAS HELD AS UNDER:- '7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE LIMIT ED ISSUE FOR CONSIDERATION IS WHETHER THERE IS A REASONABLE CAUS E FOR THE DELAY IN COMPLETING THE TAX AUDIT AND SUBMITTING THE REPORT OF THE TAX AUDITOR WITHIN THE SPECIFIED DUE DATE. UNDER SECTION 273B, NO PENALTY SHALL BE IMPOSABLE ON THE ASSESSEE FOR ANY FAILURE WHICH INT ERALIA INCLUDE THE DEFAULTS MENTIONED IN SECTION 271B, IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. IN THE P RESENT CASE, THE REASON FOR THE DELAY HAS BEEN STATED TO BE THE DELA Y IN COMPLETING THE STATUTORY AUDIT FOR THE EARLIER YEARS WHICH HAS RES ULTED IN DELAY IN COMPLETION OF STATUTORY AUDIT FOR THE YEAR UNDER CO NSIDERATION AND THE RESULTANT DELAY IN COMPLETING THE TAX AUDIT AND SUB MITTING THE REPORT THEREOF IT WAS SUBMITTED THAT WITHOUT COMPLETING TH E STATUTORY AUDIT, THE ITA NO. 1388/JP/2018 M/S GIRAL LIGNITE POWER LTD., JAIPUR VS. ACIT, CIRCLE-06, JAIPUR 4 TAX AUDIT COULD NOT HAVE BEEN COMPLETED. WE FIND TH AT THE STATUTORY AUDITORS ARE APPOINTED BY THE COMPTROLLER & AUDITOR GENERAL OF INDIA UNDER SECTION 619(2) OF THE COMPANIES ACT, 1956 AND THEY HAVE COMPLETED THE STATUTORY AUDIT AND SUBMITTED THEIR A UDIT REPORT DATED 27.03.2014. THEREAFTER, THE TAX AUDIT HAS BEEN COMP LETED ON 15.07.2014 AND THE REVISED RETURN WAS FILED ON 16.9.2014. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. PUNJAB STA TE LEATHER DEVELOPMENT CORPN. LTD. [2001] 119 TAXMAN 258 HAS H ELD THAT DELAY IN COMPLETION OF STATUTORY AUDIT WAS A REASONABLE CAUS E FOR NON-COMPLIANCE WITH SECTION 44AB AND IT WAS HELD THAT THE TRIBUNAL WAS RIGHT IN CANCELLING PENALTY LEVIED UNDER SECTION 271B. RESPE CTFULLY FOLLOWING THE SAME, WE ARE OF THE VIEW THAT IN THE INSTANT CASE, WHERE THERE HAS BEEN A DELAY IN COMPLETION OF STATUTORY AUDIT, THERE EXI ST A REASONABLE CAUSE FOR THE DELAY IN COMPLETION AND SUBMISSION OF THE T AX AUDIT REPORT UNDER SECTION 44AB OF THE ACT. THE PENALTY LEVIED UNDER S ECTION 271B IS THEREFORE DELETED' 6. THE LD DR IS HEARD WHO HAS RELIED ON THE ORDER O F THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE C&AG HAS APPOIN TED THE STATUTORY AUDITOR OF THE ASSESSEE COMPANY ON 02.09.2014 AND AFTER CONFIR MATION OF REMUNERATION AND OTHER TERMS OF APPOINTMENT BY THE BOARD OF DIRE CTORS, THE STATUTORY AUDITORS HAVE GIVEN THEIR ACCEPTANCE ON 22.09.2014. THE STATUTORY AUDIT WAS THEREAFTER UNDERTAKEN AND THE STATUTORY AUDITORS HA VE GIVEN THEIR AUDIT REPORT ON 15.01.2015 AND THEREAFTER THE TAX AUDITOR COMPLE TED THE TAX AUDIT ON 28.09.2015. WE THEREFORE FIND THAT THE FACTS OF THE PRESENT CASE ARE PARI- MATERIA TO THE FACTS IN CASE OF THE M/S RRVUNL VS. ACIT (SUPRA) WHEREIN THE CO-ORDINATE BENCH HAS HELD THAT WHERE THERE IS A DE LAY IN COMPLETION OF ITA NO. 1388/JP/2018 M/S GIRAL LIGNITE POWER LTD., JAIPUR VS. ACIT, CIRCLE-06, JAIPUR 5 STATUTORY AUDIT, THERE EXIST A REASONABLE CAUSE FOR THE DELAY IN COMPLETION OF TAX AUDIT AND ISSUANCE OF TAX AUDIT REPORT. THE RA TIO OF THE SAID DECISION EQUALLY APPLIES IN THE INSTANT CASE AS THE ACCOUNTS OF THE ASSESSEE COMPANY ARE SUBJECT TO STATUTORY AUDIT AND ONCE THE STATUTORY A UDIT IS COMPLETED, THE TAX AUDIT CAN BE INITIATED. FURTHER, WE FIND THAT UNDE R SIMILAR FACT PATTERN, THERE WAS DELAY IN COMPLETION OF TAX AUDIT FOR THE PREVIO US AY 2013-14 AND THE PENALTY PROCEEDINGS SO INITIATED U/S 271B WERE DROP PED BY THE ASSESSING OFFICER HIMSELF. IN LIGHT OF THE SAME, THE PENALTY SO LEVIED UNDER SECTION 271B IS HEREBY DIRECTED TO BE DELETED. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 18/03/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/03/2019 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S GIRAL LIGNITE POWER LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-06, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 1388/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR