M/s Cross Country Apparels, Ludhiana V. ACIT, CC-II, Ludhiana

ITA 1406/CHANDI/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5670 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-09-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 12-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AAKARSHAN SINGH CIT DR
• Assessee Lawyers: MANISH GUPTA
• Keywords: Reasonable cause; Set aside
• Section: 273B; 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 1406/CHD/2018 / ASSESSMENT YEAR : 2014-15 M/S CROSS COUNTRY APPARELS, B-36, PHASE-V, FOCAL POINT, LUDHIANA VS. ! THE ACIT, CENTRAL CIRCLE-II, LUDHIANA ' # ./ PAN NO: AACFC7500R '$/ APPELLANT &' '$ / RESPONDENT ()*+ /ASSESSEE BY : SHRI MANISH GUPTA, CA *+ / REVENUE BY : SHRI AAKARSHAN SINGH, CIT DR , -*) .# /DATE OF HEARING : 02.09.2019 /0 *) .# / DATE OF PRONOUNCEMENT : 30. 09.2019 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 14.08.2018 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-5, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)] AGIT ATING THE CONFIRMATION OF PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271 B OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') ON ACCOUNT OF DELAY IN FURNISHING THE AUDIT REPORT U/S 44AB OF THE ACT OF THE ASSESSMENT YEAR 2 014-15. ITA NO. 1406-CHD-2018 M/S CROSS COUNTRY APPARELS, LUDHIANA 2 2. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. R EPRESENTATIVES OF THE PARTIES. A PERUSAL OF THE IMPUGNED ORDER OF THE LD. CIT(A) REVEALS THAT THE LD. CIT(A) HAS DISMISSED THE APPEAL OF TH E ASSESSEE ON TWO GROUNDS, FIRSTLY, THAT THE APPEAL WAS TIME BARRED B Y A PERIOD OF MORE THAN ONE MONTH AND, SECONDLY, THAT THE ASSESSEE COU LD NOT JUSTIFY THE REASONABLE CAUSE FOR DELAY IN FLING THE AUDIT REPO RT U/S 44AB OF THE ACT BEYOND THE STIPULATED TIME PERIOD FOR THE SAME. 3. SO FAR AS THE DELAY IN FILING THE APPEAL BEFORE THE LD. CIT(A) WAS CONCERNED, THE ASSESSEE BEFORE THE LD. CIT(A) SUBMI TTED THAT THE DELAY WAS NOT ATTRIBUTABLE ON ANY FAULT ON THE PART OF TH E ASSESSEE. THAT THE ASSESSEE ENGAGED HIS COUNSEL FOR FILING OF THE APPE AL IN TIME, HOWEVER, THE COUNSEL FOR THE ASSESSEE COULD NOT FILE THE APP EAL IN TIME DUE TO CERTAIN REASONS, ONE OF THE SAME WAS THAT THE COUNS EL OF THE ASSESSEE GOT MARRIED ON 30.11.2016 AND THEREAFTER GOT BUSY IN SO ME RITUALS AND FAMILY FUNCTIONS AFTER THE MARRIAGE AND MISPLACED T HE CHALLAN OF THE FEE AND, THUS, MISSED THE DUE DATE OF FILING OF THE APP EAL. IT WAS ALSO EXPLAINED THAT COUNSEL WAS ALSO BUSY BECAUSE OF HIS INVOLVEMENT IN VARIOUS TIME BARRING INCOME TAX ASSESSMENTS ON 31. 12.2016. THAT DUE TO MARRIAGE OF THE COUNSEL ON 30.12.2016 AND FURTHER D UE TO PRESSURE OF THE TIME BARRING ASSESSMENTS ON 31.12.2016, THE CO UNSEL FORGOT TO FILE THE APPEAL IN TIME AND IT WAS ONLY WHEN THE ASSESS EE ENQUIRED ABOUT THE SAME, THE COUNSEL IMMEDIATELY FILED THE APPEAL. AN AFFIDAVIT IN THIS ITA NO. 1406-CHD-2018 M/S CROSS COUNTRY APPARELS, LUDHIANA 3 RESPECT WAS ALSO FILED OF THE COUNSEL FOR THE ASSES SEE BEFORE THE LD. CIT(A). TO VERIFY THE VERACITY OF THE CLAIM OF THE ASSESSEE, THE LD. CIT(A) SUMMONED THE COUNSEL BY ISSUING SUMMONS U/S 131 OF THE I. T. ACT AND RECORDED HIS STATEMENT ON OATH IN THIS RESP ECT, WHEREBY, THE COUNSEL OF THE ASSESSEE AFFIRMED THAT THE DELAY, IF ANY, WAS ON ACCOUNT OF THE AFORE MENTIONED CIRCUMSTANCES. HAVING VERIF IED THE FACTS BY WAY OF RECORDING OF THE STATEMENT OF THE COUNSEL, IN OU R VIEW, THERE IS NO JUSTIFICATION ON THE PART OF THE CIT(A) IN NOT CON DONING THE DELAY IN FILING THE APPEAL. THE CONTENTION OF THE ASSESSEE THAT THE DELAY WAS NEITHER INTENTIONAL NOR DUE TO ANY NEGLIGENCE ON T HE PART OF THE ASSESSEE WAS DULY PROVED ON THE FILE BY WAY OF AN AFFIDAVIT OF THE COUNSEL AS WELL AS BY WAY OF STATEMENT ON OATH OF THE COUNSEL FOR THE ASSESSEE. IT IS THEREFORE, HELD THAT THE CIT(A) WAS NOT JUSTIFIED IN NOT CONDONING THE DELAY IN FILING THE APPEAL. THE ORDER OF THE CIT(A) IN DISMISSING THE APPEAL BEING BARRED BY LIMITATION IS, THEREFORE, NO T SUSTAINABLE AND IS SET ASIDE. 4. SO FAR AS THE ISSUE ON MERITS IS CONCERNED, THE ASSESSEE EXPLAINED BEFORE THE CIT(A) THAT THERE WAS AN ONGOING DISPUTE WITH THE EARLIER AUDITOR OF THE ASSESSEE. THAT AT THE FAG END OF TH E YEAR, WHEN THE LAST DATE FOR FILING THE TAX AUDIT REPORT WAS APPROACHIN G, THE EARLIER AUDITOR OF THE ASSESSEE NAMELY MR. RAMESHWAR GUPTA DECLINED TO AUDIT THE BOOKS OF ACCOUNT OF THE ASSESSEE AND UNDER THE CIRC UMSTANCES, THE ITA NO. 1406-CHD-2018 M/S CROSS COUNTRY APPARELS, LUDHIANA 4 ASSESSEE APPROACHED THE NEW AUDITOR NAMELY SHRI A MIT SUND IN THE MONTH OF AUGUST 2014 FOR GETTING THE BOOKS OF ACCOU NTS AUDITED. THOUGH, THE NEW AUDITOR AGREED TO AUDIT THE BOOKS O F ACCOUNTS, BUT SUBJECT TO RECEIPT OF NO OBJECTION FROM THE EARLI ER AUDITOR. THE ASSESSEE CLEARED ALL THE DUES OF THE EARLIER AUDIT OR AND RECEIVED THE NOC LETTER DATED 20.9.2014 FROM HIM AND THEREAFTER THE NEW AUDITOR AGREED TO CARRY OUT THE AUDIT OF THE BOOKS OF ACCO UNTS OF THE ASSESSEE. HOWEVER, THE NEW AUDITOR WAS OVER OCCUPIED WITH THE AUDIT OF HIS PREVIOUS CLIENTS. THAT THE ASSESSEE, BEING THE NEW CLIENT OF THE SAID AUDITOR, THE AUDITOR WAS NOT FAMILIAR / CONVERSANT WITH THE BUSINESS SYSTEM / OPERATIONS OF THE ASSESSEE AND FURTHER SIN CE THE SALES / TURN OVER / BANK TRANSACTIONS / OTHER TRANSACTIONS OF THE CO NCERN WERE ON A VERY HIGHER SIDE, THE AUDITOR DECIDED TO GO FOR EXTENDED CHECK OF BOOKS OF ACCOUNTS RATHER THAN SAMPLE CHECK. THIS FACTOR ALSO CONTRIBUTED IN COMPLETING THE AUDIT REPORT, WHICH WAS FINALLY CO MPLETED ON 19.1.2015 (WRONGLY WRITTEN BY THE LD. CIT(A) IN THE IMPUGNED ORDER AS 19.5.2015). TO CHECK THE VERACITY OF THE ABOVE CON TENTION, THE NEW AUDITOR NAMELY SHRI AMIT SUND WAS SUMMONED U/S 131 OF THE ACT AND HIS STATEMENT WAS RECORDED WHO CONFIRMED THE AFORES AID FACTS. THE ASSESSEE, THUS, HAS DULY EXPLAINED THE REASONS FOR DELAY IN FILING THE AUDIT REPORT. IN VIEW OF THIS, THERE IS A REASONAB LE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE ACT FOR DELAY IN FIL ING THE AUDIT REPORT. ITA NO. 1406-CHD-2018 M/S CROSS COUNTRY APPARELS, LUDHIANA 5 WE, THEREFORE, DEEM IT NOT A FIT CASE FOR LEVY OF P ENALTY U/S 271B OF THE ACT. IN VIEW OF OUR OBSERVATIONS MADE ABOVE, THE PENALTY LEVIED BY THE ASSESSING OFFICER AND FURTHER CONFIRMED BY THE LD. CIT(A) U/S 271B OF THE ACT IS SET ASIDE. THE APPEAL OF THE ASSESSEE ST ANDS ALLOWED. IN THE RESULTS, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.09.2019. SD/- SD/- ( . . / N.K. SAINI) ( ! ' / SANJAY GARG) #$% / VICE PRESIDENT &' / JUDICIAL MEMBER DATED : 30.09.2019 .. 2*&)3454) / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. &' '$ / THE RESPONDENT 3. , 6) / CIT 4. , 6) ( )/ THE CIT(A) 5. 47 &)8 , . 8 , 9:;< / DR, ITAT, CHANDIGARH 6. ;= - / GUARD FILE 2 , / BY ORDER, > / ASSISTANT REGISTRAR