Smt. A.Sukanya, Hyderabad V. Income Tax Officer, Karimnagar

ITA 1410/HYD/2013

• Counselvise Citation: 141022514 RSA 2013
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 28-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K HARITA
• Assessee Lawyers: B SHANTHI KUMAR
• Keywords: Business income; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1410/HYD/13 : ASSESSMENT YEAR 2008 - 09 SMT. A.SUKANYA, KALVACHARLA (V), KAMANPUR (M), KARIMNAGAR DIST. ( PAN - ATNPK 6422 E ) V/S. INCOME TAX OFFICER WARD 4, KARIMNAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.SHANTHIKUMAR RESPONDENT BY : SMT. K.HARITA DATE OF HEARING 24.2.2014 DATE OF PRONOUNCEMENT 21.3.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) - II I , HYDERABAD DATED 13. 8 .2013 , CONFIRMING THE PENALTY OF RS.1,00,000 IMPOSED BY THE ASSESSING OFFICER UNDER S.271B OF THE ACT FOR THE ASSESSMENT YEAR 2008 - 09. 2. BRIEF FACTS O F THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM RUNNING A PETROL PUMP AND FIL E D RETURN OF IN C OM E FOR THE ASSESSMENT YEA R 2008 - 09, DE C LARIN G AN INCOME O F RS .1,52,350 ON 7.9.2009. AS PER THE RETURN OF INCOME AND ITS ENCLOSURES FIL E D BY THE ASSESSEE, THE TOTAL SALES WORKED OUT TO RS.3,86,54,077. SINCE THE TURNOVER WAS MORE THAN RS.40 LAKHS, OBSERVING THAT THE ASSESSEE, IN T ERMS OF S.44AB OF THE ACT, WAS UNDER AN OBLIGATION TO GET HER ACCOUNTS AUDITED. AS THE ASSESSEE FAILED TO COMPLY WITH THE PROVISIO N S OF S.44AB AND DID NOT FURNISH SUCH AUDIT REPORT WITH THE RETURN, ASSESSING OFFICER INITIATED PROCEEDINGS FOR LEVY OF PENA LTY UNDER S.271B OF THE ACT. IN RESPONSE TO THE SHOW CAUSE NO T ICE ISSUED IN THAT BEHALF, ASSESSEE, VIDE HER ITA NO. 1410/ HYD/20 13 SMT. A.SUKANYA , KALVACHARLA (V), KAMANPUR (M), KARIMNAGAR DIST. 2 LETTER DATED 17.9.2011, EXPLAINED THE REASONS FOR HER FAILURE TO COMPLY WITH THE P R OVIS I ON S OF S.44AB IN THE FOLLOWING MANNER - THAT, THE AUDI T REPORT WAS COMPLETED IN ALL RESPECTS BY 09.07.2008 AND THE SAME WAS FORWARDED BY MY TAX CONSULTANT SRI T.SHANKAR ON THE VERY SAME DAY ALONGWITH THE RETURN OF INCOME DULY FILLED IN ALL THE COLUMNS THERE IN THROUGH MY ACCOUNTANT WHO HAD TAKEN BOOKS OF ACCO UNT FOR TAX AUDIT. BUT THE SAID ACCOUNTANT HAS NOT BROUGHT THE RETURN AND AUDIT REPORT TO MY NOTICE FOR MY SIGNATURES WHEN QUESTIONED FOR THE ACCOUNTANT FAILURE TO PRODUCE THE RETURN OF INCOME AND AUDIT REPORT RELATING TO THE ASST. YEAR 2008 - 09 (WHICH LAP S WAS FOUND DURING THE COURSE OF CONTEMPLATION TO FILE RETURN OF INCOME AND AUDIT REPORT FOR THE ASSESSMENT YEAR 2008 - 09 THE ACCOUNTANT STATED THAT THE RE TURN OF IN C OM E AND AUDIT REPORT FOR THE ASST YEAR 2008 - 09 WERE MISPLACED AFTER COLLECTING THEM DURING THE MONTH S E P T EM BE R 2008 FROM THE TAX AUDITORS OFFICE SIN C E THEY WERE TRACED RECENTLY FROM HIS HOUSE THE SAME CASE OBTAINED THE ACCOUN T ANTS POSSESSION AND WERE SUB MITTED ON L17.90.2009 ALONGWITH THE RETURN OF I NCOME FOR THE ASST. YEAR 2009 - 10. IN CONFIRMATION OF THE ABOVE, AN AFFIDAVIT OBTAINED F R OM THE ACCOUNTANT IS ENCLOSED HEREWITH. HENCE, THERE IS NO M A L A FID E INTENTION ON MY PART IN FILING THE AU D IT REPO R T FOR THE ASST. YEAR 2008 - 09 BELATEDLY SIN C E IT I S EVIDENT F R OM THE FACT ON RECORD THAT THE STATUTORY AUDIT REPO R T WAS OBTAINED ON 09 - 0 7 - 2 008 FROM THE CHARTERED ACCOUN T ANT DULY GETTING THE ACCOUNTS AUDITED WITHIN THE STIPULATED STATUTORY TIME, I.E. WELL BEFO RE 30 - 09 - 2008. IN VIEW OF THE ABOVE, ASSESSING OFFICER WAS REQUESTED TO DROP THE PENALTY PROCEEDINGS INITIATED. NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE, ASSESSING OFFICER IMPOSED THE PENALTY OF RS.1 LAKH UNDER S.271B OF THE AC T, VIDE ORDER OF PENALTY DATE D 27.9.2011. 3. ON APPEAL, THE CIT(A) TOO FINDING NO LOGIC OR MERIT IN THE EXPLANATION OF THE ASSESSEE, CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER. 4. AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE US. 5. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE STATUTORY AUDIT IN TERMS OF S.44AB WAS GOT DONE VERY MUCH IN TIME, BUT AUDIT REPORT COULD NOT BE FILED ALONGWITH THE RETURN, AND SUCH NON - FILING WAS ALSO ON ACCOUNT OF THE LAPSE ON THE PART OF THE ACCOUNTANT, WHO MISPLA CED THE SAME. PLACING RELIANCE ON THE CIRCULAR OF CBDT NO.6 OF 2008 DATED 18.7.2008, IT WAS ALSO PLEADED BEFORE US THAT AUDIT REPORT UNDER S.44AB WAS NOT REQUIRED TO BE ITA NO. 1410/ HYD/20 13 SMT. A.SUKANYA , KALVACHARLA (V), KAMANPUR (M), KARIMNAGAR DIST. 3 ENCLOSED TO RETURN, AND IN ANY EVENT, ASSESSING OFFICER CAN DEMAND PRODUCTION OF THE A UDIT REPORT UNDER S.139D OF THE ACT. IN THE ABSENCE OF ANY SUCH COMMUNICATION FROM THE ASSESSING OFFICER, THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE IMPUGNED PENALTY. 5. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE CONTRARY, STRONGLY SUPPORTED TH E ORDERS OF THE REVENUE AUTHORITIES. 6 . WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL ON RECORD. THE REASON EXPLAINED BY THE ASSESSEE FOR THE DELAYED SUBMISSION OF THE AUDIT REPORT IS THAT THOUGH THE A UDITING OF THE ACCOUNTS WAS COMPLETED WELL WITHIN THE TIME STIPULATED BY THE ST ATUTE, THE SAME COULD NOT BE FI L E D ALONGWITH THE RETURN WITHIN TIME, DUE TO LAPSE ON THE PART OF THE ACCOUNTANT, WHO MISPLACED THE SAME, AND SOON AFTER THE SAME WERE TRACED OUT, ASSESSEE HAS SUBMITTED THE SAME BEFORE THE AUTHORITIES. IN SUPPORT OF SUCH AN EXPLANATION, THE AFFIDAVIT OF THE ACCOUNTANT WAS ALSO FURNISHED. THE REVENUE AUTHORITIES HAVE REJECTED THE SAID EXPLANATION, OBSERVING THAT THE ASSESSEE INSTEAD OF CHASING THE ACCOUNTANT FOR TRACING OUT/COMPLIANCE BY FURNISHING THE SAME, COULD HAVE OBTAINED A FRESH AUDIT REPORT FROM THE CHARTERED ACCOUNTANT AND GOT THE SAME FILED, AND AS SUCH, THE EXPLANATION OF THE ASSESSEE IS SIMPLY A MAKE BELIEVE ONE. WE ARE NOT IN AGREEMENT WITH THE VIEW TAKEN BY THE REVENUE AUTHORITIES. PRIMA FACIE, AUDITING OF THE ACCOUNTS WAS COMPLETED WELL WITHIN THE TIME STIPULATED IN THE STATUTE. MERELY BECAUSE ASSESSEE COULD HAVE OBTAINED A NEW AUDIT REPORT FROM THE CHARTERED ACCOUNTANT TO ENSURE BE TTER COMPLIANCE, THE COURSE ACTUALLY ADOPTED BY THE ASSESSEE CANNOT BE SAID TO BE NOT BONA FIDE. AS SUCH, WE ARE OF THE VIEW THAT THE EXPLANATION OF THE ASSESSEE FOR THE DEFAULT IN FURNISHING THE AUDIT REPORT APPEARS REASONABLE AND IT IS NOT A CASE WHERE PENALTY CAN BE JUSTIFIED. IN SUPPORT OF THIS CONCLUSION, WE MAY REFER TO THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF THANJAVUR SILK HANDLOOM WEAVERS CO - OPERATIVE PRODUCTION AND SALES SOCIETY LTD. V/S. UNION OF INDIA AND OTHERS ITA NO. 1410/ HYD/20 13 SMT. A.SUKANYA , KALVACHARLA (V), KAMANPUR (M), KARIMNAGAR DIST. 4 (263 ITR 334), WH EREIN, VIDE EHAD NOTE ON PAGE 334 OF THE REPORTS 9263 ITR), IT HAS BEEN HELD AS FOLLOWS - .A HARMONIOUS CONSIDERATION OF BOTH THE PROVISIONS (S.44AB AND S.271B) REQUIRES THE ASSESSEE TO FILE AN AUDIT REPORT WITHIN THE SPECIFIED TIME, FAILING WHICH HE WILL HAVE TO PAY PENALTY, IF THE ASSESSEE FAILS TO ASSIGN REASONABLE CAUSE FOR NOT DOING SO. THE BELATED FILING OF THE AUDIT REPORT DOES NTO AUTOMATICALLY ATTRACT PENALTY. THE EXERCISE OF PO WER UNDER S.271B IS DISCRETION A R Y . THE DISCRETION SHOULD BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL RELEVANT CIRCUMSTANCES. IN THE LIGHT OF THE ABOVE DISCUSSION, WE SET ASIDE THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES AND CANCEL THE IMPUGNED PENALTY OF RS.1 LAKH IMPOSED UNDER S.271B OF THE ACT. 7 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COU RT ON 21.3.2014 SD/ - SD/ - ( B.RAMAKOTAIAH ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 21 ST MARCH, 2014 COPY FORWARDED TO: 1. SMT. A.SUKANYA, (KALVACHARLA (V), KAMANPUR (M), KARIMNAGAR DIST.), C/O. SHRI B.SHANTIKUMAR , ADVOCATE, 411,TARAMANDAL COMPLEX, D.NO.5 - 9 - 13, SAIFABAD, HYDERABAD 4. 2 . INCOME TAX OFFICER WARD 4, KARIMNAGAR 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) II I , HYDERABAD COMMISSIONER OF INCOME - TAX I I HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S