Gee Gee Steels & Alloys Pvt. Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1448/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4286 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-06-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 23-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SREENIVASAN JCIT
• Assessee Lawyers: RANGA RAMANUJAM; K R GANESH
• Keywords: Reasonable cause

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI ... , , # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 1448/MDS/2016 / ASSESSMENT YEAR : 2013-14 M/S. GEE GEE STEELS & ALLOYS PVT. LTD., NO. 127/2B, SADAYAN KUPPAM ROAD, VAIKKADU VILLAGE, MANALI, CHENNAI 600 103. [PAN: AAACG 3007G] VS. DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(1), CHENNAI 600 034. ( / APPELLANT) ( / RESPONDENT) % & / APPELLANT BY : SHRI RANGA RAMANUJAM & SHRI K.R. GANESH )*% & / RESPONDENT BY : SHRI SREENIVASAN, JCIT & /DATE OF HEARING : 07.06.2017 & /DATE OF PRONOUNCEMENT : 14.06.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI IN ITA NO. 224CIT(A)-6/2014- 15 DATED 11.03.2016. :-2-: I.T.A. N0. 1448/MDS/2016 2. M/S. GEE GEE STEELS & ALLOYS PVT. LTD., THE ASSE SSEE, FILED RETURN FOR ASSESSMENT YEAR 2013-14 ON 29.09.2013 ADMITTING A T OTAL INCOME OF RS. 12,05,350/-. ITS TOTAL TURNOVER WAS RS. 3,57,01,18 5/-. AS IT EXCEEDED RS. 1 CRORES, THE ASSESSEE OUGHT TO HAVE FILED TAX AUDIT REPORT AS MANDATED U/S. 44AB OF THE ACT. SINCE, THE SAME WAS NOT DONE, THE AO I SSUED A SHOW CAUSE NOTICE U/S. 271B. THE ASSESSEE SUBMITTED THAT THOUGH THE TAX AUDIT REPORT AND FORM 3CD DATED 21.08.2013 DULY SINGED BY THE STATUTORY A UDITOR AND IT HAD THE SAME, IT DID NOT KNOW THE NEW REQUIREMENT OF FILING THE T AX AUDIT REPORT MANDATORILY ONLINE W.E.F. ASSESSMENT YEAR 2013-14. FURTHER, WH EN THE ASSESSEE TRIED TO UPLOAD THE TAX AUDIT REPORT AFTER RECEIVING THE SHO W CAUSE NOTICE U/S. 271B, THE IT FILING RETURN SITE DID NOT PERMIT UPLOADING. SO , THE ASSESSEE ENCLOSED THE HARD COPY OF TAX AUDIT REPORT. FURTHER, STATED THAT THE FAILURE WAS DUE TO IGNORANCE OF NEW REQUIREMENT OF FILING THE TAX AUDIT REPORT ONLI NE AND REQUESTED TO DROP THE PENALTY PROCEEDINGS U/S. 271B. IT ALSO RELIED ON T HE CASE LAWS REPORTED IN HINDUSTAN STEEL LTD VS STATE OF ORISSA 83 ITR 26 (S C) AND CIT VS SS BANGA 153 TAXMANN.313 (P&H). THE DCIT, CORPORATE CIRCLE -2(1 ), CHENNAI, INTER ALIA, HELD THAT THE ASSESSEE IS ADVISED BY PROFESSIONALS IN IT S TAX MATTERS. THE ASSESSEE COULD HAVE FILED THE TAX AUDIT REPORT MANUALLY VIDE BOARDS NOTIFICATION IN F.NO. 255/117/2013/ITA.II DATED 26.09.2013 IN CASE OF DIF FICULTIES IN FILING THE SAME ONLINE. THUS, THE AO FOUND THAT THE ASSESSEE WITHO UT REASONABLE CAUSE FAILED TO FILE THE TAX AUDIT REPORT AND HENCE LEVIED PENALTY OF RS. ONE LAKH AND FIFTY THOUSAND. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A)-6, CHENNAI THE CIT(A), INTER ALIA, RELYING ON THIS TRIBUNAL DE CISION IN THE CASE OF PARAGON :-3-: I.T.A. N0. 1448/MDS/2016 INDUSTRIES VS ITO IN ITA NO. 1739/MDS/2011 DATED 19 .01.2012 AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, CONFIRMED THE LEVY O F PENALTY U/S. 271B. AGGRIEVED, THE ASSESSEE FILED THIS APPEAL WITH THE FOLLOWING GROUNDS 2. THE LD. CIT(A) FAILED TO CONSIDER THAT OMISSION TO FILE AUDIT REPORT BEFORE THE PRESCRIBED DATE IS IN THE N ATURE OF A TECHNICAL OR VENIAL BREACH OF LAW NOT WARRANTING LEVY OF PENA LTY. 3. THE LD CIT(A) ERRED IN BEING VERY HARSH IN INTE RPRETATION OF THE WORDS REASONABLE CAUSE WHICH WOULD HAVE BEE N INTERPRETED LIBERALLY SO AS TO ADVANCE THE CAUSE OF JUSTICE AND HARSH LEGALISTIC APPROACH SHOULD HAVE BEEN AVOIDED BY SOFT PRACTICAL APPROACH IN APPLYING PENAL PROVISIONS. 4. THE LD CIT(A) FAILED TO CONSIDER THAT THE APPEL LANT COMPANY HAD ALWAYS FILED THE RETURN OF INCOME AND T HE TAX AUDIT REPORTS BEFORE THE PRESCRIBED DATE IN ALL THE 17 YE ARS SINCE THE INCORPORATION OF THE COMPANY IN THE YEAR 1995-96, A ND HE OMISSION HAD OCCURRED ONLY IN THE YEAR 2012-13, THE FIRST YE AR OF CHANGE INTRODUCING THE ONLINE FILING OF TAX AUDIT REPORTS. THE HARD COPY OF THE REPORTS IN FORM NO. 3CA DATED 21.08.2013 AND FO RM 3CD WAS FILED BEFORE THE ASSESSING OFFICER ALONG WITH THE R EPLY TO PENALTY NOTICE U/S. 271B. THE AR SUBMITTED THAT THIS IS THE FIRST YEAR IN WHI CH THERE WAS A CHANGE IN THE PROCEDURE FOR FILING RETURN FROM MANUALLY TO ELECTR ONIC FILING AND SECTIONS 139C AND 139D WERE BROUGHT BY THE FINANCE ACT, 2007 W.E. F. 01.06.2006. HE SOUGHT OUR ATTENTION TO THE PAPER BOOK WHEREIN A COPY OF T HE CBDT NOTIFICATION NO. 42/2013/F.NO. 142/5/13 TPL DATED 11.06.2016 WAS AVA ILABLE, IN WHICH THE AUDIT REPORT REQUIRED TO BE FILED U/S. 44AB WAS ALSO NOTI FIED TO BE FURNISHED ELECTRONICALLY W.E.F. 01.04.2013. THE AR PLEADED T HAT SUCH CHANGE IN LAW WAS :-4-: I.T.A. N0. 1448/MDS/2016 NOT NOTICED BY THE ASSESSEE, ALTHOUGH, IT COMPLIED FILING OF ITS RETURN AND AUDIT REPORT IN ALL THE 17 YEARS, SINCE ITS INCORPORATION 1995-96, WITHOUT DELAY. THE AR SOUGHT OUR ATTENTION TO THE PROVISIONS OF SECTION 1 39(9) AND EXPLANATION, THE RELEVANT PORTION WHICH IS EXTRACTED AS UNDER: (9) WHERE THE ASSESSING OFFICER CONSIDERS THAT THE RETURN OF INCOME FURNISHED BY THE ASSESSEE IS DEFECTIVE, HE M AY INTIMATE THE DEFECT TO THE ASSESSEE AND GIVE HIM AN OPPORTUNITY TO RECTIFY THE DEFECT WITHIN A PERIOD OF FIFTEEN DAYS FROM THE DAT E OF SUCH INTIMATION OR WITHIN SUCH FURTHER PERIOD WHICH, ON AN APPLICAT ION MADE IN THIS BEHALF, THE ASSESSING OFFICER MAY, IN HIS DISCRETIO N, ALLOW; AND IF THE DEFECT IS NOT RECTIFIED WITHIN THE SAID PERIOD OF F IFTEEN DAYS OR, AS THE CASE MAY BE, THE FURTHER PERIOD SO ALLOWED, THEM, N OTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, THE RETURN SHALL BE TREATED AS AN INVALID RETURN AND THE PROVISIONS OF THIS ACT SHALL APPLY AS IF THE ASSESSEE HAD FAILED TO FURNISH THE RETURN: PROVIDED THAT WHERE THE ASSESSEE RECTIFIES THE DEFE CT AFTER THE EXPIRY OF THE SAID PERIOD OF FIFTEEN DAYS OR THE FU RTHER PERIOD ALLOWED, BUT BEFORE THE ASSESSMENT IS MADE, THE ASSESSING OF FICER MAY CONDONE THE DELAY AND TREAT THE RETURN AS A VALID R ETURN. EXPLANATION FOR THE PURPOSES OF THIS SUB-SECTION, A RETURN OF INCOME SHALL BE REGARDED AS DEFECTIVE UNLESS ALL TH E FOLLOWING CONDITIONS ARE FULFILLED, NAMELY:- (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (AA) . . . . . . . . . . . . . . . . (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . :-5-: I.T.A. N0. 1448/MDS/2016 (BB) THE RETURN IS ACCOMPANIED BY THE REPORT OF THE AUDIT REFERRED TO IN SECTION 44AB, OR, WHERE THE REPORT H AS BEEN FURNISHED PRIOR TO THE FURNISHING OF THE RETURN, BY A COPY OF SUCH REPORT TOGETHER WITH PROOF OF FURNISHING THE REPORT;] FROM THE ABOVE, THE AR SUBMITTED THAT IT IS CLEAR T HAT THE ASSESSEES RETURN IS DEFECTIVE U/S. 139(9) FOR THE REASON THAT THE RETUR N WAS NOT ACCOMPANIED BY THE REPORT OF THE AUDIT REFERRED TO IN THE SECTION OF 4 4AB. HAD THE AO INVOKED THE ABOVE PROVISION AND INFORMED THE ASSESSEE, IT COULD HAVE ENABLED THE ASSESSEE TO RECTIFY THE DEFECT. INSTEAD OF INVOKING THIS PR OVISIONS, THE ASSESSING OFFICER WRONGLY INVOKED THE PENALTY PROVISIONS AND LEVIED P ENALTY. HE SOUGHT OUR ATTENTION TO THE COMMUNICATION REFERENCE NO. CPC/13 -14/C31/100024418707 DATED 28.10.2014 WHICH IS A LETTER FROM THE DEPARTM ENT ON THE SUBJECT RESPONSE TO THE DEFECTIVE NOTICE ISSUED U/S. 139(9 ) FOR PAN AAACG3007G, AY 2013-REMINDER, WHEREIN, THE DEFECT NOTIFIED TO THE ASSESSEE WERE (1) PAY THE TAXES DUE AND FILE THE CORRECTED RETURN U/S. 139(9) AND (2) IF YOU HAVE ALREADY PAID TAXED THEN FIE A CORRECTED RETURN U/S. 139(9) ONLY. THUS, THE AR SUBMITTED THAT THE ASSESSEE WAS NOT NOTIFIED FOR FURNISHING T HE IMPUGNED AUDIT REPORT AT ALL. IN THE ASSESSEES CASE, BUT FOR THE PROCEEDINGS U/S . 143(1) NO OTHER PROCEEDINGS ARE INITIATED EXCEPT THE IMPUGNED LEVY OF PENALTY. THUS, THE AR PLEADED THAT ON THE FACTS AND CIRCUMSTANCES, THE CORRECT ACTION SHO ULD HAVE BEEN NOTIFICATION OF THE DEFECT AND CURING THE SAME. INSTEAD, THE AO IN ITIATED PENALTY PROCEEDINGS AND LEVIED THE PENALTY. THE CIT(A) WITHOUT CONSIDE RING THE MERITS OF ITS PAST CONDUCT, ITS PLEA ETC, UPHELD THE LEVY OF PENALTY. PER CONTRA, THE DR RELIED ON THE CIT(A) ORDER. :-6-: I.T.A. N0. 1448/MDS/2016 5. WE HEARD THE RIVAL SUBMISSIONS AND FIND MERIT IN THE SUBMISSIONS MADE BY THE AR. IT IS CLEAR FROM THE PROVISIONS OF SUB SEC TION 9 OF SECTION 139, WHERE, THE ASSESSEES RETURN IS NOT ACCOMPANIED BY THE REPORT OF AUDIT REFERRED TO SECTION 44AB, THE AO SHOULD HAVE CONSIDERED SUCH A RETURN A S A DEFECTIVE ONE OUGHT TO HAVE GIVEN AN OPPORTUNITY TO THE ASSESSEE TO RECTIF Y THE DEFECT IN ACCORDANCE WITH SECTION 139(9). HE HAS NOT DONE SO. THE FACT S AND CIRCUMSTANCES OF THIS CASE INDICATE THAT THIS WAS A CURABLE ONE AS PER TH E RATIO LAID BY THE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT MEERUT VS MEDICARE P LTD 41 TAXMANN.COM 89 (ALLAHABAD). HOWEVER, THE ASSESSEE WAS NOT GIVEN A N OPPORTUNITY TO CURE IT FURTHER, THE RETURN FILED IS ALSO ACCEPTED. ON SUC H FACTS AND CIRCUMSTANCES THE PENALTY LEVIED IS NOT JUSTIFIABLE AND HENCE IT IS D ELETED. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 14 TH DAY OF JUNE, 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) ! ' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 14 TH JUNE, 2017 JPV & )12 32 /COPY TO: 1. %/ APPELLANT 2. )*% /RESPONDENT 3. 4 ( )/CIT(A) 4. 4 /CIT 5. 2 ) /DR 6. 7 /GF