Shri Vikrambhai R. Patel, Anand V. The ACIT, Anand Circle, Anand

ITA 1560/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1145 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 28-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Reasonable cause; Procedural lapse

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI S.S. GODARA JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ././ ./ ITA NO.1560/AHD/2013 / A.Y. 2008-09 SHRI VIKRAMBHAI R. PATEL, C/O. M.V. PATEL & CO., AT & POST : KUNJRAO, DIST : ANAND PAN : ADOPP 8739 L VS ASSISTANT COMMISSIONER OF INCOME-TAX, ANAND CIRCLE, ANAND (APPELLANT) (RESPONDENT) BY APPELLANT : SMT. ARTI N. SHAH, AR B Y RESPONDENT : SHRI KEYUR PATEL, SR DR / // / DATE OF HEARING : 27/06/2016 /DATE OF PRONOUNCEMENT: 11/07/2016 / O R D E R PER SHRI S.S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2008-09 , ARISES FROM ORDER OF CIT(A)-IV, VADODARA DATED 15.03.2015, PASS ED IN CASE APPEAL NO.CAB/IV-A-64/2011-12, RESTRICTING PENALTY OF RS.4 ,59,400/- AS IMPOSED BY THE ASSESSING OFFICER IN HIS ORDER DATED 13.05.2 011, IN PROCEEDING U/S 271B OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) . 2. WE COME TO THE RELEVANT FACTS FIRST. THIS ASSES SEE - AN INDIVIDUAL IS IN TOBACCO BUSINESS. HE FILED RETURN ON 26.09.2008 DECLARING LOSS OF RS.9,28,946/-. THE ASSESSING OFFICER TOOK UP SCRUT INY. HE FOUND IN COURSE THEREOF THAT THE ASSESSEES AUDIT REPORT ALTHOUGH M ENTIONS TO HAVE BEEN FILED ALONG WITH THE RETURN DULY SIGNED AND VERIFIE D, THE SAME WAS NOT ACTUALLY ENCLOSED WITH THE RETURN OF INCOME NOR BEF ORE THE LAST DATE THEREOF COMING TO BE 31.10.2008. HE FORMED AN OPINION IN T HESE FACTS THAT THE ITA NO.1560/AHD/2013 SHRI VIKRAMBHAI R PATEL VS. ACIT A.Y. 2008-09 - 2 - ASSESSEE HAD FAILED TO GET HIS BOOKS AUDITED AS REQ UIRED U/S 44AB OF THE ACT. THE ASSESSING OFFICER ACCORDINGLY INITIATED T HE IMPUGNED SECTION 271B OF THE ACT. 3. THE ASSESSEE PUT IN APPEARANCE. HE STATED TO HA VE FILED HIS AUDIT REPORT IN QUESTION DATED 18.05.2008 ALONG WITH THE RETURN ITSELF. HE PRODUCED PHOTOCOPY OF THE ITR ACKNOWLEDGEMENT AS WE LL. WE FURTHER FIND THAT THE ASSESSEE ALSO FILED THE AUDIT REPORT IN QUESTION IN COURSE OF ASSESSMENT PROCEEDINGS COMPLETED ON 26.11.2010 ASSE SSING TOTAL INCOME AS RS.13,55,730/-. 4. WE COME TO THE IMPUGNED PENALTY ORDER DATED 13.0 5.2011. THE ASSESSING OFFICER DID NOT FIND ASSESSEES ABOVE STA TED EXPLANATION TO BE SATISFACTORY INTER ALIA ON THE GROUND THAT HIS AUDIT REPORT WAS NOT FOUND WITH THE RETURN AT THE TIME OF VERIFICATION, THERE WAS NO MENTION OF AUDIT REPORT FILING AS PER PAGE 2 OF THE COMPUTATION OF I NCOME, HE HAD ALSO NOT PLACED ON RECORD ITR ACKNOWLEDGMENT AND ALTHOUGH TH E AUDIT REPORT HAD BEEN FILED, THE SAME CAME AFTER THE DUE DATE. THIS LED TO IMPOSITION OF SECTION OF 271B PENALTY AMOUNTING TO RS.4,59,400/- @ % OF THE AGGREGATE SALES AMOUNTING TO RS.9,18,68,671/-. 5. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) PARTL Y CONFIRMS ASSESSING OFFICERS ACTION TO THE TUNE OF RS.1,00,0 00/- AS UNDER:- 6. THE PENALTY ORDER U/S 271B OF THE IT ACT OF THE AO AS WELL AS THE ENTIRE SUBMISSION OF THE APPELLANT HAS BEEN CONSIDERED. TH E SUBMISSION OF THE AR OF THE APPELLANT IS NOT FOUND TO BE TENABLE. IN THE CASE OF THE APPELLANT, THE TOTAL SALES WAS COMING TO RS.9,18,68,671/- AND THER EFORE, ITS BOOKS OF ACCOUNT FOR THE YEAR UNDER CONSIDERATION WERE SUBJE CT TO AUDIT U/S 44AB OF THE IT ACT. HOWEVER, THE APPELLANT HAS NOT BEEN ABL E TO PROVE THAT THE AUDIT REPORT U/S 44AB OF THE IT ACT WAS FILED TO TH E AO ON OR BEFORE THE SPECIFIED DATE IN THE PRESCRIBED FORM DULY SIGNED A ND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MA Y BE PRESCRIBED. THE AO, ON VERIFICATION OF THE RETURN OF INCOME IN THE CASE OF THE APPELLANT AS FILED ON 26/09/2008 HAS FOUND THAT NO SUCH AUDIT RE PORT WAS FILED WITH THE ITA NO.1560/AHD/2013 SHRI VIKRAMBHAI R PATEL VS. ACIT A.Y. 2008-09 - 3 - RETURN OF INCOME IN HIS OFFICE ON OR BEFORE THE SPE CIFIED DATE I.E. ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. THE AO HAS FURTHER NOTICED THAT IN THE LIST OF DOCUMENTS ATTACHED AS PER PAGE NO. 2 OF THE COMPUTATION OF INCOME FILED WITH THE RETURN, THERE ALSO THERE WAS NO MENTION OF FILING OF AUDIT REPORT. AS PER THE AO, ALSO, ON THE FIRST PAG E OF RETURN FILED IN FORM NO. ITR-4, IN THE AUDIT INFORMATION PART, IT IS STA TED THAT THE APPELLANT WAS NO LIABLE FOR AUDIT U/S 44AB OF THE IT ACT. AS PER THE AO, THIS SHOWS THAT THE APPELLANT HAD NEVER GOT ITS ACCOUNTS AUDITED AS PER THIS PROVISION TILL THE DAFE'6TTIIING OF RETURN OF INCOME. AS PER THE A O, NO PHOTO COPY OF ITR WAS ENCLOSED WITH THE REPLY OF THE APPELLANT THOUGH IT WAS STATED THAT IT IS ENCLOSED WITH THE REPLY. THUS, AS PER THE AO, THE C ONTENTION OF THE APPELLANT WITH REGARD TO FILING OF AUDIT REPORT WIT H THE RETURN OF INCOME WAS FALSE. THE AO HAS FURTHER STATED THAT THOUGH TH E COPY OF AUDIT REPORT DATED 18/05/2008 WAS FILED DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, BUT NO AUDIT REPORT WAS FILED WITH THE RETURN OF IN COME AND IN HIS OFFICE ON OR BEFORE THE SPECIFIED DATE. IN MY OPINION, THE FI NDINGS OF THE AO ARE VERY CLEAR AND CORRECT. ON THE OTHER HAND, THE AR OF THE APPELLANT IN HIS SUBMISSION DATED 25/02/2013 HAS NOT BEEN ABLE TO RE BUT SUCH FINDINGS OF THE AO. THE AR IN SUCH SUBMISSION DATED 25/02/2013 HAS STATED THAT DURING THE ASSESSMENT PROCEEDINGS, THE AUDIT REPORT AND ST ATEMENT DULY SIGNED BY AUDITORS DATED 18/05/2008 WAS SUBMITTED. THE AR OF THE APPELLANT HAS FURTHER SUBMITTED IN SUCH SUBMISSION THAT THE ACCOU NTS WITH AUDITED REPORT AND ITS PARTICULARS WERE DULY FILED ON 26/09/2008 A ND THEREFORE, THE SAID PARTICULARS WERE NOT WRITTEN IN THE LIST OF DOCUMEN TS ON PAGE NO. 2 OF THE COMPUTATION OF INCOME TO AVOID DUPLICATION. BUT, TH IS PARTICULAR SUBMISSION OF THE AR OF THE APPELLANT CANNOT BE ACC EPTED. ONCE, THE AR OF THE APPELLANT CLAIMED THAT THE ACCOUNTS WITH AUDITE D REPORT AND ITS PARTICULARS WERE DULY FILED ON 26/09/2008, THEN IN SUCH CASE, THE APPELLANT SHOULD HAVE MENTIONED THE SAME IN THE LIST OF DOCUM ENTS. THE AR OF THE APPELLANT HAS CLAIMED THAT THE AUDITED ACCOUNTS AND ITS PARTICULARS WERE FILED IN THE INCOME-TAX OFFICE ON 26/07/2010 SH OWING THE FILING OF THE ABOVE RECORDS ON 26/09/2008. AGAIN, THIS SUBMIS SION OF THE AR OF THE APPELLANT DOES NOT PROVE THE FACT THE AUDIT REPORT WERE FILED BY THE APPELLANT ALONG WITH THE RETURN OF INCOME ON OR BEFORE THE SP ECIFIED DATED. THE AR HAS FILED SUCH AUDIT REPORT DATED 18/05/2008 ONLY D URING THE COURSE OF ASSESSMENT PROCEEDINGS. THERE IS NOTHING ON RECORD TO SHOW THAT THE AUDIT REPORT U/S 44AB OF THE IT ACT WERE ACTUALLY FILED B Y THE APPELLANT ON OR BEFORE THE SPECIFIED DATE I.E. ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. CONSIDERING ALL THESE FACTS, I HOLD THAT TH E AO HAS LEVIED THE PENALTY U/S 271B OF THE IT ACT CORRECTLY AND THEREF ORE, THE SAME IS CONFIRMED. THUS, THE ABOVE GROUNDS OF APPEAL OF THE APPELLANT ARE DISMISSED. HOWEVER, PENALTY U/S 271B OF THE ACT CAN BE LEVIED ONLY UPTO RS. 1,00,000/- WHICH IS THE MAXIMUM LIMIT. CONSIDER ING THIS FACT THE AO IS ITA NO.1560/AHD/2013 SHRI VIKRAMBHAI R PATEL VS. ACIT A.Y. 2008-09 - 4 - DIRECTED TO LEVY THE PENALTY OF RS.1,00,000/- U/S 2 71B INSTEAD OF RS.4,50,400/- AS LEVIED BY HIM. 6. WE HAVE HEARD BOTH THE PARTIES. RELEVANT FACTS NARRATED HEREINABOVE ARE NOT REPEATED FOR THE SAKE OF BREVIT Y. THIS IS A CASE WHERE THE ASSESSEES ACCOUNTS/AUDIT REPORT IN QUESTION IS DATED 18.05.2008. HE FILED RETURN ON 26.09.2008. THE SAME IS STATED TO HAVE BEEN ENCLOSED WITH THE ASSESSEES AUDIT REPORT IN QUESTION. THE ASSES SING OFFICER IN THE COURSE OF VERIFICATION NOTICED THAT THIS AUDIT REPORT WAS IN FACT NOT ENCLOSED WITH THE RETURN. THE ASSESSEE RELIED ON HIS ITR ACKNOWL EDGMENT WHICH THE ASSESSING OFFICER HAS OUT RIGHTLY REJECTED QUOTING THE FORMERS FAILURE IN PRODUCING ON RECORD A COPY THEREOF. THERE IS NO DI SPUTE THAT THE ASSESSEES AUDIT REPORT STOOD FILED WELL BEFORE THE FRAMING OF A REGULAR ASSESSMENT IN HIS CASE ON 26.11.2010. THE SAME FAC T STANDS RECORDED AT PAGE 4 (IV) OF THE LOWER APPELLATE ORDER. WE OBVER SE IN THESE PECULIAR FACTS AND CIRCUMSTANCES THAT EVEN IF WE HOLD THAT THE ASS ESSEE HAS NOT FILED HIS AUDIT REPORT MANDATED U/S 44AB OF THE ACT, THE SAME IS MERELY A PROCEDURAL LAPSE ON HIS PART. WE ACCORDINGLY HOLD THAT THE ASSESSEE HAS BEEN ABLE TO EXPLAIN HIS DEFAULT IN QUESTION BY PUT TING FORTHWITH REASONABLE CAUSE IN TENDERING HIS EXPLANATION AGAIN ST THE LEVY OF IMPUGNED SECTION 271B PENALTY AS IMPOSED BY BOTH TH E LOWER AUTHORITIES. THE SAME IS ACCORDINGLY ACCEPTED. WE PROCEED TO DE LETE THE PENALTY IN QUESTION OF RS.1,00,000/-. 7. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 11 TH JULY, 2016 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 11/07/2016 *BT ITA NO.1560/AHD/2013 SHRI VIKRAMBHAI R PATEL VS. ACIT A.Y. 2008-09 - 5 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. TRUE COPY / BY ORDER, TRUE COPY / // / (DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD