Sai Auto, Vellore V. ITO, Vellore

ITA 1592/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7938 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 31-05-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: T VASUDEVAN
• Keywords: Reasonable cause

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , ! ' . #$ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.1592/MDS./2016 / ASSESSMENT YEAR :2011-12 M/S.SAI AUTO , NO.1,CHENNAI BANGALORE HIGHWAY, NEAR SANGAVI SHOES, ABDULLAPURAM, VELLORE 632 010. VS. THE ITO, WARD NO.I(6), VELLORE. [PAN ABCFS 6186 Q ] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : MR.T.VASUDEVAN, ADVOCATE /RESPONDENT BY : MR.SHIVA SRINIVAS, JCIT, DR / DATE OF HEARING : 15 - 11 - 201 6 / DATE OF PRONOUNCEMENT : 30 - 11 - 2016 , / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-13, DATED 23.0 2.2016 ITA NO.1592/MDS./16 :- 2 -: PERTAINING TO ASSESSMENT YEAR 2011-12 CONFIRMING TH E PENALTY LEVIED U/S.271B OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DEC LARED INCOME OF ` 2,41,850/-, ALONG WITH AGRICULTURAL INCOME OF ` 3,70,000/-. DURING THE ASSESSMENT PROCEEDINGS, AO NOTICED THAT THE AS SESSEE HAS NOT FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 BEFORE 30.09.2011 AND ASSESSEE HAS ALSO NOT FURNISHED THE AUDIT REPOR T U/S.44AB OF THE ACT WITHIN DUE DATE 30.09.2011, HENCE SHOWCASE NOTI CE AS TO WHY PENALTY U/S.271B SHOULD NOT BE INVOKED, DATED 28.0 8.2014 WAS ISSUED TO THE ASSESSEE. IN RESPONSE, THE ASSESSEE COULD NO T SATISFACTORILY EXPLAIN THE REASONS AS TO WHY AUDIT REPORT U/S.44AB COULD NOT BE PREPARED BEFORE THE DUE DATE. THEREFORE, THE AO BY INVOKING THE PROVISIONS OF THE SECTION 271B OF THE ACT, HE PROPO SED LEVY PENALTY @ 0.5% OF THE TURNOVER OR ` 1,50,000/- WHICHEVER IS MINIMUM AND ACCORDINGLY, LEVIED PENALTY AT ` 1,50,000/- U/S.271B OF THE ACT. AGGRIEVED, THE ASSESSEE CARRIED THE APPEAL BEFORE T HE LD.CIT(A). 2.1 BEFORE LD.CIT(A), THE ASSESSEE PLEADED T HAT THERE WAS SOME UNDERSTANDING BETWEEN THE ASSESSEE AND THE AUD ITOR AND PARTNERS OF THE FIRM DECIDED TO CHANGE THE AUDITOR. AFTER THAT ASSESSEE APPROACHED NEW AUDITORS M/S.B.B.SRINIVASAN & ASSOCI ATES AS PER THE APPOINTMENT LETTER DATED 8.11.2011 AND NEW AUDITOR FILED ITS RETURN ON ITA NO.1592/MDS./16 :- 3 -: 02.12.2011. HENCE, THE LD.CIT(A) FOUND THAT THERE IS NO REASONABLE CAUSE FOR NOT FILING THE AUDIT REPORT WITHIN THE TI ME PRESCRIBED AND CONFIRMED THE PENALTY LEVIED U/S.271B OF THE ACT AT ` 1,50,000/-. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, DUE DATE OF FILING THE RETURN OF INCOME WAS 30.09.2011, RETURN WAS FILED ON 02.12.2011. THE AS SESSMENT WAS COMPLETED ON 04.03.2014. THE DUE DATE FOR FILING TH E AUDIT REPORT WAS ON 30.09.2011, BUT THE AUDIT REPORT ALONG WITH RETU RN OF INCOME WAS FILED ON 02.12.2011. IT WAS BROUGHT TO OUR NOTICE THAT THERE WAS A CHANGE OF AUDITOR OF THE ASSESSEE. EARLIER AUDITOR, M/S.B. N. B & ASSOCIATES RESIGNED TO THE POST OF AUDITOR AND TOOK TIME TO APPOINT NEW AUDITOR. THE NEW AUDITOR WAS APPOINTED ONLY ON 08.11.2011 AND HE WAS INFORMED THE OLD AUDITOR AND SOUGHT THE NOC VIDE ITS LETTER DATED 10.11.2011, WHICH WAS SENT BY REGISTERED POST ON 11.11.2011 AND THE NEW AUDITOR PREPARED THE AUDIT REPORT WITH IN A SHORT TIME I.E. ON 02.12.2011 AND THE RETURN WAS FILED ON THE SAME DAY. ACCORDING TO THE LD.A.R, THERE EXISTS REASONABLE CAUSE FOR FILIN G THE AUDIT REPORT BELATEDLY. WE HAVE SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND IN OUR OPINION THIS IS NOT A FIT CASE FOR LEVYING PENALTY U/S.271B OF THE ACT FOR SUCH TECHNICAL BREACH OR VE NIAL BREACH CONTRACT. ITA NO.1592/MDS./16 :- 4 -: THE RESIGNATION THE PREVIOUS AUDITOR IS BEYOND THE CONTROL OF THE ASSESSEE AND IT TOOK FEW MONTHS TO APPOINT NEW AUDI TOR AND TO GET ITS ACCOUNT AUDITED BY THE NEW AUDITOR. ACCORDINGLY, CO NSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO D ELETE THE PENALTY LEVIED U/S.271B OF THE ACT. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON 30 TH NOVEMBER, 2016, AT CHENNAI. SD/ - SD/ - ! ' # . $ %& ' ( DUVVURU RL REDDY ) ) % / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER () / CHENNAI *+ / DATED: 30 TH NOVEMBER, 2016 K S SUNDARAM +,-- ./-0/ / COPY TO: - 1 . / APPELLANT 3. - 1-!' / CIT(A) 5. /23- 4 / DR 2. / RESPONDENT 4. - 1 / CIT 6. 3&-5 / GF