Bhagwan Das Rai, Itarsi V. The ITO Ward-, Itarsi

ITA 16/Ind/2023

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0566 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-10-2023
• Assessment Year: misc
• Appeal Filed On: 23-01-2023
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Business income; Principle of natural justice
• Section: 144; 273B; 271B; 44AB

Judgement Text

Page 1 of 4 आयकर अपीलȣय अͬधकरण, इंदौर Ûयायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No.16/Ind/2023 Assessment Year: 2017-18 Shri Bhagwandas Rai, M/s.Deva Marketing, Hospital Road, Bankhedi बनाम/ Vs. ITO, Ward-2, Itarsi. (Assessee / Appellant) (Revenue / Respondent) PAN: BYNPR 3993 P Assessee by Shri Apurva Mehta, CA Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 12.10.2023 Date of Pronouncement 25.10.2023 आदेश / O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by appeal-order dated 25.11.2022 passed by learned Commissioner of Income-tax, NFAC, Delhi [“Ld. CIT(A)”], which in turn arises out of penalty-order dated 07.01.2022 passed by ITO-2, Itarsi, [“Ld. AO”] u/s 144 of Income-tax Act, 1961 [“the Act”] for assessment-year [“AY”] 2017-18, the assessee has filed this appeal on following grounds: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), National Faceless Appeal Centre (NFAC) [‘The Ld. CIT(A)] has erred in confirming the levy of penalty u/s 271B of the Income-tax Act, 1961, (‘the Act’) by the Ld. AO,NFAC, Delhi (‘the Ld.AO’) for not furnishing tax audit report u/s 44AB of the Act which is wrong and contrary to the facts Shri Bhagwan Das Rai ITA No.16/Ind/2023 A.Y. 2015-16 Page 2 of 4 of the case and thus the penalty u/s 271B of the Act is liable to be deleted. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that the assessee is a commission agent for Bharti Airtel and earns commission income. Thus the assessee was under bonafide belief that only the commission receipt was to be considered in determining the turnover and consequently deciding whether the assessee was liable to get his accounts audited u/s 44AB of the Act. Thus, the levy of penalty u/s 271B of the Act is wrong and is liable to be deleted. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that the assessee is voucher distributor for the telecom company Bharti Airtel and earns commission income. The assessee merely transfers the cash collected from the retailers to Bharti Airtel and charges a percentage as commission. Thus the levy of penalty u/s 271B of the Act by considering the cash collected from retailers on behalf of Bharti Airtel as turnover of the assessee is wrong and liable to be deleted. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that the amount credited in the Bank account of the assessee was received by him as an agent/dealer of Bharti Airtel. The assessee had only retained his commission income. Thus, the levy of penalty u/s 271B of the Act is wrong and contrary to the facts of the case and is liable to be deleted. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming penalty u/s 271B of the Act which is against the principle of natural justice. Thus, the penalty u/s 271B is against the facts of the case and provisions of the Act which is liable to be deleted.” 2. Heard the learned Representatives of both sides at length and case- records perused. 3. The assessee in present appeal is aggrieved by penalty of Rs. 64,025/- imposed by AO u/s 271B of the Income-tax Act, 1961 vide order dated 07.01.2022 for not getting accounts audited u/s 44AB. 4. Ld. AR for assessee submitted that the assessee was engaged in the business of selling telecom re-charge coupons. The assessee had a bonafide belief that the assessee’s activity was in the nature of earning commission from sale of re-charge coupons and the amounts collected from customers Shri Bhagwan Das Rai ITA No.16/Ind/2023 A.Y. 2015-16 Page 3 of 4 as sale price of coupons and transferred to telecom companies, was not assessee’s turnover. Since the commission amount did not exceed the limit of Rs. 1 crore prescribed in section 44AB for audit of accounts, the assessee did not get the audit done. Ld. AR submitted that the section 273B prescribes that no penalty u/s 271B shall be imposed if there is a reasonable cause of default. Ld. AR prayed that the assessee’s bonafide understanding of the nature of business as ‘commission business’ constitutes a reasonable cause, therefore the assessee should be given benefit of section 273B and relieved from penalty. Ld. AR also relied upon the decision of ITAT, Kolkata Bench in Anunoy Mukherjee Vs. ITO, Durgapur, ITA No. 555/Kol/2022, order dated 23.02.2023 wherein identical penalty imposed by revenue in identical set of circumstance was quashed. 5. Per contra, Ld. DR for revenue supported the orders of lower- authorities and opposed the submissions of assessee. He submitted that the AO has assessed turnover of assessee at Rs. 1,28,05,010/- in assessment- order. Thereafter and therefore, the AO has concluded that the turnover of assessee had exceeded the limit of Rs. 1 crore prescribed in section 44AB necessitating audit of accounts. Then only, the AO has imposed penalty of Rs. 64,025/- @ ½% of turnover of Rs. 1,28,09,010/-. Ld. AR contended that the order passed by AO is proper, legal and justified in the situation; the penalty imposed by AO must be upheld. 6. We have considered rival contentions of both sides and perused the assessment-order as well as penalty-order passed by AO and first appeal- order passed by CIT(A). On a careful consideration of assessment-order, a copy of which is available in case-file, we find that the AO has computed turnover of assessee at Rs. 1,28,05,010/- and on that turnover, applied net profit rate of Rs. 18.85%; accordingly computed taxable business income of assessee at Rs. 24,13,744/-. Thus, it is manifest that the AO has not assessed ‘commission’ receipt of assessee, he has found and assessed Shri Bhagwan Das Rai ITA No.16/Ind/2023 A.Y. 2015-16 Page 4 of 4 business receipts at Rs. 1,28,05,010/- on the basis of business receipts deposited in bank a/c. Therefore, when we countered Ld. AR on this aspect and enquired from him as to whether the assessee has accepted AO’s finding, Ld. AR submitted that the assessee has contested AO’s finding in quantum-appeal before CIT(A) but that appeal is pending as of now. Finding this state, we feel it more appropriate to remand this appeal also to the file of CIT(A) for a fresh adjudication after final clarity in quantum-appeal qua the activity/turnover of assessee. Needless to mention that while deciding penalty issue, the CIT(A) shall also consider the decision in Anunoy Mukherjee (supra). 7. Resultantly, this appeal is allowed for statistical purpose. Order pronounced in the open court on 25.10.2023. Sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore Ǒदनांक /Dated : 25.10.2023 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore