M/s. U.P.CoperatriveCane Development Union Ltd., Basti V. DCIT, GONDA

ITA 166/LKW/2011

• Counselvise Citation: 16623714 RSA 2011
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 08-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K B AJAJ
• Assessee Lawyers: J N SHUKLA
• Keywords: Question of law; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B - BENCH, LUCKNOW. BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI, ACCOUNTANT MEMBER I.T.A.NO.166(LKW.)/2011 A.Y.: 2006-07 M/S. U.P. CO-OPERATIVE CANE DEVELOPMENT VS. THE DY.CIT, CIR. UNION LTD., LUCKNOW. MUNDERWA, DISTRICT BASTI. (U.P.) PAN AAAAC3028R (APPELLANT) (RESPONDENT) I.T.A.NO.167 & 168 (LKW.)/2011 A.YS.: 2006-07 & 2007-08 M/S. U.P. CO-OPERATIVE CANE DEVELOPMENT VS. THE DY.CIT, CIR. UNION LTD., LUCKNOW. BABHNAN, DISTRICT BASTI. (U.P.) PAN AAAAC2736J (APPELLANT) (RESPONDENT) I.T.A.NO.169(LKW.)/2011 A.Y.: 2007-08 M/S. U.P. CO-OPERATIVE CANE DEVELOPMENT VS. THE DY.CIT, CIR. UNION LTD., LUCKNOW. MUNDERWA, DISTRICT BASTI (U.P.) PAN AAAAC3028R (APPELLANT) (RESPONDENT) I.T.A.NO.170(LKW.)/2011 A.Y.: 2007-08 M/S. U.P. CANE DEVELOPMENT VS. THE DY.CIT, CIR. COUNCIL, BABHNAN, LUCKNOW. DISTRICT BASTI (U.P.) PAN AAAZ0217H (APPELLANT) (RESPONDENT) 2 APPELLANTS BY : SHRI J.N.SHUKLA, ADVOCATE RESPONDENT BY : SHRI P.K.BAJAJ, SR.D.R. O R D E R PER H.L.KARWA, VICE PRESIDENT THESE FIVE APPEALS INVOLVING COMMON ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN THE ABOVE APPEALS OF THE ASSESSES, THE AO HAS IMPOSED PENALTIES UNDER SECTION 271B OF INCOME-TAX ACT, 1961 (IN SHORT THE ACT) FOR THE FOLLOWING ASSESSMENT YEARS : APPEAL NO. PENALTY ASSESSMENT YEAR ITA NO.166(LKW)/2011 RS.25,928 2006-07 ITA NO.167(LKW)/2011 RS.30,614 2006-07 ITA NO.168(LKW)/2011 RS.46,660 2007-08 ITA NO.169(LKW)/2011 RS.28,825 2007-08 ITA NO.170(LKW)/2011 RS.24,309 2007-08 2.1 THE LD.CIT(A) UPHELD THE ORDERS OF THE AO IN IMPOSING THE ABOVE PENALTIES UNDER SECTION 271B OF THE ACT AND HENCE THE ASSESSEES ARE IN APPEALS AGAINST THE SEPARATE ORDERS OF THE LD.CIT(A)-II, LUCKNOW DATED 21.12.2010 BEFORE THE TRIBUNAL. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSES ARE CO- OPERATIVE SOCIETIES REGISTERED UNDER THE U.P.CO-OPERATIVE SOCIETIES REGISTRATION ACT AND ENGAGED IN THE BUSINESS OF MARKETING OF SUGARCANE, WHICH IS AN AGRICULTURAL PRODUCE AND TOTAL INCOME IS DEDUCTED FROM THE GROSS 3 TOTAL INCOME OF THE ASSESSEE UNDER SECTION 80P OF THE ACT. IN ALL THE CASES, THE GROSS RECEIPTS OF THE ASSESSES EXCEEDED RS.40 LACS AND THE ASESSEES HAD CLAIMED DEDUCTION UNDER SECTION 80P OF THE ACT AND HAVE FILED THE RETURNS OF INCOME SHOWING NIL INCOME FOR THE ASSESSMENT YEARS UNDER REFERENCE. THE AO IMPOSED IMPUGNED PENALTIES FOR NON-COMPLYING WITH THE PROVISIONS OF SECTION 44AB OF THE ACT. THE ASSESSES WERE REQUIRED TO GET THEIR ACCOUNTS AUDITED AS REQUIRED BY THE SAID SECTION BECAUSE GROSS PROFITS OF THE ASSESSES FOR THE ASSESSMENT YEARS UNDER CONSIDERATION WERE MORE THAN RS.40 LACS. THE ASSESSES FILED SEPARATE APPEALS BEFORE THE LD.CIT(A) AGAINST THE PENALTY ORDERS PASSED BY THE AO. THE LD.CIT(A) CONFIRMED THE PENALTIES IMPOSED BYS THE AO IN ALL THE CASES. 4. BEFORE US SHRI J.N.SHUKLA, ADVOCATE, LEARNED COUNSEL FOR THE ASSESSES INVITED OUR ATTENTION TO THE PROVISIONS OF SECTION 273B OF THE ACT AND SUBMITTED THAT NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN SECTION 271B OF THE ACT, IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. SHRI J.N.SHUKLA, LEARNED COUNSEL FOR THE ASSESSES VEHEMENTLY ARGUED THAT THE ASSESSES WERE PREVENTED BY A REASONABLE CAUSE FROM NOT COMPLYING WITH THE PROVISIONS OF SECTION 44AB OF THE ACT. IN THIS REGARD, SHRI J.N.SHUKLA, LEARNED COUNSEL FOR THE ASSESSEES SUBMITTED THAT THE ASSESSES DID NOT FILE THE AUDIT REPORTS, WHICH WERE REQUIRED UNDER SECTION 44AB OF THE ACT AS THE ASSESSES WERE UNDER THE PRESUMPTION AND BONA FIDE BELIEF THAT THE TOTAL INCOME OF THE ASSESSEES WAS 100% DEDUCTABLE UNDER SECTION 80P OF THE ACT AND HENCE THE ASSESSES, IN GOOD FAITH, DID NOT FILE THE SAME. HE FURTHER SUBMITTED THAT NON-FILING OF THE ABOVE-MENTIONED REPORT IS NON-DELIBERATED AND UNINTENTIONAL AND AS SUCH NO LOSS HAS BEEN CAUSED TO THE REVENUE BY 4 SUCH DEFAULT UNDER SECTION 44AB OF THE ACT. SHRI J.N.SHUKLA, LEARNED COUNSEL FOR THE ASSESSEES ALSO SUBMITTED THAT THE ASSESSES ARE SEMI- GOVERNMENT BODIES AND THEIR SECRETARIES ARE ALSO GOVERNMENT OFFICERS AND AS SUCH A GOVERNMENT DEPARTMENT AND LEVY OF SUCH PENALTY ON THE ASSESSES, WHOSE INCOMES ARE 100% DEDUCTABLE UNDER SECTION 80P OF THE ACT CANNOT BE DONE BY ONE GOVERNMENT DEPARTMENT TO THE OTHER GOVERNMENT DEPARTMENT, WHICH WAS ALSO AN INSTRUMENT AUTHORITY OF THE STATE UNDER ARTICLE 12 OF THE CONSTITUTION AND THE ACT AND HENCE THE IMPUGNED PENALTIES MAY BE CANCELLED. 4.1 SHRI J.N.SHUKLA, ADVOCATE, LEARNED COUNSEL FOR THE ASSESSES ALSO SUBMITTED THAT THE ASSESSES WERE ALSO PREVENTED BY YET ANOTHER REASONABLE CAUSE BECAUSE THEIR ACCOUNTS WERE REQUIRED TO BE AUDITED BY THE STATUTORY AUDITOR, NAMELY, THE DISTRICT AUDIT OFFICER AND SINCE DUE TO NON-FINALISATION OF PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE PRECEDING YEAR, THE AUDIT OF THE ACCOUNTS FOR THE PRECEDING YEAR COULD NOT BE DONE BY THE SAID STATUTORY AUDITOR AND ALSO BY THE CHARTERED ACCOUNTANT. ACCORDING TO SHRI J.N.SHUKLA, LEARNED COUNSEL FOR THE ASSESSES, DUE TO ABOVE REASON THE AUDIT REPORT COULD NOT BE FILED. 4.2 SHRI J.N.SHUKLA, LEARNED COUNSEL FOR THE ASSESSES ALSO INVITED OUR ATTENTION TO A JUDGMENT OF THE HON'BLE HIGH COURT OF UTTARAKHAND IN THE CASE OF CIT AND ANOTHER VS. IQBALPUR CO-OPERATIVE CANE DEVELOPMENT UNION LTD. (2009) 179 TAXMAN 27 WHEREIN ON SIMILAR SET OF FACTS, THE HON'BLE HIGH COURT OF UTTARAKHAND HAS CONFIRMED THE ORDER OF THE TRIBUNAL IN CANCELLING THE PENALTY LEVIED UNDER SECTION 271B OF THE ACT. IN VIEW OF THE ABOVE, SHRI 5 J.N.SHUKLA, LEARNED COUNSEL FOR THE ASSESSES SUBMITTED THAT THE IMPUGNED PENALTIES MAY BE CANCELLED. 5. SHRI P.K.BAJAJ, LD.SR.D.R. ARGUED THAT SINCE THE ASSESSES ADMITTEDLY FAILED TO SUBMIT THE AUDIT REPORT WITHIN THE DUE DATE, AS SUCH, THE ACTION OF THE AO IN IMPOSING THE PENALTIES UNDER SECTION 271B OF THE ACT CANNOT BE HELD TO BE ILLEGAL OR OTHERWISE. SHRI P.K.BAJAJ, LD.SR.D.R. SUBMITTED THAT THE IMPUGNED ORDERS PASSED BY THE LD.CIT(A) MAY BE UPHELD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. SECTION 273B OF THE ACT PROVIDES THAT PENALTY NOT TO BE IMPOSED IN CERTAIN CASES. THIS SECTION FURTHER PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISIONS OF SECTION 271B OF THE ACT, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. IN THE INSTANT CASES, THE CONTENTION OF THE ASSESSES IS THAT THE ASSESSEES WERE UNDER THE BONA FIDE BELIEF THAT THEY WERE NOT REQUIRED TO GET THEIR BOOKS OF ACCOUNT AUDITED UNDER SECTION 44AB OF THE ACT BECAUSE THE TOTAL INCOME OF THE ASSESSEES WAS DEDUCTABLE UNDER SECTION 80P OF THE ACT AND HENCE THE ASSESSEES IN GOOD FAITH DID NOT GET THEIR BOOKS OF ACCOUNT AUDITED. THE NEXT CONTENTION OF THE ASSESSEES IS THAT THEIR ACCOUNTS WERE REQUIRED TO BE AUDITED BY THE STATUTORY AUDITORS, NAMELY, THE DISTRICT AUDIT OFFICER AND SINCE DUE TO NON- FINALISATION OF PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE IMMEDIATELY PRECEDING YEAR, THE AUDIT OF THE ACCOUNT FOR THE PRECEDING YEAR COULD NOT BE DONE BY THE SAID STATUTORY AUDITOR AND ALSO BY THE CHARTERED ACCOUNTANT AND THEREFORE, THE AUDIT OF THE BOOKS OF ACCOUNT FOR THE 6 ASSESSMENT YEARS UNDER CONSIDERATION COULD NOT BE DONE. IN OUR OPINION, THE ABOVE REASONS GIVEN BY THE ASSESSES ARE SATISFACTORY FOR NON-COMPLIANCE OF THE PROVISIONS OF SECTION 44AB OF THE ACT, SO FAR AS THE ASSESSMENT YEARS UNDER CONSIDERATION ARE CONCERNED. WE MAY ALSO POINT OUT THAT THERE IS NO MATERIAL ON RECORD TO CONTROVERT THE ABOVE CONTENTION OF THE ASSESSEES. IN THAT VIEW OF THE MATTER, IT CAN SAFELY BE HELD THAT THE ASSESSEES WERE PREVENTED BY A REASONABLE CAUSE FOR THE FAILURE UNDER SECTION 44AB OF THE ACT. ON THIS SCORE ALONE, IMPUGNED PENALTIES DESERVE TO BE CANCELLED. 6.1 SHRI J.N.SHUKLA, LEARNED COUNSEL FOR THE ASSESSES ALSO CITED A DECISION OF THE HON'BLE HIGH COURT OF UTTARAKHAND IN THE CASE OF CIT VS. IQBALPUR CO-OPERATIVE CANE DEVELOPMENT UNION LTD.(2009) 179 TAXMAN 27. IN THE SAID CASE, THE ASSESSEE WAS A CO-OPERATIVE SOCIETY AND ITS INCOME WAS DEDUCTABLE UNDER SECTION 80P OF THE ACT. THE ASSESSEE WAS REQUIRED UNDER SECTION 44AB OF THE ACT TO GET ITS ACCOUNTS AUDITED, WHICH IT FAILED TO GET DONE WITHIN THE TIME PRESCRIBED UNDER THE ACT. WHEN NOTICES WERE ISSUED TO THE ASSESSEE BEFORE THE PENALTY IS IMPOSED, UNDER SECTION 271B OF THE ACT, THE ASSESSEE PLEADED THAT IT WAS UNDER THE BONA FIDE BELIEF THAT IT WAS NOT REQUIRED TO GET THE REPORT SUBMITTED AS THE INCOME OF THE ASSESSEE WAS EXEMPT UNDER SECTION 80P OF THE ACT. HOWEVER, THE AO HELD THAT THE INCOME OF THE ASSESSEE WAS DEDUTABLE UNDER SECTION 80P, SINCE THE ASSESSEE HAS FAILED TO SUBMIT THE AUDIT REPORT, IT IS LIABLE TO PAY PENALTY UNDER SECTION 271B OF THE ACT. THE ASSESSEE CHALLENGED THE ORDER BEFORE THE LD.CIT(A), DEHRADUN AND THE LD.CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. HOWEVER, IN SECOND APPEAL, I.T.A.T., DELHI ALLOWED THE APPEAL OF THE ASSESSEE. THE DEPARTMENT PREFERRED AN APPEAL BEFORE THE HON'BLE HIGH COURT OF 7 UTTARAKHAND AGAINST THE ORDER OF THE TRIBUNAL AND THE HON'BLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL OBSERVING AS UNDER : 5. HAVING HEARD LEARNED COUNSEL FOR THE PARTIES AND AFTER GOING THROUGH THE PAPERS ON RECORD, WE FIND THAT IT IS ADMITTED CASE THAT ASSESSEE IS A CO-OPERATIVE SOCIETY AND ITS INCOME WAS DEDUCTIBLE UNDER S. 89P OF IT ACT, 1961. NO DOUBT, UNDER THE PROVISIONS OF S. 44AB OF THE ACT, THE ASSESSEE WAS REQUIRED TO GET ITS ACCOUNT AUDITED IRRESPECTIVE OF THE FACT WHETHER THE INCOME WAS DEDUCTIBLE OR NOT. THE QUESTION BEFORE US IS WHETHER IN SUCH A CASE, THERE WAS JUSTIFICATION ON THE PART OF THE AO TO IMPOSE PENALTY UNDER S. 271B OF THE ACT FOR NON- SUBMISSION OF AUDIT REPORT UNDER S. 44AB OR NOT ON OR BEFORE DUE DATE. AO TO IMPOSE PENALTY UNDER S. 271B OF THE ACT FOR NON-SUBMISSION OF AUDIT REPORT UNDER S. 44AB OR NOT ON OR BEFORE DUE DATE. 6. CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT SINCE THERE APPEARS NO INTENTION ON THE PART OF THE ASSESSEE AS FOUND BY THE TRIBUNAL TO CONCEAL THE INCOME OR TO DEPRIVE THE GOVERNMENT OF REVENUE, AS THERE IS NO TAX PAYABLE ON THE INCOME OF THE ASSESSEE, IN VIEW OF THE PROVISIONS OF S. 8OP OF IT ACT, 1961, WE ARE OF THE VIEW THAT IT WAS NOT NECESSARY FOR THE AO TO IMPOSE PENALTY UNDER S. 271B OF THE ACT. ON GOING THROUGH THE IMPUGNED ORDER PASSED BY THE TRIBUNAL, IN THE ABOVE CIRCUMSTANCES, WE DO NOT FIND ANY SUFFICIENT REASON TO INTERFERE WITH THE SATISFACTION RECORDED BY THE TRIBUNAL AS TO THE FINDING OF FACT THAT THE ASSESSEE HAD NO INTENTION TO CAUSE ANY LOSS TO THE REVENUE AND AS SUCH, THE PENALTY WAS NOT NECESSARILY REQUIRED TO BE IMPOSED BY THE AO. AGREEING WITH THE VIEW OF THE TRIBUNAL, WE HOLD THAT THOUGH AN ASSESSEE IS LIABLE TO PENALTY UNDER S. 271B OF IT ACT, 1961, FOR FAILURE TO COMPLY THE PROVISIONS OF S.44AB OF THE ACT, BUT SINCE IN THE PRESENT CASE, NO TAX WAS PAYABLE BY THE ASSESSEE/RESPONDENT IN VIEW OF THE PROVISIONS CONTAINED IN S. 80 P OF THE ACT, THE TRIBUNAL HAS COMMITTED NO ERROR OF LAW IN SETTING ASIDE THE PENALTY IMPOSED BY THE AO. ACCORDINGLY, THE QUESTION OF LAW RAISED IN THE APPEAL STANDS ANSWERED AND THE APPEAL IS DISMISSED. 8 6.2 CONSIDERING THE RATIO LAID DOWN BY THE HON'BLE HIGH COURT OF UTTARAKHAND IN THE CASE OF IQBALPUR CO-OPERATIVE CANE DEVELOPMENT UNION LTD.(SUPRA), WE HOLD THAT IN THE INSTANT CASES ALSO THERE APPEARS TO BE NO INTENTION ON THE PART OF THE ASSESSES TO CONCEAL THE INCOME OR TO DEPRIVE THE GOVERNMENT OF ITS REVENUE AS NO TAX WAS PAYABLE ON THE INCOME OF THE ASSESSEES IN VIEW OF THE PROVISIONS OF SECTION 80P OF THE ACT. IN OUR OPINION, THE RATIO LAID DOWN BY THE HON'BLE HIGH COURT OF UTTARAKHAND IN THE CASE OF IQBALPUR CO-OPERATIVE CANE DEVELOPMENT UNION LTD. (SUPRA) IS CLEARLY APPLICABLE TO THE FACTS OF THE PRESENT CASES. WE MAY ALSO STATE HERE THAT NO CONTRARY DECISION OF ANY HIGH COURT/ HON'BLE SUPREME COURT WAS BROUGHT TO OUR NOTICE BY THE DEPARTMENT. IN VIEW OF THE ABOVE DECISION OF THE HON'BLE HIGH COURT OF UTTARKHAND IN THE CASE OF IQBALPUR CO-OPERATIVE CANE DEVELOPMENT UNION LTD. (SUPRA) ALSO, NO PENALTY UNDER SECTION 271B OF THE ACT IS LEVIABLE IN THE INSTANT CASES. 6.3 IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSES HAVE PROVED THAT THERE WAS REASONABLE CAUSE FOR NOT COMPLYING WITH THE PROVISIONS OF SECTION 44AB OF THE ACT. IN OTHER WORDS, THE ASSESSES WERE PREVENTED BY A REASONABLE CAUSE FOR THE FAILURE ENVISAGED IN SECTION 44AB OF THE ACT. ON SECOND COUNT ALSO, NO PENALTY UNDER SECTION 271B IS LEVIABLE BECAUSE THE DECISION OF THE HON'BLE HIGH COURT OF UTTARAKHAND IN THE CASE OF IQBALPUR CO-OPERATIVE CANE DEVELOPMENT UNION LTD. (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASES. 6.4 VIEWED FROM ANY ANGLE, WE HOLD THAT NO PENALTY UNDER SECTION 271B OF THE ACT IS IMPOSABLE IN THE INSTANT CASES. 9 6.5 IN VIEW OF THE ABOVE, WE CANCEL THE IMPUGNED PENALTIES AND CONSEQUENTLY ALL THE APPEALS SUCCEED. 7. IN THE RESULT, ALL THE FIVE APPEALS ARE ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 7.7.2011. SD. SD. (N.K.SAINI) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT JULY 7TH, 2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R.,ITAT, LUCKNOW. SRIVASTAVA.