Morakhia Copper & Alloys pvt. Ltd., Ahmedabad V. ACIT, Circle-2(1)(2), Ahmedabad

ITA 1660/AHD/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0820 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-02-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 12-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Reasonable cause; Set aside
• Section: 139; 143(3); 274; 143(2); 271B; 44AB; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I KUL BHARAT , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER MORAKHIA COPPER AND ALLOYS PVT. LTD. 12, SECOND FLOOR, MARDIA PLAZA, C.G. ROAD, NAVRANGPURA, AHMEDABAD PAN: AAACM3439J (APPELLANT) VS THE ACIT, CIRCLE - 2(1)(2), 112, 1 ST FLOOR NAVJIVAN TRUST BUILDING, NR. NAVJIVAN POST OFFIC E, AHMEDABAD - 380014 (RESPONDENT) REVENUE BY : S H RI VIDHYUT TRIVEDI , SR. D . R. ASSESSEE BY: SHRI TUSHAR P. HEMANI , A.R. DATE OF HEARING : 28 - 0 2 - 2 020 DATE OF PRONOUNCEMENT : 21 - 05 - 2 020 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2015 - 16 , ARI SES FROM ORDER OF THE CIT(A) - 2, AHMEDABAD DATED 1 3 - 06 - 2 018 , IN PROCEEDINGS UNDER SECTION 271B OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 1660 / A HD/20 18 A S S ESSMENT YEAR 2015 - 16 I.T.A NO. 1660 /AHD/20 18 A.Y. 2015 - 16 PAGE NO MORAKHIA COPPER & ALLOYS PVT. LTD. VS. ACIT 2 2. THE SO LITARY ISSUE IN THE GROUND OF APPEAL FILED AGAINST THE ORDER OF LD. CIT(A) IN CONFIRMING THE LEVY OF PENALTY OF RS. 1,50,000/ - U/S. 271 B OF THE ACT. 3. THE FACT IN BRIEF IS THAT ASSESSEE HAS FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2015 - 16 ON 6 TH MARCH, 2017 DECLARING LOSS OF RS. 1 , 12 , 52 , 215/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) OF THE ACT WAS ISSUED ON 21 ST SEP, 2017. THE ASSESSMENT U/S. 143(3) OF THE ACT WAS FINALIZED ON 19 TH DECEMBER, 2017 AND TOTAL INCOME WAS DETERMINED AT LOS S OF RS. 82 , 89 , 679/ - . THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAS NOT FILED AUDIT REPORT ALONG WITH TAX AUDIT REPORT IN FORM 3CD WHILE SUBMITTING THE RETURN OF INCOME AS SPECIFIED U/S. 139 OF THE ACT. THEREFORE, SHOW CAUSE NOTICE U/S. 274 R.W.S 2 71B OF THE ACT WAS ISSUED ON 28 TH AUGUST, 2017. THE ASSESSEE HAS FILED LETTER FOR ADJOURNMENT. THE ASSESSING OFFICER HAS STATED THAT ASSESSEE HAS FAILED TO FURNISH THE REQUIRED AUDIT REPORT U/S. 44AB, THEREFORE, HE HAS LEVIED A PENALTY OF RS. 1,50,000/ - ON THE GROUND THAT ASSESSEE WAS HAVING TOTAL TURNOVER OF RS.83 , 85 , 40 , 050/ - IN THE BELATED RETURN OF INCOME FILED ON 6 TH MARCH, 2017. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE ASSESSEE HAS SUBMITTED BEFORE LD. CIT(A) THAT IT HAS BE EN SUFFERING LOSSES FROM LAST COUPLE OF YEARS AS A RESULT THE COMPANY HAS FACED TREMENDOUS DIFFICULTIES EVEN TO MANAGE BASIC EXPENSES FOR ADMINISTERING THE BUSINESS OF THE COMPANY. THE CHIEF ACCOUNTANT OF THE ASSESSEE COMPANY HAS RESIGNED AT THE CRITICAL MOMENT A N D THERE WAS NO OTHER STAFF AVAILABLE TO CO - ORDINATE THAT THE AUDIT TO GET ITS ACCOUNT AUDITED. IT IS FURTHER SUBMITTED THAT NEWLY APPOINTED ACCOUNTANT SHRI PRAKASH MORAKHIA WAS DIAGNOSED WITH I.T.A NO. 1660 /AHD/20 18 A.Y. 2015 - 16 PAGE NO MORAKHIA COPPER & ALLOYS PVT. LTD. VS. ACIT 3 POLYARTHRITS AND THEREFORE HE COULD NOT ATTEND THE OF FICE. THE ASSESSEE COMPANY HAS FURNISHED THE ADDITIONAL EVIDENCES BEFORE THE LD. CIT(A) IN THE FORM OF MEDICAL CERTIFICATE AND THE RESIGNATION LETTER OF THE CHIEF ACCOUNTANT ETC. HOWEVER, THE LD. CIT(A) HAS NOT ACCEPTED THE AFORESAID SUBMISSION OF THE AS SESSEE AND DISMISSED THE APPEAL OF THE ASSESSEE. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS FURNISHED PAPER BOOK COMPRISING DETAIL AND DOCUMENT S I.E. RESIGNATION LETTE R OF CHIEF ACCOUNTANT, COPY OF MEDICAL CERTIFICATE A ND RELATED DOCUMENTARY EVIDENCES IN RESPECT OF ILL HEALTH OF NEWLY APPOINTED ACCOUNTANT, MR. PRAKASH MORAKHIA AND DOCUMENTARY EVIDENCES OF THE FACT THAT ACCOUNTANT SHRI PRAKASH MORAKHIA WAS DISQUALIFIED BY THE MINISTRY OF CORPORATE AFFAIRS W.E.F. 1 ST NOV, 2016. THE LD. COUNSEL HAS VEHEMENTLY CONTENDED THAT WITHOUT GIVING ANY COMMENT ON THE SUPPORTING RELEVANT EVIDENCES FURNISHED BY THE ASSESSEE FOR NOT FILING TAX AUDITOR REPORT TO THE ITD SYSTEM WITHIN DUE DATE , THE LD. CIT(A) HAS ERRONEOUSLY CONFIRMED THE PENALTY U/S. 271 B LEVIED BY THE ASSESSING OFFICER. ON THE OTHER HAND , LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDER OF AUTHOR ITIES BELOW. THE ASSESSING OFFICER HAS LEVIED PENALTY U/S. 271B FOR FAILURE TO FURNISH THE AUDIT REPORT U/S. 44AB TO THE ITD SYSTEM WITHI N DUE DATE . BEFORE THE LD. CIT(A), T HE ASSESEE HAS FURNISHED ADDITIONAL DOCUMENTARY EVIDENCES I.E. RESIGNATION OF ITS CHIEF ACCOUNTANT SUBSTANTIATING LACK OF ADEQUATE STAFF, PROOF OF ILLNESS OF MR. PRAKASH MORAK HIA AND HIS DISQUALIFICATION BY MINISTRY OF CORPORATE AFFAIRS ETC. IT IS I.T.A NO. 1660 /AHD/20 18 A.Y. 2015 - 16 PAGE NO MORAKHIA COPPER & ALLOYS PVT. LTD. VS. ACIT 4 NOTICED THAT EVEN AFTER ADMITTING ADDITIONAL EVIDENCES THE LD. CIT(A) HAS NEITHER DISPRO VED THE GENUINENESS OF DOCUM EN TARY EVIDENCES FURNISHED BY THE ASSESSEE AT THE TIME OF APPELLATE PROCEEDINGS IN THE FORM OF ADDITIONAL EVIDENCES NOR CALLED ANY REMAND REPORT/EVIDENCES FROM THE ASSESSING OFFICER TO DISPROVE THE GENUINENESS OF THE EVIDENCES F URNISHED BY THE ASSESSEE. APART FR OM THIS, THE ASSESSEE HAS ALSO SUBMITTED BEFORE THE LD. CIT(A) THAT ASSESSEE COMPANY HAS BEEN IN THE BUSINESS FOR MORE THAN 10 YEARS AND ASSESSE E COMPANY HAS NEVER COMMITTED SUCH DEFAULT IN SUBMISSION OF AUD IT REPORT. WE OBSERVE THAT PROVISION OF SECTION 273 PROVIDES THAT NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASESSEE AS THE CASE MAY BE REFERRED TO IN THE SAID PROCEEDINGS, IF HE PROVES THAT THERE IS REASONABLE CAUSE FOR THE SAID FAILURE. AFTER CONSIDERING THE ABOVE FACTS AND MATERIAL ON RECORD PLACE D IN THE PAPER BOOK, WE OBSERVE THAT ASSESSEE HAS PROVED WITH NECESSARY EVIDENCES THAT THERE WAS SUFFICIENT AND REASONABLE CAUSE FOR NOT FILING TAX AUDIT REPORT TO THE ITD SYSTEM WITHIN THE DUE DATE, T HEREFORE, W E CONSIDER THAT LD. CIT(A) WITHOUT DISPROVING THE AFORESAID FACTS HAS SIMPLY UPHELD PENALTY LEVIED BY THE ASSESSING OFFICER. HENCE, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND DIRECTED THE ASSESSING OFFICER TO DELETE PENALTY LEVIED U/S. 271B OF TH E INCOME TAX ACT, 1961. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 21 - 0 5 - 20 20 SD/ - SD/ - ( KUL BHARAT ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 21 /0 5 /2020 I.T.A NO. 1660 /AHD/20 18 A.Y. 2015 - 16 PAGE NO MORAKHIA COPPER & ALLOYS PVT. LTD. VS. ACIT 5 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,