Sri C.T.Chacko, Kottayam V. ITO, Thiruvalla

ITA 170/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61472 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-03-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 03-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: THANKACHAN ZACHARIA
• Keywords: Reasonable cause
• Section: 273B; 148; 2; 139

Judgement Text

1 ITAS 169 TO 172 & 216 TO 222/COCH/2010 IN THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N (AM) I.T.A. NO. 169/COCH/2010 - A.Y. 1998-99 I.T.A. NO. 170/COCH/2010 - A.Y. 1999-2000 I.T.A. NO. 171/COCH/2010 - A.Y. 2000-01 I.T.A. NO. 172/COCH/2010 - A.Y. 2001-02 I.T.A. NO. 216/COCH/2010 - A.Y. 1995-96 I.T.A. NO. 217/COCH/2010 - A.Y. 1996-97 I.T.A. NO. 218/COCH/2010 - A.Y. 1997-98 I.T.A. NO. 219/COCH/2010 - A.Y. 1998-99 I.T.A. NO. 220/COCH/2010 - AY 1999-2000 I.T.A. NO. 221/COCH/2010 - A.Y. 2000-01 I.T.A. NO. 222/COCH/2010 - A.Y. 2001-02 SHRI C.T. CHACKO VS ITO, WD.1 CHALUVELIL, THOTTACKADU THIRUVALLA CHANGANACHERRY PAN : ABNPT3951H (APPELLANT) (RESPONDENT) DATE OF HEARING : 27-03-2012 DATE OF PRONOUNCEMENT : 27-04-2012 APPELLANT BY : SHRI THANKACHAN ZACHARIA RESPONDENT BY : SHRI S.R. SENAPATI O R D E R PER N.R.S. GANESAN (JM) ITA NOS 169 TO 172/COCH/2010 ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY THE COMMISSIONER (APPEALS) CONFIRMING THE PENALTY LEVIED U/S 271A OF 2 ITAS 169 TO 172 & 216 TO 222/COCH/2010 THE ACT FOR THE ASSESSMENT YEARS 1998-99 TO 2001-02. ITA NOS 216 TO 222/COCH/2010 ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY THE COMMISSIONER (APPEALS) CONFIRMING THE PENALTY LEVIE D U/S 271(1)(C) FOR THE ASSESSMENT YEARS 1995-96 TO 2001-02. THEREFORE, WE H EARD ALL THE APPEALS TOGETHER AND DISPOSE OF THE SAME BY THIS COMMON ORD ER. 2. LET US FIRST TAKE THE APPEALS PERTAINING TO LEVY OF PENALTY U/S 271A FOR THE ASSESSMENT YEARS 1998-99 TO 2001-02. 3. SHRI THANKACHAN ZACHARIA, THE LD.REPRESENTATIVE F OR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A SMALL TIME POULTRY FARMER IN A REMOTE VILLAGE IN THE STATE OF KERALA. THEREFORE, THE ASSESSEE COULD NOT MAINTAIN ANY BOOKS OF ACCOUNT FOR THE POULTRY BUSINESS. ACCORDING TO THE LD.REPRESENTATIVE, IT IS VERY DIFFICULT TO GET AN ACCOUNTANT TO MAINTAIN THE BOOKS OF ACCOUNT AT THE REMOTE VILLAGE. THEREFORE, THE NON MAINTENANCE OF THE BOO KS OF ACCOUNT BY THE ASSESSEE IS DUE TO REASONABLE CAUSE WITHIN THE MEANING OF SE CTION 273B OF THE ACT. 4. ON THE CONTRARY, SHRI S.R. SENAPATI, THE LD.DR S UBMITTED THAT WHEN THE INCOME EXCEEDS RS.25,000 THE ASSESSEE WAS EXPECTED TO MAINTAIN THE BOOKS OF ACCOUNT AS REQUIRED U/S 44AA OF THE ACT. ADMITTEDL Y, THE INCOME EXCEEDED RS.25,000 IN ALL THE YEARS. THEREFORE, THE NON MAI NTENANCE OF BOOKS OF ACCOUNT IS NOT JUSTIFIED. ACCORDING TO THE LD.DR, THERE WAS N O REASONABLE CAUSE FOR NON MAINTENANCE OF THE BOOKS OF ACCOUNT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS DOING POULTRY BUSINESS IN A REMOTE VILLAGE IN THE STATE OF KERALA. IT IS VERY DIFFICULT FOR THE 3 ITAS 169 TO 172 & 216 TO 222/COCH/2010 ASSESSEE TO GET ACCOUNTANT IN A REMOTE VILLAGE. TH E ASSESSEE WAS ALSO NOT FILING RETURN OF INCOME REGULARLY. THE FACT REMAINS IS TH AT THE ASSESSEE IS NOT MAINTAINING BOOKS OF ACCOUNT. SECTION 44A(2) CLEARL Y SAYS THAT THE ASSESSEE HAS TO MAINTAIN THE BOOKS OF ACCOUNT WHEREVER THE INCOME EXCEEDS RS.25,000. THE LEGISLATURE PROVIDES FOR IMMUNITY FROM LEVY OF PENA LTY WHEREVER THERE WAS A REASONABLE CAUSE FOR NOT COMPLYING WITH THE PROVISI ONS OF THE INCOME-TAX ACT. IN OTHER WORDS, SECTION 273B PROVIDES FOR IMMUNITY FRO M PENALTY WHEREVER THERE WAS A REASONABLE CAUSE. IN THIS CASE, THE ASSESSEE CLAIMS THAT IN A REMOTE VILLAGE IT IS VERY DIFFICULT TO GET AN ACCOUNTANT AT AFFORD ABLE COST, THEREFORE, HE COULD NOT MAINTAIN THE BOOKS OF ACCOUNT. THE FACT REMAINS IS THAT THE ASSESSEE IS IN THE BUSINESS OF POULTRY FARMING WHICH IS ASSOCIATED WIT H AGRICULTURE. IN THIS COUNTRY AGRICULTURE IS STILL CONTINUED TO BE AN UNORGANIZED SECTOR. MANY PEOPLE ARE DOING AGRICULTURE WITHOUT MAINTAINING ANY BOOKS OF ACCOUNT . IT DOES NOT MEAN THAT THE ASSESSEE IS NOT EXPECTED TO MAINTAIN BOOKS OF ACCOU NT. THE ASSESSEE IS VERY MUCH EXPECTED TO MAINTAIN THE BOOKS OF ACCOUNT. BUT TAKING INTO CONSIDERATION THE REMOTENESS OF THE VILLAGE IN WHICH THE ASSESSEE IS CARRYING ON THE BUSINESS AND THE NATURE OF BUSINESS CONDUCTED BY THE ASSESSE E, THIS TRIBUNAL IS OF THE OPINION THAT THERE WAS A REASONABLE CAUSE FOR NOT M AINTAINING BOOKS OF ACCOUNT AS REQUIRED U/S 44AA OF THE ACT. THEREFORE, THE AS SESSEE IS ENTITLED FOR EXEMPTION U/S 273B OF THE ACT. IN VIEW OF THE ABOV E, WE ARE UNABLE TO UPHOLD THE ORDER OF THE LOWER AUTHORITIES. ACCORDINGLY, T HE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE LEVY OF PENALTY U /S 271A IS DELETED. 6. NOW COMING TO THE PENALTY LEVIED U/S 271(1)(C) O F THE ACT FOR THE ASSESSMENT YEARS 1995-96 TO 2001-02, THE CONTENTION O F THE ASSESSEE IS THAT THERE WAS A REASONABLE CAUSE ON THE PART OF THE ASS ESSEE. ACCORDING TO THE LD.REPRESENTATIVE, THE QUANTUM ADDITION MADE BY THE ASSESSING OFFICER WAS 4 ITAS 169 TO 172 & 216 TO 222/COCH/2010 SUBSTANTIALLY REDUCED BY THE COMMISSIONER OF INCOME -TAX(A). ON FURTHER APPEAL BEFORE THIS TRIBUNAL, THE TRIBUNAL HAS ALSO DELETED PART OF THE ADDITION MADE BY THE ASSESSING OFFICER. IT IS NOT A CASE OF CONCEAL MENT OF ANY INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. 7. ON THE CONTRARY, SHRI S.R. SENAPATI, THE LD.DR S UBMITTED THAT IN THE ORIGINAL RETURNS ASSESSEE HAS NOT DISCLOSED THE CORRECT INCO ME. THE ASSESSING OFFICER COLLECTED THE MATERIAL FROM VARIOUS SHOPS AND DIFFE RENT BANKS WITH REGARD TO THE TRANSACTION OF THE ASSESSEE. ON THE BASIS OF THE M ATERIAL COLLECTED FROM THE SHOPS AND THE BANKS THE ADDITION WAS MADE. REFERRIN G TO THE PENALTY ORDER, THE LD.DR POINTED OUT THAT THE ASSESSEE HAS NOT FILED A NY RETURN OF INCOME AS REQUIRED U/S 148 OF THE ACT. THEREFORE, THERE WAS A CONCEALMENT OF INCOME. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS RIGHTLY POINT ED OUT BY THE LD.DR, THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME IN RESP ONSE TO NOTICE ISSUED U/S 148 AFTER REOPENING THE ASSESSMENT. EXPLANATION 3 TO S ECTION 271(1)(C) READS AS FOLLOWS: EXPLANATION 3.- WHERE ANY PERSON FAILS, WITHOUT REA SONABLE CAUSE, TO FURNISH WITHIN THE PERIOD SPECIFIED IN SUB-SECTIO N (1) OF SECTION 153 A RETURN OF HIS INCOME WHICH HE IS REQUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMME NCING ON OR AFTER THE 1 ST DAY OF APRIL, 1989, AND UNTIL THE EXPIRY OF THE PE RIOD AFORESAID, NO NOTICE HAS BEEN ISSUED TO HIM UNDER C LAUSE (I) OF SUB- SECTION (1) OF SECTION 142 OR SECTION 148 AND THE A SSESSING OFFICER OR THE COMMISSIONER (APPEALS) IS SATISFIED THAT IN RESPECT OF SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INCOME, THE N, SUCH PERSON SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SE CTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RESPECT OF SUCH ASSESSMENT YEAR, NOTWITHSTANDING THAT SUCH PERSON F URNISHES A 5 ITAS 169 TO 172 & 216 TO 222/COCH/2010 RETURN OF HIS INCOME AT ANY TIME AFTER THE EXPIRY O F THE PERIOD AFORESAID IN PURSUANCE OF A NOTICE UNDER SECTION 14 8. ONCE THE ASSESSEE HAS NOT FURNISHED ANY RETURN IN R ESPONSE TO NOTICE U/S 148 AND THE ASSESSEE WAS HAVING TAXABLE INCOME THERE WAS A DEEMED CONCEALMENT WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. FURTH ERMORE, THE ASSESSMENT WAS MADE ON THE BASIS OF THE MATERIAL COLLECTED FROM TH E SHOPS AND BANKS. THE ASSESSED INCOME AS PER THE ORDER OF THIS TRIBUNAL I S MORE THAN THE INCOME ACTUALLY RETURNED BY THE ASSESSEE IN ALL THE YEARS. THEREFORE, THE DIFFERENCE BETWEEN THE INCOME RETURNED AND INCOME ASSESSED AS PER THE ORDER OF THIS TRIBUNAL HAS TO BE CONSIDERED AS CONCEALED INCOME, SINCE THE ASSESSEE HAS NOT FILED RETURN OF INCOME U/S 148 OF THE ACT. THE APP ELLATE COMMISSIONER HAS RESTRICTED THE PENALTY TO MINIMUM EVEN THOUGH THE A SSESSING OFFICER LEVIED PENALTY AT 150%. SINCE THE COMMISSIONER OF INCOME- TAX(A) HAS RESTRICTED THE PENALTY TO THE MINIMUM AMOUNT PRESCRIBED U/S 271(1) (C) OF THE ACT, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LOWER AUTHORITY. 9. IN THE RESULT, APPEALS IN ITA NOS 172 TO 216/COC H/2010 ARE ALLOWED AND APPEALS IN ITA NOS 217 TO 222/COCH/2010 ARE DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF APRIL, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 27 TH APRIL, 2012 PK/- 6 ITAS 169 TO 172 & 216 TO 222/COCH/2010 COPY TO: 1. SHRI C.T. CHACKO, CHALUVELIL, THOTTACKADU, CHANGANACH ERRY 2. ITO, WD.1, THIRUVALLA 3. THE COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, KOCHI