M/s. CRYSTAL CORPORATION (MUMBAI), MUMBAI V. DCIT CEN CIR 20(1), MUMBAI

ITA 177/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1720 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 09-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Assessee Lawyers: MANISH SANGHAVI
• Keywords: Reasonable cause; TDS
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KUM AR ,(AM) ITA NO.177/MUM/2009 ASSESSMENT YEAR : 2004-05 CRYSTAL CORPORATION (MUMBAI) PLOT NO.16, ANDHERI CO. OP. HSG. SOCIETY LTD. V.P. ROAD, ANDHERI (W) MUMBAI-400 058. ..( APPELLANT ) P.A. NO. (AACFC 0802 E) VS. DY. COMMISSIONER OF INCOME TAX -20(1) ROOM NO.603, 6 TH FLOOR PIRAMAL CHAMBERS PAREL, LALBAUG MUMBAI-400 012. ..( RESPONDENT ) APPELLANT BY : SHRI MANISH SANGHAVI RESPONDENT BY : SHRI VI RENDRA OJHA O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 27.10.2008 PASSED BY THE LD. CIT(A) FOR T HE ASSESSMENT YEAR 2004-05. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE F IRM IS A TRADER IN ALUMINIUM AND GLASS AND ALSO DOES JOB WORKS. THE RETURN WAS FILED DECLARING AN INCOME OF RS.17,46,985/-. HOWEV ER, THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.20,94,990/- VID E ORDER ITA NO.177/M/09 A.Y:04-05 2 DATED 28.12.2006 PASSED U/S.143(3) OF THE INCOME TAX ACT , 1961.(THE ACT). WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFICER A LSO INITIATED PENALTY PROCEEDING U/S.271B OF THE ACT AND ACCORDINGLY THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY PENALTY U/S.271B SHO ULD NOT BE IMPOSED. IN RESPONSE, THE ASSESSEE VIDE LETTER DAT ED 10.1.2007 SUBMITTED HIS EXPLANATION WHICH READS AS UNDER (EXTRACTED FROM PAGE 1-2 OF THE PENALTY ORDER): THE SEARCH ACTION U/S.132 OF THE I.T. ACT WAS CARR IED OUT ON 04.10.2001 AND CONCLUDED FINALLY 02.11.2001. TH E BOOKS OF ACCOUNTS, FILES, VOUCHERS AND RECORDS WERE SEIZED ON THAT DATE. THEREAFTER, INSPITE OF ALL EF FORTS COPIES OF BOOKS OF ACCOUNTS COULD NOT BE OBTAINED F ROM THE OFFICE OF THE DIT(INV) AND HENCE THERE WAS DELA Y IN FINALIZING THE ACCOUNTS AND SUBMITTING THE TAX AUD IT REPORT. THUS THERE IS A REASONABLE CAUSE FOR DELAY IN FINALIZING TAX AUDIT FOR ASSESSMENT YEAR 2001-02. FURTHER WE HAVE TO STATE THAT SHRI J.B. DHELIA, FAT HER OF THE PARTNER OF THE FIRM WAS ILL DURING F.Y. 2002-03 . MR. J.B. DHELIA EXPIRED ON 8 TH OCTOBER, 2002. DUE TO THIS AND DUE TO DELAY IN FINALIZATION OF ACCOUNTS OF ASSESSM ENT YEAR 2001-02 THERE WAS DELAY IN FINALIZATION OF ACC OUNTS AND AUDIT FOR ASSESSMENT YEAR 2002-03 AND ASSESSMEN T YEAR 2003-04. THE RETURN OF INCOME FOR ASSESSMENT YEAR 2002-03 WAS FILED ON 24 TH MARCH, 2003 AND RETURN OF INCOME FOR ASSESSMENT YEAR 2003-04 WAS FILED IN MAR CH, 2005. SINCE THE RETURN OF INCOME FOR ASSESSMENT YEAR 2003 -04 AND FINALIZATION OF ACCOUNTS AND AUDIT WAS COMPLETE D IN MARCH, 2005. THE FINALIZATION OF BOOKS OF ACCOUNTS AND AUDIT FOR ASSESSMENT YEAR 2004-05 WAS DELAYED. FUR THER WE HAVE TO STATE THAT THE SR. ACCOUNTANT WHO WAS FINALIZING ACCOUNTS LEFT THE JOB. IT TOOK LOT OF TI ME TO RECONCILE VARIOUS ACCOUNTS AND TO COLLECT TDS CERTI FICATES FROM CUSTOMERS. FINALLY THE AUDIT FOR ASSESSMENT YE AR 2004-05 WAS COMPLETED IN MARCH, 2006. THE RETURN O F INCOME FILED IN MARCH, 2006, DUE TO DELAY IN RECEIV ING TDS CERTIFICATES FROM CUSTOMERS. ITA NO.177/M/09 A.Y:04-05 3 IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THERE IS NO WILLFUL ATTEMPT TO CONTRAVENE THE PROVISIONS OF SEC TION 44AB OF THE ACT. WE REQUEST YOUR HONOUR TO CONSIDER OUR SUBMISSION SYMPATHETICALLY AND CONDONE THE DELAY. REQUESTING YOUR HONOUR TO DROP THE PENALTY PROCEEDI NGS INITIATED U/S.271B OF THE I.T. ACT AND OBLIGE. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEE'S EXPLANATION. HE OBSERVED THAT THE ASSESSEE FIRM HAD ENOU GH TIME TO COMPLETE THE AUDIT OF BOOKS OF ACCOUNT FOR THE YEAR END ING 31.3.2004 ON OR BEFORE 31.10.2004. MOREOVER, IT IS SEEN FROM T HE PAST RECORDS THAT THE ASSESSEE IS A HABITUAL DEFAULTER AND PENALTY LE VIED U/S.271B FOR THE ASSESSMENT YEAR 2003-04 WAS ALSO CONFIRMED BY THE LD. CIT(A). THE ASSESSEE WITHOUT REASONABLE CAUSE FAILED TO G ET HIS ACCOUNTS AUDITED IN TERMS OF SECTION 44 AB OF THE INCOME TAX ACT WITHIN THE STIPULATED TIME AND, HENCE, LIABLE FOR PEN ALTY U/S.271B OF THE ACT AND ACCORDINGLY HE IMPOSED PENALTY OF RS.1,00,00 0/- VIDE ORDER DATED 21.6.2007 PASSED U/S.271B OF THE ACT. ON APPEAL, THE LD. CIT(A) WHILE AGREEING WITH THE VIEWS AND FINDINGS OF THE ASSESSING OFFICER AND RELYING ON THE APPELLATE ORDER FOR THE A SSESSMENT YEAR 2003-04, CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING O FFICER AND DISMISSED THE APPEAL. ITA NO.177/M/09 A.Y:04-05 4 3. BEING AGGRIEVED, BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SU STENANCE OF PENALTY IMPOSED BY THE ASSESSING OFFICER. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE SUBMITS THAT THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE ACIT VS. M/S. CRYSTAL COR PORATION (MUMBAI) IN ITA NO.2103 TO 2106/MUM/2006 FOR THE ASSE SSMENT YEARS 2001-02 AND 2002-03 ORDER DATED 2.8.2007 AND I N CRYSTAL CORPORATION (MUMBAI) VS. ACIT IN ITA NO.2304/M/2007 FOR ASSESSMENT YEAR 2003-04 ORDER DATED 10.3.2008. HE ALSO PLACED ON RECORD THE COPY OF THE SAID ORDERS OF THE TRIBUNAL. HE, THEREFORE , SUBMITS THAT THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) BE DELETED. 5. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER O F THE ASSESSING OFFICER AND THE LD. CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS THE ASSESSEE CONSISTENTLY STAT ED THAT FINALIZATION OF BOOKS OF ACCOUNT AND AUDIT FOR THE ASSESSM ENT YEAR 2004-05 WAS DELAYED IN THE ABSENCE OF FINALIZATION AND RECONCILIATION ITA NO.177/M/09 A.Y:04-05 5 OF ACCOUNTS AND FILING OF RETURNS FOR THE EARLIER YEARS. THE ABOVE EXPLANATION OF THE ASSESSEE WAS NOT CONTROVERTED BY THE R EVENUE EVEN AT THIS STAGE. 7. IN THE ASSESSMENT YEARS 2001-02 AND 2002-03 THE TRIB UNAL IN ASSESSEE'S OWN CASE SUPRA, AFTER CONSIDERING THE SIMILAR REASO NABLE CAUSE SHOWN BY THE ASSESSEE HAS DELETED THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND THE SAID ORDER WAS FOLLOWED BY THE T RIBUNAL IN APPEAL FOR THE ASSESSMENT YEAR 2003-04 SUPRA. IN THE ABSE NCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENU E, WE RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBU NAL HOLD THAT THERE WAS A REASONABLE CAUSE IN TERMS OF SECTION 273B OF T HE ACT. THIS VIEW ALSO FINDS SUPPORT FROM THE DECISION OF THE TRIBUN AL IN ACIT VS. KAMLESH R. AGARWAL (HUF) (2006) 282 ITR(AT) 117(AHD.) (TM), WHEREIN IT HAS BEEN HELD (PAGE-118 OF 282 ITR(AT) HE ADNOTE): HELD, PER R.P. GARG (VICE-PRESIDENT) AGREEING WITH I.P. BANSAL (JUDICIAL MEMBER): SANJAY ARORA (ACCOUNTANT MEMBER) (DISSENTING), DISMISSING THE AP PEAL, THAT IF THERE WAS A REASONABLE CAUSE FOR THE DELAY IN THE EARLIER YEAR, IT HAD TO BE A REASONABLE CAUSE FOR T HE SUBSEQUENT YEAR AS WELL. IF THERE WAS NO REASONABL E CAUSE FOR THAT YEAR, IT WOULD STILL BE A REASONABLE CAUSE FOR THE YEAR UNDER CONSIDERATION, THE REASON BEING THAT IN THE ABSENCE OF AUDIT OF THE EARLIER YEAR, THE OPENI NG BALANCES OF THE ACCOUNTS WOULD NOT BE AVAILABLE AND WITHOUT WHICH NO AUDIT COULD BE COMPLETED VALIDLY. THE AUDIT WITHOUT CONSIDERATION OF OPENING BALANCES WOU LD BE INCOMPLETE AND WOULD HAVE NO SANCTITY. TO THIS EXT ENT, THE ASSESSEE COULD NOT BE SAID TO BE IN DEFAULT.. ITA NO.177/M/09 A.Y:04-05 6 ACCORDINGLY THE PENALTY IMPOSED BY THE ASSESSING OFFICER A ND SUSTAINED BY THE LD. CIT(A) IS DELETED. THE GROUNDS TA KEN BY THE ASSESSEE ARE, THEREFORE, ALLOWED. 8. IN THE RESULT, ASSESSEE'S APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.6.2010. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 11.6.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.