The Mathavas Dudh Utpadak Sahakari Mandli Ltd., Sabarkantha V. The Income Tax Officer, S.K.Ward-2, Himatnagar

ITA 1809/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 6826 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 05-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Keywords: Bonafide belief
• Section: 143(1); 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 1809/AHD/2016 (ASSESSMENT YEAR: 2013-14) THE MATHAVAS DUDH UTPADAK SAHAKARI MANDLI LTD., AT: MATHAVAS, PO: FAREDI, TA.- MALPUR, DIST.- SABARKANTHA V/S INCOME TAX OFFICER, S.K. WARD-2, HAMMATNAGAR (APPELLANT) (RESPONDENT) PAN: AABAT 6841N APPELLANT BY : NONE RESPONDENT BY : SHRI S.K.DEV, SR. D.R. ( )/ ORDER DATE OF HEARING : 03 -12-201 8 DATE OF PRONOUNCEMENT : 31-12-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-2, AHMEDABAD DATED 21.08.2015 PERTAINING TO A.Y. 2013- 14. ITA NO. 1809 /AHD/2016 . A.Y. 2013-1 4 2 2. THERE IS A DELAY OF 242 DAYS FOR CONDONATION OF DEL AY. ASSESSEE HAS FILED DETAILED REPLY AND WE ARE CONVINCED WITH THE PLEA T AKEN BY THE ASSESSEE IN THE SAID AFFIDAVIT. THEREFORE, WE CONDONE THE DELAY AND PROCEED WITH THE APPEAL AND APPELLANT HAS TAKEN FOLLOWING GROUNDS OF APPEAL : 1. THE LEARNED COMMISSIONER OF APPEALS-11 HAS CONFIRME D THE PENALTY ORDER PASSED BY LEARNED INCOME TAX OFFICER U/S. 271-B OF I. T. ACT FOR NON FILING TAX AUDIT REPORT U/S. 44AB(A) OF I. T. ACT BEFORE DUE D ATE. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, T O AMEND, TO MODIFY, TO SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEALS ON OR BEFORE THE FINAL HEARING, IF NECESSARY SO ARISES . 3. NONE APPEARED ON BEHALF OF THE ASSESSEE BUT WRITTEN SUBMISSIONS HAVE BEEN FILED. 4. IN THIS CASE, THE RETURN OF INCOME FOR A.Y. 2013-14 WAS E-FILED BY THE ASSESSEE ON 21/10/2013 DECLARING TOTAL INCOME OF RS NIL. THE SAME WAS PROCESSED U/S. 143(1) OF THE IT. ACT. THE ASSESSEE HAS SHOWN GROSS SALES/TURNOVER OF RS 1,43,86,446/- IN HIS RETURN OF INCOME. 5. AS PER SECTION 44AB(A) OF THE IT. ACT, EVERY PERSON CARRYING ON BUSINESS SHALL, IF HIS TOTAL -TURNOVER OR GROSS RECEIPTS AS THE CAS E MAY BE IN BUSINESS EXCEED RS 1 CRORES IN ANY PREVIOUS YEAR GET HIS ACCOUNTS OF S UCH PREVIOUS YEAR AUDITED BY AN ACCOUNTANT BEFORE THE SPECIFIED DATE AND FURNISH BY THAT DATE THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND V ERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCR IBED. ITA NO. 1809 /AHD/2016 . A.Y. 2013-1 4 3 6. IN THIS CASE, ASSESSEE'S GROSS RECEIPT IS RS 1,43 ,86,446/-. IT WAS THEREFORE MANDATORY FOR THE SOCIETY TO GET ITS BOOKS OF ACCOU NTS AUDITED AND FILE THE TAX AUDIT REPORT WITHIN THE SPECIFIED DATE. SECTION 27IB PROVIDES THAT: 'IF ANY PERSON FAILS TO GET HIS ACCOUNTS AUDITED IN RESPECT OF ANY PREVIOUS YEAR OR YEARS RELEVANT TO AN ASSESSMENT YEAR OR FURNISH A REPORT OF SUCH AUDIT AS REQUIRED UNDER SECTION 44AB, THE ASSESSING OFFICER MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY A SUM EQUAL TO O NE-HALF PERCENT OF THE TOTAL SALES, TURNOVER OR GROSS RECEIPTS AS THE CASE MAY B E, IN BUSINESS OR OF THE GROSS RECEIPTS IN PROFESSION, IN SUCH PREVIOUS YEAR OR YE ARS OR A SUM OF ONE HUNDRED FIFTY THOUSAND RUPEES WHICHEVER IS LESS'. 7. THE ASSESSEE WAS REQUIRED TO FILE ITS TAX AUDIT REP ORT WITHIN SPECIFIED DATE. 'SPECIFIED DATE', IN RELATION TO THE ACCOUNTS OF TH E ASSESSEE OF THE PREVIOUS YEAR RELEVANT TO AN ASSESSMENT YEAR MEANS, THE DUE DATE FOR FURNISHING RETURN OF INCOME UNDER SUB SECTION (1) OF SECTION 139. 8. THE PENALTY NOTICE WAS ISSUED TO THE ASSESSEE ON 07 /08/2014 FIXING HEARING ON 20/08/2014. . HOWEVER, NOBODY ATTENDED ON THE DATE OF HEARING. THE REMINDER DATED 20/08/2014 WAS ISSUED TO THE ASSESSEE FIXING HEARING ON 05/09/2014. HOWEVER, NOBODY ATTENDED ON THE DATE OF HEARING. FU RTHER, A SHOW CAUSE NOTICE DATED 11/09/2014 WAS ISSUED TO THE ASSESSEE AS TO WHY A PENALTY U/S 271B SHOULD NOT BE LEVIED FOR VIOLATION OF SECTION 44AB OF THE IT ACT. 9. IN RESPONSE TO THE ABOVE NOTICE, THE ASSESSEE HAS F URNISHED HIS REPLY DTD. 19/09/2014 WHICH IS REPRODUCED AS UNDER:- ' WE ARE IN RECEIPT OF SHOWN CAUSE NOTICE DATED 11/ 09/2014, IN WHICH YOU HAVE ASKED TO PRODUCED NECESSARY DOCUMENTS. IN THIS REGA RD, WE HAVE TO STATE THAT OUR MANDLI IS A MILK UTPADAK MANDALI AND REGISTERED WITH DISTRICT REGISTRAR AS A CO-OPERATIVE SOCIETY. OUR SERVICES ARE TO COLLECT M ILK FROM OUR MEMBERS AND TO ITA NO. 1809 /AHD/2016 . A.Y. 2013-1 4 4 REFILL THE COLLECT MILK TO SABAR DAIRY, WHICH IS NO T DIRECTLY SALE/PURCHASE FOR OUR SOCIETY. THEREFORE, OUR SALE/PURCHASE INCLUDES SUCH MILK COLLECTION, THEREFORE WE REQUEST YOUR GOODSELF TO CONDON THE PENALTY PROC EEDINGS. WE WERE NOT WELL CONVERSANT WITH THE IT LAW THEREFORE WE COULD NOT G OT AUDITED OUR ACCOUNTS U/S 44AB. IF REQUIRED, WE WILL PRODUCE AUDITED DOCUMENT S.' 10. THE ABOVE REPLY OF THE ASSESSEE IS DULY CONSIDERED BUT NOT FOUND ACCEPTABLE. IT WAS MANDATORY FOR ASSESSEE TO GET ITS BOOKS OF ACCO UNTS AUDITED AND FILE THE TAX AUDIT REPORT WITHIN THE SPECIFIED DATE AS PER SECTI ON 44 AB OF THE IT ACT. 11. BUT LD. A.O. WAS NOT CONVINCED WITH THE REPLY FILED BY THE ASSESSEE, THEREFORE, HE IMPOSED PENALTY OF RS. 71,933/-. 12. AGAINST THE ORDER OF THE A.O. FOR LEVY OF PENALTY, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) BUT TO NO AV AIL AND HE CONFIRMED THE ORDER OF THE LD. A.O. 13. NOW APPELLANT IS BEFORE US. 14. WE HAVE GONE THROUGH THE RELEVANT AND IMPUGNED ORDE R. APPELLANT IS A CO-OP. SOCIETY AND MAIN OBJECT OF THE SOCIETY IS TO COLLEC T MILK FROM THE MEMBER OF THE SOCIETY AND WHO ARE LIVING IN MATHAVAS VILLAGE AND SURROUNDING SMALL VILLAGE ONLY. AFTER COLLECTING MILK FROM MEMBER THE SAME MILK SUPPLIED TO SABAR DAIRY CO-OP. SOCIETY LTD., HIMMATNAGAR. THE S OCIETYS PROFIT IS EXEMPTED U/S 80P OF INCOME TAX ACT AND THERE IS NO REVENUE LINKAGE OF THE INCOME TAX DEPARTMENT. THE CO-OP. SOCEITY HAS FILED ITS INCOME TAX RETURN ON 21/10/2013 WITHOUT OBTAINING TAX AUDIT REPORT U/ S. 44AB(A) OF INCOME TAX ACT. ASSESSEES CONTENTION WAS THAT HE WAS OF T HE BONA FIDE BELIEF THAT IT ITA NO. 1809 /AHD/2016 . A.Y. 2013-1 4 5 WAS NOT REQUIRED TO GET THE AUDIT REPORT UNDER INCO ME TAX ACT AS PROFITS OF THE CO-OP. SOCIETY IS EXEMPTED UNDER INCOME TAX ACT. 15. IN SUPPORT OF ITS CONTENTION, ASSESSEE FILED A CASE LAW OF CO-ORDINATE BENCH IN THE MATTER OF THE DODIYA GROUP DUDH UTAPADAK SAHKAR I MANDLI LTD. IN ITA NO. 3279/AHD/2015 AND OPERATIVE PARA OF THE SAID OR DER IS REPRODUCED: 2.1 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE INCOME OF THE ASSESSEE-SOCIETY WAS NIL DURING THE YEAR UNDER CONSIDERATION AND THE SAME WA S ACCEPTED AS SUCH AFTER EXEMPTION U/S 80P OF THE ACT. IT WAS PLEADED BY THE ASSESSEE BEFORE ME THAT THAT THE ASSESSEE WAS OF THE BONAFIDE BELIEF THAT IT WAS NOT REQUIRED TO GET THE AUDIT REPORT UNDER THE INCOME-TAX ACT AS THE PROFIT OF TH E ASSESSEE WAS EXEMPTED UNDER SECTION 80P OF THE ACT. IT WAS ALSO SUBMITTED THAT THERE WAS NO LEAKAGE OF REVENUE SINCE RETURNED INCOME AT NIL WAS ACCEPTED A ND THERE WAS NO DELIBERATE MALAFIDE INTENTION FOR THE DEFAULT. I FIND THAT HON 'BLE UTTARANCHAL HIGH COURT IN THE CASE OF CIT VS. IQBALPUR COOPERATIVE CANE DEVEL OPMENT UNION LTD, REPORTED IN [2009] 179 TAXMAN 27 (UTTARAKHAND), HELD AS UNDER:- 'SECTION 271B- READ WITH SECTION 44AB AND 80P, OF TH E INCOME-TAX ACT, 1961 - PENALTY - FOR FAILURE TO GET ACCOUNTS AUDITE D -ASSESSEE WAS A CO- OPERATIVE SOCIETY ENGAGED IN PROMOTION AND SUPPLY O F SUGARCANE PRODUCED BY ITS MEMBERS TO LOCAL SUGAR MILLS - IT F AILED TO GET ITS ACCOUNT AUDITED AS REQUIRED UNDER SECTION 44AB WITHIN PRESC RIBED TIME AND, THUS, ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 27I B - ON SECOND APPEAL, TRIBUNAL HAVING REGARD TO FACT THAT NO TAX WAS PAYA BLE BY ASSESSEE- SOCIETY UNDER PROVISIONS OF SECTION 80P, SET ASIDE IMPUGNED PENALTY ORDER - WHETHER EVEN THOUGH ASSESSEE WAS LIABLE TO PENALT Y UNDER SECTION 27IB FOR FAILURE TO COMPLY WITH PROVISIONS OF SECTION 44 AB, YET, IN VIEW OF FACT THAT NO TAX WAS PAYABLE BY IT AS PER' PROVISIONS CON TAINED IN SECTION SOP, TRIBUNAL HAD COMMITTED NO ERROR OF LAW IN SETTING A SIDE PENALTY IMPOSED BY ASSESSING OFFICER - HELD, YES.' 2.2 NOTHING CONTRARY WAS BROUGHT TO MY KNOWLEDGE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONIN G AS REFERRED TO ABOVE IN THE CASE OF IQBALPUR CO-OPERATIVE CANE DEVELOPMENT UNIO N LTD (SUPRA), I AM NOT INCLINED TO CONCUR WITH THE FINDINGS OF THE ID. CIT (A); BECAUSE IN THE PRESENT CASE ITA NO. 1809 /AHD/2016 . A.Y. 2013-1 4 6 ALSO NO TAX WAS PAYABLE BY THE ASSESSEE UNDER THE P ROVISIONS OF SECTION 80P THOUGH ASSESSEE, UNDER THE BONAFIDE BELIEF AS STATE D ABOVE, FAILED TO GET ITS ACCOUNT AUDITED AS REQUIRED UNDER SECTION 44AB OF A CT. I, THEREFORE, ALLOW THIS APPEAL FILED BY THE ASSESSEE AND DELETE THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 27IB OF THE ACT. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 16. RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH, WE DELETE THE PENALTY OF RS. 71,933/- U/S. 271B OF INCOME TAX ACT AND LEVIED FOR DEFAULT IN THE TAX AUDIT REPORT. 17. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 31- 12- 2018 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 31/12/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD