Bhavana Investor Services Ltd, Hyderabad V. ITO, Ward-1(1), Hyderabad

ITA 1813/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66098 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 21-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PHANI RAJU
• Assessee Lawyers: K A SAI PRASAD
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1813/HYD/2010 ASSESSMENT YEAR : 2004-05 BHAVANA INVESTOR SERVICES LTD., HYDERABAD. PAN: AAACB 8283 H .... APPELLANT VS. ITO, WARD-1(1), HYDERABAD. RESPONDENT APPELLANT BY : SHRI K.A. SAI PRASAD RESPONDENT BY : SHRI PHANI RAJU DATE OF HEARING : 06-06-2012 DATE OF PRONOUNCEMENT : 03 -08-2012 ORDER PER SAKTIJIT DEY, J.M.: T HIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 15-7-2011 OF CIT (A)-II, HYDERABAD PASS ED IN ITA NO.0047/CIT(A)-II, HYD/2007-08 AND IT PERTAINS TO T HE ASSESSMENT YEAR 2004-05. 2. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO IMPOSITION OF PENALTY U/S 271B OF THE ACT. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF SHARE BROKING AND A MEMBER OF NATIO NAL STOCK 2 ITA NO. 1813 OF 2011 BHAVANA INVESTOS SERVICES LTD., HYD.. EXCHANGE. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER DISPUTE ON 27-1-2005. THE AO ISSUED A NOTICE FOR INITIATING PROCEEDING FOR IMPOSITION OF PENALTY U/S 271B OF THE ACT ON THE GROUND THAT THE ASSESSEE HAD NOT FILED THE AUDIT REPORT BEFORE THE SPECIFIED DATE AS PROVIDED U/S 44 AB OF THE ACT. THE ASSESSEE IN ITS EXPLANATION SUBMITTED BEFORE TH E AO STATED THAT ASSESSEE CLOSED DOWN ITS BUSINESS IN AUGUST 20 04 AND ALSO SURRENDERED THE MEMBERSHIP OF NATIONAL STOCK EXCHAN GE. THOUGH THE ASSESSEE GOT ITS ACCOUNTS AUDITED BEFORE THE DU E DATE IT COULD NOT BE SUBMITTED AS THE MANAGING DIRECTOR OF THE CO MPANY FELL ILL AND WAS ADVISED TOTAL BED REST FOR WHICH THE AUDIT REPORT COULD NOT BE SUBMITTED BEFORE THE SPECIFIED DATE. 4. THE AO HOLDING THE EXPLANATION SUBMITTED BY THE ASSESSEE AS AN AFTERTHOUGHT TO EXPLAIN THE LAPSE ON ITS PART PASSED AN ORDER IMPOSING PENALTY OF RS.1,00,000/- U/S 271B OF THE ACT. 5. THE ASSESSEE CHALLENGED THE IMPOSITION OF PENALT Y BY FILING AN APPEAL BEFORE THE CIT (A). THE CIT (A) SUSTAINE D THE IMPOSITION OF PENALTY BY HOLDING THAT AFTER AMENDME NT OF SEC. 44AB, FILING OF AUDIT REPORT WITHIN THE SPECIFIED D ATE IS OBLIGATORY. THE CIT (A) ALSO HELD THAT IF THE ASSESSEE HAD OBTA INED THE AUDIT REPORT WITHIN THE DUE DATE THEN THERE WAS NO REASON TO FILE IT BEYOND THE SPECIFIED DATE. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. IT IS FACT THAT THE ASSESSEE HAD OBTAIN ED THE AUDIT REPORT ON 27-10-2004. THE ASSESSEE HAS ALSO SUBMITT ED EXPLANATION STATING THEREIN THE CAUSE FOR NON SUBMI SSION OF AUDIT REPORT DUE TO ILLNESS OF THE MANAGING DIRECTOR. A MEDICAL CERTIFICATE WAS ALSO SUBMITTED IN SUPPORT OF ILLNES S OF THE MANAGING DIRECTOR. IMPOSITION OF PENALTY U/S 271B OF THE ACT IS NOT AUTOMATIC. THE AO IS VESTED WITH DISCRETION TO CONSIDER THE 3 ITA NO. 1813 OF 2011 BHAVANA INVESTOS SERVICES LTD., HYD.. REASONABLENESS OF AN EXPLANATION BEFORE IMPOSING PE NALTY U/S 271B. PROVISIONS CONTAINED U/S 271B READ WITH SEC. 274 AND 273B MAKES THIS FACT CLEAR. THE CONCLUSION ARRIVED AT BY THE CIT (A) HOLDING THAT AFTER AMENDMENT OF SEC. 44AB FILIN G OF AUDIT REPORT IS OBLIGATORY AND ANY DEVIATION WOULD INVITE IMPOSITION OF PENALTY U/S 271B IS NOT THE CORRECT PROPOSITION OF LAW. THE EXPLANATION SUBMITTED BY THE ASSESSEE PRIMA FACIE C ANNOT BE HELD TO BE UNREASONABLE CONSIDERING THE FACT THAT THE MA NAGING DIRECTOR WAS ILL AND THE ASSESSEE WAS FACING SEVERA L OTHER PROBLEMS. IN THE AFORESAID VIEW OF THE FACT, WE HO LD THAT THE IMPOSITION OF PENALTY WAS NOT JUSTIFIED AND WE DIRE CT FOR DELETING THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 3- 8-2012. SD/- SD /- (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 3 RD AUGUST, 2012. COPY TO:- 1) C/O B. NARASINGH RAO & CO., CAS, PLOT NO.554, RO AD NO.92, JUBILEE HILLS, HYDERABAD. 2) ITO, WARD-1(1), HYDERABAD. 3) THE CIT (A)-II, HYDERABAD 4) THE CIT CONCERNED, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D. JMR* 4 ITA NO. 1813 OF 2011 BHAVANA INVESTOS SERVICES LTD., HYD.. 5 ITA NO. 1813 OF 2011 BHAVANA INVESTOS SERVICES LTD., HYD..