M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, JAIPUR

ITA 188/JPR/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6234 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 08-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA
• Keywords: Reasonable cause; Revised return
• Section: 273B; 27; 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 188/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., VIDYUT BHAWAN, JAN PATH, JYOTI NAGAR, JAIPUR CUKE VS. ACIT, CIRCLE-06 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCR8312A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. SEEMA MEENA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/04/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT :11/04/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-2, JAIPUR DATED 21.11.2017 FOR ASSESSMEN T YEAR 2013-14 WHEREIN THE ASSESSEE HAS CHALLENGED THE CONFIRMATIO N OF LEVY OF PENALTY OF RS. 1,50,000/- U/S 271B OF THE IT ACT, 1961. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE COMPANY IS A STATE GOVERNMENT UNDERTAKING ENGAGED I N THE TRANSMISSION OF ELECTRICITY WITHIN THE STATE OF RAJ ASTHAN. DURING THE YEAR UNDER CONSIDERATION, IT FILED ITS RETURN OF INCOME ON 20.09.2013 CLAIMING ITA NO. 188/JP/2018 M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD ., JAIPUR VS. ACIT, JAIPUR 2 LOSS OF RS. 3,66,02,91,213/-. THE SAID RETURN OF IN COME WAS ACCEPTED EXCEPT FOR AN AMOUNT OF RS. 9,048/- WHICH WAS DISAL LOWED U/S 36(1)(VA) AND RS. 429,539/- WHICH WAS BROUGHT TO TAX IN RESPECT OF INTEREST ON INCOME TAX REFUND. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON PERUSAL OF FORM NO. 3CA, THE ASSESS ING OFFICER NOTICED THAT THE STATUTORY AUDIT OF THE ASSESSEE WAS CONDUC TED ON 16.07.2014 AND THE ASSESSEE HAS THEREFORE FAILED TO FURNISH AN D GET HIS ACCOUNTS AUDITED AND FURNISHED THE REPORT BEFORE THE SPECIFI ED DATE I.E. 30.09.2013. THEREFORE, IN VIEW OF THE FACTS AND CIR CUMSTANCES OF THE CASE UNDER CONSIDERATION, PENALTY PROCEEDINGS U/S 2 71B OF THE ACT FOR FAILURE TO GET THE ACCOUNTS AUDITED AND FURNISHING THE REPORT IN THE PRESCRIBED PERFORMA BEFORE THE SPECIFIED DATE WAS I NITIATED AGAINST THE ASSESSEE COMPANY BY ISSUANCE OF NOTICE DATED 12.03. 2016. 3. DURING THE COURSE OF PENALTY PROCEEDINGS, THE AS SESSEE COMPANY SUBMITTED THAT THE DELAY IN GETTING THE ACCOUNTS AU DITED U/S 44AB IS ON ACCOUNT OF DELAY IN FINALIZATION OF ACCOUNTS OF THE PREVIOUS YEARS STARTING FROM THE F.Y 2008-09 AND THE AUDIT BY THE STATUTORY AUDITOR AS WELL AS BY C&AG AND WITHOUT WHICH, THE TAX AUDIT CA NNOT BE TAKEN UP BY THE TAX AUDITOR. HOWEVER, THE REPLY FILED BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER. THE ASSE SSING OFFICER OBSERVED THAT THE AUDIT HAS BEEN CARRIED OUT ON 16. 07.2014 I.E AFTER DELAY OF 10 MONTHS AND HENCE THE ASSESSEE COMPANY H AS FAILED TO GET ITS ACCOUNTS AUDITED AND FURNISHED THE AUDIT REPORT BEFORE THE SPECIFIED DATE. IT WAS ACCORDINGLY HELD THAT THERE IS NO REAS ONABLE CAUSE FOR THE DELAY IN GETTING THE ACCOUNTS AUDITED AND PENALTY U /S 271B WAS LEVIED ON THE ASSESSEE COMPANY. ITA NO. 188/JP/2018 M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD ., JAIPUR VS. ACIT, JAIPUR 3 4. BEING AGGRIEVED, THE ASSESSEE COMPANY CARRIED TH E MATTER IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HELD T HAT THE REASONS SUBMITTED FOR THE DELAY ARE NOT BACKED BY EVIDENCES . FURTHER, LD. CIT(A) HELD THAT THE STATUTORY AUDITORS NOT AGREEING TO TH E AUDIT FEES AND HENCE THE DELAY IS NOT A PLAUSIBLE REASON AND EFFOR TS SHOULD HAVE BEEN MADE IN TIME TO GET THE AUDIT CONDUCTED WITHIN THE STIPULATED TIME. HENCE, THE PENALTY LEVIED BY THE AO WAS CONFIRMED B Y THE LD. CIT(A). 5. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE REASONS FOR DELAY IN GETTING THE ACCOUNTS AUDITED U /S 44AB IS DUE TO DELAY IN GETTING ACCOUNTS AUDITED BY STATUTORY AUDI TOR AS WELL AS C&AG FOR EARLIER YEARS STARTING FROM F.Y 2008-09 RELEVAN T TO ASSESSMENT YEAR 2009-10. IT WAS SUBMITTED THAT FOR FY 2008-09, INI TIALLY M/S GHIYA & COMPANY, CHARTERED ACCOUNTANTS WAS APPOINTED AS STA TUTORY AUDITOR BY C&AG VIDE LETTER DATED 31.07.2008 U/S 619(2) OF THE COMPANIES ACT, 1956. IN VIEW OF REFUSAL OF M/S GHIYA & COMPANY TO CONDUCT THE AUDIT, C&AG VIDE LETTER DATED 06.02.2009 APPOINTED ANOTHER AUDITOR M/S D.R. MOHNOT & COMPANY, WHICH AGAIN REFUSED TO ACCEPT THE AUDIT OF THE COMPANY DUE TO THEIR PRE-OCCUPATION IN SOME OTHER W ORK. IN VIEW OF THE SAME, ANOTHER AUDITOR M/S S. R. GOYAL & COMPANY WAS APPOINTED VIDE LETTER DATED 23.04.2009 WHO AGAINST SUBMITTED THAT GIVEN THE QUANTUM OF WORK INVOLVED, THEY ARE NOT IN POSITION TO CONDU CT THE AUDIT AT THE SPECIFIED FEES OF RS. 175000/-. THE MATTER WAS THER EAFTER TAKEN BY THE BOARD AND FEES WAS INCREASED TO RS 3 LACS AND COMMU NICATED TO THE AUDITOR VIDE LETTER DATED 02.09.2009. FURTHER, A ME ETING WAS CONDUCTED BY C&AG WITH MANAGEMENT AND STATUTORY AUDITOR WHERE IN IT WAS DIRECTD TO MAKE COMPLIANCE OF ALL THE ACCOUNTING STANDARDS. THUS, DUE TO DELAY IN APPOINTMENT OF AUDITORS AND TO MAKE ALL THESE CO MPLIANCE WITH THE ACCOUNTING STANDARDS, HAS RESULTED IN DELAY IN THE STATUTORY AUDIT FOR FY ITA NO. 188/JP/2018 M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD ., JAIPUR VS. ACIT, JAIPUR 4 2008-09 WHICH WAS COMPLETED IN THE MONTH OF DECEMBE R, 2009 AND APPROVED BY THE BOARD IN ITS MEETING HELD ON 21.12. 2009. SUBSEQUENTLY, THE ACCOUNTS WAS SUBMITTED TO C&AG FO R THEIR COMMENTS WHO HAVE RAISED MANY ISSUES AND THEREAFTER, THE BOA RD OF DIRECTORS DECIDED TO RECAST THE ACCOUNTS OF THE COMPANY AND F INALLY, THE AUDIT OF THE RECASTED ACCOUNTS WAS COMPLETED IN THE MONTH OF JULY, 2010 AND APPROVED IN THE BOARD MEETING HELD ON 12.07.2010. T HEREAFTER, C&AG APPROVED THE ACCOUNTS VIDE ITS LETTER DATED 13.07.2 010 AND THEREAFTER THE AGM OF THE COMPANY FOR FY 2008-09 WAS HELD ON 1 6.09.2010. 6. IT WAS FURTHER SUBMITTED THAT DUE TO DELAY IN GE TTING THE AMOUNTS AUDITED FOR FY 2008-09, THE ACCOUNTS FOR FY 2009-10 WERE FINALIZED AND APPROVED BY BOARD OF DIRECTORS ON 29.03.2011 AND AP PROVED BY THE C&AG ON 28.06.2011. THEREAFTER, ACCOUNTS FOR FY 201 0-11 WERE FINALIZED AND APPROVED BY THE BOARD OF DIRECTORS ON 12.01.2012 AND C&AG CERTIFICATE WAS RECEIVED ON 21.5.2012. THEREAF TER ANNUAL ACCOUNTS FOR FY 2011-12 WERE FINALIZED AND APPROVED BY THE BOARD ON 28.02.2013 AND CAG CERTIFICATE WAS RECEIVED ON 27.0 6.2013. 7. IT WAS ACCORDINGLY SUBMITTED THAT THE DELAY IN F INALIZATION OF ACCOUNTS OF EARLIER YEARS RESULTANT IN CONSEQUENTIA L DELAY IN FINALIZATION OF ACCOUNTS OF YEAR UNDER CONSIDERATION. IT WAS SUB MITTED THAT IMMEDIATELY AFTER FINALIZATION OF ACCOUNTS OF FY 20 11-12 AND OBTAINING OF THE C&AG CERTIFICATE IN JUNE, 2013, ACCOUNTS FOR THE YEAR UNDER CONSIDERATION WERE TAKEN UP WHICH WERE FINALIZED AN D APPROVED BY THE BOARD ON 27.12.2013 AND SAME WERE SENT TO C&AG FOR THEIR AUDIT AND CERTIFICATE FROM C&AG WAS RECEIVED ON 25.06.2014. T HEREAFTER, AGM OF COMPANY WAS HELD ON 01.09.2014. SIMULTANEOUSLY, TAX AUDITOR HAS ALSO TAKEN UP THE AUDIT AND TAX AUDIT WAS COMPLETED ON 1 6.07.2014 AND THE ITA NO. 188/JP/2018 M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD ., JAIPUR VS. ACIT, JAIPUR 5 SAME WAS UPLOADED ON THE SAME DAY ON THE WEBSITE OF INCOME TAX DEPARTMENT. 8. IT WAS ACCORDINGLY SUBMITTED THE DELAY IN GETTIN G ACCOUNTS AUDITED IS BECAUSE OF DELAY IN CONDUCTING THE STATU TORY AUDIT AD WITHOUT THE STATUORY AUDIT, TAX AUDIT CANNOT BE CONDUCTED. THUS, THERE WAS A REASONABLE CAUSE IN OBTAINING THE AUDIT REPORT U/S 44AB WITHIN DUE DATE. IT WAS FURTHER SUBMITTED THAT UNDER SIMILAR CIRCUMSTANCES, FOR AY 2009-10, PENALTY PROCEEDINGS U/S 271B WAS DROPPED B Y THE AO VIDE ORDER DATED 19.06.2012. 9. FURTHER, THE LD. AR SUBMITTED THAT IT IS SETTLE D LAW THAT LEVY OF PENALTY U/S 271B IS MANDATORY BUT IS SUBJECT TO THE PROVISION OF SECTION 273B WHICH PROVIDES THAT NO PENALTY SHALL BE IMPOSA BLE ON THE ASSESSEE IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR TH E FAILURE. PENALTY CANNOT BE LEVIED LACONICALLY OR MECHANICALLY WITHOU T EXAMINING WHETHER THERE WAS REASONABLE CAUSE AS ADVANCED BY THE ASSES SEE FOR THE SAID FAILURE OR DEFAULT. IN THE PRESENT CASE THERE WAS A REASONABLE CAUSE FOR DELAY IN CONDUCTING THE AUDIT U/S 44AB AND THEREFOR E, PENALTY U/S 271B IS NOT LEVIABLE. FOR THIS PURPOSE, RELIANCE IS PLAC ED ON THE FOLLOWING CASES:- HINDUSTAN STEEL LTD. VS. STATE OF ORISSA 83 ITR 26 (SC) RSEB VS. ITAT & ANR. (2003) 262 ITR 262 (RAJ.) (HC) RCDF VS. DCIT (2003) 259 ITR 126 (RAJ.)(HC) GEMORIUM VS. ITO (2016) 48 CCH 147 (JAIPUR) (TRIB.) KRIPA INDUSTRIES (I) LTD. VS. JCIT (2001) 20 CCH 38 7 (PUNE)(TRIB.) ITA NO. 188/JP/2018 M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD ., JAIPUR VS. ACIT, JAIPUR 6 10. IT IS NOTED THAT A SIMILAR ISSUE HAS BEEN EXAMI NED AND BY US RECENTLY IN CASE OF M/S RAJASTHAN RAJYA VIDYUT UTPA DAN NIGAM LTD. (ITA NO.100/JP/2018 DATED 28/03/2018) WHEREIN WE HAVE HELD AS UNDER:- 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSE D THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE LIMIT ED ISSUE FOR CONSIDERATION IS WHETHER THERE IS A REASONABLE CAUS E FOR THE DELAY IN COMPLETING THE TAX AUDIT AND SUBMITTING THE REPORT OF THE TAX AUDITOR WITHIN THE SPECIFIED DUE DATE. UNDER SECTION 273B, NO PENALTY SHALL BE IMPOSABLE ON THE ASSESSEE FOR ANY FAILURE WHICH INT ERALIA INCLUDE THE DEFAULTS MENTIONED IN SECTION 271B, IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. IN THE PRESENT CASE, THE REASON FOR THE DELAY HAS BEEN STATED TO BE THE DELA Y IN COMPLETING THE STATUTORY AUDIT FOR THE EARLIER YEARS WHICH HAS RES ULTED IN DELAY IN COMPLETION OF STATUTORY AUDIT FOR THE YEAR UNDER CO NSIDERATION AND THE RESULTANT DELAY IN COMPLETING THE TAX AUDIT AND SUB MITTING THE REPORT THEREOF. IT WAS SUBMITTED THAT WITHOUT COMPLETING T HE STATUTORY AUDIT, THE TAX AUDIT COULD NOT HAVE BEEN COMPLETED. WE FI ND THAT THE STATUTORY AUDITORS ARE APPOINTED BY THE COMPTROLLER & AUDITOR GENERAL OF INDIA UNDER SECTION 619(2) OF THE COMPANIES ACT, 1956 AND THEY HAVE COMPLETED THE STATUTORY AUDIT AND SUBMITTED TH EIR AUDIT REPORT DATED 27.03.2014. THEREAFTER, THE TAX AUDIT HAS BE EN COMPLETED ON 15.07.2014 AND THE REVISED RETURN WAS FILED ON 16.9 .2014. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. P UNJAB STATE LEATHER DEVELOPMENT CORPN. LTD. [2001] 119 TAXMAN 258 HAS H ELD THAT DELAY IN COMPLETION OF STATUTORY AUDIT WAS A REASONABLE CAUS E FOR NON- COMPLIANCE WITH SECTION 44AB AND IT WAS HELD THAT T HE TRIBUNAL WAS RIGHT IN CANCELLING PENALTY LEVIED UNDER SECTION 27 1B. RESPECTFULLY ITA NO. 188/JP/2018 M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD ., JAIPUR VS. ACIT, JAIPUR 7 FOLLOWING THE SAME, WE ARE OF THE VIEW THAT IN THE INSTANT CASE, WHERE THERE HAS BEEN A DELAY IN COMPLETION OF STATUTORY A UDIT, THERE EXIST A REASONABLE CAUSE FOR THE DELAY IN COMPLETION AND SU BMISSION OF THE TAX AUDIT REPORT UNDER SECTION 44AB OF THE ACT. THE PE NALTY LEVIED UNDER SECTION 271B IS THEREFORE DELETED. 11. IN THE INSTANT CASE, WE FIND THAT THERE IS A R EASONABLE CAUSE FOR THE DELAY IN COMPLETION AND SUBMISSION OF THE TAX A UDIT REPORT UNDER SECTION 44AB OF THE ACT DUE TO DELAY IN APPOINTMENT OF STATUTORY AUDITORS AND CONSEQUENT DELAY IN FINALIZATION OF AN NUAL ACCOUNTS FOR THE EARLIER YEARS. FOLLOWING OUR AFORESAID DECISION, T HE PENALTY LEVIED UNDER SECTION 271B IS HEREBY DIRECTED TO BE DELETED. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/04/2018. SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11/04/2018 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-6, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. ITA NO. 188/JP/2018 M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD ., JAIPUR VS. ACIT, JAIPUR 8 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 188/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR