Krishi Utpadan Mandi Samiti, Bulandshahr V. ACIT, Bulandshahr

ITA 1885/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8473 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-07-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 06-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Bonafide belief; Retrospective amendment; Reasonable cause
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `B: NEW DELHI BEFORE SHRI R.P.TOLANI,JM AND SHRI R.C. SHARMA, A M I.T.A. NOS.1884 TO 1886/DEL OF 2009 ASSESSMENT YEARS: 2003-04 TO 2005-06 M/S KRISHI UTPADAN MANDI SAMITI, ASSTT. COMMR. OF INCOME-TAX, KHURJA, DISTT. BULANDSHAHR. VS CIRCLE BUL ANDSHAHR, BULANDSHAHR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY KUMAR, CA RESPONDENT BY : S HRI SANJAY KUMAR, DR ORDER PER R.P. TOLANI: JM THESE ARE ASSESSEES APPEALS. COMMON GROUND RAISED IN ALL THE APPEALS IS IMPOSITION OF PENALTIES U/S 271B BY FOLL OWING GROUNDS: 1. BECAUSE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY IMPOSED U/S 271B OF THE ACT MERELY BECAUSE THE REGISTRATION U/S 12A OF THE ACT WAS AVAILABLE TO THE APPELLANT W.E.F . 1.4.2005. 2. BECAUSE OF NOW, THE APPELLANT MANDI SAMITI HAS BEEN GRANTED REGISTRATION U/S 12A OF THE ACT W.E.F. 1.4.2002 BY THE LD. CIT, MEERUT THEREFORE, THE IMPUGNED PENALTY IS LIABLE TO BE DELETED. 2. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT O RIGINALLY THE REGISTRATION U/S 12A WAS GRANTED TO ASSESSEE W.E.F. 1.4.2005 BY ORDER DATED 20.9.2006 PASSED BY CIT, MEERUT. ASSESSEE APPROACH ED ITAT WHEREIN THE 2 CIT WAS DIRECTED TO GIVE RETROSPECTIVE EFFECT TO RE GISTRATION I.E. W.E.F. 1.4.2002. THE CIT ACCORDINGLY GRANTED RETROSPECTIV E EFFECT BY THE ABOVE ORDER. 3. LEARNED COUNSEL FURTHER CONTENDS THAT THE ASSESS EE IS AN ENTITY CREATED BY UTTAR PRADESH KRISHI UTPADAN MANDI ADHINIYAM, 19 64. ASSESSEE WAS CLAIMING EXEMPTION U/S 10(20) READ WITH SECTION 29 OF THE INCOME-TAX ACT AS A LOCAL AUTHORITY. IT IS NOT IN DISPUTE THAT TH E INCOME OF THE ASSESSEE HAS NOT BEEN ASSESSED UNDER THE HEAD BUSINESS INCOME. PROVISIONS OF SECTION 44AB ARE APPLICABLE TO ASSESSEES, WHO DOES NOT DERI VE INCOME FROM BUSINESS. AO IMPOSED THE PENALTY BY FOLLOWING OBSE RVATIONS: I HAVE VERY CAREFULLY GONE THROUGH THE FACTS OF TH E CASE. CONSEQUENT TO AMENDMENT IN SECTION 10(20) OF THE I.T. ACT, 1861 BY THE FINANCE ACT, 2002 W.E.F. 1.4.2003, IT WAS MANDATORY FOR THE ASSESSEE TO GET ITS ACCOUNTS AUDITED BY AN AUDITOR AS DEFINE D IN SECTION 288(2) OF THE I.T. ACT, 1961, BUT THE ASSESSEE FAILED TO DO SO, THEREFORE AO ISSUED A PENALTY NOTICE DATED 26.4.2007 WITHIN THE ASSESSMENT ORDER. IN VIEW OF THE ABOVE DISCUSSION, IT IS WELL ESTABLISHED THAT THE ASSESSEE HAS WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 44AB(2) OF THE I.T. ACT, 1961 AND RENDERED ITSELF LIABLE FOR PENALTY U/S 271B OF THE I.T. ACT, 1961. 4. CIT(A) CONFIRMED THE PENALTY BY FOLLOWING OBSERV ATIONS: I HAVE CAREFULLY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS A FACT THAT REGISTRATION U/S 12A OF THE I.T. ACT IS AVAILABLE T O 3 THE APPELLANT FROM 1.4.2005 ONLY. HENCE AS THE MANDI SAMITI IS NOT HAVING EXEMPTION U/S 12A IN THE YEAR UNDER CONSIDERATION THE PENALTY IMPOSED CANNOT BE DELETED AND IS CONFIRMED. 5. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT T HE PENALTY HAS BEEN CONFIRMED BY CIT(A) ON THE PREMISE THAT (I) ASSESS EE WAS NOT HOLDING EXEMPTION U/S 12A AS EARLIER REGISTRATION WAS GRANT ED FROM 1.4.2005. SUBSEQUENTLY, AS MENTIONED ABOVE, THE REGISTRATION HAS BEEN MADE RETROSPECTIVELY W.E.F. 1.4.2001; (II) THE ASSESSEE IS NOT CARRYING ON ANY BUSINESS ACTIVITY; (III) WHEN AO CALLED FOR THE AUD IT REPORT, THE SAME WAS FURNISHED; AND (IV) ASSESSEE WAS UNDER BONAFIDE BEL IEF THAT IT IS NOT LIABLE FOR AUDIT U/S 44AB. RELIANCE WAS PLACED ON HONBLE SUP REME COURT JUDGMENT IN THE CASE OF HINDUSTAN STEELS LTD. VS STATE OF OR ISSA,83 ITR 26 FOR THE PROPOSITION THAT PENALTY SHOULD NOT BE LEVIED ON TE CHNICAL DEFAULTS AND THE SAME SHOULD NOT BE IMPOSED MERELY BECAUSE IT IS LAW FUL TO DO SO. FURTHER RELIANCE WAS PLACED ON ACIT VS INDIA MAGNUM FUND, 8 1 ITD 295 (MUMBAI), AND BAJRANG OIL MILLS VS ITO, 295 ITR 314 . 6. IT WAS CONTENDED THAT THE ASSESSEE IS NOT INTO A NY BUSINESS ACTIVITY BEING CREATURE OF STATE LAW AND IN ANY CASE THE REA SONABLE CAUSE ON THE PART OF ASSESSEE NOT BE LIABLE TO AUDIT U/S SECTION 44 AB IS MANIFEST FROM RECORD. 4 THE REGISTRATION U/S 12A HAS ALSO BEEN GRANTED WITH RETROSPECTIVE EFFECT FROM 1.4.2002. ALL THESE FACTORS DO NOT LEAVE ANY SCOPE FOR LEVY OF PENALTY. 6. THE LEARNED DR SUPPORTED THE ORDERS OF LOWER AUT HORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED ON RECORD. WE FIND MERIT IN THE ARGUMENTS OF LEARN ED COUNSEL, WHICH REMAINS TO BE CONTROVERTED BY REVENUE IN EFFECTIVE TERMS I.E. TO SAY THAT ASSESSEE WAS GRANTED REGISTRATION W.E.F. 1.4.2002. IT IS AN ENTITY CREATED BY STATE LAW IN CARRYING OUT ANY BUSINESS TRANSACTIONS , NOT LIABLE FOR AUDIT U/S 44AB AND IN ANY CASE GIVES ASSESSEE BONAFIDE BELIEF , CANNOT BE HELD TO BE NOT GENUINE. IN VIEW OF THESE FACTS, WE HOLD THAT ON THESE FACTS PENALTY CANNOT BE IMPOSED ON THE ASSESSEE, WHICH ARE DELET ED. 8. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE A RE ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 16 TH JULY, 2009. SD/- SD/- (R.C. SHARMA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH JULY, 2009 VIJAY COPY TO:- 1. APPELLANT. 2. RESPONDENT 3. CIT 4. CIT(A), MEERUT 5. THE DR ASSISTANT REGISTRAR.