R.Kalavathy, CHENNAI V. ITO, CHENNAI

ITA 1916/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8477 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 24-06-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: Y SRIDHARC A
• Section: 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . !' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1916/MDS./2016 / ASSESSMENT YEAR :2013-14 SMT.R.KALAVATHY , M/S.RAMESH & RAMACHANDRAN, CHARTERED ACCOUNTANTS, NEW NO.39, OLD NO.29/3, VISWANATHAPURAM MAIN ROAD, KODAMBAKKAM, CHENNAI 600 024. VS. INCOME TAX OFFICER, NON-CORPORATE WARD 5(1), CHENNAI. [PAN AEOPK 8652 G ] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : MR.Y.SRIDHAR,C.A /RESPONDENT BY : MR.SHIVA SRINIVAS, JCIT D.R / DATE OF HEARING : 07 - 0 9 - 201 6 !' / DATE OF PRONOUNCEMENT : 21 - 0 9 - 2016 ' / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-5,CHENNAI DATED 13.04.2016 PERTAINING TO ASSESSMENT YEAR 2013-14. ITA NO. 1211/MDS./2016 :- 2 -: 2. THE MAIN GRIEVANCE OF THE ASSESSEE IN THIS APP EAL IS THAT LD.CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY U /S.271B OF THE ACT AT ` 1,50,000/-. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED HER RETURN OF INCOME ADMITTING AN INCOME OF ` 9,18,181/- AND IN PROFIT AND LOSS ACCOUNT, ASSESSEE ADMITTED A TURNOVER OF ` 2,64,69,127/-, WHICH REQUIRED THE ASSESSEE TO COMPLY WITH THE PROVISIONS 44ABOF THE ACT. 3.1. AS PER THE GUIDELINES/INSTRUCTION F.NO.225/117/2013 ITA.II DATED 26.9.2013 WHICH IS REPRODUCED AS FOLLOWS CBDT IN EX ERCISE OF POWER UNDER SEC 119(2)(A) OF THE L.T. ACT, 1961 READ WITH SEC 1 39 AND RULE 12, HAS DECIDED TO RELAX THE REQUIREMENT OF FURNISHING THE REPORT OF AUDIT ELECTRONICALLY AS PRESCRIBED UNDER THE PROVISO TO S UB-RULE (2) OF RULE 12 OF THE IT RULES FOR THE ASSESSMENT YEAR 201314 AS UND ER:- (C) THE ASSESSEES, WHO ARE PRESENTLY FINDING IT DIF FICULT TO UPLOAD THE PRESCRIBED REPORT OF AUDIT (AS REFERRED TO ABOVE) I N THE SYSTEM ELECTRONICALLY MAY ALSO FURNISH THE SAME MANUALLY BEFORETHE JURISD ICTIONAL ASSESSING OFFICER WITHIN THE PRESCRIBED DUE DATE. (D) THE SAID REPORT OF AUDIT SHOULD HOWEVER BE FURN ISHED ELECTRONICALLY ON OR BEFORE 31.10.2013. FURTHER VIDE CIRCULAR/INSTRUCTION/DIRECTION ISSUED BY CBDT IN NO. F.NO.225/117//2013/ITA1I DATED-24,10.2013 THE CBDT HAD INSTRUCTED VIDE ORDER UNDER SECTION 119 OF THE INCOME TAX ACT, 1961 , IN EXERCISE OF POWERS CONFERRED UNDER SECTION 119 OF THE INCOME-TAX ACT, 1961, THE CENTRAL BOARD DIRECT TAXES, IN CONTINUATION TO ORDER U/S 119 DATE D 26.09.2013 F.NO.225/117/2013/ITA.11, HEREBY DIRECTS THAT IN CA SES WHERE THE DUE ITA NO. 1211/MDS./2016 :- 3 -: DATE OF FURNISHING REPORTS OF AUDIT AND CORRESPOND ING INCOME-TAX RETURN WAS 30TH SEPTEMBER, 2013 SUCH REPORTS OF AUDIT AND RETU RNS OF INCOME SHALL BE DEEMED TO HAVE BEEN FURNISHED WITHIN THE DUE DATE PRESCRIBED UNDER SECTION 139 OF THE INCOME TAX ACT 1961. IT IS SEEN FROM THE MATERIAL AVAILABLE ON RECORDS T HAT THE ASSESSEE HAD NOT FURNISHED OR FILED THE AUDIT REPORT PRESCRIBED U/S 44AB OF THE ITACT 1961 BEFORE THE ASSESSING OFFICER AS PER THE GUIDELINE M ENTIONED ABOVE. HENCE PENALTY U/S 271B WAS INITIATED BY ISSUE OF NOTICE U /S 2718 DATED 28/8/2014 WHICH WAS DULY SERVED ON THE ASSESSEE. THE CASE WAS POSTED FOR HEARING AND THE ASSESSEE RE PLIED THROUGH LETTER DATED 9.9,2014 & 27/12/2014 WHEREIN SHE HAD STATED WHICH IS REPRODUCED AS UNDER: I COULD NOT FILE THE 3CB 3CD ELECTRONICALLY DUE TO TECHNICAL DIFFICULTY, I.E., I COULD NOT ADD THE NAME OF THE C HARTERED ACCOUNTANT. I HAVE SUBMITTED THE AUDIT REPORT IN FO RM 3CB,3CD (MANUAL PRINT) ALONG WITH P&L A/C., BALANCE SHEET, PROOF FOR INCOME TAX SUBMISSION VIDE ACKNOWLEDGEMENT NO. 82481865125013 DATED 25/10/2013, WITH ITO WARD XL(1 ) ON 28/10/2013. THE SUBMISSIONS FILED BY THE ASSESSEE ARE PERUSED A ND IT IS SEEN THAT THE ASSESSEE HERSELF STATED AND ALSO SEEN FROM THE COPY OF THE 3CD REPORT WHICH WAS AUDITED AND SIGNED ON 25/10/2013. IT IS V ERY CLEAR THAT THE ASSESSEES ACCOUNTS ARE NOT AUDITED WELL WITHIN THE DUE DATE SPECIFIED IN THE ACT AND THEREFORE THE ASSESSEE NOT COMPLIED WITH TH E PROVISIONS OF SECTION 44A8 OF THE I.T. ACT 1961. THERE IS NO DENIAL OF TH E FACT THAT THE ASSESSEE HAS NOT ONLY OBTAINED THE AUDIT REPORT WELL BEYOND THE SPECIFIED DATE BUT ITA NO. 1211/MDS./2016 :- 4 -: HAS ALSO FILED THE RETURN OF INCOME ONLY ON 25/10/2 013. MOREOVER, ON RECEIPT OF THE PENALTY NOTICE THE ASSESSEE FILED THE AUDIT REPORT ELECTRONICALLY ONLY ON 17/10/2014. THUS IT IS VERY CLEAR THAT THE ASSESSEE NEITHER AUDITED THE ACCOUNTS WITHIN THE DUE DATE NOR FILED THE RETURN O F INCOME AND ALSO THE ASSESSEE HAD NOT FILED THE AUDIT REPORT ELECTRONICA LLY IN TIME ALLOWED BY THE BOARD, FROM THE FACTS IT IS CLEAR THAT ASSESSEE HAD VIOLATED THE PROVISION OF SECTION 44AB AND IS LIABLE TO BE PROCEED UNDER SECT ION 2718 OF E T ACT 1961. HENCE, THE AO IMPOSED THE PENALTY U/S.271B OF THE A CT ON THE ASSESSEE @ 0.5% OF THE TURNOVER OF ` 2,64,69,127/-, THE MINIMUM WORKS OUT TO ` 1,32,346/-. AGAINST THIS, THE ASSESSEE CARRIED T HE APPEAL BEFORE LD.CIT(A). ON APPEAL, THE LD.CIT(A) CONFIRMED THE L EVY OF PENALTY U/S.271B OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING, LD.A.R PRIMARILY OBJECT ED THAT THE PENALTY ORDER WAS NOT SIGNED BY THE ITO, NON-CORPOR ATE WARD- 5(1),CHENNAI, WHO HAS PASSED THE ORDER. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GO NE THROUGH THE PENALTY ORDER DATED 11.02.2015 ISSUED BY ITO, C HENNAI. ADMITTED IN THIS, THE ORDER WAS NOT SIGNED BY ITO. IN THE AB SENCE OF SIGNED ORDER OF PENALTY, WE HAVE TO HOLD THAT THE PENALTY ORDER IS INVALID. WE ARE ALSO OF THE VIEW THAT PROVISIONS OF THE SECTION 292B CANNOT COME TO RESCUE OF THE REVENUE. IN OUR OPINION, NO RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDINGS FU RNISHED OR MADE OR ISSUED OR TAKEN IN PURSUANCE OF ANY OF THE PROVI SIONS OF THE ACT ITA NO. 1211/MDS./2016 :- 5 -: SHALL BE INVALID OR SHALL BE DEEMED TO BE INVALID. MERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN SUCH RETURN OF I NCOME, ASSESSMENT , NOTICE, SUMMONS OR OTHER PROCEEDINGS IF SUCH RETURN OF INCOME, ASSESSMENT , NOTICE, SUMMONS OR OTHER PROCEEDINGS I S IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE I NTENT AND PURPOSE OF THIS ACT. PROVISIONS OF THE SECTION 271B OF THE ACT CONTEMPLATES THAT AO SHALL PASS AN ORDER OF PENALTY IN WRITING. REQU IREMENT OF SIGNATURE OF AO IS THEREFORE LEGAL REQUIREMENT. THE OMISSION TO SIGN THE PENALTY ORDER CANNOT BE EXPLAINED BY RELYING ON THE PROVISI ONS OF THE SECTION 292B OF THE ACT. BUT, THE NOTICE OF DEMAND SIGNED B Y THE OFFICE OF AO WITHOUT THE EXISTENCE OF A DULY SIGNED ORDER OF PEN ALTY BY THE AO, IN OUR VIEW, CANNOT SAID TO BE AN OMISSION, WHICH WAS OUGHT TO BE COVERED BY THE PROVISIONS OF THE SECTION 292B OF TH E ACT. IF SUCH A COURSE IS PERMITTED TO BE FOLLOWED THAN THAT IT WOU LD AMOUNT TO DELEGATION OF POWERS CONFERRED ON THE AO BY THE ACT . DELEGATION OF POWERS OF THE AO U/S.143(3) OF THE ACT IS NOT THE I NTENT AND PURPOSE OF THE ACT. THE UNSIGNED ORDER OF PENALTY CANNOT SA ID TO BE IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDIN G TO THE INTENT AND PURPOSE OF THE ACT. SINCE THE PENALTY ORDER IS NOT SIGNED BY THE ASSESSING AUTHORITY, IN OUR OPINION, IS BAD IN LAW, CANNOT STAND ON ITS LEG. ACCORDINGLY, PLACING RELIANCE ON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF KALYANKUMAR RAY VS. CIT REPORTED IN [1991] 191 ITR ITA NO. 1211/MDS./2016 :- 6 -: 634 (SC), WE ARE INCLINED TO HOLD THAT THE PENALTY ORDER IS INVALID AND BAD IN LAW. SINCE WE HAVE QUASHED THE PENALTY ORDER ITSELF, WE ARE REFRAINED FROM GOING TO OTHER GROUNDS OF APPEAL RAI SED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED ON 21 ST SEPTEMBER, 2016, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 21 ST SEPTEMBER, 2016 K S SUNDARAM &'(()*( +* / COPY TO: ( 1 . / APPELLANT 3. ( ,(- . / CIT(A) 5. */0 (1 / DR 2. / RESPONDENT 4. ( , / CIT 6. 02(3 / GF