ROYAL REGENCY REALTORS P. LTD, MUMBAI V. ACIT CIR 9(3), MUMBAI

ITA 2007/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7538 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2001-2002
• Appeal Filed On: 01-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DURGESH SUMROTT
• Keywords: Business income; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI A.L.GEHLOT, AM & SMT. P.MADHAVI DEVI, JM I.T.A.NO.2007/MUM/2009 - A.Y 2001-02 M/S ROYAL REGENCY RELATORS PVT.LTD. 1 ST FLOOR, BANK OF INDIA BUILDING 56, HILL ROAD, BANDRA [WEST] MUMBAI PAN NO.AACCR6533Q ASST. COMMISSIONER OF I.T., CIRCLE 9 (3) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJESH P. SHAH. REVENUE BY : SHRI DURGESH SUMROTT. O R D E R PER P.MADHAVI DEVI, JM: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST CI T(A)S ORDER DATED 16/01/2009. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEA L IS AGAINST THE ORDER OF THE CIT[A] CONFIRMING THE LEVY OF PENALTY OF RS.1,00,000/- U/S.271B OF THE INCOME TAX ACT WITHOUT APPRECIATING THAT THERE WAS A REASONABLE CAUSE FOR NOT FILING OF THE TAX AUDIT R EPORT IN TIME AND ALSO THAT THE RETURN WAS NON EST RETURN AND THERE WAS NO VALID RETURN TO LEVY PENALTY U/S.271B. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY FILED ITS RETURN OF INCOME ON 25-10-2005 DECLARING TOTAL INCO ME OF RS.2,01,970/- ENCLOSING THEREWITH A REPORT U/S.44AB . BEING A RETURN FILED OUT OF TIME, THE SAME WAS REGULARIZED BY ISSU ANCE OF NOTICE DATED 6-12-2005 U/S.148 OF THE ACT. SUBSEQUENTLY, AFTER S CRUTINY OF THE SAME, 2 THE TOTAL INCOME WAS DETERMINED BY ORDER U/S.143[3] . THE AO INITIATED PENALTY PROCEEDINGS U/S.271B AS THE ASSESSEE HAS DE CLARED TOTAL SALES OF RS.1,45,90,000/- AND NO AUDIT REPORT WAS FURNISH ED U/S.44AB OF THE ACT WITHIN THE SPECIFIED PERIOD. THE ASSESSEE VIDE LETTER DATED 9-4- 2008 SUBMITTED THAT FOR A.Y 2001-02 THE DUE DATE FO R FILING OF INCOME TAX RETURN AND TAX AUDIT REPORT IS 30-11-2001 AND T HE ASSESSEE COMPANY HAD COMPLETED ITS AUDIT AS REQUIRED UNDER T HE COMPANIES ACT AND ALSO U/S.44AB OF THE ACT BUT AS THE ACCOUNTANT, WHO USED TO HANDLE THE MATTER, HAD LEFT THE ORGANIZATION, THE R ETURN WAS NOT FILED BY MISTAKE, AND ON REALIZING THE MISTAKE THE RETURN WAS FILED IN OCTOBER, 2005. THE ASSESSEE RELIED UPON THE DECISIO N OF THE MADRAS HIGH COURT IN THE CASE OF APEX LABORATORIES PVT. LT D., REPORTED IN 156 TAXMAN 385 FOR THE PROPOSITION THAT NO PENALTY LU/S .271B CAN BE LEVIED WHEN THE RETURN WAS NOT FILED. ACCORDING TO THE ASS ESSEE, SINCE THE RETURN WAS FILED BELATEDLY, THE SAME WAS VOID AB IN ITIO AND, THEREFORE, NO PENALTY IS LEVIABLE. THE AO HOWEVER WAS NOT CONV INCED WITH THE SAID EXPLANATION AND HELD THAT THOUGH THE RETURN WA S FILED BELATEDLY, IT WAS REGULARIZED BY THE ISSUANCE OF NOTICE U/S.148 A ND THEREFORE THE RETURN WAS VALID. HE HELD THAT THE ACCOUNTS HAD TO BE AUDITED AND REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM SHOULD BE DULY SIGNED BY THE ACCOUNTANT AND FURNISHED U/S.44AB BY THE SPECIF IED DATE AND IT IS NOT ENOUGH IF THE ACCOUNTS ARE AUDITED BY THE SPECI FIED DATE. THEREFORE PENALTY PROVISIONS OF SEC.271B ARE ATTRACTED. HE, T HUS, LEVIED A PENALTY OF RS.1,00,000/- U/S.271B OF THE ACT. 3 4. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE C IT[A] WHO CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS I N SECOND APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE WHILE REITERATI NG THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW, DREW OUR ATTENTION TO THE AUDIT REPORT DATED 5-9-01, A COPY OF WHICH IS F ILED BEFORE US. 6. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW. 7. HAVING HEARD BOTH THE PARTIES, WE FIND THAT THE ASSESSEE HAD GOT ITS ACCOUNTS AUDITED ON 5-9-2001 I.E. WELL BEFO RE THE SPECIFIED DATEU/S.44AB OF THE ACT. UNDER SEC.44AB, THE ASSESS EE IS NOT ONLY REQUIRED TO GET HIS ACCOUNTS AUDITED BY AN ACCOUNTA NT BEFORE THE SPECIFIED DATE, BUT HE HAS ALSO TO FURNISH THE REPO RT OF THE AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY THE SAI D ACCOUNTANT. IN THE CASE BEFORE US, THE ASSESSEE HAS FILED THE REPORT A LONG WITH THE RETURN OF INCOME BELATEDLY. HAVING GOT THE ACCOUNTS AUDITE D THERE IS NO REASON AS TO WHY THE ASSESSEE WOULD NOT HAVE FILED IT BEFORE THE AUTHORITIES BEFORE THE SPECIFIED DATE. THE REASON G IVEN BY THE ASSESSEE IS THAT THE ACCOUNTANT WHO WAS DEALING WITH THE TAX MATTERS HAD LEFT THE ORGANIZATION DUE TO WHICH RETURN WAS NOT FILED WITHIN TIME. THIS APPEARS TO BE A REASONABLE CAUSE FOR NOT FILING THE AUDIT REPORT WITHIN THE SPECIFIED TIME. PENALTY U/S.271B IS NOT MANDATO RY BUT IS WITHIN THE DISCRETIONARY POWERS OF THE AO. SECTION 273B OF THE ACT PROVIDES THAT NO PENALTY SHALL BE IMPOSED ON THE PERSON OR AN ASS ESSEE, AS THE CASE 4 MAY BE, FOR ANY FAILURE, REFERRED TO IN THE SAID PR OVISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILUR E. AS THE ASSESSEE HAS SHOWN THE REASONABLE CAUSE FOR THE FAILURE, WE ARE OF THE VIEW THAT THE PENALTY IS NOT LEVIABLE. ACCORDINGLY, WE DELETE THE SAME AND ALLOW THE GROUND OF APPEAL RAISED BY THE ASSESSEE. 8. AS WE HAVE ALREADY ALLOWED GROUND OF APPEAL NO.1 , WE DO NOT SEE ANY REASON TO ADJUDICATE GROUND OF APPEAL NO.2 REGARDING THE VALIDITY OF THE RETURN AS IT WOULD BE ONLY AN ACADE MIC EXERCISE. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 22 ND DAY OF FEBRUARY, 2010. SD/- SD/- (A.L.GEHLOT) (P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 22 ND FEBRUARY, 2010. P/-* COPY TO- 1) APPELLANT 2) RESPONDENT 3) CITA MUMBAI. 4) CIT CITY MUMBAI 5) DR BENCH MUMBAI TRUE COPY BY ORDER DY /ASST.REGISTRAR,ITAT MUMBAI. 5