Rup Kumar Biswas, Hooghly V. ITO, Ward - 1(1), Hooghly, Hooghly

ITA 2074/KOL/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2605 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2010
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 21-04-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 20-11-2008
• Court: TRIBUNAL
• Department Lawyers: P C NAYAK
• Keywords: Business income; Reasonable cause
• Section: 273B; 27; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SRI D. K. TYAGI, JM & HONBLE SRI B . C. MEENA , AM] I.T.A. NO.2074/KOL/2008 ASSESSMENT YEAR: 2006-07 RUP KUMAR BISWAS -VS- INCOME-TAX OFFICER, WD-1( 1), HOOGHLY (PA NO.AIEPB 0268 M) (APPELLANT) (RESPONDENT) APPELLANT BY : SRI SOMNATH GHOSH RESPONDENT BY : SRI P. C. NAYAK O R D E R PER D. K. TYAGI, JM: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE LD. CIT(A), KOLKATA DATED 11.11.2008 FOR ASSESSMENT YEA R 2006-07 ON THE SOLE GROUND OF UPHOLDING THE ORDER OF THE AO IMPOSING PENALTY U/S . 271B OF THE I. T. ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE AO IN THE A SSESSMENT ORDER OBSERVED THAT THE TOTAL TURNOVER DURING THE YEAR OF THE ASSESSEE WAS RS.77,38,074/- AND HENCE, THE ASSESSEE WAS REQUIRED TO GET HIS ACCOUNTS AUDITED U/S. 44AB OF THE I. T. ACT AND FURNISH THE COPY OF THE REPORT WITHIN THE PRESCRIBED TIME. SINCE TH E ASSESSEE FAILED TO FILE THE AUDIT REPORT WITHIN THE PRESCRIBED TIME THE PENALTY PROCEEDINGS HAD BEEN INITIATED AND A PENALTY OF RS.38,600/- BEING HALF PERCENT OF THE TOTAL TURNOVE R HAD BEEN IMPOSED BY THE AO IN APPEAL, THE LD. CIT(A) HELD THAT THE AO HAS RIGHTLY IMPOSED THE PENALTY U/S. 271B AND CONFIRMED THE SAME. AGGRIEVED BY THE SAID ORDER, N OW THE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE WHILE REITERATING HIS SAME SUBMISSIONS AS SUBMITTED BEFOR E THE LOWER AUTHORITIES FURTHER SUBMITTED THAT THE IT IS AN UNDISPUTED FACT THAT TH E TOTAL SALES OF THE ASSESSEE EXCEEDED RS.40,00,000/- FOR THE FIRST TIME IN THE ASSESSMENT YEAR UNDER DISPUTE AND AS SUCH THE PROVISIONS OF SECTION 44AB OF THE I. T. ACT, 1961 B ECAME APPLICABLE FOR THE FIRST TIME IN THE CASE OF THE ASSESSEE. THE ASSESSEE IS A PERSON OF NORMAL PRUDENCE AND OF AVERAGE INTELLIGENCE AND AS SUCH HE WAS UNAWARE OF HIS OBLI GATION OF GETTING HIS ACCOUNTS AUDITED 2 UNDER SECTION 44AB OF THE I. T. ACT. IN SUPPORT OF HIS SUBMISSIONS HE PLACED RELIANCE ON THE FOLLOWING DECISIONS : I) JCIT VS- DAINIK ASSAM (P) LTD. (2004) 3 SOT 542 , II) MOTILAL PADAMPAT SUGAR MILL CO. LTD. VS. STATE OF UP & ORS. (1979) 118 ITR 326 (SC), III) MARTINDALE VS. FAULKNER (1846) 135 ER 1124, IV) MADAN LAL GUPTA VS- ITO (2004) 3 SOT 144 (DELH I), V) ITO VS. SMT. RAJKUMARI JAIN (2004) 3 SOT 145 (JP ), HE FURTHER CONTENDED THAT SINCE THE IMPOSITION OF P ENALTY IS A QUASI CRIMINAL PROCEEDINGS AND PENALTY WILL NOT ORDINARILY IMPOSED UNLESS THE PARTY EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF A CONDUCT, CONTUMACIOUS OR DISHONEST OR ACTED IN DISREGARD OF ITS OBLIGATION. IN THIS CASE , THE ASSESSEE DID NOT HAVE ANY PREVIOUS EXPERIENCE OF FILING THE AUDIT REPORT ALONG WITH TH E RETURN. THEREFORE, HE SUBMITTED THAT IT CANNOT BE SAID THAT THE ASSESEE HAS ACTED DELIBE RATELY IN DEFIANCE OF LAW. THEREFORE, IT WAS A REASONABLE CAUSE FOR NOT COMPLYING WITH THE P ROVISIONS OF SECTION 44AB. HE LASTLY PRAYED BEFORE THE BENCH TO DELETE THE PENALT Y SO CONFIRMED BY THE LD. CIT(A). 4. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE LOWER AUTHORITIES. 5. AFTER HEARING THE RIVAL SUBMISSIONS, CAREFULLY P ERUSING THE MATERIAL AVAILABLE ON RECORD AND THE CASE LAWS CITED BY THE LD. COUNSEL F OR THE ASSESSEE, WE FIND THAT THIS WAS THE FIRST TIME WHERE THE ASSESSEES TURNOVER REACHE D BEYOND THE PRESCRIBED LIMIT OF RS.40 LACS AS PER SECTION 44AB OF THE I. T. ACT. SO, TH ERE IS A REASONABLE CAUSE FOR THE ASSESSEE FOR NOT KNOWING THE MATTER WELL AND FOR TH E SAID DEFICIENCY IN KNOWLEDGE HE WAS PREVENTED FROM GETTING HIS ACCOUNTS AUDITED AND FILE THE SAME ALONG WITH THE RETURN. THEREFORE, IT CANNOT BE SAID THAT THERE WAS ANY MAL A FIDE INTENTION OF THE ASSESSEE IN NOT GETTING HIS ACCOUNTS AUDITED AS PER PROVISIONS OF S ECTION 44AB OF THE ACT. THEREFORE, THIS CONSTITUTE A REASONABLE CAUSE UNDER SECTION 27 3B OF THE I. T. ACT. WE ALSO FIND THAT THE DELHI C BENCH OF ITAT IN THE CASE OF MADAN LA L GUPTA VS. ITO REPORTED IN (2004) 3 SOT 144 HAS HELD AS UNDER : SECTION 273B, READ WITH SECTION 44AB, OF THE I. T. ACT, 1961 PENALTY - NOT TO BE IMPOSED IN CERTAIN CASES ASSESSMENT YEAR 1998-99 WHETHER WHERE YEAR IN QUESTION WAS FIRST YEAR OF BUSINESS OF ASSESSEE AND QUANTUM OF TURNOVER WAS JUST ABOVE RS.40 LAKHS, IT COULD NOT BE SAID THAT THERE WAS ANY MALA FIDE INTENTION OF ASSESSEE IN NOT GETTING HIS ACCOUNTS AUDITED AS HE WAS NOT AWARE O F PROVISION OF SECTION 44AB AND BONA FIDE BELIEF ON PART OF ASSESSEE CONSTITUTED A REASONABLE CAUSE UNDER SECTION 273B HELD YES. 3 IN THIS VIEW OF THE MATTER, WE CANCEL THE PENALTY CONFIRMED BY THE LD. CIT(A). 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 7. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 7.5 .2010 SD/- SD/- (B. C. MEENA) (D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 7 TH MAY, 2010 COPY TO : 1. SHRI RUP KUMAR BISWAS, C/O, SHRI SOMNATH GHOSH, ADV OCATE, SEVEN BROTHERS LODGE, BUROSHIBTALA, P. S. CHINSURAH, DIST, HOOGHL Y, PIN 712 105 2. ITO, WARD-1(1), HOOGHLY 3. CIT(A), KOLKATA. 4. CIT, KOLKATA. 5. D.R., ITAT, KOLKATA. TRUE COPY BY ORDER DEPUTY REGISTRAR JD.(SR.P.S.) I.T.AT., KOLKATA