Smt. Jigisha M. soni, Anand V. The Income Tax Officer, Ward 1, Anand

ITA 2091/AHD/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1190 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 08-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D V SINGH
• Assessee Lawyers: KETAN BHATT
• Keywords: Principle of natural justice; Reasonable cause; Non compliance
• Section: 273B; 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI RAJPAL YADAV, J.M. & SHRI ANIL CHATURV EDI, A.M.) I.T. A. NO.2091/AHD/2013 (ASSESS MENT YEAR: 2009-10) SMT. JIGISHA M. SONI NR. RAILWAY GODI, STATION ROAD, ANAND- 388001 V/S ITO, WARD-1, ANAND (APPELLANT) (RESPONDENT) PAN: APOPS 7078D APPELLANT BY : SHRI KETAN BHATT RESPONDENT BY : SHRI D.V. SINGH, SR. D.R. ( )/ ORDER DATE OF HEARING : 13-08-2015 DATE OF PRONOUNCEMENT : 21-08-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-IV, BARODA DATED 28.05.2013 FOR A.Y. 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE DERIVING INC OME MAINLY FROM COMMISSION ON SELLING OF NON JUDICIAL STAMP PAPERS. ASSESSEE FILED HER RETURN OF INCOME FOR A.Y. 2009-10 ON 03.11.2009 DEC LARING TOTAL INCOME AT ITA NO 2091/ AHD/2013 . A.Y. 2009-10 2 RS. 1,59,906/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORD ER DATED 09.08.2011 AND THE TOTAL INCOME WAS DETERMINED AT RS. 2,39,366 /-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NOTICED THAT ASSESSEE I S A STAMP VENDOR AND HAD MADE SALE OF STAMP PAPERS OF RS. 2.72 CRORES BU T THE BOOKS OF ACCOUNTS WERE NOT AUDITED AS REQUIRED U/S. 44AB OF THE ACT. THE SUBMISSION OF THE ASSESSEE THAT ON PURCHASE AND SALE OF STAMP PAPERS SHE EARNS COMMISSION AND THEREFORE THE PURCHASE AND SALE OF STAMP PAPERS CANNOT BE CONSIDERED TO BE HER TURNOVER WHICH WOULD NECESSIATE THE AUDIT U/ S. 44AB OF THE ACT. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE A.O AS HE WAS OF THE VIEW THAT ASSESSEE SHOULD HAVE GOT HER BOOKS OF ACCOUNTS AUDITED. A.O ALSO NOTED THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF AHMEDABAD STAMP VENDORS ASSOCIATION (124 TAXMAN.COM 628) HAS HELD THAT THE DISCOUNT MADE AVAILABLE TO THE LICENSED ST AMP VENDOR UNDER THE PROVISION OF THE RULES DOES NOT FALL WITHIN THE EXP RESS COMMISSION OR BROKER. HE ACCORDINGLY HELD THAT SINCE ASSESSEE H AS FAILED TO GET THE ACCOUNTS AUDITED, SHE WAS LIABLE FOR PENALTY U/S. 2 71B OF THE ACT AND ACCORDINGLY LEVIED PENALTY OF RS. 1 LAC. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO U PHELD THE ORDER OF A.O BY HOLDING AS UNDER:- 10. THE AO IN HIS PENALTY ORDER HAS MENTIONED THAT THE APPELLANT IS A STAMP VENDER AND SHE HAD MADE SALES OF STAMP PAPERS WORTH RS. 2.72 C RORES. THIS FACT ITSELF SHOWS THAT THE GROSS TURN, OVER /RECEIPTS IN THE CASE OF APPELLANT WAS MORE THAN 40 LACS AND THEREFORE HER BOOKS OF ACCOUNTS FOR THE YEAR UNDER CONSIDERAT ION WERE SUBJECT TO AUDIT U/S 44AB OF THE IT ACT, THIS FACT IS ADMITTED BY THE APPELLANT. EVEN IN HER GROUNDS OF APPEAL. THE APPELLANT AS PER GROUND OF APPEAL NO.1 HAS STATED T HAT THE NON COMPLIANCE OF PROVISIONS, OF SECTION 44AB WAS NOT DELIBERATE OR INTENTIONAL. AS PER THIS GROUND OF APPEAL, THE APPELLANT HAS STATED THAT THE NON COMPLIANCE OF PRO VISIONS OF SECTION 44AB WAS DUE TO, ITA NO 2091/ AHD/2013 . A.Y. 2009-10 3 MISIMPRESSION, ADMITTEDLY THE APPELLANT FAILED TO GET HER BOOKS OF ACCOUNTS' AUDITED U/S 44AB OF THE IT ACT. THIS IS NOT THE CASE OF THE APPELLANT THAT SHE USED TO GET PURELY HER COMMISSION FOR MAKING THE SALES OF STAM P PAPERS. THE ENTIRE SALES OF STAMP PAPERS HAVE BEEN MADE BY THE APPELLANT ONLY. THE A PPELLANT HAD ARGUED THAT ONLY LICENSED VENDORS-CAN APPLY TO TREASURY OFFICE-FO R THIS STAMPS REQUIRED IN DIFFERENT DENOMINATIONS ALONG WITH CHALLAN WHICH IS TO BE FIL LED IN WITH THE AMOUNT OF STAMP REQUIRED AFTER REDUCING THE DISCOUNT AVAILABLE FOR SUCH PURCHASE OF STAMP AND THEREFORE SHE HAS RIGHTLY SHOWN SUCH DISCOUNT UNDER THE HEAD COMMISSION IN THE P & L ACCOUNT. IN THIS REGARD, THE AO HAS RIGHTLY QUOTED THE DECISION -OF HON'BLE-GUJARAT HIGH COURT IN THE CASE OF -AHMEDABAD STAMP VENDERS ASSOCIATION, 324 T AXMAN 628 WHEREIN 'THE HON'BLE GUJARAT HIGH COURT HAS HELD THAT THE 'DISCOUNT MADE AVAILABLE TO THE LICENSED STAMP VENDORS UNDER THE PROVISIONS OF THE RULES DOES NOT FAIL WITHIN THE EXPRESSION 'COMMISSION OF RUPEES'. CONSIDERING ALL THESE FACTS, IT-IS HELD THAT THE APPELLANT WAS REQUIRED TO GET HER .BOOKS OF ACCOUNTS AUDITED AS PER PROVISIONS OF SECTION 44AB OF THE IT ACT AND TO TILE THE SAME ON OR BEFORE DUE DATE WHICH SHE HAS FAILED TO DO AND-THEREFORE THE AO HAS RIGHTLY LEVIED THE PENALTY OF RS.1,00,000/- U/S 271 B OF THE IT ACT. 1, THEREFORE, CONFIRM THE PENALTY OF RS. 1,00,000/- AS LEVIED BY THE AO U/S 2 7IB OF THE IT ACT. THUS, THE ABOVE GROUNDS OF APPEAL OF THE APPELLANT ARE HEREBY DISMI SSED. 4. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASS ESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:-. 1.1THE ORDER PASSED U/S.250 ON 28.5.2013 FOR A. Y.2 009-10 BY CIT(A)-IV, BARODA, UPHOLDING THE PENALTY OF RS 1 LAKH IMPOSED U/S.27IB BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O R ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PROD UCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED PENALTY. 2.1THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THAT THE APPELLANT WAS REQUIRED TO GET HER BOOKS OF ACCOUNT AUDITED U/S.44AB OF THE ACT SO THAT THE PENALTY OF RS.L,00,000 IMPOSED BY AO WAS JUSTIF IED. ITA NO 2091/ AHD/2013 . A.Y. 2009-10 4 2.2THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE THAT THE APPELLANT WAS REQUI RED TO GET HER BOOKS OF ACCOUNT AUDITED U/S.44AB OF THE ACT SO THAT THE PENALTY OF RS. L ,00,000 IMPOSED BY AO WAS JUSTIFIED. THAT BOTH THE LOWER AUTHORITIES HAVE FAILED TO APPR ECIATE THAT THERE WAS SUFFICIENT CAUSE FOR FAILURE TO GET THE BOOKS OF ACCOUNTS AUDITED U/ S.44AB. 3.1THAT BOTH THE LOWER AUTHORITIES OUGHT TO HAVE APPRECIATED THAT TOTAL TU RNOVER, SALES OR GROSS RECEIPTS OF THE APPELLANT'S BUSINESS WAS MERELY THE COMMISSION RECE IPTS OF RS.3,36,572 WHEREAS THE TURNOVER OF RS.2.88 CR. DID NOT PERTAIN TO THE APPE LLANT. IT IS, THEREFORE, PRAYED THAT THE PENALTY OF RS. L ,00,000 IMPOSED BY THE AO U/S.271 B AND CONFIRMED BY THE CIT(A) SHOULD BE DELETED. 5. THOUGH VARIOUS GROUNDS HAVE BEEN RAISED BUT THE SOL ITARY ISSUE IS ABOUT THE LEVY OF PENALTY U/S. 271B OF THE ACT. 6. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER SUBMITTED THAT ASSESSEE IS A GOV ERNMENT APPROVED STAMP VENDOR SELLING THE STAMP PAPERS PROCURED FROM GOVERNMENT ON CUSTODIAN BASIS AND AFTER CERTAIN DATE UNSOLD STAMP PAPER HAVE TO BE RETURNED TO THE GOVERNMENT AND THEREFORE THE ASSESSEE ACTS A S AN AGENT AND FOR WHICH SHE GETS COMMISSION. IT WAS FURTHER SUBMITTED THAT THE TITLE OF THE STAMP PAPERS IS NOT TRANSFERRED TO THE ASSESSEE ON ITS PU RCHASE. HE FURTHER SUBMITTED THAT THE DECISION OF AHMEDABAD STAMP VEND ORS ASSOCIATION ARE ON DIFFERENT FACTS AND CANNOT BE APPLIED TO THE FAC TS OF THE ASSESSEE. HE FURTHER PLACED RELIANCE ON CBDT CIRCULAR NO. 452 DA TED 17.03.1986 WHEREBY IT IS STATED THAT PROVISIONS OF SECTION 44A B IS APPLICABLE ONLY WHEN THE COMMISSION INCOME EXCEEDS RS. 40 LACS. HE ALSO PLACED RELIANCE IN THE CASE OF PREM PRAKASH GUPTA 55 TAXMAN.COM 291 (JAIPU R) HASMUKH M. SHAH ITA NO 2091/ AHD/2013 . A.Y. 2009-10 5 85 ITD 99 (AHD). HE FURTHER SUBMITTED THAT ASSESSEE WAS UNDER BONA FIDE BELIEF THAT SHE WAS NOT REQUIRED TO GET THE ACCOUNT S AUDITED AND THE BREACH WAS TECHNICAL IN NATURE AND THEREFORE PENALTY BE DE LETED. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND LD. CIT(A ). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT ASSESSEE IS GOVERNMENT APPR OVED STAMP VENDOR SELLING STAMP PAPERS AND THE COMMISSION EARNED ON S ELLING OF THE STAMP PAPERS WAS NOT IN EXCESS OF THE LIMIT PRESCRIBED U/ S. 44AB FOR THE PURPOSE OF GETTING THE BOOKS AUDITED. BEFORE US, IT IS ASSESSE ES SUBMISSION THAT SHE WAS UNDER BONA FIDE BELIEF THAT THE PURCHASE AND SA LES OF STAMP PAPERS WOULD NOT FORM PART OF TURNOVER AND THEREFORE HAD NOT GOT THE BOOKS AUDITED AND FOR WHICH SHE HAD PLACED RELIANCE ON CBDT CIRCULAR. THE AFORESAID SUBMISSION OF THE ASSESSEE PRIMA FACIE APPEARS TO BE BONA FIDE BELIEF ON HER PART AND REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO S UPPORT THAT THE BELIEF OF THE ASSESSEE WAS NOT BONA FIDE. A.O HAS LEVIED PENA LTY U/S. 271B OF THE ACT FOR NOT GETTING THE BOOKS AUDITED U/S. 44AB OF THE ACT. A READING OF SECTION 271B MAKES IT CLEAR THAT THE IMPOSITION OF PENALTY IS NOT MANDATORY AS THE WORD USED IS MAY MEANING THEREBY THAT A DISCRETIO N IS CONFERRED ON THE A.O TO IMPOSE OR NOT TO IMPOSE THE PENALTY. FURTHER THE PROVISION WITH RESPECT TO IMPOSITION OF PENALTY IS NOT MANDATORY I N VIEW OF THE PROVISION CONTAINED IN SECTION 273B OF THE ACT WHICH INTERALI A PROVIDES THAT NOTWITHSTANDING THE PROVISIONS OF SECTION 271B, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CAS E MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THA T THERE WAS REASONABLE CAUSE FOR THE FAILURE. IN THE PRESENT CASE, THE ASSESSEE WAS HAVING A BONA FIDE BELIEF THAT SHE WAS NOT REQUIRED TO GET HER BOOKS A UDITED UNDER 44AB IN VIEW ITA NO 2091/ AHD/2013 . A.Y. 2009-10 6 OF THE CBDT CIRCULAR (SUPRA). IN SUCH A SITUATION, WE ARE OF THE VIEW THAT THERE WAS A REASONABLE CAUSE ON THE PART OF THE ASS ESSEE FOR NOT GETTING THE BOOKS AUDITED. FURTHER IT IS A SETTLED LAW THAT WHE N THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF LAW, THE ENDS OF JUSTICE REQUIRES THAT DISCRETION SHOULD NOT BE EXERCISED IN FAVOUR OF PUN ISHING A MINOR DEFAULT AND FOR WHICH WE GET SUPPORT FROM THE DECISION OF HONB LE APEX COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (1 972) 83 ITR 26 (SC) WHEREBY HONBLE APEX COURT HAS HELD AS UNDER:- 'EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHO RITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THE RE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE S TATUTE.' 8. CONSIDERING THE TOTALITY OF THE FACTS AND RELYING O N THE AFORESAID DECISION OF HONBLE APEX COURT, WE ARE OF THE VIEW THAT IN THE PRESENT CASE THE LEVY OF PENALTY U/S. 271B OF THE ACT WAS NOT JUSTIFIED AND THEREFORE DIRECT ITS DELETION. THUS THE GROUND OF ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN OPEN COURT ON 21 - 08 - 2015 . SD/- SD/- (RAJPAL YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT.