Umesh Chandra Baral, Koraput V. ITO, Jeypore

ITA 219/CTK/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0748 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 15-02-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 03-06-2010
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: D K SETHM SETH ARS
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 219/CTK/2010 / ASSESSMENT YEAR 2008 - 09 UMESH CHANDRA BARAL, BHEJAOPUT,DAMANJODI PAN: ACZPB 2049 R - - - VERSUS - INCOME - TAX OFFICER, WARD 1, JEYPORE. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI D.K.SETH/M.SETH, ARS / FOR THE RESPONDENT: / SHRI S.C.MOHANTY, DR / ORDER . . . , , SHRI K.S.S.PRASAD RAO, JUDICIAL MEM BER . THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.12.3.2010 FOR THE ASSESSMENT YEAR 2008 - 09 IN THE CASE OF THE ASSESSEE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES IN THE GROUN DS OF APPEAL. 1. THAT, THE LEARNED C.I.T.(A) IS NOT CORRECT IN CONFIRMING THE PENALTY ORDER OF LEARNED A.O. BECAUSE FOR NON - CONSIDERATION OF REASONABLE CAUSE WHICH PREV ENTED THE APPELLANT FOR FILING I .T. RETURN U/S. 139(1) OF THE I .T. ACT, UNDER THE FACT S AND CIRCUMSTANCES OF THE CASE. 2. THAT, THE LEARNED C.L.T.(A) HAS ERRED IN DISPUTING THE APPELLANTS CLAIM THAT CONFUSION AND MISLEADING ARISING IN INTERPRETATION OF ACT WITH CIRCULAR (S. 139(1) OF THE L.T. ACT WITH CIRCULAR NO.5/2007 DT. 26 - 07 - 2007) IS THE MAIN REASON FOR FAILURE IN COMPLYING THE PROVISION OF S 44AB AND SUCH CONFUSION AND MISLEADING IN INTERPRETATION OF LAW CONSTITUTE A REASONABLE CAUSE. THE CLAIM OF THE APPELLANT IS TRUE WHEN THE LEARNED A.O. HIMSELF ADMITTED SUCH CONFUSION IN THE ASSES SMENT PROCEEDING WHILE DEALING THE ABOVE MATTER. AS SUCH THE EXPLANATION OFFERED BY THE APPELLANT SHOWING ABOVE REASONABLE CAUSE IS BONAFIDE, WANT OF NEGLIGENCE AND HAVING NO INTENTION TO ACT BEYOND LAW OR TO DEFRAUD GOVERNMENT REVENUE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. I.T.A.NO. 219/CTK/2010 2 3. THAT, WHILE DISCUSSING WHAT FACTS CONSTITUTE REASONABLE CAUSE, THE LEARNED C.L.T.(A) HAS NOT FORMED ANY INDEPENDENT OPINION FOR THE ADMITTANCE OF LEARNED A.O. WHO HAS OBSERVED IN THE PENALTY ORDER THAT THERE EXIST A CONTRADIC TION BETWEEN ACT AND CIRCULAR IN IMPLEMENTING THE PROVISION OF S. 271B. AS SUCH THE BENEFIT OF DOUBT SHALL GO IN FAVOUR OF THE APPELLANT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THAT ADMISSION OF CONTRADICTION BETWEEN ACT AND CIRCULAR BY LEARNED A.O. IS BEING AN IMPORTANT PIECE OF EVIDENCE IN PENAL PROCEEDING, THE LEARNED C.L.T.(A) COULD HAVE DELETED THE PENALTY CONSIDERING IT AS A REASONABLE CAUSE WITHIN THE MEANING OF U/S. 273B OF THE L.T. ACT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. T HAT THE ALLEGATION AND CONCLUSION OF LEARNED C.I.T.(A) FOR NOT OBTAINING AUDITED REPORT WITHIN THE STATUTORY PERIOD OF TIME IS NOT CORRECT. THIS IS BECAUSE THE DOCUMENTARY EVIDENCE LIKE 3CB AND 3CD DULY SIGNED AND DATED BY THE STATUTORY AUDITOR HAS BEEN SU BMITTED TO THE APPELLANT IN TIME IN DISCHARGING OF HIS OFFICIAL RESPONSIBILITY AND THERE IS NO EVIDENCE ON RECORD TO DISPROVE IT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THAT THE ANNEXURE LESS RETURN WITH MANY GUIDELINES CAME INTO FORCE FROM ASSE SSMENT YEAR 2007 - 08 JUST AFTER COMMENCEMENT OF THE PRESENT ASSESSMENT YEAR NOW UNDER APPEAL. THIS BEING THE SECOND ASSESSMENT YEAR AND NOT PROPERLY UNDERSTOOD BY THE APPELLANT SUCH ERROR MAY CONSTITUTE A REASONABLE CAUSE UNDER THE FACTS AND CIRCUMSTANCES O F THE CASE. BUT ALL THE GROUNDS ARE CHALLENGING THE LEVY OF PENALTY U/S.271B OF THE INCOME - TAX ACT,1961. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES AND THEIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE T RIBUNAL IN THE LIGHT OF THE RIVAL SUBMISSIONS OF BOTH THE PARTIES , THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE IS A CONTRACTOR AND DURING THE PERIOD UNDER CONSIDERATION THE ASSESSEE HAS EXECUTED CONTRACT WORKS WITH NALCO, DAMANJODI, VEDANATA ALUMINUM LTD., LANGIGARH AND UTKAL ALUMINUM , RAYAGADA AND THE GROSS CONTRACT RECEIPT I.T.A.NO. 219/CTK/2010 3 WAS 63,81,579.THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR THE PERIOD UNDER CONSIDERATION ON 31.12.2008 DECLARING A TOTAL INCOME OF 3,29,284, BUT WITHOUT ANY ANNEXURE THERETO. THE ASSESSING OFFICER HAS NOTICED THAT THE RETURN WAS FILED LONG AFTER THE DUE DATE AS PER THE PROVISIONS CONTAINED IN SECTION 139(1) AND SECTION 44AB OF THE I.T.ACT,1961. AFTER HEARING THE ASSESSEE, THE ASSESSING OFFICER IMPOSED PENALTY OF 32,020 U/S.271B FOR FAILURE TO FURNISH AUDIT REPORT BEFORE SPECIFIED DATE MENTIONED IN THE PR OVISIONS CONTAINED IN SECTION 44AB. AGGRIEVED BY THIS ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE COMMISSIONER OF INCOME - TAX (APPEALS) AND IS UNSUCCESSFUL AND THE PRESENT APPEAL IS FILED BY THE ASSESSEE BEFORE THE TRIBUNAL. 5. DURING THE COURSE OF HEARIN G, THE LEARNED AR OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE PROVISIONS CONTAINED IN SECTION 44AB SPECIFIES OF OBTAINING THE AUDIT REPORT. IT DOES NOT SAY ANYTHING ABOUT THE DATE OF FILING. THEREFORE, UNDISPUTEDLY THE AUDIT REPORT HAVING BEEN OBTAINED BEFO RE THE DATE SPECIFIED UNDER THE PROVISIONS CONTAINED IN SECTION 44AB, THE ASSESSEE COULD NOT FILE IT BEFORE THE ASSESSING OFFICER BY THAT DATE BECAUSE HE COULD NOT PREPARE THE RETURN ALONG WITH THE ANNEXURES TO BE FILED BEFORE THE ASSESSING OFFICER. HE FU RTHER SUBMITTED THAT CIRCULAR NO.5/2007 DT.26.7.2007 ISSUED BY THE CBDT CLEARLY SPEAKS OF NO NEED TO FURNISH THE COPY OF THE AUDIT REPORT. APART FROM THAT RELYING ON VIEWS REPORTED IN (1995) 129 CTR, PENALTY U/S.271B COULD NOT BE IMPOSED FOR DELAY IN FILIN G THE RETURN. AS SUCH, THERE IS CONTRADICTION AND CONFUSION BETWEEN THE ACT AND CIRCULAR OF THE CBDT. THIS IS A SUFFICIENT REASONABLE CAUSE FOR FAILURE IN COMPLYING WITH THE PROVISIONS CONTAINED IN SECTION 44AB.THEREFORE, NO PENALTY IS IMPOSABLE IN THE CAS E OF THE ASSESSEE. IN SUPPORT OF THIS PROPOSITION, HE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF AZADI BACHAO ANDOLAN VS . U NION OF I.T.A.NO. 219/CTK/2010 4 INDIA [2001] 252 ITR 471 (DEL) ,WHEREIN IT WAS HELD THAT REASONABLE CAUSE AS APPLIED TO HUMAN ACTION, IS THAT WHICH WOULD CONSTRAIN A PERSON OF AVERAGE INTELLIGENCE AND ORDINARY PRUDENCE. THE EXPRESSION REASONABLE IS NOT SUSCEPTIBLE OF A CLEAR AND PRECISE DEFINITION FOR AN ATTEMPT TO GIVE A SPECIFIC MEANING TO THE WORD REASONABLE IS TRYING TO COUNT WH AT IS NOT NUMBER AND MEASURE WHAT IS NOT SPACE. IT CAN BE DESCRIBED AS RATIONAL ACCORDING TO THE DICTATES OF REASON AND IS NOT EXCESSIVE OR IMMODERATE. THE WORD REASONABLE HAS IN LAW THE PRIMA FACIE MEANING OF REASONABLE WITH REGARD TO THOSE CIRCUMSTANCE S OF WHICH THE ACTOR, CALLED ON TO ACT REASONABLY, KNOWS OR OUGHT TO KNOW. REASONABLE CAUSE CAN BE REASONABLY SAID TO BE A CAUSE WHICH PREVENTS A MAN OF ORDINARY PRUDENCE AND AVERAGE INTELLIGENCE, ACTING UNDER NORMAL CIRCUMSTANCES, WITHOUT NEGLIGENCE OR IN ACTION OR WANT OF BONAFIDES. THEREFORE, THE LOWER AUTHORITIES FAILED TO TAKE INTO CONSIDERATION THIS REASONABLE CAUSE FOR CONSIDERING THE LEVY OF PENALTY AGAINST THE ASSESSEE. THE CONTRADICTION AND CONFUSION BETWEEN THE ACT AND THE CIRCULAR OF CBDT IS EVID ENT FROM THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER ITSELF. THEREFORE , UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEVY OF PENALTY AGAINST THE ASSESSEE U/S.271B IS HIGHLY UNSUSTAINABLE AND REQUIRES TO BE CANCELLED. 6. CONTRARY TO THIS, THE LEARNED DR SUPPORTED THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES AND SOUGHT FOR UPHOLDING THEM BY DISMISSING THE APPEAL OF THE ASSESSEE. 7. ON CAREFUL ANALYSIS OF THE UNDISPUTED FACTS IN THE LIGHT OF THE PROVISIONS CONTAINED IN SECTION 44AB AS WELL A S SECTION 139(1) AND THE LAW LAID DOWN BY THE JUDICIAL FORUMS AND THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES AS WELL AS THE RIVAL SUBMISSIONS OF BOTH THE PARTIES, IT IS FOUND THAT UNDISPUTEDLY CIRCULAR NO.5/2007 DT.26.2.2007 CATEGORICALLY SAYS THAT NO PE NALTY U/S.271B I.T.A.NO. 219/CTK/2010 5 SHALL BE INITIATED OR LEVIED FOR NOT FURNISHING THE TAX AUDIT REPORT ON OR BEFORE THE DUE DATE. AS CAN BE SEEN FROM THE PROVISIONS OF THE ACT , FURNISHING OF AUDIT REPORT BY THE ASSESSEE HAVING MORE THAN 40 LAKHS TURNOVER PER YEAR IS ONLY TO FACILIT ATE THE AO TO EXPEDITE PROCESS OF ASSESSMENT. NOWHERE IN THE PENALTY ORDER IT WAS POINTED OUT BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT FILED THE AUDIT REPORT BEFORE THE ASSESSMENT PROCEEDINGS ARE STAR TED. SINCE THE ASSESSMENT PROCEEDINGS WILL NOT BE STARTED WITHOUT FILING OF THE RETURN BY THE ASSESSEE AND THE ASSESSEE HEREIN HAS FILED THE RETURN ALONG WITH THE AUDIT REPORT OBTAINED BEFORE THE DATE MENTIONED IN SECTION 44AB, THEREFORE, CANNOT BE SAID TH AT THE ASSESSING OFFICER HAS EXPERIENCED ANY DIFFICULTY IN CONCLUDING THE ASSESSMENT PROCEEDINGS BASING ON THE RETURN FILED BY THE ASSESSEE. APART FROM THAT THE OBSERVATION OF THE ASSESSING OFFICER IN THE CONCLUDING PARAGRAPH AT PAGE 5 OF THE PENALTY ORDER THAT BECAUSE THERE IS AMENDMENT TO THE SECTION 44AB BY SUBSTITUTING THE WORDS OBTAINED BEFORE BY WORDS FURNISHED BY HE CONTENDED THAT THE REASON OF THIS AMENDMENT IS TO CHECK THE LOSS OF REVENUE AND AMBIGUITY WHICH ASSESSEE HAS AVAILED. BUT NOWHERE IN THE ASSESSMENT ORDER OR THE PENALTY ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT THERE IS LOSS OF REVENUE CAUSED BY THE ASSESSEE BY NOT FILING THE AUDIT REPORT WITHIN THE DATE PRESCRIBED IN THE PROVISIONS CONTAINED IN SECTION 44AB RESULTING IN ANY LOSS OF REVENUE TO THE GOVERNMENT. IN THAT VIEW OF THE MATTER, THE TECHNICALITY RELIED ON BY THE ASSESSING OFFICER FROM THE PROVISIONS CONTAINED IN SECTION 44AB IS OF NO HELP AS STATED SUPRA THERE IS AMBIGUITY BETWEEN THE PROVISIONS OF SECTION 44AB AND SECTION 130 AND CIRCULAR NO.5/2007 (SUPRA), THE REASONABLE CAUSE PLEADED BY THE ASSESSEE IS TO BE ACCEPTED MORE SO IN THE LIGHT OF CLAUSE (II) OF SL.6 OF THE SAID CIRCULAR, WHICH CATEGORICALLY SAYS THAT THE PROVISIONS OF THE LAW SHALL BE DEEMED TO HAV E BEEN COMPLIED WITH IN RESPECT OF THE REQUIREMENT OF THE FILING OF THE ATTACHMENTS OR I.T.A.NO. 219/CTK/2010 6 DOCUMENTS OR REPORTS ALONG WITH THE RETURN. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT OBTAINED THE AUDIT REPORT BEFORE THE DATE PRESCRIBED IN SECTION 44AB AS THE AUDIT REPORT IS DT.25.9.2008. THEREFORE, RESPECTFULLY, CONSIDERING THE UNDISPUTED FACTS OF THE CASE STATED SUPRA IN THE LIGHT OF THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF AZADI BACHAO ANDOLAN VS. UNION OF INDIA (SUPRA), W E ARE OF THE CONSIDERED VIEW THAT THE LEVY OF PENALTY BY THE ASSESSING OFFICER AND AS CONFIRMED BY THE LEARNED CIT(A) IS NOT SUSTAINABLE UNDER THE LAW AND THE SAME IS HEREBY CANCELLED BY ALLOWING THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 14 TH MARCH, 2011 S D/ - S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER. ( ) DAT E: 14 TH MARCH, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : UMESH CHANDRA BARAL, BHEJAOPUT,DAMANJODI 2 / THE RESPONDENT: INCOME - TAX OFFICER, WARD 1, JEYPORE. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.