Trichy Construction Company, Trichy V. Addl. CIT, Trichy

ITA 2209/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90345 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 03-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: K MEENAKSHISUNDARAM ITP
• Keywords: Reasonable cause
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! # , $ & BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO . 2209/MDS/2014 ( / ASSESSMENT YEAR: 2007-08) M/S. TRICHY CONSTRUCTION COMPANY, 12/G-4, RAHUMANIAPURAM, 11 TH CROSS, THILLAI NAGAR, TIRUCHIRAPALLI. VS ADDITIONAL COMMISSIONER OF INCOME-TAX, TRICHY. PAN:AAAFT4511H ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. K.MEENAKSHISUNDARAM, ITP /RESPONDENT BY : MR. A.V.SREEKANTH, JCIT /DATE OF HEARING : 19 TH MARCH, 2015 /DATE OF PRONOUNCEMENT : 15 TH MAY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), TIRUCH IRAPALLI DATED 18.07.2014 FOR THE ASSESSMENT YEAR 2007-08. THE ONLY GRIEVANCE OF THE ASSESSEE IN ITS APPEAL IS THA T COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING LEVY OF PENALTY UNDER SECTION 271B OF THE ACT. 2. THE ASSESSEE FILED RETURN OF INCOME ON 31.03.200 8 ENCLOSING AUDIT REPORT UNDER SECTION 44AB OF THE AC T IN FORM NO.3CB AND 3CD DATED 24.03.2008. ASSESSMENT WAS 2 ITA NO.2209 /MDS/2014 COMPLETED ON 17.12.2009 UNDER SECTION 143(3) OF THE ACT. THE DUE DATE FOR FILING RETURN OF INCOME FOR THE AS SESSMENT YEAR 2007-08 WAS 31.10.2007. THE ASSESSEE SHOULD HA VE FILED RETURN ALONG WITH AUDIT REPORT ON OR BEFORE T HIS DATE. SINCE THE ASSESSEE FILED AUDIT REPORT DATED 24.03.2 008 UNDER SECTION 44AB ON 31.03.2008 ALONG WITH RETURN, ASSES SEE WAS REQUIRED TO EXPLAIN AS TO WHY PENALTY UNDER SECTION 271B SHOULD NOT BE LEVIED FOR CONTRAVENTION OF PROVISION S OF SECTION 44AB OF THE ACT. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT MANAGING PARTNER OF THE FIRM HAS BEEN LOOKING AFTER DAY-TO-DAY AFFAIRS OF THE FIRM AND H E IS ALSO DEALING WITH ACCOUNTING AND FINANCIAL MATTERS. IT WAS THE SUBMISSIONS OF THE ASSESSEE THAT MANAGING PARTNER A LONG WITH AUDITORS FINALIZED THE ACCOUNTS AND EXTENDS FU LL CO- OPERATION IN PREPARING FINANCIAL STATEMENTS AND PRO FIT AND LOSS ACCOUNT EVERY YEAR. IT WAS THE SUBMISSION OF THE A SSESSEE THAT MANAGING PARTNER WAS ADMITTED IN GVN HOSPITAL, TRICHY IN JUNE, 2007 AND WAS DIAGNOSED WITH KIDNEY AILMEN T AND WAS TAKING TREATMENT TILL JANUARY, 2008. THUS ASSES SEE SUBMITTED THAT IT COULD NOT OBTAIN AUDIT REPORT IN TIME BECAUSE OF THE HOSPITALIZATION OF MANAGING PARTNER AND IT I S NOT WILLFUL 3 ITA NO.2209 /MDS/2014 DEFAULT. HOWEVER, THE ASSESSING OFFICER REJECTING THE SUBMISSIONS LEVIED PENALTY UNDER SECTION 271B OF TH E ACT OBSERVING THAT OTHER PARTNERS ARE LOOKING AFTER DAY TO DAY AFFAIRS OF THE FIRM IN THE ABSENCE OF THE MANAGING PARTNER AND THEY ARE ALSO COMPETENT TO COMPLETE ACCOUNTS. THEREFORE, ASSESSING OFFICER WAS OF THE OPINION THA T ASSESSEE HAS EMPLOYED ACCOUNTANT, QUALIFIED CHARTER ED ACCOUNTANT FOR DOING FINALIZATION OF ACCOUNTS AND AUDIT, THUS NO ASSISTANCE IS REQUIRED FROM MANAGING PARTNER. TH EREFORE, HE LEVIED PENALTY UNDER SECTION 271B OF THE ACT. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) PASSED EX-PART E ORDER CONFIRMING THE PENALTY LEVIED STATING THAT TH ERE IS NO REASONABLE CAUSE. 3. COUNSEL FOR THE ASSESSEE SUBMITS THAT ACCOUNTS C OULD NOT BE AUDITED WITHIN THE TIME, AS THE MANAGING PAR TNER WAS HOSPITALIZED AND HE WAS WELL VERSED WITH THE DAY T O DAY AFFAIRS OF THE ASSESSEE FIRM IN ASSISTING AUDITORS AND ACCOUNTANT FOR FINALIZATION OF ACCOUNTS. THEREFORE, IT CANNOT BE SAID THAT IN THE ABSENCE OF MANAGING PARTNER OTH ER PARTNERS CAN FINALIZE THE ACCOUNTS. THERE IS A REA SONABLE 4 ITA NO.2209 /MDS/2014 CAUSE IN NOT GETTING THE ACCOUNTS AUDITED IN TIME A ND THEREFORE, HE PLEADS FOR DELETION OF PENALTY. 4. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDERS OF LOWER AUTHORITIES IN LEVYING AND CONFIRMING THE PEN ALTY. 5. HEARD BOTH SIDES. ON GOING THROUGH THE ASSESSMEN T ORDER AND APPELLANT ORDER, WE FIND THAT LOWER AUTHO RITIES ARE NOT JUSTIFIED IN LEVYING AND SUSTAINING THE PENALTY . IN OUR VIEW, THERE IS A REASONABLE CAUSE FOR NOT GETTING THE ACC OUNTS AUDITED WITHIN THE TIME AS THE MANAGING PARTNER OF THE FIRM WAS HOSPITALIZED. IN THE CIRCUMSTANCES, WE DELETE T HE PENALTY LEVIED UNDER SECTION 271B OF THE ACT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MAY, 2015. SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 15 TH MAY, 2015 SOMU ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .