Shri Mahendra Ramlabhaya Verma, Ahmedabad V. The Income tax Officer, Ward-10(3), Ahmedabad

ITA 2236/AHD/2009

• Counselvise Citation: 223620514 RSA 2009
• Duration Of Justice: 2 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-10-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 20-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P R GHOSH
• Assessee Lawyers: M R VARMA
• Keywords: Reasonable cause
• Section: 273B; 271B; 44AB

Judgement Text

, , . .. . . .. . , , , , . .. . . .. .!'#$ !'#$ !'#$ !'#$ , % % % % & & & & IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SHRI A.K.GARODIA, A.M.) . ITA NOS. 2236&2237/AHD./2009 : ' ()- 2003-04 & 2004-05 MAHENDRA RAMLABHAYA VARMA, AHMEDAB AD .. (,- /APPELLANT) -VS- (PAN : AAKPV 9 144N) I.T.O., WARD-10(3), AHMEDABAD ( ./,- /RESPONDENT ) ,- 0 1 / APPELLANT BY : SHRI M.R.VARMA (SELF) ./,- 0 1 / RESPONDENT BY : SHRI P.R.GHOSH, SR.D.R. 2'3 0 4% / DATE OF HEARING : 20/10/2011 5'( 0 4% / DATE OF PRONOUNCEMENT : 25/10/2011 / ORDER PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THESE TWO APPEALS FILED BY THE ASSESSEE ARE AGAINS T THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XVI, AHMEDABAD BOTH DATED 08-05-2009 CONFIRMING THE PENALTY OF RS.31,340/- AND RS.40,641 /- LEVIED BY THE AO UNDER SECTION 271B OF THE I.T. ACT, 1961 FOR THE ASSESSMENT YEARS 2003-2004 AND 2004-2005 RESPECTIVELY. 2. BRIEFLY STATED, THE FACTS ARE THAT THE AO LEVIED THE PENALTY OF RS. 31,340/- AND RS.40,641/- FOR THE ASSESSMENT YEARS 2003-2004 AND 2004-2005 RESPECTIVELY. 3. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE PL EADED THAT ACCOUNTS FOR THE PREVIOUS YEAR 2001-02 (ASSESSMENT YEAR 2002-03) WER E NOT READY. THEREFORE, IT WAS NOT POSSIBLE TO COMPLETE THE ACCOUNTS FOR BOTH THE ASSESSMENT YEARS UNDER APPEAL. IT WAS ALSO CONTENDED THAT SOME RECORDS OF THE ASSESSE E WERE SEIZED BY THE SALES TAX DEPARTMENT ON 21.10.2003, I.E. JUST BEFORE 31.03.20 03, WHICH WAS THE DUE DATE OF ITA NO. 2236&2237-AHD-09 2 FILING THE TAX AUDIT REPORT UNDER SECTION 44AB FOR THE ASSESSMENT YEAR 2003-04. IN THE ABSENCE OF FINAL OPENING BALANCE AND NON-AVAILABILI TY OF FULL ACCOUNTING RECORDS, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO FINALISE ACCOU NTS AND GET THE SAME AUDITED BEFORE THE DUE DATES, AS REQUIRED UNDER SECTION 44AB OF TH E ACT. ON THE STRENGTH OF THESE DOCUMENTS, IT WAS CONTENDED THAT THERE WAS A REASON ABLE CAUSE WITHIN THE MEANING OF SECTION 273B AND THE PENALTY LEVIED FOR BOTH THE AS SESSMENT YEARS BE CANCELLED. 3.1 IN SUPPORT OF THE AFORESAID CONTENTIONS, THE AS SESSEE ALSO RELIED ON THE FOLLOWING DECISIONS: I) CIT-VS- TEA KING REPORTED IN [2000] 158 CTR 413 II) ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 10(1) V. KAMLESH R. AGRAWAL (HUF) [2006] 99 ITD 27 (AMD.) (T M) 3.2 AFTER CONSIDERING THE AFORESAID SUBMISSIONS, TH E LD. CIT(A) CONFIRMED THE PENALTY FOR BOTH THE ASSESSMENT YEARS FOR THE DETAI LED REASONS GIVEN IN PARA 2.3 TO 2.6 OF THE IMPUGNED ORDER, WHICH READ AS UNDER: 2.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT. THE CONTENTION OF THE APPELLANT THAT THE ACCOUNTS COULD NOT BE AUDITED BE CAUSE THE RECORDS WERE SEIZED BY THE SALES TAX DEPTT ON 21-10-2003 JUST BE FORE THE DUE DATE FOR FILING THE RETURN OF INCOME FOR A Y 2003-04 DOES NOT APPEA R TO BE VERY CONVINCING BECAUSE AS PER THE SEIZURE MEMO OF SALES TAX DEPART MENT, ONLY SOME PURCHASE BILLS WERE SEIZED BY THE SALES TAX DEPTT. NO OTHER BOOKS OF ACCOUNTS OR OTHER SALE BILLS ETC. WERE TAKEN BY THE SALES TAX DEPTT. FURTHER THE APPELLANT HAS FAILED TO PRODUCE ANY CORRESPONDENCE WITH THE SALES TAX DEPTT WHICH SHOWS THAT THE COPIES OF BILLS WERE DENIED BY THE SALES T AX DEPTT. TO THE APPELLANT. THE AUDIT COULD HAVE BEEN DONE IN THE ABSENCE OF SO ME PURCHASE BILLS SUBJECT TO THE REMARKS THAT THE PURCHASE BILLS IN QUESTION ARE IN THE CUSTODY OF SALES TAX DEPTT. THE APPELLANT HAS NOT TAKEN ANY MEASURE WHATSOEVER TO TAKE XEROX COPIES OF THE BILLS. 2.4 ANOTHER REASON MENTIONED BY THE APPELLANT IS T HAT HE HAS MULTIPLE FRACTURE IN HIS LEGS ON 12-7-2006 FOR WHICH HE WAS OPERATED ON 14-7-2006 AND WAS ADVISED REST UPTO 6-12-2006. THIS EXPLANATION HAS N O RELEVANCE WHATSOEVER WITH THE AUDIT OF THE ACCOUNT FOR THE A Y 2003-04 A ND 2004-05 BEFORE THE DUE DATE. 2.5 ANOTHER REASON GIVEN IS THAT THERE WAS SOME PRO BLEM IN THE COMPUTER OF THE APPELLANT IN F Y 2001-02 HAS NO RELEVANCE WITH THE AUDIT FOR A Y 2003-04 & A Y 2004-05. THE APPELLANT ALSO RELIED UPON THE DECIS ION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF TEA KING 158 CTR 413 AND 3 RD MEMBER DECISION OF ITA NO. 2236&2237-AHD-09 3 AHMEDABAD ITAT IN THE CASE OF KAMLESH R AGARWAL 99 ITD 27 (AHD)(TM). AS PER THIS DECISION IF THE ACCOUNT OF EARLIER YEARS C OULD NOT BE COMPLETED FOR SOME REASONABLE CAUSE, THEN PENALTY U/S. 271B CANNO T BE LEVIED FOR SUBSEQUENT YEARS BECAUSE THE APPELLANT WOULD NOT BE ABLE TO TA KE THE CLOSING BALANCE OF EARLIER YEAR WHICH WOULD BE THE OPENING BALANCE OF SUBSEQUENT YEARS. IN MY OPINION, THIS DECISION ALSO DOES NOT HELP THE APPEL LANT BECAUSE THERE IS NOT A SINGLE VALID REASON GIVEN BY THE APPELLANT FOR A Y 2003-04, 2004-05 & 2005-06 FOR NOT GETTING HIS BOOKS OF ACCOUNTS AUDITED FOR T HESE TWO/ THREE ASSESSMENT YEARS. THEREFORE PENALTY LEVIED U/S. 271B IS HEREBY CONFIRMED. 2.6 THE ARGUMENT OF THE AUTHORISED REPRESENTATIVE IS THAT IF THERE IS A REASONABLE CAUSE FOR NOT GETTING THE ACCOUNTS AUDIT ED FOR A Y 2002-03 THEN NO PENALTY U/S. 271B CAN BE LEVIED FOR A Y 2002-03, 20 03-04 & 2004-05 AND SO ON BECAUSE THE OPENING BALANCE AS ON 1-4-2002 WILL NOT BE AVAILABLE FOR CONDUCTING THE NECESSARY AUDIT. THIS EXPLANATION CA NNOT BE TREATED TO BE CORRECT IN THE CASE OF THE APPELLANT BECAUSE THE AU DIT OF THE ACCOUNTS FOR A Y 2003-04, 2004-05 & 2005-06 HAS NOT BEEN COMPLETED E VEN AS ON TODAY I.E. AS ON PASSING THIS ORDER 8-5-2009. FURTHER THERE HAS T O BE SOME VALID REASON FOR NOT GETTING THE ACCOUNTS AUDITED IN EARLIER YEAR. I N THIS CASE NOT A SINGLE REASON HAS BEEN QUOTED BY THE APPELLANT WHICH JUSTIFIES TH E REASONS FOR NOT GETTING THE ACCOUNTS AUDITED U/S. 44AB OF THE I T ACT. FURTHER IN A Y 2002-03, THE TURNOVER OF THE APPELLANT WAS BELOW RS.40 LACS AND THEREFORE AS PER THE APPELLANT HE WAS NOT SUBJECT TO SECTION 44AB OF THE ACT. IN MY VIEW NONE THE REASONS GIVEN BY THE APPELLANT ARE VALID REASONS FO R NOT GETTING THE ACCOUNTS AUDITED U/S. 44AB. 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEALS BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, SHRI M.R.VARMA , THE ASSESSEE HIMSELF APPEARED AND CONTENDED THAT THERE WAS REASONABLE CA USE FOR NOT GETTING THE ACCOUNTS AUDITED, AS REQUIRED UNDER SECTION 44AB OF THE ACT AND BOTH THE DEPARTMENTAL AUTHORITIES BELOW REJECTED THIS PLEA OF THE ASSESSE E ON DOUBTS AND SUSPICION. HE ACCORDINGLY CONTENDED THAT PENALTY LEVIED FOR BOTH THE ASSESSMENT YEARS BE CANCELLED. 6. ON THE OTHER HAND, SHRI JAYRAJ KUMAR, SR.D.R., A PPEARING ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). THE LD. D.R. POINTED OUT THAT ONLY ONE SALES REGISTER WAS SEIZED BY THE DEPA RTMENT. THEREFORE, IT WAS POSSIBLE TO GET THE ACCOUNTS AUDITED. ITA NO. 2236&2237-AHD-09 4 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT SOM E RECORDS OF THE ASSESSEE WERE SEIZED BY THE SALES-TAX DEPARTMENT ON 21.10.2003 I.E. JUST BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04. T HE ACCOUNTS FOR EARLIER YEARS WERE ALSO NOT READY AND IN THE ABSENCE OF THE SAME, IT W AS NOT POSSIBLE FOR THE ASSESSEE TO COMPLETE THE ACCOUNTS FOR THE SUBSEQUENT YEARS I.E. FOR BOTH THE ASSESSMENT YEARS UNDER APPEAL. IT IS WELL-SETTLED LAW THAT IF THERE IS A REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B, THE PENALTY UNDER SECTION 271B IS NOT LEVIABLE. FROM THE REASONING GIVEN BY BOTH THE DEPARTMENTAL AUTHORITIE S BELOW FOR NOT ACCEPTING THE PLEA OF THE ASSESSEE FOR REASONABLE CAUSE, WE ARE CONVIN CED THAT BOTH THE DEPARTMENTAL AUTHORITIES HAVE REJECTED THIS EXPLANATION ON DOUBT S AND SUSPICION. SINCE AUDIT OF EARLIER YEAR WAS PENDING AND SOME RECORDS OF THE AS SESSEE WERE SEIZED BY THE SALES TAX DEPARTMENT, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO GET ITS BOOKS OF ACCOUNTS AUDITED, AS REQUIRED UNDER SECTION 44AB BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. WE, THEREFORE, CANCEL THE PENALTY LEVIED BY THE AO UNDE R SECTION 271B FOR BOTH THE ASSESSMENT YEARS I.E. 2003-04 AND 2004-05. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. 6 0 5'( #' ) 25/10 /2011 ' 7 0 !3 8 THIS ORDER PRONOUNCED IN THE OPEN COURT ON 25/10/2011. SD/- SD/- (A.K.GARODIA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25/10/2011 0 00 0 .49 .49 .49 .49 :9(4) :9(4) :9(4) :9(4)- -- - 1. ,- 2. ./,- 3. 4 2> 4. 2>- - 5. 9A! .4' , , 8 6. !$ C6 , D/ F TALUKDAR/ SR. P.S. 8 ITA NO. 2236&2237-AHD-09 5