Hytaisun Magnetics Ltd., Ahmedabad V. The Income Tax Officer, Ward-2(1)(3), Ahmedabad

ITA 2236/AHD/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0490 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 01-09-2016
• Court: TRIBUNAL

Judgement Text

ITA NO.2236/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO.2236/AHD/2016 ASSESSMENT YEAR: 2012-13 HYTAISUN MAGNETICS LTD., VS. INCOME TAX OFFICER, MARUTI HOUSE, WARD 2(1)(3), AHMEDABAD. OPP. AIR INDIA, ASHRAM ROAD, AHMEDABAD 380 009. [PAN AAACH 3873 P] (APPELLANT) (RESPONDENT) APPELLANT BY : S.V. AGARWAL & DIVYA AGARWAL, A.R. RESPONDENT BY : S.K. DEV, SR. D.R. DATE OF HEARING : 13.11.2018 DATE OF PRONOUNCEMENT : 29.11.2018 O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE APPE LLANT AGAINST ORDER OF LD. CIT(A) DATED 16.08.2016 FOR THE ASSESSMENT YEAR 201 2-13. THE APPELLANT HAS TAKEN FOLLOWING GROUNDS OF APPEAL :- 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.1,00,000/- LEVIED BY A.O. UNDER SECTION 271B OF THE ACT. 2. THE ASSESSEE CRAVES FOR LIBERTY TO AMEND, MODIFY AND ADD ANY GROUNDS OF APPEAL OR FILE ADDITIONAL EVIDENCES. 2. FACTS OF THE CASE ARE THAT THE CASE OF THE ASSES SEE WAS REOPENED AND NOTICE U/S.148 OF THE ACT WAS ISSUED TO THE ASSESSEE COMPA NY ON 18.11.2014. IN RESPONSE TO THE NOTICE U/S.148 OF THE ACT, THE ASSESSEE COMPANY HAS SUBMITTED REPLY ON 25.03.2015 IN WHICH THE ASSESSEE COMPANY HAS SUBMIT TED PAPER RETURN OF INCOME FOR THE A.Y. 2012-13 AND STATED THAT WHICH IS CONSIDERE D THE SAME IN RESPONSE TO THE NOTICE U/S. 148 OF THE ACT. THEREAFTER, THE ASSESSE E COMPANY HAS E-FILED ITS RETURN OF INCOME FOR A.Y. 2012-13 ON 09.09.2015, DECLARING TO TAL INCOME OF RS. NIL. DURING THE ASSESSMENT PROCEEDINGS DETAILS WAS SUBMITTED, PERUS AL OF DETAILS SHOWS THAT THE TOTAL ITA NO.2236/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 2 OF 4 SALES RECEIPTS/TURNOVER OF THE ASSESSEE COMPANY IS SHOWN IN THE P&L ACCOUNT AT RS.5,07,23,128/. IT IS NOTICED THAT THE ASSESSEE-C OMPANY HAS FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 44AB OF I.T. ACT, 1961. A CCORDINGLY, A NOTICE U/S 271B OF THE ACT WAS ISSUED ON 23.10.2015, WHICH WAS DULY SERVED UPON THE ASSESSEE COMPANY. THE HEARING WAS FIXED ON 30.10.2015. IN RESPONSE T O NOTICE, THE ASSESSEE COMPANY HAS NOT FILED ANY REPLY. THE ASSESSEE COMPANY DI D NOT BOTHER TO COMPLY WITH THE NOTICE BY PERSONAL ATTENDANCE OR THROUGH ITS A.R OR THROUGH ANY SUBMISSION IN THIS REGARD. AS PER THE PROVISIONS OF SECTION 44AB OF T HE ACT 'EVERY PERSON CARRYING ON BUSINESS SHALL, IF HIS TOTAL SALES, TURNOVER OR GRO SS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS EXCEED OR EXCEEDS SIXTY LAKHS RUPEES IN AN Y PREVIOUS YEAR; GET HIS ACCOUNTS OF SUCH PREVIOUS YEAR AUDITED BY AN ACCOUNTANT BEFO RE THE SPECIFIED DATE AND FURNISH BY THAT DATE THE REPORT OF SUCH'. 2.1 IT WAS NOTICED THAT THE ASSESSEE-COMPANY ITSELF HAD SHOWN ITS GROSS RECEIPTS OF RS.5,07,23,128/- DURING F.Y. 2011-12 RELEVANT TO AY 2012-13. HENCE, THE ASSESSEE WAS REQUIRED TO GET ITS ACCOUNTS AUDITED BY A CHART ERED ACCOUNTANT AS PROVIDED IN SECTION 44AB OF THE INCOME-TAX ACT, 196ION OR BEFOR E 30.09.2012. HOWEVER, THE ACCOUNTS OF THE COMPANY WERE NOT AUDITED. THE COMPA NY HAS FAILED TO COMPLY WITH THE PROVISION OF SECTION 44AB OF THE ACT FOR THE F.Y. 2 011-12 RELEVANT TO A.Y. 2012-13. HENCE, THE ASSESSEE-COMPANY HAS MADE THE CONTRAVENT ION TO THE PROVISION OF SECTION AND IS LIABLE FOR PENALTY U/S. 271B OF THE ACT. 2.2 THE RELIANCE WAS PLACED ON JUDICIAL PRONOUNCEME NT IN THE CASE OF K. RAVINDRANATHAN NAIR (2009), 319 ITR 108 (KERALA) WH EREIN IT WAS HELD THAT : 'WHERE APPELLANT DID NOT ADDUCE ANY EVIDENCE TO JUS TIFY DELAY IN FILING AUDIT REPORT AS REQUIRED UNDER SECTION 44AB, IN ABSENCE O F ANY EVIDENCE ADDUCED BY APPELLANT AT LEAST BEFORE TRIBUNAL, THERE WAS NO GR OUND TO INTERFERE WITH MINIMUM PENALTY IMPOSED UNDER SECTION 27IB FOR ADMI TTED DELAY OF FILING AUDIT REPORT 2.3 FURTHER, RELIANCE WAS ALSO PLACED ON THE JUDGME NT IN THE CASE OF MADHUBAN CHEMICALS & FERTILIZERS LTD. VS. CIT, JAIPUR-I [157 TAXMAN 374(RAJ)] WHEREIN IT WAS HELD THAT 'SECTION 271B, READ WITH SECTION 44AB, OF THE INCOM E-TAX ACT, 1961 - PENALTY - FOR FAILURE TO GET ACCOUNTS AUDITED - WHETHER WHERE ASSESSEE OBTAINED AUDIT REPORT WITHIN SPECIFIED DATE BUT DID NOT FILE SAME WITH RETURN, CONDUCT OF ITA NO.2236/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 3 OF 4 ASSESSEE IN WITHHOLDING AUDIT REPORT, THOUGH IT WAS OBTAINED IN TIME WOULD CREATE SUSPICION AND DOUBT AND, THEREFORE, PENALTY UNDER SECTION 27IB WAS RIGHTLY LEVIED' 2.4 CONSIDERING ALL THE ABOVE FACTS, CIRCUMSTANCES OF THE CASE AND JUDICIAL PRONOUNCEMENTS, THE ASSESSING OFFICER OBSERVED THAT HE WAS SATISFIED THAT THE ASSESSEE HAS WITHOUT ANY CAUSE FAILED TO GET HIS AC COUNTS AUDITED IN TIME AS REQUIRED UNDER THE AFORESAID PROVISION. THE TURNOVER OF THE COMPANY AS PER THE RECORD DISCUSSED ABOVE ARRIVED AT RS.5,07,23,128/-. AS P ER THE PROVISIONS OF THE ACT, THE PENALTY LEVIABLE U/S.271B OF THE ACT IS EITHER ONE- HALF PERCENT OF THE TOTAL SALES, TURNOVER OR GROSS RECEIPTS, OR SUM OF RUPEES ONE HU NDRED THOUSAND RUPEES WHICHEVER IS LESS. HOWEVER, ONE-HALF PERCENT OF TOTAL TURN OVER WORKS OUT AT RS. 2,53,615/-, [0.5% OF 5,07,23,128]. ACCORDINGLY, THE ASSESSI NG OFFICER HAS LEVIED PENALTY OF RS.1,00,000/- U/S. 271B OF THE ACT. 3. AGAINST THE PENALTY ORDER THE APPELLANT PREFERRE D FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO DISMISSED THE APPEAL OF THE APPE LLANT. NOW APPELLANT COMPANY IS BEFORE US. 4. WE HAVE GONE THROUGH THE RELEVANT RECORDS AND TH E IMPUGNED ORDER. IN THIS CASE THERE WAS DISPUTE OF THE COMPANY WITH THE STAT UTORY AUDITORS ABOUT PAYMENT OF COURT FEE AS WELL AS CURRENT FEE DUE TO, AND DUE TO SICKNESS OF THE APPELLANT COMPANY COULD NOT PAY THE PROFESSIONAL PAY REGULARLY. HENC E, THE AUDITOR WAS RELUCTANT TO CARRY OUT THE COMPANY AUDIT UNDER THE COMPANIES ACT AND T AX AUDIT UNDER THE ACT. THE COMPANY HAS GONE TO BIFR AND IN ASSESSEES OWN CASE ITAT FOR ASSESSMENT YEAR 2004-05 IN ITA NO.1634/AHD/2007 HAS GIVEN RELIEF TO THE APPELLANT AND RELEVANT PARAGRAPHS OF ITAT ORDER IS REPRODUCED HEREUNDER :- 5. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HA VE HEARD THE LD. D.R. WHO MAINLY RELIED ON THE ORDER OF LD. CIT(A). IN O UR CONSIDERED VIEW, ONCE ASSESSEE HAS BEEN DECLARED AS A SICK UNIT BY BIFR A ND IT IS ALSO HELD THAT ENTIRE NET WORTH RS.2060.87 LACS AS ON 31.3.99 WAS ERODED ON ACCOUNT OF ACCUMULATED LOSSES OF RS.2415.23 LACS, THE ASSESSEE COULD NOT BE EXPECTED TO INCUR EXPENDITURE ON COMPULSORY AUDIT. EVEN THOUGH STATUTORILY IT IS REQUIRED THAT AN ASSESSEE, HAVING TURNOVER OF RS.40 LACS AND ABOVE SHOULD GET ITS ACCOUNTS AUDITED UNDER SECTION 44AB AND IN THE EVEN T OF NON-COMPLIANCE PENALTY UNDER SECTION 271B CAN BE IMPOSED, BUT BEFO RE LEVY OF PENALTY IT HAS TO BE SEEN WHETHER ASSESSEE HAS A REASONABLE CAUSE OR NOT. LEVY OF PENALTY IS ITA NO.2236/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 4 OF 4 NOT AUTOMATIC AND CANNOT ALWAYS BE PRESUMED THAT ON CE TURNOVER IS ABOVE THE PRESCRIBED LIMIT COMPULSORY AUDIT HAS NECESSARILY T O BE GOT DONE AND ON FAILURE PENALTY WILL BE AUTOMATIC. PROVISIONS OF COMPULSOR Y AUDIT HAS BEEN INSERTED IN THE STATUTE SO AS TO SAVE THE TIME OF AO FROM EXAMI NATION OF LARGE NUMBER OF ACCOUNT BOOKS, VOUCHERS ETC. IN A CASE OF HEAVY TUR NOVER MADE BY THE ASSESSEE. IN FACT, COMPULSORY AUDIT IS ONLY AN ASS ISTANCE OF AO. IT IS BY ITSELF NOT AN ASSESSMENT OF INCOME. WHETHER COMPULSORY AU DIT IS DONE OR NOT DONE, THE AO IS ALWAYS AT LIBERTY AND IN LAW WITHIN HIS P OWER TO CARRY OUT INVESTIGATION IN ADDITION TO COMPULSORY AUDIT. THUS IN A CASE SUC H COMPULSORY AUDIT IS NOT DONE AO HAS A STATUTORY DUTY TO INVESTIGATE INTO TH E ACCOUNTS AND BRING HIS OWN CONCLUSION ON THE BASIS OF HIS FINDINGS. 6. IN THE PRESENT CASE DECLARATION OF THE ASSESSEE COMPANY AS-A SICK, UNIT AND ITS ASSERTION IT HAS RETRENCHED THE STAFF IS A SUFFICIENT AND REASONABLE PROOF FOR NOT GETTING ACCOUNTS AUDITED. WE ARE UNABLE TO AGREE WITH THE ID. CIT(A) AND THE ID. DR THAT ORDER OF THE BIFR, A COPY OF WHICH IS PLACED ON RECORD DECLARING THE ASSESSEE AS A SICK UNIT HAS NO RELEVANCE. IN O UR CONSIDERED VIEW THIS IS A REASONABLE CAUSE FOR NOT GETTING THE ACCOUNTS AUDIT ED. ACCORDINGLY LEVY OF PENALTY OF AO AND SUSTAINED BY ID. CIT(A) IS CANCEL LED. 5. SINCE THE COMPANY HAS GONE TO BIFR AND THE APPEL LANTS STAFF HAVE BEEN RETRENCHED AND THERE WAS DISPUTE WITH THE STATUTORY AUDITOR AND UNDER SIMILAR CIRCUMSTANCES ITAT HAS DELETED THE PENALTY IN ASSES SEES OWN CASE. THUS RESPECTFULLY FOLLOWING THE ORDER OF ITAT IN ASSESSE ES OWN CASE FOR A.Y. 2004-05, WE DELETE THE PENALTY OF THE APPELLANT. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF NOVEMBER, 2018. SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, THE 29 TH DAY OF NOVEMBER, 2018 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER UE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD