M/s. Asha Fashion, New Delhi V. ITO, New Delhi

ITA 2236/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3573 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS PRATIMA KAUSHIK
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO. 2236/DEL/2010 ASSESSMENT YEAR: 2005-06 ASHA FASHION, C-1/14, SAFDURJUNG DEVELOPMENT AREA, NEW DELHI. AAHFA6788Q VS. ITO, WARD 24(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY: MRS. PRATIMA KAUSHIK, SR. DR O R D E R PER I.P. BANSAL, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS D IRECTED AGAINST THE ORDER OF CIT(A) DATED 16.3.10 FOR A.Y. 2005-06. GROUNDS OF APPEAL READ AS UNDER: - 1. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE T HE LD.CIT(A)-XXIII IS NOT CORRECT IN DISMISSING THE APPEAL FILED AFTER CONCLU DING THAT THE AFFIDAVIT BY THE AUDITOR IS NOTHING BUT A SELF SERVING DOCUME NT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A)-XXIII, NEW DELHI HAS ERRED IN ASSESSING THE CIRCUMSTANCES UNDE R WHICH THE SUBMISSION OF THE RETURN GOT LATE. 2. THE ASSESSEE IN THE PRESENT CASE IS ENGAGED IN T HE BUSINESS OF READYMADE GARMENTS AND HANDICRAFTS. THE TOTAL RECE IPT OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION ARE RS. 58,03,020/-. AS THE TOTAL RECEIPTS EXCEEDS RS. 40 LAKH, THE ASSESSEE WAS UNDER AN OBLIGATION T O GET ITS ACCOUNTS AUDITED 2 ITA NO. 2236/DEL/2010 AND FILE THE AUDITED ACCOUNTS WITH THE DEPARTMENT A LONG WITH RETURN OF INCOME WITHIN THE DUE TIME PRESCRIBED FOR FILING THE INCOM E TAX RETURN UNDER THE PROVISIONS OF SEC. 139(1) OF THE INCOME TAX ACT, 19 61 (ACT). SINCE THE RETURN OF INCOME WAS FILED ON 31.03.06, FOR THE FAILURE OF TH E ASSESSEE TO FILE THE AUDITED ACCOUNTS WITHIN THE TIME PRESCRIBED FOR FILING THE RETURN, PENALTY U/S 271B WAS INITIATED AND ACCORDINGLY PENALTY OF RS. 29,540/- W AS LEVIED. 3. IN RESPONSE TO SHOW CAUSE NOTICE, IT WAS SUBMITT ED TO THE AO THAT THE ACCOUNTS OF THE ASSESSEE WERE AUDITED ON 31 ST AUGUST, 2005 WHICH WAS WELL WITHIN THE TIME PRESCRIBED FOR FILING THE INCOME TA X RETURN WHICH WAS 31 ST OCTOBER, 2005. IT WAS SUBMITTED THAT RETURN OF INC OME ONLY WAS DELAYED AS SR. PARTNER, SMT. ASHA LUGANI, WAS PATIENT OF DIABETIES FOR WHICH SHE WAS UNDER CONSTANT MEDICAL TREATMENT. SHE WAS UNABLE TO ACTI VELY PARTICIPATE IN DAY-TO - DAY WORKING. IT WAS ALSO SUBMITTED THAT THE ASSESS EE FIRM WAS HAVING FEW EXPORT ORDERS IN HAND WHICH WERE TO BE EXECUTED IN TIME AND THE OTHER PARTNER SH. SURESH LUGANI DEVOTED HIS FULL ATTENTION IN THE EXECUTION OF EXPORT ORDER. THE SUBMISSION OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO WHO LEVIED THE PENALTY OF RS. 29,540/-. 4. BEFORE CIT(A) THE SUBMISSIONS MADE BEFORE AO REI TERATED AND THE RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: - I) CIT VS. L.S. LAKSHMA NARSWAMY 296 ITR 591, WHERE IN BASED ON AFFIDAVIT, IT WAS ACCEPTED BY TRIBUNAL THAT DUE TO THE FACT THAT ASSESSEE HAD MISPLACED ADVANCE TAX CHALLAN, THE RETURN WAS F ILED LATE WHEN THE AUDIT REPORT WAS OBTAINED IN TIME AND IT WAS HELD B Y HONBLE MAD. HIGH 3 ITA NO. 2236/DEL/2010 COURT THAT TRIBUNAL HAD ACCEPTED SAID CAUSE AS REAS ONABLE CAUSE AND THAT WAS A FINDING OF FACT WHICH DID NOT WARRANT AN Y INFERENCE FROM THE HIGH COURT. II) CIT VS. MATHANA MODEL COOPERATIVE CREDIT AND SE RVICE SOCIETY 299 ITR 70. IN THAT CASE THE ASSESSEE FAILED TO GET ITS AC COUNT AUDITED WITHIN STIPULATED DATE. COPY OF AUDITED REPORT WAS FILED IN RESPONSE TO NOTICE ISSUED U/S 271B STATING THAT ASSESSEE WAS REQUIRED TO GET ITS ACCOUNT AUDITED BY THE AUDITOR APPOINTED BY REGISTRAR, COOP ERATIVE SOCIETY AND SINCE AUDITOR WAS NOT APPOINTED BY REGISTRAR WITHIN STIPULATED TIME, AUDIT REPORT COULD NOT BE FILED IN TIME WHICH WAS ACCEPTE D AS REASONABLE CAUSE AND IT WAS HELD THAT TRIBUNAL HAS RIGHTLY DEL ETED THE PENALTY. 5. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS HAS REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT ASSESSEE COULD NOT SUBSTANTIATE THE EXPLANATION WITH THE DOCUMENTARY EVIDENCE. HE ALSO OBSERVED THAT ACCORDING TO AO THERE WERE THREE WORKING PARTNERS OF THE FIRM AND ASSESSEE COULD NOT SUBSTANTIATE THAT ALL THE THREE PARTNERS WERE BUSY. THE AFFIDAVIT FILED BY THE ASSESSEE WAS OBSERVED TO BE SELF-SERVING DOCUMENTS. THE PENALTY IS UPHELD. THE ASSESSEE IS AGGRIEVED, HENCE IN APPEAL. 6. AT THE TIME OF HEARING, NONE WAS PRESENT ON BEHA LF OF ASSESSEE. AS THIS IS A SMALL APPEAL, WHICH CAN BE DECIDED ON THE BASI S OF FACTS AVAILABLE ON RECORD, WE PROCEED TO DECIDE THE PRESENT APPEAL IN ABSENCE OF ASSESSEE AFTER HEARING LD. DR. 4 ITA NO. 2236/DEL/2010 7. LD. DR AFTER NARRATING THE FACTS RELIED UPON THE ORDER OF AO AND CIT(A). 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF L D. DR AND ALSO GONE THROUGH THE ORDER OF LD. CIT(A). THE REPLY FILED B Y THE ASSESSEE BEFORE AO HAS BEEN REPRODUCED BY LD. CIT(A) IN PARA 3. THE ASSES SEE HAD GOT ITS ACCOUNT AUDITED ON 31 ST AUGUST, 2005 WHICH IS MUCH BEFORE THE STATUTORY DA TE OF GETTING THE ACCOUNTS AUDITED. THEREFORE, THE FAULT COMMITT ED BY THE ASSESSEE IS NOT IN RESPECT OF OBTAINING AUDIT REPORT WITHIN THE STIPUL ATED TIME. NO MATERIAL WHATSOEVER HAS BEEN BROUGHT ON RECORD TO SUGGEST TH AT THE DATE OF AUDIT WAS WRONG. IF IT IS SO THEN THE FAULT OF THE ASSESSEE IS ONLY WITH REGARD TO LATE FILING OF THE RETURN AND NON-SUBMISSION OF THE AUDIT REPOR T WITHIN THE STIPULATED TIME. FOR THIS THE ASSESSEE HAS SUBMITTED THE REPLY THAT ONE OF ITS PARTNERS WAS SUFFERING FROM DIABETIES AND WAS UNDER CONSTANT MED ICAL TREATMENT AND THE OTHER PARTNER WHO WAS ACTIVELY ENGAGED IN THE ACTIV ITY OF THE FIRM WAS BUSY IN FULFILLING THE EXPORT ORDER REQUIREMENT. THESE FAC TS WERE SUBSTANTIATED BY THE AFFIDAVIT FILED BEFORE CIT(A). IN OUR OPINION IN A BSENCE OF CONTRARY MATERIAL, THE STATEMENT OF THE ASSESSEE SHOULD HAVE BEEN ACCEPTED BEING REASONABLE CAUSE AS THE ASSESSEE WAS DILIGENT TO FULFILL ITS STATUTO RY OBLIGATION OF GETTING THE ACCOUNTS AUDITED WITHIN PRESCRIBED TIME AND THE LAT E FILING OF THE RETURN WAS FOR THE REASONABLE CAUSE EXPLAINED BEFORE AO AND SUPPOR TED BY AFFIDAVIT FILED BEFORE CIT(A). 9. IN THIS VIEW OF THE SITUATION, WE ARE OF THE OPI NION THAT ASSESSEE WAS PREVENTED BY REASONABLE CAUSE FOR NOT FULFILLING IT S OBLIGATION TO SUBMIT THE AUDIT 5 ITA NO. 2236/DEL/2010 REPORT TO THE DEPARTMENT WITHIN THE STIPULATED TIME . THEREFORE, THE PRESENT PENALTY IS SAVED BY THE PROVISIONS OF SEC. 273B. T HE PENALTY LEVIED IS DELETED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 16.07.201 0 (K.D. RANJAN) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: 16.07.2010 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR