Sri. Najeeb C, Cochin V. The ITO, Cochin

ITA 237/COCH/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7722 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-08-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 13-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Business income
• Section: 144

Judgement Text

ITA NO . 237/C/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH KOCHI BEFORE S/ SHRI B P JAIN , AM & GEORGE GEORGE K, JM ITA NO 237/COCH/2015 (A SST YEAR 2002 - 03 ) SHRI NAJEEB C M/S NAJEEB ASSOCIATES 4 TH FLOOR - CHICAGO PLAZA RAJAJI ROAD KOCHI 682 035 VS THE INCOME TA X OFFICER WARD 2(3), KOCHI ( APPELLANT) (RESPONDENT) PAN NO. AAOPN2180L ASSESSEE BY SH T M SREEDHARAN REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 18 TH AUG 2016 DATE OF PRONOUNCEMENT 18 TH AUG 2016 ORDER PER GEORGE GEORGE K, JM; THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DIRECTED AGAINST THE CIT(A) S ORDER DATE D 30.6.2014. THE ORDER OF THE CIT(A) ARISES OUT OF THE ORDER PASSED U/S 271B OF THE I T ACT . THE RELEVANT ASSESSMENT YEAR IS 2002 - 03. 2 THERE IS A DELAY 2 09 DAYS IN FILING THE APPEAL. THE ASSESSEE HAS FILED CONDONATION PETITION ALONG WITH AN AFFIDAVIT STATING THE REASONS FOR THE DELAY IN FILING THE APPEAL. ON PERUSAL OF THE AFFIDAVIT, WE FIND THERE IS SUFFICIENT CAUSE FOR THE DELAY IN FILING TH IS APPEAL AND HENCE, WE CONDONE THE DELAY A ND PROCEED TO DISPOSE OFF THE APPEAL ON MERIT. ITA NO . 237/C/2015 2 3 THE SOLITARY ISSUE THAT ARISES F OR OUR CONSIDERATION IS WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY IMPOSED U/S 271B OF THE AC T A MOUNTING T O RS. 1 ,00,000/ - . 4 BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS AN ARCHITECT AND THE PROPRIETOR OF M/S NAJEEB ASSOCIATES. THE ASSESSEE UNDERTAKES THE WORK AS AN ARCHITECT AND IS ALSO ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AS A CONTRACTOR. FOR THE ASSESSMENT YEAR 2002 - 03, IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICE D THAT THE ASSESSEES GROSS RECEIPTS UNDER THE BUSINESS CAME TO RS. 2, 09,91,240/ - . SINCE THE GROSS RECEIPTS FROM THE BUSINESS EXCEEDED THE PRESCRIBED LIMIT, THE ASSESSEE WAS LIABLE TO GET THE ACCOUNTS AUDITED , AS REQUIRED U/S 44AB OF THE I T ACT. IT WAS NOTICE D THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WAS NOT AUDITED , AS REQUIRED UNDER SECTION 44AB OF THE A CT AND HENCE, PENALTY U/S 271 B OF THE ACT AMOUNTING TO RS. 1,00,000/ - WAS IMPOSED BY THE AO BY OBSERVING AS UNDER: 4. ALL THE GROUNDS OF APPEAL RELATES TO IMPOSITION OF PENALTY OF RS . 1,00 , 0001 - ULS 271 B . THE ASSESSING OFFICER HAS LEVIED THIS PENALTY OBSERVING AS THE FOLLOWING: ' IT IS SEEN THAT ASSESSEE ' S GROSS RECEIPTS IN BUSINESS DURING . THE PREVIOUS YEAR COMES TO RS . 2 , 09 , 91 , 240/ - AS UNDER: CONTRACT RECEIPTS RS. 2,03,16,240/ - CONSULTANCY CHARGES RS. 4,59,000/ - INT ERIOR DESIGNING RS. 2,16,000/ - RS. 2,09,91,240/ - THUS, THE PROVI SIONS OF SECTION 44AB OF THE ACT ARE ATTRACTED IN THE CASE OF THE ASSESSEE. THE ASSESSEE WAS LIABLE TO GET HIS ACCOUNTS OF THE PREVIOUS YEAR AUDITED BY AN ACCOUNTANT BEFORE THE SPECIFIED DATE ITA NO . 237/C/2015 3 AND TO FURNISH BY THAT DATE A REPORT OF SUCH AUDIT, THE SPECIFIED DATE BEING 31 - 10 - 2002 . IT IS SEEN THAT THE ASSESSEE HAD NOT GOT HIS ACCOUNTS FOR THE Y EAR SO AUDITED AND THAT HE HAD NOT FURNIS HED THE REPORT OF THE AUDIT AS REQUIRED U/S 44AB . FOR THIS FAILURE THE ASS ESSEE IS LIABLE FOR PENALTY AS PROVIDED IN SECTION, 271 B . FOR THE PURPOSE OF CONSIDERING T HE LEVY OF PENALTY U/S 271 B A SHOW CAUSE NOTICE WA S ISSUED TO THE ASSESSEE BY THE ACIT , CENTRAL CIRCLE - 3, ERNAKULAM ON 3 - 3 - 2005 . THE ASSESSEE HAS NOT FURNISHED ANY REPLY TO THE SAID SHOW CAUSE NOTICE OR IN RESPONSE TO THE SUBSEQUENT POSTING LETTERS ISSUED BY THE DCIT, CENTRAL CIRCLE - 3, ERNAKULAM OR BY ME . SHRI . SIJU SAM , ACA , ASSESSEE ' S AUTHOR I ZED REP R ESE NT A T I VE WHO APPEAR E D FOR HEARING OF THE PENALTY PROCEEDINGS ON 26 - 3 - 2008 ADMITTED THAT THE . ACCOUNTS OF THE A SS E SSEE HAD NOT BEEN AUD I TED AS PROVIDED IN SECTION 44A8 . IN THE CON S OLIDATED REPLY TO THE PENALTY NOTICES U/S 271 (1) ( C) , 271(1 )(B ) AND 271 B FIL E D BY ASSESSEE ON 28 - 3 - 20 8 ALSO NO EXPLANATI O N S HAVE BEEN OFFERED . AS THE ASSESSEE HAD NOT FU R NI SHED ANY REPLY/ EX P LANATION R E GARDING THE FA I L URE , I HOLD THAT THE ASSES S EE HAD NO REAS O NABLE CAUSE FOR HIS FAILURE AND AS SUCH PENALTY U/S 271 B IS E X IGIBLE . I HEREBY DIRECT THE ASSESSEE TO PAY A SUM OF RS . 1 , 00 , 00 0/ - AS PENALTY U/S 2718 FOR HIS FA I LURE TO GET HIS ACCOUNTS AUD I TED . ' 4.1 . TH E ASSESSEE DURING THE COURSE OF APPE L LAT E PROC E EDING S DID NOT HAVE ANY EXPLAN A TION TO BE FURN I SHED. IN V I EW OF THE SPECIFIC D E TAILS BROUGHT OUT BY THE AS S ESSING OFFICER , IT IS SEEN THAT THE ASSESSEE SHOULD HAVE GOT HIS ACCOUNTS A UDIT ED AND IN THE E VE NT O F FAI L URE TO DO SO , THE ASSES S ING OFFICE R WAS CORRECT I N LAW IN IMP O SING THIS PENALTY U/S 271 B. A C CORD IN G L Y , T HE I MPOS I T I O N O F PENALTY OF RS. 1 , 00,000 / - U / S 27 1 B I S H ER EB Y CO N F I RME D. 5 AGGRIEVED BY THE ORDER OF THE AO , IMPOSING PENALTY U/S 271 B OF THE ACT, THE ASSESSEE PREFERRED APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) CONFIRMED THE IMPOSITION OF THE PENALTY . 6 THE ASSESSEE BEING A GGRIEVED IS IN A PPEAL BEFORE US , RAISING THE FOLLOWING GROUNDS: 1 . THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - II , KOCHI IN ITA NO . 1 0/R - II/E/CIT(A) - 11/08 - 09 DATED 30.6.2014 DISMISSING THE APPEAL IS OPPOSED TO LAW , FACTS AND CIRCUMSTANCES OF THE CASE. 2 . THE CIT(A) WENT WRONG IN CONFIRMING THE LEVY OF PENALTY AM OUNTING TO RS . 1 , OO , OOOI - U/S 271 B OF THE INCOME TAX ACT , 1961 FOR THE ASSESSMENT YEAR 2002 - 03. ITA NO . 237/C/2015 4 3 . THE CIT(A )HAS ERRED IN CONCURRING WITH THE VIEW OF THE ASSESSING OFFICER AND FURTHER STATING THAT ' ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS DID NOT HAVE ANY EXPLANATION TO FURNISH' WITHOUT EVEN LOOKING I N T O THE MERITS OF THE CASE SPECIFICALLY BROUGHT OUT IN APPELLATE PROCEED I NGS . 4 . IT IS RESPECTFULLY SUBMITTED THAT THERE WAS NO REQUIREMENT OF GETTING AUDIT REPORT U/S 44AB IN THE CASE OF A PERSONS WHO HAVE NOT MAINTAINED REGULAR BOOKS OF ACCOUNTS . 5 . IN THIS CONNECTION IT IS RESPECTFULLY SUBMIT TED THAT THE GROSS RECEIPTS/TURNOVER IS BELOW THE PRESCRIBED LIMIT AND AS SUCH THE APPELLANT CANNOT BE TREATED AS A DEFAULTER U/S 271 B. 6 . THE APPELLANT BEING AN ARCHITECT AND AT THE SAME TIME A CONTRACTOR, HIS PROFESSIONAL INCOME DOES NOT WARRANT AUDIT U/S 44AB SINCE GROSS RECEIPTS /TURNOVER IS BELOW THE PRESCRIBED LIMIT BUT BUSINESS INCOME TAKEN FOR THE PURPOSE OF ASSESSMENT U/S 144 OF THE INCOME TAX ACT , 1961 WHICH HAD BEEN CONSIDERED FOR THE PURPOSE OF LEVY OF PENALTY U/S 271 B FOR FAILURE TO OBTA IN AUDIT REPORT . 7 . RULING BY THE HON'BLE ITAT COCHIN BENCH IN THE CASE OF KV . RAMACHANDRAN VS. DY . CIT CIR - 1 (1) , KANNUR DATED 28.03 . 2013 MAY PLEASE BE CONSIDERED IN THE CASE OF PERSONS WHO HAVE NO BOOKS OF ACCOUNT (N THIS CASE ASSESSMENT IS U/S 144) AND THE Q UESTION OF AUDIT DOES NOT ARISE UNDER SUCH CIRCUMSTANCES. 8 . THE APPELLANT HUMBLY PRAYS THAT THE GROUNDS OF APPEAL BEFORE THE CIT (A) MAY BE CONSIDERED AS PART OF THESE GROUNDS. FOR THESE AND OTHER REASONS THAT MAY BE URGED AT THE TIME OF HEARING , IT IS HUMBLY PRAYED THAT THE HON ' BLE INCOME TAX AP PELLATE TRIBUNAL, COCHIN BENCH MAY KINDLY BE PLEASED TO VACATE THE LEVY OF PENALTY , ALLOW THE APPEAL AND RENDER J USTICE . 7 THE LD COUNSEL FOR THE ASSESSE E, RELIED ON THE GROUNDS RAISED ; WHEREAS THE LD DR SUPPORTED THE ORDERS OF THE INCOME TAX AUTHORITIES. 8 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, THE ASSESSEES GROSS RECEIPT S FROM THE BUSINESS DURING THE ITA NO . 237/C/2015 5 ASSESSMENT YEAR 2002 - 03 COMES TO RS. 2,09,91,240/ - . AS PER THE PROVISIONS OF SECTION 44AB OF THE ACT, THE ASSESSEE OUGHT TO HAVE GOT THE BOOKS OF ACCOUNT AUDITED BY A N ACCOUNTANT BEFORE THE SPECIFIED DATE. IN THE INSTANT CASE, THE ASSESSEE HAD NOT GOT HIS BOOK S OF ACCOUNT AUDITED , AS REQUIRED U/S 44AB OF THE ACT. THE ASSESSEE HAS NOT FURNISHED ANY SATISFACTORY EXPLANATION FOR NOT GETTING HIS BOOKS OF ACCOUNT AUDITED , AS REQUIRED UNDER SECTION 44AB OF THE ACT. EVEN BEFORE US, NO EXPLANATION IS GIVEN ; WHY THE ASSESSEES BOOKS OF ACCOUNT S WERE NOT AUDITED WITHIN THE SPECIFIED TIME. HENCE, WE ARE OF THE VIEW THAT THE AO IS JUSTIFIED IN LEVYING PENALTY U/S 271 B , WHICH WAS RIGHTLY CON FIRMED BY THE CIT(A). THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AND UPHOLD THE SAME , AS CORRECT AND IN ACCORDANCE WITH LAW. IT IS ORDERED ACCORDINGLY. 9 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOU NCED IN THE OPEN COURT ON THIS 18 TH DAY OF AUG 2016 . SD/ S D / - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 18 TH AUG 2016 RAJ* ITA NO . 237/C/2015 6 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT, 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTR AR ITAT, COCHIN