Sushil Kr. Hazra, Kolkata V. ITO, WD-22(2), KOLKATA, Kolkata

ITA 237/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1773 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 10-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI ABY. T. VARKEY, JM & SHRI M. BALAGANESH, AM ] I.T.A NO. 237/KOL/201 5 ASSESSMENT YEAR : 2008-0 9 SHRI SUSHIL KUMAR HAZRA -VS- ITO, WARD-22(2), KOLKATA [PAN: AANPH 1619 P] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : NONE FOR THE RESPONDENT : NONE DATE OF HEARING : 07.08.2017 DATE OF PRONOUNCEMENT : 11 .08.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEAL)-6, KOLKATA IN APPEAL NO. 53/CIT( A)-6/KOL/WD.-55(4)/10-11 DATED 30.12.2014 FOR THE ASSESSMENT YEAR 2008-09 CONFIRMI NG THE LEVY OF PENALTY U/S 271B OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ACT AMOUNTING TO RS. 1 LAC. BY THE INCOME TAX OFFICER, WARD-55(4), KOLKATA (IN SHORT T HE LD AO). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY U/S 271 B OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS A VERY OLD ASSESSEE CARRYING ON WHOLESALE BUSINESS IN MEDICINE UNDER THE NAME AND S TYLE OF M/S HAZRA MEDICAL AGENCY. THE ASSESSEE HAS BEEN FILING HIS RETURN FOR THE EARLIER YEARS VOLUNTARILY WITHIN THE DUE DATE PRESCRIBED FOR THE RELEVANT PERIOD. DU RING THE FINANCIAL YEAR 2008-09, THE 2 ITA NO.237/KOL/2015 SUSHIL KUMAR HAZRA A.YR.2008-09 2 ASSESSEE WAS BED RIDDEN AND DUE TO ACUTE SICKNESS F OLLOWED BY WAIST SPONDOLYTIS FROM AUGUST 2008 TO 2 ND WEEK OF JANUARY, 2009, THE ASSESSEE WAS FORCED TO CLOSE HIS NORMAL BUSINESS ACTIVITIES DURING THIS PERIOD AND ACCORDIN GLY COULD NOT SUBMIT THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 IN TIME. HOW EVER, HE MANAGED TO GET HIS ACCOUNTS AUDITED AND TAX AUDIT REPORT IN FORM 3CB A ND 3CD WAS OBTAINED IN TIME ON 30.09.2008. THE ASSESSEE FILED HIS RETURN OF INCOME BELATEDLY ON 05.01.2009 VOLUNTARILY AFTER PAYING ALL THE TAXES. THE SAID RETURN WAS DUL Y PROCESSED U/S 143(1) OF THE ACT. THE LD. AO INITIATED PENALTY PROCEEDINGS U/S 271B OF TH E ACT ON THE GROUND THAT THE ASSESSEES TURNOVER IS MORE THAN 40 LACS AND ACCORD INGLY HE IS LIABLE FOR TAX AUDIT U/S 44AB OF THE ACT AND THAT THE SAID TAX AUDIT REPORT IS TO BE FILED ON OR BEFORE DUE DATE OF FILING OF RETURN OF INCOME BY THE ASSESSEE, FAILIN G WHICH PENALTY U/S 271B OF THE ACT WOULD BE EXIGIBLE. THE LD. AO OBSERVED THAT IN THE INSTANT CASE, THOUGH THE ASSESSEE HAD OBTAINED THE TAX AUDIT REPORT ON 30.09.2008 BUT HAD ENCLOSED THE SAME ALONG WITH THE RETURN OF INCOME FILED ON 05.01.2009 WHICH WAS BEYOND THE DUE DATE PRESCRIBED U/S 139(1) OF THE ACT. ACCORDINGLY, HE INITIATED PENALT Y PROCEEDINGS U/S 271B OF THE ACT. THE ASSESSEE REPLIED THAT DUE TO ACUTE SICKNESS HE COULD NOT FILE THE RETURN IN TIME EVEN THOUGH THE ACCOUNTS WERE DULY AUDITED AND TAX AUDIT REPORT WAS OBTAINED WELL WITHIN TIME. THE ASSESSEE ALSO PLACED RELIANCE ON CBDT CIR CULAR NO. 5 OF 2007 DATED 26.07.2007 WHEREIN THE BOARD HAD CLEARLY CLARIFIED THAT THE AUDIT REPORT NEED NOT BE ENCLOSED ALONG WITH RETURN OF INCOME AND IT IS ENOU GH IF THE SAID ACCOUNTS WERE DULY AUDITED WITHIN TIME AND READY FOR FURNISHING BEFORE THE LD. AO AS AND WHEN CALLED FOR DURING THE ASSESSMENT PROCEEDINGS. ACCORDINGLY, THE ASSESSEE STATED THAT HE WAS PREVENTED FROM REASONABLE CAUSE FOR NOT FURNISHING THE AUDIT REPORT AS HE WAS NOT ABLE TO MOVE PHYSICALLY AND HIS FAMILY MEMBERS WERE TREMEND OUSLY WORRIED ABOUT HIS ACUTE PHYSICAL TROUBLE, AND THAT THE SAME ALSO FORCED THE ASSESSEE TO CLOSE HIS NORMAL BUSINESS ACTIVITY FROM 1 ST WEEK OF AUGUST, 2008 TO EARLY 2 ND WEEK OF JANUARY, 2009 SUSTAINING HUGE FINANCIAL LOSS. IT WAS ALSO SUBMITTED THAT DUE TO NON-PAYMENT OF MONTHLY SALARY IN TIME, HIS ACCOUNTANT ALSO LEFT THE JOB WITHOUT ANY NOTICE TO THAT EFFECT. HENCE, IN THESE 3 ITA NO.237/KOL/2015 SUSHIL KUMAR HAZRA A.YR.2008-09 3 CIRCUMSTANCES, IT WAS PLEADED THAT THE NON-SUBMISS ION OF THE TAX AUDIT REPORT IN TIME WAS MERELY A TECHNICAL VENIAL BREACH AND NO PENALTY SHOULD BE IMPOSED FOR THE SAME. THE LD. AO HOWEVER DID NOT HEED TO THE CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO LEVY PENALTY U/S 271B OF THE ACT AMOUNTING TO RS. 1 LAC WHICH WAS ALSO CONFIRMED BY THE LD. CIT(A). AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. THAT THE ORDER OF THE CIT(APPEALS)-6/1/ KOLKATA IS ABSOLUTELY PERVERSE, WRONG, ILLEGAL AND AGAINST THE PRINCIPLES OF NATURAL JUSTI CE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-6/KOL WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR IMPOSING PENALTY OF RS. 1,00,000/- U/S 271B WHICH IS ARBITRARY, ILLEGAL , UNJUSTIFIED AND BAD IN THE EYES OF LAW. HENCE THE PENALTY OF RS. 1,00,000/- SHOULD BE DELETED. 4. NONE APPEARED ON BEHALF OF BOTH THE PARTIES. 5. WE HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD . IT IS NOT IN DISPUTE THAT THE TAX AUDIT REPORT WAS OBTAINED ON 30.09.2008 WHICH IS WI THIN TIME. IT IS NOT IN DISPUTE THAT THE ASSESSEE WAS INDEED SUFFERING FROM ACUTE PHYSIC AL TROUBLE WHICH IS SUPPORTED BY MEDICAL CERTIFICATE PLACED BEFORE THE LD. AO. WE FI ND THAT THE LD. CIT(A) HAD CONFIRMED THE PENALTY U/S 271B OF THE ACT BY PLACIN G RELIANCE ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CAPITAL ELECTRONICS REPORTED IN 261 ITR 4. WE FIND THAT IN THE FACTS BEFORE THE HONBLE HIGH COURT THE ASSESSEE HAD NOT PRODUCED ANY REASONS FOR THE DELAY IN SUBMISSION OF AUDIT REPORT AND ACCORDINGLY, THE HONBLE HIGH COURT HELD THAT THERE WAS NO REASONABL E CAUSE ADDUCED BY THE ASSESSEE IN TERMS OF SECTION 273B AND CONFIRMED THE LEVY OF PEN ALTY. WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE HAD INDEED GIVEN SUBSTANTIAL REA SONS FOR THE DELAY IN SUBMISSION OF THE TAX AUDIT REPORT, EVEN THOUGH THE SAID REPORT W AS DULY OBTAINED WITHIN TIME ON 30.09.2008. THE REASONS ADDUCED BY THE ASSESSEE FO R THE DELAY ARE NOT REITERATED HEREIN FOR THE SAKE OF BREVITY. WE FIND FROM THE ORDERS OF THE LOWER AUTHORITIES THAT THE REASONS ADDUCED BY THE ASSESSEE WERE NOT DISBELIEVED BY TH E REVENUE AND TAKING INTO ACCOUNT 4 ITA NO.237/KOL/2015 SUSHIL KUMAR HAZRA A.YR.2008-09 4 THE PAST CONDUCT OF THE ASSESSEE IN FILING HIS RETU RN IN TIME VOLUNTARILY AND THE DIFFICULTY FACED BY HIM DURING THE FINANCIAL YEAR 2008-09 DUE TO HIS ILL HEALTH LEADING TO ACUTE PHYSICAL TROUBLE THEREBY MAKING HIM IMMOBILE, WE FI ND THAT THE ASSESSEE HAS INDEED ADDUCED PROPER REASONS AND IS ENTITLED FOR IMMUNITY IN TERMS OF SECTION 273B OF THE ACT. MOREOVER, WE FIND THAT HONBLE MADRAS HIGH COU RT IN THE CASE OF CIT VS. A.N. ARUNACHALAM REPORTED IN 208 ITR 481 HAD HELD THAT T HE AUDIT REPORT FOR CLAIMING DEDUCTION U/S 80J OF THE ACT THOUGH NOT FILED ALONG WITH RETURN OF INCOME BUT WAS FURNISHED BEFORE THE LD. AO BEFORE THE COMPLETION O F ASSESSMENT PROCEEDINGS, THE DEDUCTION U/S 80J OF THE ACT COULD NOT BE DENIED. I T WAS FURTHER HELD THAT THE STIPULATION THAT THE AUDIT REPORT IS TO BE FILED ALONG WITH RET URN OF INCOME SHALL NOT BE CONSTRUED AS A MANDATORY CONDITION FOR GRANTING DEDUCTION U/S 80J OF THE ACT, PROVIDED THE SAME WAS FURNISHED AND MADE AVAILABLE TO THE LD. AO BEFORE T HE COMPLETION OF ASSESSMENT PROCEEDINGS. THE ABOVE ANALOGY WOULD BE APPLICABLE IN THE INSTANT CASE ALSO AND WE FIND THAT THE ASSESSEE IS IN MUCH BETTER FOOTING AS ADMITTEDLY THE AUDIT REPORT WAS FILED ALONG WITH RETURN OF INCOME ON 5.01.2009 AND MOREOV ER, THERE IS NO MANDATE FOR THE ASSESSEE TO FURNISH THE AUDIT REPORT ALONE BEFORE T HE INCOME TAX OFFICER VIDE CIRCULAR NO. 5 OF 2007 DATED 26.07.2007 AS RETURN WAS FILED BELATEDLY BY THE ASSESSEE. IN VIEW OF THESE FACTS AND CIRCUMSTANCES WE DO NOT DEEM THIS T O BE A FIT CASE FOR LEVY OF PENALTY U/S 271B OF THE ACT AND ACCORDINGLY, CANCEL THE SAME. A CCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 11.08.2017 SD/- SD/- [A.T. VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11.08.2017 SB, SR. PS 5 ITA NO.237/KOL/2015 SUSHIL KUMAR HAZRA A.YR.2008-09 5 COPY OF THE ORDER FORWARDED TO: 1. SUSHIL KUMAR HAZRA, 57/13, ATHPUR, 2, BANKIM NAG AR, DIST-24 PGS (N), PIN-743128 2. ITO WARD-22(2)/KOL, 54/1, RAFI AHMED KIDWAI ROAD , KOLKATA-700016, 3..C.I.T(A)-6, KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S