Bharat Spices, Kasargode V. Income Tax Officer, Kasargode

ITA 238/COCH/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 7575 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2010
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 01-05-2009
• Court: TRIBUNAL
• Department Lawyers: T J VINCENT
• Assessee Lawyers: K SHIVA PRASAD
• Keywords: Reasonable cause; Non compliance
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.A.NO.238/COCH/2009 ASSESSMENT YEAR:2002-03 M/S. BHARATH SPICES, NILESHWAR. PA NO.AACFB 2918G VS. THE INCOME-TAX OFFICER, WARD-1, KASARAGOD. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI K. SHIVA PRASAD RESPONDENT BY SHRI TJ VINCENT, JR.DR O R D E R PER N.VIJAYAKUMARAN,J.M: THIS APPEAL IS BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2002-03 AGAINST THE LEVY OF PENALTY UNDER SECTION 2 71B OF I.T.ACT,1961. 2. THIS APPEAL WAS DELAYED BY 12 DAYS. WE HAVE PE RUSED THE PETITION AS WELL AS THE AFFIDAVIT IN SUPPORT O F THE CONDONATION OF DELAY. THE PETITIONER, C.H.SHAMSUDH IN, MANAGING DIRECTOR OF M/S. BHARATH SPICES, THE ASSES SEE HEREIN SUBMITTED THAT THE PETITIONER WAS NOT DOING WELL AND HE COULD NOT GIVE THE NECESSARY DETAILS TO HIS AUTH ORIZED REPRESENTATIVE TO PREPARE THE APPEAL AT AN EARLY DA TE. THE 2 ITA NO.238/COCH/2009 M/S. BAHARATH SPICES, NILESHWAR. APPEAL WAS PREPARED WITHIN THE TIME BUT WAS SENT TO THE OFFICE OF CIT(APPEALS)-II, ERNAKULAM, BY MISTAKE. THAT APPEAL PAPERS ALONGWITH DOCUMENTS WERE RETURNED BY THE AUTHORITIES ONLY ON 23-04-2009. THIS WAS THE DELA Y FOR FILING THE APPEAL. AFTER CONSIDERING THE RIVAL SU BMISSIONS AND ON PERUSAL OF THE MATERIALS AVAILABLE ON RECORD AND BY FOLLOWING THE RECENT DECISION OF THE HONBLE APEX C OURT IN THE CASE OF IMPROVEMENT TRUST VS. UJAGAR SINGH DATED WEDNESDAY AUGUST 11, 2010 (ITATONLINE.ORG), WE CONDONE THE DELAY OF 12 DAYS IN FILING THE APPEAL, AS THE S UFFICIENT CAUSE HAS BEEN FORTIFIED. 3. COMING TO THE MERITS OF THE CASE, PENALTY WAS LE VIED U/S.271B OF THE ACT ON THE REASON THAT THE ASSESSEE HAS NOT FILED THE AUDIT REPORT BEFORE THE DUE DATE WHICH WA S ON 31- 10-2002. THE ASSESSEE HAS FILED THE AUDIT REPORT O N 02-01- 2003. THEREFORE, THE ASSESSING OFFICER LEVIED PENA LTY U/S.271B FOR THE VIOLATION OF THE PROVISIONS OF THE I.T. ACT. ON APPEAL, THE CIT(APPEALS) ANALYZED THE DUE DATE A ND THE DATE OF COMPLETION OF THE AUDIT AND THE DATE OF FIL ING OF THE RETURN. HOWEVER, HE FOUND THAT FOR THE EARLIER YE AR AUDIT WAS COMPLETED ON 16-03-2002 AND AS SUCH THERE CANNO T BE ANY REASON FOR THE DELAY IN COMPLETING THE AUDIT FO R THE YEAR 3 ITA NO.238/COCH/2009 M/S. BAHARATH SPICES, NILESHWAR. UNDER CONSIDERATION. HENCE, HE CONFIRMED THE FIND INGS OF THE ASSESSING OFFICER AND ULTIMATELY THE ASSESSEE I S IN SECOND APPEAL BEFORE US. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND AFTE R CONSIDERING THE INTRODUCTION OF 44AB INTO THE STATU TE BY THE FINANCE ACT 1984, THE PROPER AUDIT FOR TAX PURPOSES WOULD ENSURE THAT THE BOOKS OF ACCOUNT THAT AND OTHER REC ORDS ARE PROPERLY MAINTAINED THAT THEY FAITHFULLY REFLECT TH E INCOME OF THE TAX PAYER AND CLAIMS FOR DEDUCTION ARE CORRECTL Y MADE. PURPOSE OF INTRODUCING THE MANDATE FOR AUDIT WOULD HELP IN CHECKING FRAUDULENT PRACTICES. THEREFORE, COMPLIA NCE OF SECTION 44AB HAS TO BE TAKEN SERIOUS NOTE AND NON COMPLIANCE OF THE PROVISIONS OF SECTION 44AB WITHIN THE DUE DATE WILL ATTRACT LEVY OF PENALTY U/S.271B OF THE A CT. 5. HERE WE HAVE TO SEE WHETHER THERE IS ANY SUFFICI ENT CAUSE FOR THE DELAY IN FURNISHING THE AUDIT REPORT ALONG WITH THE RETURN. IT IS NOT DISPUTED THAT THE RETURN OF INCOME HAS BEEN FILED ONLY ON 02-01-2003. THE AUDIT REPORT W AS FURNISHED ONLY ALONG WITH THE RETURN. THE REASON FOR THAT WOULD BE THAT EARLIER YEARS AUDIT REPORT COULD NOT BE PREPARED WITHIN THE TIME SO AS TO ARRIVE AT THE OPE NING 4 ITA NO.238/COCH/2009 M/S. BAHARATH SPICES, NILESHWAR. BALANCE AND DETERMINE THE SAME FOR THIS RELEVANT ASSESSMENT YEAR, WHICH IS THE FOREMOST CONDITION FO R PREPARING THE AUDIT REPORT. THUS, DELAY HAS BEEN OCCURRED BEYOND THE CONTROL OF THE ASSESSEE. AS THE ASSESSM ENT OF THE ASSESSMENT YEAR 2001-02 WAS COMPLETED U/S.143(3 ) AND THE AUDIT REPORT FOR THAT YEAR HAS BEEN PREPARED BY A DELAY OF FIVE MONTHS, I.E. ON 16-03-2002 WHEREAS THE DUE DATE FOR 2001-02 WAS ON 31-10-2001. THUS, THERE WAS A DELA Y OF FIVE MONTHS. THIS IS THE REASON FOR THE CONSEQUEN T DELAY FOR THIS YEAR, I.E. FOR 2002-03. THE DECISION OF THE TRIBUNAL IN THE CASE OF STAR AGENCIES VS. ITO (2006) 5 SOT 336 (COCH) WHEREIN THE AUDIT REPORT WAS DELAYED ON ACCOUNT OF THE ILLNESS OF ONE OF THE PARTNERS WAS ACCEPTED AS A REASONABLE CAUSE AND THE TRIBUNAL JUSTIFIED THAT IT WAS NOT A FIT CASE FOR LEVYING THE PENALTY U/S.271B. THE DECISION OF THE HONBLE THIRD MEMBER OF THE AHMEDABAD BENCH IN THE CASE OF ACIT VS. KAMLESH R. AGARWAL (HUF) (2006) 99 ITD 27 CORRESPONDING 100 TTJ 194(ABD.) ON THE BASIS OF THE DECISION OF THE HONBLE THIRD MEMBER, IT WAS HELD T HAT THE DELAY FOR COMPLETION OF AUDIT OF THE EARLIER YEAR W OULD CONSTITUTE A REASONABLE CAUSE FOR THE COMPLETION OF THE SUBSEQUENT YEAR BECAUSE THE AUDIT FOR THE SUBSEQUEN T YEAR UNDER CONSIDERATION COULD NOT BE COMPLETED WITHOUT THE 5 ITA NO.238/COCH/2009 M/S. BAHARATH SPICES, NILESHWAR. OPENING BALANCES OF THE EARLIER YEAR. RESPECTFULL Y FOLLOWING THE ABOVE TWO DECISIONS, WE ACCEPT THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT THERE WAS A REASONABL E CAUSE WHICH PREVENTED THE ASSESSEE FROM FILING THE AUDIT REPORT WITHIN THE STIPULATED TIME. ON THIS, WE ARE CONVI NCED THAT THE ASSESSEE WAS PREVENTED BY WAY OF REASONABLE CAU SE. THEREFORE, THE LEVY OF PENALTY U/S.271B FOR NON COM PLIANCE OF SECTION 44AB IS QUASHED. CONSEQUENTLY THE ORDE R OF THE AUTHORITIES IS REVERSED AND THAT THE ASSESSEES CLA IM IS ALLOWED. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMA RAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM, DATED THE 26 TH OCTOBER,2010. PM. COPY FORWARDED TO: 1. M/S. BHARATH SPICES, RAJA ROAD, NILESHWAR, KASAR AGOD. 2. THE INCOME-TAX OFFICER, WARD-1, KASARAGOD. 3. CIT(A)-II, KOCHI. 4. CIT, KANNUR./5. D.R.