Gujarat Natural Resources Ltd., Ahmedabad V. ITO, Ward-2(1)(1), Ahmedabad

ITA 2396/AHD/2017

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8622 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V.K. SINGH
• Keywords: Reasonable cause
• Section: 273B; 139(1); 271B; 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH (Conducted Through Virtual Court) Before: Shri Mahavir Prasad, Judicial Member And Shri Amarjit Singh, Accountant Member Gujarat Natural Resources Ltd . 8, Sigma Co rp orate, Nr. Mann Party Plot, S. G. Highway , Ahmedabad PAN: AAACL3550 B (Appellant) Vs The ITO, Ward-2(1)(1), Roo m No. 104, 1 s t Flo or, Nav jeevan Trust Bldg, Off. Ashram ro ad -38 00014 (Resp ondent) Revenue by : Shri V. K. Sing h, Sr. D. R. Asses see b y : Shri M. J. Shah, A. R. Date of hearing : 20-10 -2 021 Date of pronouncement : 15-11 -2 021 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- This assessee’s appeal for A.Y. 2010-11, arises from order of the CIT(A)-2, Ahmedabad dated 04-09-2017, in proceedings under section 271B of the Income Tax Act, 1961; in short “the Act”. 2. The solitary ground of appeal of the assessee is directed against the order of ld. CIT(A) in confirming the penalty of Rs. 92,500/- levied u/s. 271B. ITA No. 2396/Ahd/2017 Assessment Year 2010-11 I.T.A No. 2396/Ahd/2017 A.Y. 2010-11 Page No Gujarat Natural Resources Ltd. vs. ITO 2 3. The brief fact of the case is that during the course of assessment, the Assessing Officer stated that assessee had claimed consultancy income of Rs. 10 lacs and income of Rs. 1.75 crores shown under the head income from business and profession in the P & L A/c. The assessee was required to get its account audited u/s. 44AB(b) of the act. Since the assessee has failed to do so, the Assessing Officer has imposed penalty of Rs. 92,500/- by invoking the provision of section 271B of the act. 4. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 5. During the course of appellate proceedings before us, the ld. counsel has contended that the main object of the company as per object clause of the memorandum of association was not for financing and investment but it was related to business of oil and gas. He has further submitted that interest earned on temporary advances would not be considered as business receipt. He has also referred decision of Hon’ble Supreme Court in the case of the Chennai Property and Investment Ltd. vs. CIT (2015) 373 ITR 673 (SC). He has also referred the decisions of (1971) 82 ITR 363 (SC) Kedarnath Jute Mfg Co. Ltd. Vs. CIT and (1997) 227 ITR 172 Tuticorin Alkali Chemical & Fertilizer Ltd. On the other hand, the ld. Departmental Representative has submitted after referring decision of ld. CIT(A) contended that I.T.A No. 2396/Ahd/2017 A.Y. 2010-11 Page No Gujarat Natural Resources Ltd. vs. ITO 3 interest income was a part of business income of the assessee and its source of investment was out of share capital and unsecured loan. 6. Heard both the sides and perused the material on record. As per the profit and loss account of the assessee company it has shown consultancy income of Rs. 10 lacs and interest income of Rs. 1.75 crores as income from business and profession. Since the assessee failed to get its accounts audited within the specified time and furnished the audited report before the specified date under the provisions of section 44AB of the act, therefore, Assessing Officer has imposed penalty of Rs. 92,500/- vide order u/s. 271B of the act dated 29 th April, 2016. The ld. counsel contended that main object of the assessee as per memorandum of association was related to oil and gas and not for financing investment. The ld. counsel has also referred the decision of Chennai Property and Investment Ltd. vs. CIT (2015) 373 ITR 673 (SC). We have perused this judicial pronouncement wherein the issue was related to the leasing out coad fields was the business of the assessee, however, the revenue has treated the income received from leasing income from house property. We find that facts of the case of the assessee company are distinguishable from the aforesaid case referred by the ld. counsel as in the case of the assessee, it has earned interest income out of fund financed from the share capital of the assessee company and same was shown by the assessee under the head business income. The accounts were not audited under the provisions I.T.A No. 2396/Ahd/2017 A.Y. 2010-11 Page No Gujarat Natural Resources Ltd. vs. ITO 4 of section 44AB of the act. Similarly, the other two cases of (1971) 82 ITR 363 (SC) Kedarnath Jute Mfg Co. Ltd. Vs. CIT and (1997) 227 ITR 172 Tuticorin Alkali Chemical & Fertilizer Ltd. are also distinguishable from the facts of the case since the issue in the case of the assessee was pertaining to applicability of the provision of section 44AB of the act because of earning of income from business and profession. We have carefully considered the submission of the ld. representatives of both the parties and orders of the authorities below. It is demonstrated from the P & L A/c that nature of interest income received on investment and finance was also a part of the business receipt of the assessee company during the year under consideration. The total receipts from business and profession of the assessee was to the amount of Rs. 1,85,00,000/-, therefore, the assessee was required to get its accounts audited u/s. 44AB of the act and file the same along with return of income within the due date prescribed u/s. 139(1) of the act. The assessee failed to do so therefore penalty u/s. 271B of the act @ 0.5% of total receipt of the assessee was levied. Section 273B provides that no penalty shall be imposed for any failure referred in section 271B if the assessee proved that there was reasonable cause for said failure. In the light of the facts, since the whole income during the year was earned out of investment made from share capital and unsecured loan along with professional receipt under the head business and profession, therefore, we are of the considered view that the assessee is required to get its accounts audited as per provisions of I.T.A No. 2396/Ahd/2017 A.Y. 2010-11 Page No Gujarat Natural Resources Ltd. vs. ITO 5 section 44AB of the act and enclosed a copy of the said report in the prescribed form before the specified date. Since the assessee has failed to prove that there existed any reasonable cause for such failure, therefore, order of penalty u/s. 271B was justified. Accordingly, the appeal of the assessee stands dismissed. 7. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 15-11-2021 Sd/- Sd/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 15/11/2021 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद