ZOYEB HYDERABADWALA, VISAKHAPATNAM V. INCOME TAX OFFICER, WARD-1, VISAKHAPATNAM

ITA 240/VIZ/2024

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 5091 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-08-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 27-05-2024
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

आयकरअपीलीयअधिकरण,धिशाखापटणमपीठ,धिशाखापटणम INTHEINCOMETAXAPPELLATETRIBUNAL VISAKHAPATNAMBENCH,VISAKHAPATNAM श्द ु व्वआरएलरेडी,न्यायसदसएवंश्एसब्ल्यृष्,लेख्सदसयेसमक BEFORESHRIDUVVURURLREDDY,HON’BLEJUDICIALMEMBER & SHRISBALAKRISHNAN,HON’BLEACCOUNTANTMEMBER आयकरअपीलसं./I.T.A.No.240/VIZ/2024 (धििाधरणिरध/AssessmentYear:2018-19) ZoyebHyderabadwala 27-32-9,GroundFloor 75FeetRoad,Visakhapatnam–530001 AndhraPradesh [PAN:AAAPZ3387M] v.ITO–Ward–1(2) DirectTaxesBuilding,MVP DoubleRoad BesidesGayatriCollege,MVPColony Visakhapatnam–530017 AndhraPradesh (अपीलार्/Appellant)(प्र्/Respondent) यरद्त्य्पयतय्यिध/AssesseeRepresentedby :ShriC.SanjeevRao,AR र्जसय्पयतय्यिध/DepartmentRepresentedby :Dr.AparnaVilluri,Sr.AR सु्व्ईसम्पहो्ेय्यतयि/DateofConclusionofHearing :08.08.2024 घोषण्य्त्र्ख/DateofPronouncement :05.09.2024 आदेश/ORDER PERSHRISBALAKRISHNAN,ACCOUNTANTMEMBER: 1.ThisappealisfiledbytheassesseeagainstorderofLearned CommissionerofIncomeTax(Appeals),NFAC,Delhi[hereinafterin short“Ld.CIT(A)”]videDIN&OrderNo.ITBA/NFAC/S/250/2024- I.T.A.No.240/VIZ/2024 ZoyebHyderabadwala PageNo.2 25/1064955464(1)dated17.05.2024fortheA.Y.2018-19arisingoutof thepenaltyorderpassedundersection271BofIncomeTaxAct,1961 (inshort‘Act’)dated21.12.2021. 2.Brieffactsofthecasearethat,assesseefiledreturnofincome admittingtotalincomeatRs.31,07,860/-fortheA.Y.2018-19on 04.12.2018.Thecasewasselectedforscrutinyandtheassessmentwas completedundersection143(3)r.w.s.144BoftheActdated05.06.2021 determiningthetotalincomeatRs.84,79,027/-.AssessingOfficer noticedthattheassesseehastotalsales/turnover/grossreceiptsfor theyearexceedtheprescribedlimitundersection44ABoftheAct. Therefore,theAssessingOfficerconsideredthatassesseeisrequiredto gethisbooksofaccountsauditedintermsofprovisionsofsection44AB oftheActandfiletheauditreportasrequiredwithintheduedateunder section139(1)oftheAct.However,itwasnoticedthatassesseehas filedtheauditreporton04.12.2018whichisbeyondtheextendeddue dateof31.10.2018.TheAssessingOfficerthereafterissuedshowcause noticeon05.06.2021.Inresponse,assesseesubmittedthattheaudit reportintheForm-3CBandForm-3CDwasfiledon04.12.2018. AssessingOfficerrejectedreplyoftheassesseeandproceededtolevy I.T.A.No.240/VIZ/2024 ZoyebHyderabadwala PageNo.3 ofpenaltyundersection271BoftheAct@one-halfpercentofthetotal turnoversubjecttomaximumpenaltyRs.1,50,000/-. 3.Aggrievedbythepenaltyorder,assesseefiledanappealbefore Ld.CIT(A).TheLd.CIT(A)consideringthesubmissionsandreplyby relyingonvariousjudicialpronouncementssustainedthepenaltyorder bydismissingtheappealoftheassessee. 4.BeingaggrievedbytheorderoftheLd.CIT(A),assesseeisin appealbeforeusbyraisingfollowinggroundsofappeal:- “1.ThatthelearnedCommissionerofIncome-tax(Appeal),[for brevityCIT(A)']Income-taxDepartment,Delhierredinupholding theorderoflearnedAssessingOfficer(forshort'AO')and confirmingthepenalty,ignoringthefactsarebadinlawand arbitrary. 2.ThattheLearnedCIT(A)erredinconfirmingthepenaltyof Rs.1,50,000/-madebythelearnedAOthoughtheappellanthad adducedtheevidencesandexplainedthecircumstancesofdelayin filingtheauditreportunderSection44ABwithintime 3.Eachoneoftheabovegroundsofappealiswithout prejudicetoeachother. 4.Thattheappellantcravesleavetoadd/alteranyofthe groundsofappealonorbeforethetimeofhearing.” 5.Theonlyissueemanatingfromthegroundsofappealraisedby theassesseeiswithrespecttoconfirmingofpenaltybytheLd.CIT(A) forfailureoftheassesseetofiletheauditreportwithintheextended duedatei.e.,31.10.2018. I.T.A.No.240/VIZ/2024 ZoyebHyderabadwala PageNo.4 6.TheLd.ARsubmittedthatassesseecouldnotfiletheauditreport beforetheextendedduedatei.e.,31.10.2018,duetothefactthatthe invoicesandotherrecordsweredestroyedbythewhiteants,andthe appellanthadreconstructedthebooksofaccountsafter26.11.2018for submissiontotheCharteredAccountantforcompletionoftheaudit. Ld.ARpleadedthatthereisasufficientreasonablecauseforthe assesseefornotfilingtheauditreportundersection44ABwithinthe timelimitprescribed.Hethereforepleadedtodeletethepenalty. 7.Percontra,Ld.DRheavilyplacedrelianceontheordersofthe revenueauthorities. 8.Wehaveheardboththesidesandperusedthematerialavailable onrecord.Admittedlyassesseehasnotcompletedtheauditofthe booksofaccountsundersection44ABoftheActfortheimpugned assessmentyear.Submissionoftheassesseeisthattheinvoicesand otherrecordsaredestroyedbythewhiteantsforcingtheassesseeto reconstructthebooksofaccountsforsubmittingtotheChartered Accountantforgettingthebooksofaccountauditedundersection44AB oftheAct,hencethereisdelayinfilingtheauditreportundersection 44ABoftheAct.ForReferenceweextractbelowSection44ABoftheAct. I.T.A.No.240/VIZ/2024 ZoyebHyderabadwala PageNo.5 “44AB.Auditofaccountsofcertainpersonscarryingonbusinessorprofession. Everyperson,— (a)carryingonbusinessshall,ifhistotalsales,turnoverorgrossreceipts,as thecasemaybe,inbusinessexceedorexceedsonecrorerupeesinany previousyear[***]: [Providedthatinthecaseofapersonwhose— (a)aggregateofallamountsreceivedincludingamountreceivedfor sales,turnoverorgrossreceiptsduringthepreviousyear,incash, doesnotexceedfivepercentofthesaidamount;and (b)aggregateofallpaymentsmadeincludingamountincurredfor expenditure,incash,duringthepreviousyeardoesnotexceedfive percentofthesaidpayment, thisclauseshallhaveeffectasifforthewords"onecrorerupees",the words"[ten]crorerupees"hadbeensubstituted:] [Providedfurtherthatforthepurposesofthisclause,thepaymentor receipt,asthecasemaybe,byachequedrawnonabankorbyabank draft,whichisnotaccountpayee,shallbedeemedtobethepayment orreceipt,asthecasemaybe,incash;or] (b)carryingonprofessionshall,ifhisgrossreceiptsinprofessionexceedfifty lakhrupeesinanypreviousyear;or (c)carryingonthebusinessshall,iftheprofitsandgainsfromthe businessaredeemedtobetheprofitsandgainsofsuchpersonundersection 44AEorsection44BBorsection44BBB,asthecasemaybe,andhehas claimedhisincometobelowerthantheprofitsorgainssodeemedtobethe profitsandgainsofhisbusiness,asthecasemaybe,inanypreviousyear;or (d)carryingontheprofessionshall,iftheprofitsandgainsfromthe professionaredeemedtobetheprofitsandgainsofsuchpersonunder section44ADAandhehasclaimedsuchincometobelowerthantheprofits andgainssodeemedtobetheprofitsandgainsofhisprofessionandhis incomeexceedsthemaximumamountwhichisnotchargeabletoincome-tax inanypreviousyear;or (e)carryingonthebusinessshall,iftheprovisionsofsub-section(4) ofsection44ADareapplicableinhiscaseandhisincomeexceedsthe maximumamountwhichisnotchargeabletoincome-taxinany previousyear, gethisaccountsofsuchpreviousyearauditedbyanaccountantbefore thespecifieddateandfurnishbythatdatethereportofsuchauditin I.T.A.No.240/VIZ/2024 ZoyebHyderabadwala PageNo.6 theprescribedformdulysignedandverifiedbysuchaccountantand settingforthsuchparticularsasmaybeprescribed” 9.Aplainreadingoftheabovesection,itisnoticedthattheassessee isrequiredtogethisbooksofaccountauditedbeforethespecifieddate andsuchreportshallbedulysignedandverifiedbysuchAccountantas prescribed.However,underexceptionalcircumstances,whenassessee providesareasonableandsufficientcause,thedelayedfilingofthe auditreportmaybecondoned.Intheinstantcase,assesseehasstated thatbooksofaccountsaredestroyedbywhiteantsandtheauditreport ofthebooksofaccountswascommencedafter26.11.2018only. Section273Bprovidesthatnopenaltytherebyimposableonthe assessee,iftheassesseeprovesthatthereisareasonablecauseforthe saidfailure.However,assesseewasnotabletosubmitanyevidencesto showthatassesseeishavingareasonablecauseshowingthatthebooks ofaccountshavebeendestroyedbythewhiteants.Furtherinour opinionthecauseadducedbytheassesseecouldnotbeconsideredas reasonablecause.Intheabsenceofassesseenotbeingableto demonstratereasonablecausethenon-filingofauditreportattracts provisionsofsection271BoftheAct,inourconsideredopinion. Therefore,wehavenohesitationtoconfirmthepenaltyleviedunder section271BoftheActbytheLd.AssessingOfficerandwedonotfind I.T.A.No.240/VIZ/2024 ZoyebHyderabadwala PageNo.7 anyinfirmityintheorderoftheLd.CIT(A)onthisissue.Accordingly, thegroundsraisedbytheassesseeisdismissed. 10.Intheresult,appealoftheassesseeisdismissed. Orderpronouncedintheopencourton05 th September,2024. Sd/- (द ु व्वआर.एलरेड्) (DUVVURURLREDDY) नाधयकसदस/JUDICIALMEMBER Sd/- (एसब्ल्यृष्) (S.BALAKRISHNAN) लेखासदस/ACCOUNTANTMEMBER Dated:.05.09.2024 Giridhar,Sr.PS आदेशय्पयतयलयिअगेयषत/Copyoftheorderforwardedto:- 1. य्ि्धारत्/TheAssessee :ZoyebHyderabadwala 27-32-9,GroundFloor 75FeetRoad,Visakhapatnam–530001 AndhraPradesh 2. र्जस/TheRevenue :ITO–Ward–1(2) DirectTaxesBuilding,MVPDoubleRoad BesidesGayatriCollege,MVPColony Visakhapatnam–530017 AndhraPradesh 3.ThePrincipalCommissionerofIncomeTax 4. यवभ्ग्ापयतय्यि,आयकरअपीलीयअधिकरण,धिशाखापटणम/DR,ITAT,Visakhapatnam 5.TheCommissionerofIncomeTax 6. ग्रधफ़्ईल/Guardfile //TrueCopy// आदेश््ुस्र/BYORDER Sr.PrivateSecretary ITAT,Visakhapatnam