Parulben Pravinkumar Bhavsar, Sabarkantha V. The Income Tax Officer, S.K. Ward-2, Himatnagar

ITA 2424/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1044 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 10-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Bonafide belief; Reasonable cause
• Section: 273B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.2424/AHD/2013 ( / ASSESSMENT YEAR : 2011-12 ) PARULBEN PRAVINKUMAR BHAVSAR 45, ANANDNAGAR SOCIETY IDAR 383 430 DIST. SABARKANTHA / VS. THE ITO SK WARD-2 HIMATNAGAR $ ./ ./ PAN/GIR NO. : AGLPB 4858 N ( $& / APPELLANT ) .. ( '($& / RESPONDENT ) $&) / APPELLANT BY : NONE '($&*) / RESPONDENT BY : SHRI JAMES KURIAN, SR.DR +* / DATE OF HEARING 27/07/2016 ,-./* / DATE OF PRONOUNCEMENT 27/07/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-III, AHMEDABAD DATED 16/07/2013 FOR THE ASSESSMENT YEAR (AY) 2011-12. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- ITA NO. 2424/AH D/2013 PARULBEN P. BHAVSAR VS. ITO ASST.YEAR 2011-12 - 2 - 2.1. ASSESSEE IS AN INDIVIDUAL WHO FILED HER RETURN OF INCOME FOR AY 2011-12 ON 31/03/2012. THE ASSESSING OFFICER (AO) ON VERIFICATION OF THE RETURN NOTICED THAT THE GROSS RECEIPTS OF THE A SSESSEE WAS RS.97,03,424/- BUT HAD NOT GOT HER ACCOUNTS AUDITED AS REQUIRED U/S.44AB OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS 'THE ACT'). ASSESSEE WAS THEREFORE SHOW-CAUSED TO SHOW AS TO WH Y PENALTY U/S.271B OF THE ACT NOT BE LEVIED FOR NOT GETTING THE ACCOUN TS AUDITED AND FURNISHING THE AUDIT REPORT AS REQUIRED U/S.44AB OF THE ACT. THE ASSESSEE IN RESPONSE TO SHOW-CAUSE INTER-ALIA SUBMITTED THAT SHE DERIVED INCOME BY WAY OF COMMISSION ON RECHARGE COUPONS OF TELECOMMUNICATION AND SHE EARNED COMMISSION ON ITS SALES. IT WAS HER CONTENTION THAT THE SALE OF COUPONS CANNOT BE CONSI DERED AS TURNOVER AND IN SUPPORT SHE RELIED ON THE BOARDS CIRCULAR NO.4 52 DATED 17/03/1986. THE SUBMISSION OF THE ASSESSEE WAS NOT ACCEPTABLE T O THE AO AS HE WAS OF THE VIEW THAT ASSESSEE HAD PURCHASED AND SOLD CO UPONS AND COULD NOT BE TREATED AS KUTCHA ARAHTIYA AND THAT ASSESSEE HAD SHOWN THE GROSS RECEIPTS OF SALE OF RECHARGE COUPONS AS HER TURNOVE R. HE THEREFORE LEVIED PENALTY OF RS.48,517/- U/S.271B OF THE ACT VIDE ORD ER DATED 25/10/2012. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER:- 2.3 DECISION : ITA NO. 2424/AH D/2013 PARULBEN P. BHAVSAR VS. ITO ASST.YEAR 2011-12 - 3 - I HAVE CAREFULLY CONSIDERED THE PENALTY ORDER, FACT S OF THE CASE AND THE SUBMISSION GIVEN BY THE APPELLANT. THE A.O HAS IMPOSED PENALTY, AS THE TURNOVER OF THE APPELLANT, IN HIS O PINION, EXCEEDED THE PRESCRIBED LIMIT IN SECTION 44AB OF THE ACT. THE AP PELLANT HAS SUBMITTED THAT SHE IS A COMMISSION AGENT AND THEREFORE, ONLY THE COMMISSION PART INCLUDED IN THE GROSS RECEIPT SHOULD BE TAKEN FOR T URNOVER AND IN CASE THAT IS CONSIDERED THE TURNOVER WOULD BE MUCH LESS THAN THE PRESCRIBED LIMIT. THE APPELLANT IS DERIVING INCOME FROM SALE OF RECHA RGE COUPONS AND TIME SLOT AND A COMMISSION INCOME OUT OF THE SA LE IS EARNED BY HER. THE APPELLANT SUBMITTED THAT THERE WAS A PRINCIPAL AGENT RELATIONSHIP BETWEEN HER AND M/S. AMAZING INDIA MOBILE PVT. LTD FOR WHICH THERE WAS A FRANCHISEE AGREEMENT. THERE WAS NO PURCHASER AND SELLER RELATIONSHIP WITH THE COMPANY. THE APPELLANT PURCHA SES TIME SLOT FOR MOBILE COMMUNICATION WHICH IS IN TURN SOLD BY HER O R TO HER AGENT AND COMMISSION INCOME IS EARNED ON THE SALE. IT IS FURT HER BE SUBMITTED BY HER THAT EVEN THE TDS HAS BEEN DEDUCTED ON THE COMM ISSION PART ONLY. THE APPELLANT HAS CLAIMED THAT HER BUSINESS IS LIKE THE BUSINESS OF KUTCHA ARAHTIYA AND THEREFORE, THE TURNOVER SHOULD BE TAKEN ONLY OF THE COMMISSION INCOME WHICH IS RECEIVED ON THE SALES. IT IS NOTED THAT THE APPELLANT HAS MADE ALMOST THE SIMILAR SUBMISSIONS WHICH WERE MADE BEFORE THE A.O. THE A.O WHILE PASSING THE PENALTY ORDER HAS GIVEN HIS FINDING ON THE ISSU E OF KUTCHA ARAHTIYA, INCOME BY WAY OF COMMISSION AND OTHER ISSUES. I AM IN COMPLETE AGREEMENT WITH THE FINDINGS GIVEN BY THE A.O IN THE PENALTY ORDER. THE SUBMISSIONS OF THE APPELLANT, MADE BEFORE ME, HAVE NO FORCE. FIRST OF ALL, THE APPELLANT HAS SHOWN IN BOOKS OF ACCOUNTS T HE TOTAL TURNOVER AS SALES WHICH HAS BEEN CONSIDERED BY THE A.O FOR IMPO SING THE PENALTY. THE APPELLANT IS SELLING RECHARGE COUPONS WHICH ARE PURCHASED BY HER FROM THE COMPANY UNDER CERTAIN TERMS AND CONDITION ADVANCE PAYMENT IS MADE AND THE APPELLANT HAS GIVEN FINANCIAL SECUR ITY FOR MAKING THE SALES AS PER THE AGREEMENT. IT IS SEEN FROM THE AGR EEMENT THAT THERE IS A COMMITMENT FOR MINIMUM SALE AND THERE IS NO LIMIT O N THE MAXIMUM SALE WHICH CAN BE MADE. THEREFORE, THE CLAIM OF THE APPELLANT THAT ONLY ITA NO. 2424/AH D/2013 PARULBEN P. BHAVSAR VS. ITO ASST.YEAR 2011-12 - 4 - THE COMMISSION PART OUT OF THE TOTAL SALE MADE SHOU LD BE TREATED FOR TURNOVER IS NOT ACCEPTABLE. A PERUSAL OF THE PROFIT AND LOSS ACCOUNT SUBMITTED BY THE APPELLANT SHOW THAT THE APPELLANT HAS SHOWN SALES OF RS.97,03,424/- LAKHS AND CORRESPONDING PURCHASES OF RS.93,43,534 LAKHS HAVE BEEN MADE. THIS SHOWS THAT THE APPELLANT HAS FIRST PURCHASED THE PROPERTY AND SUBSEQUENTLY SOLD IT. IT WOULD BE RELEVANT TO NOTE THAT THE GUIDANCE NOTE ISSUED BY ICAI MENTIONS THAT IN C ASE PROPERTY IN THE GOODS OR ALL SIGNIFICANT RISKS AND REWARDS OF OWNER SHIP OF GOODS CONTINUE TO BELONG TO THE PRINCIPAL, THE RELEVANT S ALE PRICE SHALL NOT FORM PART OF THE SALES/TURNOVER OF THE COMMISSION A GENT AND/OR THE CONSIGNEE AS THE CASE MAY BE. IF, HOWEVER, THE PROP ERTY IN THE GOODS, SIGNIFICANT RISKS AND REWARD OF OWNERSHIP BELONGS T O THE COMMISSION AGENT AND/OR THE CONSIGNEE, AS THE CASE MAY BE, THE SALE PRICE RECEIVED/RECEIVABLE BY HIM SHALL FORM PART OF HIS S ALES/TURNOVER. IN THE PRESENT CASE IT IS CLEAR FROM THE TRANSACTIONS SHOW N BY THE APPELLANT THAT THE PROPERTY HAS BEEN PURCHASED THEREFORE, THE SIGNIFICANT RISK AND REWARD HAVE ALSO BEEN TRANSFERRED TO THE APPELLANT AND ACCORDINGLY BY RIGHTLY FOLLOWING THE GUIDELINES OF ICAI THE APPELL ANT HAS SHOWN THE TURNOVER BY SHOWING THE TOTAL SALES MADE BY HER. IT IS THEREFORE, HELD THAT THE TURNOVER OF THE APPELLANT SHOULD BE TAKEN AS TOTAL SALES SHOWN IN THE PROFIT AND LOSS ACCOUNT AND NOT THE AMOUNT O F COMMISSION EARNED BY HER ON THE SALES. THE ARGUMENT THAT THE TDS HAS BEEN DEDUCTED ON THE COMMISSION ONLY WILL ALSO BE OF NO HELP TO THE APPELLANT AS TH E APPELLANT IS MAKING PAYMENT FOR COMPLETE PURCHASES TO THE PRINCIPAL COM PANY AND ON THAT SALE CERTAIN AMOUNT OF COMMISSION WHICH IS OTHERWIS E EARNED BY THE APPELLANT THAT TDS IS DEDUCTED. IN VIEW OF THE ABOVE DISCUSSION, I AM OF THE CONSI DERED OPINION THAT THE AO WAS JUSTIFIED IN IMPOSING THE PENALTY U /S.271B OF THE ACT. THE GROUND OF APPEAL S ACCORDINGLY DISMISSED. 3. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), ASSESSE E IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- ITA NO. 2424/AH D/2013 PARULBEN P. BHAVSAR VS. ITO ASST.YEAR 2011-12 - 5 - THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN UPH OLDING THE ORDER CONSIDERING THE ENTITY TO BE AUDITABLE U/S.44AB ON CONSIDERATION OF SALES OF RECHARGE COUPONS IS TURNOVER. 4. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF APPELLANT- ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED. WE THEREFORE PROCEED TO DECIDE THE APPEAL, EX-PARTE QUA THE ASSESSEE ON THE BASIS OF MATERIAL ON RECORD. 4.1. BEFORE US, LD.SR.DR SUPPORTED THE ORDERS OF AO AND LD.CIT(A). 5. WE HAVE HEARD THE LD.SR.DR, PERUSED THE MATERIA L AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE ISSUE IN THE PRESENT CASE IS ABOUT LEVY OF PENALTY U/S. 2 71B ON ACCOUNT OF NON AUDIT OF THE ACCOUNTS AND FURNISHING OF AUDIT REPOR T BY THE ASSESSEE. BEFORE US, THOUGH NONE APPEARED ON BEHALF OF ASSES SEE BUT ON PERUSING THE APPEAL-MEMO, WE FIND THAT ASSESSEE (ALONG WITH GROUNDS OF APPEAL) HAS MADE THE FOLLOWING SUBMISSIONS:- 1 SALES OF RECHARGE COUPONS MAY NOT BE TERMED AS T URNOVER APPELLANT DEALS IN TELECOMMUNICATION TIME SLOT SALE IN DIRECT SALE OF TIME SLOT OR IN PHYSICAL FORM OF RECHARGE COUPONS. APPELLANT EARNS COMMISSION ON SALE OF COUPONS AND TIME SLOT. SALE O F COUPONS IS NOT TO BE TERMED AS DIRECT SALE OR TURNOVER AS SERVICE TAX IS DIRECTLY LEVIED BY THE SERVICE PROVIDED AT ITS END AND NO OTHER AGENCY IS DEEMED TO BE TAKEN CREDIT ON THE SAME. IT CLEARLY ESTABLISHES PRINCIPAL AGENT RELATIONSHIP AND NOT PURCHASER SELLER RELATIONSHIP. DURING THE Y EAR THERE HAS BEEN SUBSTANTIAL TRANSACTIONS MADE WITH M /S AMAZING INDIA MOBILE PVT LTD WITH WHOM THERE HAS BEEN A FRANCHISE E AGREEMENT MADE ITA NO. 2424/AH D/2013 PARULBEN P. BHAVSAR VS. ITO ASST.YEAR 2011-12 - 6 - WHERE IT HAS BEEN CLEARLY PROVIDED TO DEAL IN FRANC HISEE COMMISSION WHILE IN DEALS WITH RELIANCE COMMUNICATIONS LTD, ID S U/S 194H HAS BEEN DEDUCTED AND IS SHOWN IN 26AS STATEMENT. IN SALES OR TURNOVER THE DIFFERENCE OF AMOUNT OF SA LES AND PURCHASE AFTER DEDUCTION OF TAX AND EXPENSES. WHILE IN THE PRESENT CASE THERE IS NO DIFFERENCE IN PRICING. THE TIME SLOT PURCHASED IS SOLD AT THE SAME VALUE WHEN IT WAS PURCHASED. COMMISSION IS EARNED IN PLACE OF PROFITS. THE FULL AMOUNT RECEIVED IS TRANSFERRED TO THE ORIGINAT ING SERVICE PROVIDER. IN THE SIMILAR CASE IN THE ITAT AHMEDABAD BENCH 'A' ASSISTANT COMMISSIONER OF INCOME-TAX V. HASMUKH M. SHAH [2003] 85 ITD 99 (AHD.), IT WAS HELD THAT APPELLANT BEING THE SHARE BROKER DOES NOT SELL GOODS OF ITS CONSTITUENTS AS HIS OWN AND ONLY CHARGES COMMISSION FOR BRINGING TWO PARTIES TOGETHER TO TRA NSACTIONS OF SALE AND PURCHASE OF SHARES, SUCH TRANSACTIONS CANNOT AMOUNT TO 'SALE, TURNOVER OR RECEIPT' OF SHARE BROKER HIMSELF WITHIN MEANING OF SECTION 44AB. IN THIS CASE, THE FACTS ARE SAME AS TIME SLOT AND RECH ARGE COUPONS ARE BEING PURCHASED AND SOLD AT SAME VALUE. HERE ONLY C OMMISSION INCOME IS EARNED WHICH MAY BE TERMED AS GROSS RECEIPTS. 2. LEARNED COMMISSIONER (APPEALS) HAS CONSIDERED RE CHARGE COUPONS AS DIFFERENT FROM TIME SLOT WHICH MAY NOT H OLD GOOD IN BUSINESS TERM PARLANCE AND TECHNICALITIES INVOLV ED, RECHARGE COUPONS AND SALE OF TIME SLOT DIRECTLY IS ONE AND SAME. THE SE ARE DIFFERENT STRATEGIES OF DOING THE TRADE OF TIME SLOT SALE. EV EN WITH THE RECHARGE COUPONS, THE TIME SLOT IS BEING SOLD AND NO REWARDS ARE EARNED THAN WHAT HAS BEEN REWARDED IN DIRECT TIME SLOT SELLING. 3 APPELLANT EARNS INCOME IN COMMISSION FORM AND COM MISSION MAY BE CONSIDERED AS GROSS RECEIPTS AND NOT THE SALE OF COUPONS. THE SAME MAY BE CONFIRMED FROM THE INCOME TAX RETUR N FILED BY THE APPELLANT WHERE HE HAS EARNED COMMISSION AND TDS HA S BEEN DEDUCTED U/S 194H ON COMMISSION. EVEN IN THE RETURN OF INCOME THE SAME HAS TDS DEDUCTED HAS BEEN SHOWN AND PROVIDED. M/S AMAZING INDIA MOBILE PVT LTD IS HAVING FRANCHISEE AGREEMENT WITH TECH VISION ITA NO. 2424/AH D/2013 PARULBEN P. BHAVSAR VS. ITO ASST.YEAR 2011-12 - 7 - (PARULBEN BHAVSAR) AND PAYS FRANCHISEE COMMISSION W HILE IN DEALS WITH RELIANCE COMMUNICATIONS LTD, TDS U/S 194H HAS BEEN DEDUCTED AND IS SHOWN IN 26AS STATEMENT. IT IS CLEARLY ESTABLISHING PRINCIPAL AGENT RELATIONSHIP. 4. APPELLANT HAS BY MISTAKE SHOWN THE SALE OF REC HARGE COUPONS IN BONAFIDE BELIEF. APPELLANT IN BONAFIDE BELIEF FILED RETURN OF INCOME SHOWING SALE OF TIME SLOT AND RECHARGE COUPONS AS SALES. ALONG WITH THAT LEARNED COMMISSIONER (APPEALS) FAILED TO CONSIDER IN LEVYIN G PENALTY THAT COMMISSION INCOME HAS BEEN SEPARATELY SHOWN AS INCO ME IN FINANCIAL STATEMENTS AS RS 6,48,030/-. LEARNED COMMISSIONER (APPEALS) HAS ERRED IN NOT CON SIDERING APPELLANT AS KUTCHA ARATIYA OR AGENT. APPELLANT AND THE DEALERS DEALING IN TIME RECHARGE BUSINESS ARE CLEAR SELLING AGENTS OF THE COMPANY. COMPANIES DEDUCT TDS ON COMMISSION U/S 194H IN THE CASES. IT IS CLEAR FROM THE FACTS A ND RULINGS MADE IN COURT OF LAWS, THAT SUCH DEALERS ARE AGENTS. AND TH ERE IS CLEAR PRINCIPAL AGENT RELATIONSHIP IS ESTABLISHED. CASE MAY BE REFE RRED TO BHARTI CELLULAR LTD. V .ASSISTANT COMMISSIONER OF INCOME-T AX*, CIRCLE-57, KOLKATA[2011] 12 TAXMANN.COM 30 (CAL.). IN THE MENT IONED CASE THERE HAS BEEN CLEAR PRINCIPAL AGENT RELATIONSHIP IS ESTA BLISHED BETWEEN THE RETAILERS AND THE TELECOM COMPANIES. AS PER BOARD C IRCULAR NO. 452 DATED 17/03/1986, APPELLANT MAY BE TREATED AS KUTCH A ARATIA ACCORDING TO THE ACTIVITIES INVOLVED. CLARIFICATIONS FROM THE BOARD CLEARLY APPLIES TO THE APPELLANT AS 1. APPELLANT SELLS COUPONS THROUGH FRANCHISEE AGREEMEN T WHERE EARNS COMMISSION INCOME AND NOT TRADE DISCOUNT. 2. REMUNERATION IS BY WAY OF COMMISSION INCOME WHICH I S CLEARLY ESTABLISHED IN THE TDS DEDUCTED STATEMENTS OF APPELLANT. ITA NO. 2424/AH D/2013 PARULBEN P. BHAVSAR VS. ITO ASST.YEAR 2011-12 - 8 - 3. APPELLANT DOES NOT HAVE ANY PERSONAL INTEREST ON GO ODS AND INTEREST TO THE EXTENT OF COMMISSION INCOME WHICH I S ESTABLISHED IN MANNER THAT THE TALKTIME PURCHASE AN D SALES ARE BEING MADE AT SAME PRICE AND NO MARGINS ARE ADD ED ON THE PRICE BY THE APPELLANT. 4. BEING FRANCHISEE, THE FRANCHISOR INDEMNIFIES THE A PPELLANT IN EVENT OF LOSS WHILE APPELLANT DOES NOT HAVE DOMINAN CE ON GOODS. 6. LEARNED COMMISSIONER APPEALS ERRED IN CONSIDERIN G THE RECHARGE COUPONS AS GOODS THE LEARNED COMMISSIONER HAS CONSIDERED THE RECHARG E COUPONS AS GOODS WHERE IT WAS MENTIONED IN THE ORDER THAT SIGN IFICANT RISK AND REWARDS ARE TRANSFERRED TO APPELLANT. IT IS IMPORTA NT TO MENTION HERE THAT THE RECHARGE COUPONS ARE SERVICES PROVIDED BY THE OPERATOR TO THE END USER. TRANSACTION OF SALE HAPPENS ONLY WHEN THE SERVICE IS GIVEN TO THE END CONSUMER. THE GUIDANCE NOTE MAY BE INVOKED ONLY IF THERE IS TRANSFER OF GOODS. IN THE PRESENT CASE THE APPELLAN T IS ENABLING THE SERVICE PROVIDER TO SELL THE SERVICES TO THE END US ERS. SIGNIFICANT RISK AND REWARDS TRANSFER ONLY WHEN SERVICE IS BEING PURCHAS ED BY END USER. THE LEARNED COMMISSIONER (APPEALS) ERRED IN CONSIDERING THE RECHARGE COUPONS AS GOODS AS THE SAME CANNOT BE DEFINED AS G OODS AS IT IS NOT APPLICABLE TO VAT, AND DOES NOT FIT INTO THE DEFINI TION OF GOODS AS PER SALE OF GOODS ACT, 1930 WHERE IT IS GIVEN THAT 'GOO DS' MEANS EVERY KIND OF MOVABLE PROPERTY OTHER THAN ACTIONABLE CLAIMS AN D MONEY; AND INCLUDES STOCK AND SHARES, GROWING CROPS, GRASS, AN D THINGS ATTACHED TO OR FORMING PART OF THE LAND WHICH ARE AGREED TO BE SEVERED BEFORE SALE OR UNDER THE CONTRACT OF SALE. RECHARGE COUPONS AND TIME SLOT ARE SERVICES PROVIDED BY TELECOM OPERATORS TO THE GENER AL PUBLIC AT LARGE AND CHARGES SERVICE TAX AND FALLS IN DEFINITION OF SERVICE OF TELECOMMUNICATION SERVICE AS THE SAME IS DEFINED SERVICE BY FINANCE ACT, 1994 AS TELECOMMUNICATION SERVICE. BASED ON ABOVE CONTENTIONS, IT IS HEREBY PRAYED TO CONSIDER THE TRANSACTIONS MADE IN PRINCIPAL AGENT RELATIONSHIP A ND AGENCY ITA NO. 2424/AH D/2013 PARULBEN P. BHAVSAR VS. ITO ASST.YEAR 2011-12 - 9 - COMMISSION MAY BE TERMED AS GROSS RECEIPTS AND NOT SALE OF RECHARGE COUPONS AND TO DROP PENALTY LEVIED U/S 27IB. 5.1. ON PERUSING THE AFORESAID SUBMISSIONS MADE BY ASSESSEE, IT IS SEEN THAT IT IS ASSESSEES SUBMISSION THAT SHE WAS UNDER BONA FIDE BELIEF THAT SHE WAS NOT REQUIRED TO GET THE ACCOUNTS AUDITED IN VIEW OF CBDT INSTRUCTION NO. 452 DATED 17 TH MARCH, 1986 AND THE VARIOUS DECISIONS RELIED UPON BY HER. IT IS ASSESSEES SUBMISSION TH AT ON THE COMMISSION EARNED, THE PAYER HAD DEDUCTED TDS U/S.194H OF THE ACT. BEFORE US, NO MATERIAL HAS BEEN PLACED ON RECORD BY REVENUE TO DE MONSTRATE THAT THE BELIEF OF THE ASSESSEE ON THAT BEING NO REQUIREMENT OF GETTING THE ACCOUNTS AUDITED AND FURNISHING THE AUDIT REPORT WA S NOT A BONA FIDE BELIEF. A READING OF SECTION 271B OF THE ACT MAKES IT CLEAR THAT THE IMPOSITION OF PENALTY IS NOT MANDATORY IN ALL CASES AS THE WORD USED IN THE SECTIONIS MAY MEANING THEREBY THAT A DISCRETI ON IS CONFERRED ON THE A.O TO IMPOSE OR NOT TO IMPOSE THE PENALTY. FURTHER THE PROVISION WITH RESPECT TO IMPOSITION OF PENALTY IS NOT MANDATORY I N VIEW OF THE PROVISION CONTAINED IN SECTION 273B OF THE ACT WHICH INTER-ALIA PROVIDES THAT NOTWITHSTANDING THE PROVISIONS OF SECTION 271B, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CAS E MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PR OVES THAT THERE WAS REASONABLE CAUSE FOR THE FAILURE. IN THE PRESENT C ASE, WE ARE OF VIEW THAT THE ASSESSEE WAS HAVING A BONA FIDE BELIEF THAT SHE WAS NOT REQUIRED TO GET HER BOOKS AUDITED UNDER 44AB IN VIEW OF THE CBD T CIRCULAR (SUPRA). ITA NO. 2424/AH D/2013 PARULBEN P. BHAVSAR VS. ITO ASST.YEAR 2011-12 - 10 - IN SUCH A SITUATION, WE ARE OF THE VIEW THAT THERE WAS A REASONABLE CAUSE ON THE PART OF THE ASSESSEE FOR NOT GETTING THE BOO KS AUDITED. FURTHER, IT IS A SETTLED LAW THAT WHEN THERE IS A TECHNICAL OR VEN IAL BREACH OF THE PROVISIONS OF LAW, THE ENDS OF JUSTICE REQUIRES THA T DISCRETION SHOULD NOT BE EXERCISED IN FAVOUR OF PUNISHING A MINOR DEFAULT AND FOR WHICH WE GET SUPPORT FROM THE DECISION OF HONBLE APEX COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (1972) 83 ITR 26 (SC) WHEREBY HONBLE APEX COURT HAS HELD AS UNDER:- 'EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHO RITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE.' 5.1. CONSIDERING THE TOTALITY OF THE FACTS AND RELY ING ON THE AFORESAID DECISION OF HONBLE APEX COURT, WE ARE OF THE VIEW THAT IN THE PRESENT CASE THE LEVY OF PENALTY U/S. 271B OF THE ACT WAS N OT JUSTIFIED AND THEREFORE DIRECT ITS DELETION. THUS THE GROUND OF A SSESSEE IS ALLOWED . 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALL OWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 27/07/2016 SD/- SD/- () () (RAJPAL YADAV) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 27/ 07 /2016 ITA NO. 2424/AH D/2013 PARULBEN P. BHAVSAR VS. ITO ASST.YEAR 2011-12 - 11 - 3..,.../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 456 7 / CONCERNED CIT 4. 7 ( ) / THE CIT(A)-VIII, AHMEDABAD 5. 89:'56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<=+ / GUARD FILE. / BY ORDER, (8' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 27.7.16 (DICTATION-PAD 4- P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27.7.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.27.7.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 27.7.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER