Shri Naresh Kumar Sonraj Mootha, Koppal V. ITO, Hospet

ITA 268/BANG/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9402 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 01-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K P RAO
• Assessee Lawyers: D DEVARAJ
• Keywords: Reasonable cause

Judgement Text

ITA.268/B/09 PAGE - 1 IN THE INCOME-TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B' BEFORE SHRI. K. P. T. THANGAL, VICE PRESIDENT AND SHRI. N. L. KALRA, ACCOUNTANT MEMBER I.T.A.NO.268/BANG/2009 (ASSESSMENT YEAR : 2006-07 ) SHRI. NARESHKUMAR SONRAJ MOOTHA, M/S. SANJAY CORPORATION, OPP : CHURCH, NEAR APMC, GANJ, R. G. ROAD, GANGAWATI .. APPELLANT V. INCOME TAX OFFICER, WARD -2, HOSPET .. RESPONDENT APPELLANT BY : SHRI. D. DEVARAJ RESPONDENT BY : SHRI. K. P. RAO O R D E R PER K. P. T. THANGAL, VICE PRESIDENT : THIS APPEAL BY THE ASSESSEE IS FOR THE ASSESSMENT YEAR 2006-07 AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A) CONFIRMING THE PENALTY LEVIED U/S.271B OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IS HAVING TOTAL TURNOVER OF RS.1,22 ,89,490/- FOR THE YEAR UNDER CONSIDERATION. IT FILED THE RETURN WITH AUDIT REPORT U/S.44AB ON 22.12.2006. THE DUE DATE FOR FILING TH E RETURN WAS ITA.268/B/09 PAGE - 2 31.10.06. THE ASSESSING OFFICER NOTICED THAT THE A UDIT REPORT WAS OBTAINED ON 22.12.06 AND THE RETURN FILED, THEREFOR E, WAS DELAYED BY MORE THAN ONE AND HALF MONTHS. SINCE THERE WAS A D EFAULT IN GETTING THE ACCOUNTS AUDITED AND FILED, NOTICE U/S.271B WAS ISSUED ON 18.06.2007 TO SHOW CAUSE AS TO WHY PENALTY U/S.271B SHOULD NOT BE LEVIED. IN REPLY, THE ASSESSEE STATED THAT THE DEL AY HAS OCCURRED DUE TO THE FACT THAT THE ASSESSEE'S ACCOUNTANT, SHRI. DURG A PRASAD MAHARAJ, WHO WROTE THE ACCOUNTS OF THE ASSESSEE CONCERN HAD FALLEN SICK DUE TO CHICKEN GUINEA DISEASE WHICH WAS PREVALENT IN THAT AREA AT THE RELEVANT POINT OF TIME. HE WAS ADVISED REST UP TO NOVEMBER 2006 AND HE RESUMED DUTIES ON 21.11.2006. AS SUCH, HE COULD NOT COMPLETE THE AUDIT IN TIME. A DOCTOR'S CERTIFICATE WAS ISSUED A ND PRODUCED TO THIS EFFECT. HENCE, THE ASSESSEE CONTENDED THAT DUE TO THE ABOVE REASON, ITS ACCOUNTS WERE CLOSED ON 31.3.2006. THE ACCOUNTANT' S SERVICES WERE AVAILABLE UPTO 7.8.2006. IN BETWEEN THESE TWO EVEN TS, TIME GAP WAS ALMOST FOUR MONTHS AND SEVEN DAYS. THE PERIOD WAS SUFFICIENT TO COMPLETE THE ACCOUNTS AND TO GET THE ACCOUNTS AUDIT ED. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ABOVE AND HE LEV IED THE IMPUGNED PENALTY OF RS.61,447. THE ASSESSEE APPROACHED THE FIRST APPELLATE AUTHORITY. ITA.268/B/09 PAGE - 3 3. THE SUBMISSIONS WERE REITERATED BEFORE THE FIRST APPELLATE AUTHORITY AS WELL. THE COMMISSIONER OF INCOME-TAX( A) HELD THAT THE ASSESSEE'S TURNOVER IS QUITE HIGH AND IT WAS AWARE OF THE PROVISIONS OF THE INCOME TAX ACT. HE FURTHER HELD THAT THE ASSES SEE IS IN FACT TAKING THE SHELTER OF THE ACCOUNTANT'S SICKNESS AS A REASO N FOR NOT GETTING THE ACCOUNTS AUDITED IN TIME. THE COMMISSIONER OF INCO ME-TAX(A) FURTHER HELD THAT THE ACCOUNTANT'S JOB IS OVER BY T HE END OF THE YEAR EXCEPT ASSISTING THE AUDITOR, WHICH COULD HAVE BEEN DONE BY ANY OTHER ACCOUNTANT. THE COMMISSIONER OF INCOME-TAX(A) FURT HER HELD THAT EVEN FOR GETTING THE AUDIT REPORT THERE WAS A DELAY OF ALMOST A MONTH WHICH THE ASSESSEE COULD NOT EXPLAIN PROPERLY. HE CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 4. THE LEARNED REPRESENTATIVE FOR THE ASSESSEE REIT ERATED THE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES AND FURTHER SUBMITTED THAT IN FACT THE ASSESSEE FILED THE RETUR N IN TIME FOR EARLIER YEARS AND SUBSEQUENT YEARS WHICH SHOWS THAT THE ASS ESSEE IS NOT A HABITUAL DEFAULTER. IN SUPPORT OF THIS, HE BROUGHT OUR ATTENTION TO PAGE 2, 2(A) TO 2(F) OF THE PAPER BOOK, WHEREIN COPIES O F THE ACKNOWLEDGEMENTS WERE FILED. THE FAILURE TO FILE T HE RETURN ALONG WITH THE AUDIT REPORT HAPPENED BECAUSE OF THE ILLNE SS OF THE ACCOUNTANT ITA.268/B/09 PAGE - 4 TO WHICH THE ASSESSEE PRODUCED THE MEDICAL CERTIFIC ATE WHICH ALSO WAS PLACED BEFORE US, IN WHICH IT IS NOT MENTIONED WHET HER THE FEVER WAS VIRAL OR NOT. 5. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDER OF THE REVENUE AUTHORITIES. 6. HEARING THE RIVAL SUBMISSIONS, WE ARE OF THE VIE W THAT THE ORDER OF THE REVENUE AUTHORITIES ARE TO BE REVERSED. IT IS BORNE OUT ON RECORD THAT THE ASSESSEE'S ACCOUNTANT HAD FALLEN SICK. TH E REASONING OF THE REVENUE AUTHORITIES THAT EVEN AFTER THE COMPLETION OF THE ASSESSMENT YEAR, THERE WERE MORE THAN FOUR MONTHS TO COMPLETE THE ACCOUNTS BEFORE THE ACCOUNTANT FELL ILL. THE ASSESSING OFFI CER HELD THAT THE PERIOD OF FOUR MONTHS WAS MORE THAN SUFFICIENT TO C OMPLETE THE ACCOUNTS WHICH THE ASSESSEE COULD NOT DO. WE ARE O F THE VIEW THAT EVEN IF FOUR MONTHS AS RIGHTLY HELD BY THE REVENUE AUTHORITIES WERE AVAILABLE, IF THE ASSESSEE POSTPONED IT TO CERTAIN EXTENT BY A REASONABLE PERIOD, BUT BEFORE THE DUE DATE IF THE ACCOUNTANT F ELL ILL, IT COULD ONLY BE TREATED AS A REASONABLE CAUSE, BECAUSE THE ASSES SEE COULD NOT ANTICIPATE THAT THE ACCOUNTANT WOULD FALL ILL. WE ARE OF THE VIEW THAT THE APPEAL OF THE ASSESSEE IS TO BE ALLOWED IN VIEW OF SECTION 273B. ITA.268/B/09 PAGE - 5 7. IN THE RESULT, ASSESSEE'S APPEAL IS ALLOWED. OR DER PRONOUNCED IN OPEN COURT ON THIS 7TH DAY OF AUGUST, 2009. SD/- SD/- (N. L. KALRA) (K. P. T. THANGAL) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE DATED : 7TH AUGUST, 2009 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, NEW DELHI 7. GF, ITAT, BANGALORE