M/s Laxmi Vayaapar Pvt. Ltd., Kolkata V. Income Tax Officer, Ward-3(4), Kolkata, Kolkata

ITA 2698/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4574 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 03-12-2013
• Court: TRIBUNAL
• Department Lawyers: RAJAT KUMAR KUREEL J CIT SR DT
• Assessee Lawyers: PARTHA CHOWDHURY
• Keywords: Reasonable cause; Non compliance
• Section: 27

Judgement Text

1 ITA NO. 2698/KOL/2013 LAXMI VAYAAPAR PVT. LTD., AY 2005-06 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI S. S. VISWAN ETHRA RAVI, JM] I.T.A NO.2698/KOL/2013 ASSESSMENT YEAR: 2005-06 M/S. LAXMI VAYAAPAR PVT. LTD. VS. INCOME-TAX OFF ICER, WD-3(4), KOLKATA. (PAN: AABCL0367P) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 22.06.2016 DATE OF PRONOUNCEMENT: 08.07.2016 FOR THE APPELLANT: SHRI PARTHA CHOWDHURY, AR FOR THE RESPONDENT: SHRI RAJAT KUMAR KUREEL, J CIT, SR. DT ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XIV, KOLKATA VIDE APPEAL NO. 311/CIT(A)-XIV/2011-12 DATED 28.10.2013. PENALT IES UNDER DISPUTE WERE IMPOSED BY ITO, WARD-3(4), KOLKATA U/S. 271B AND 271F OF THE I NCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2005-06 VIDE HIS S EPARATE ORDERS DATED 09.10.2007 AND 03.10.2007 RESPECTIVELY. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CITA IS JUSTIFIED IN UPHOLDING THE LEVY OF PENALTIES U/S. 271B AND 27 1F OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSE SSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRADING IN IRON AND STEE L. THE RETURN OF INCOME FOR AY 2005-06 WAS FILED BY THE ASSESSEE ON 28.09.2006 ALONG WITH TAX AUDIT REPORT ALTHOUGH THE DUE DATE FOR FILING RETURN OF INCOME WAS 31.10.2005. THE AS SESSEE EXPLAINED THE FOLLOWING REASONS FOR THE DELAY IN FILING THE RETURN OF INCOME AND DE LAYED FILING OF TAX AUDIT REPORT FOR AY 2005-06: THE REAL FACT TO DELAY IN FILING INCOME TAX RETUR N AS WELL AS TAX AUDIT REPORT U/S 44AB BEFORE THE INCOME TAX DEPARTMENT ALREADY INFORMED T O YOUR DEPARTMENT AND AGAIN WE INFORMED YOU THAT THERE IS SERIOUS MISCOMMUNICATION I MISREPRESENTATION OF OUR ACCOUNTANT. 2 ITA NO. 2698/KOL/2013 LAXMI VAYAAPAR PVT. LTD., AY 2005-06 WE INFORMED BY OUR ACCOUNTANT THAT THE BOOKS OF ACC OUNTS FOR THE YEAR ENDED 31.03.2005 HAVE BEEN AUDITED AND IT RETURN AS WELL AS TAX AUDI T REPORT FOR THE SAID PERIOD ALSO BEEN FILED BEFORE THE INCOME TAX DEPARTMENT. BUT THE REA L FACT COMES TO OUR KNOWLEDGE AT THE TIME OF FILING IT RETURN FOR THE A. Y. 2006-2007. T HAT TIME IT WAS THE PRACTICE TO ENCLOSE THE XEROX COPY OF LAST YEAR RETURN FOR SUBMISSION THE C URRENT YEAR RETURN. WHEN WE PREPARING OUR BOOKS OF ACCOUNTS TO FILE THE IT RETURN AND TAX AUDIT REPORT FOR THE A. Y. 2006-2007, WE SEARCHING OUR LAST YEAR COPY AND COMES TO OUR KNOWL EDGE THAT THERE IS NO COPY OF LAST YEAR RETURN AS IT WAS NOT FILED THEN WE HAD NO OTHER ALT ERNATIVE WITHOUT SUBMITTING THE LAST YEAR RETURN AND FINALLY WE SUBMITTED OUR ITR AND TAX AUD IT REPORT FOR THE A. Y. 2005-2006 ON 28.09.2006 I.E. AT THE TIME OF SUBMITTING RETURN FO R THE A. Y. 2006-2007. SIR, OUR MISTAKE WAS WE TRUSTED OUR ACCOUNTANT. WE HOPED THAT RETURN WAS FILED AS WE SIGNED THE RELEVANT DOCUMENTS LIKE COPY OF BALANCE SHEET, ITR FORM ETC. IN TIME. AGAIN WE INFORMED YOU THAT OUR BOOKS OF ACCOUNTS HAVE BEEN AUDITED IN TIME I.E. ON 12.09.200~ BEFORE DUE DATE. IT WAS OUR DUTY TO VERIFY THE DEPARTMENTAL STAMP I ACKNOWLEDGEMENT REGARDING SUBMISSION OF IT RETURN BUT IN THIS CASE SIMPLY WE TRUSTED OUR AC COUNTANT AFTER THIS INCIDENCE OUR ACCOUNTANT LEFT THE JOB. SIR, OUR HUMBLE REQUEST PLEASE DO NOT IMPOSE ANY PE NALTY U/S 271B AND U/S 271F OF THE INCOME TAX ACT 1961 AS WE ARE IN VERY FINANCIAL CRI SIS. WE HAD NO ANY INTENTION TO FILE THE RETURN. WE ALWAYS FILED OUR RETURN IN TIME THEREAFT ER I.E. FROM A. Y 2006-2007 TO TILL A. Y. 2013-2014. WE INFORM YOU THAT NEVER WE DONE SUCH TY PE OF MISTAKE IN FUTURE. WE ALSO INFORM YOU THAT OUR ACCOUNTS ALREADY DECLARE NPA BY THE BA NK AS PER RBI GUIDELINE AND COURT CASE WAS PROCEEDING AGAINST OUR COMPANY WITH DEBTS RECOV ERY TRIBUNAL NO. -1, KOLKATA VIDE CASE NO. OA 478 OF 2012. WE ARE ENCLOSING HEREWITH THE RELEVANT DOCUMENTS FOR YOUR PERUSAL. 4. THE LD. AO DID NOT CONVINCE WITH THE REPLY GIVE N BY THE ASSESSEE PROCEEDED TO LEVY PENALTIES U/S. 271B AND 271F OF THE ACT IN THE SUM OF RS. 1 LAC AND RS.5,000/- FOR NON FILING OF TAX AUDIT REPORT AND NON FILING OF RETURN IN TIME RESPECTIVELY. THESE PENALTIES WERE CONFIRMED BY THE LD. CIT(A) ON FIRST APPEAL. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 01. THAT THE ORDER OF LD. CIT(A)XIV KOLKATA DATED 28.10.2013 WHICH WE RECEIVED ON 15.11.2013 SEEMS TO VINDICTIVE AND BAD IN LAW AND I S LIABLE TO BE MODIFIED IN LIGHT OF THE FOLLOWING FACTS AND CIRCUMSTANCES: 02. THAT THE LD. CIT(A)-XIV KOLKATA PASSED HIS ORDE R WITHOUT CONSIDERING ANY SINGLE POINT OF OUR PRAYER. WE EXPLAINED HIM AT THE TIME OF HEAR ING THAT WE AUDITED OUR BOOKS OF ACCOUNTS IN TIME. AS WE MISCOMMUNICATED BY OUR ACCO UNTANT REGARDING SUBMISSION OF TAX AUDIT REPORT AS WELL AS INCOME TAX RETURN, THERE IS DELAY TO FILE THE SAME. 03. THAT LD. CIT(A)XIV, KOLKATA NOT CONSIDERING IN HIS MIND THAT THIS IS NOT THE AMOUNT OF INCOME TAX. THIS IS THE AMOUNT OF PENALTY. HE MAY W AIVE THE SAME. BUT HE DOES NOT CONSIDER THE SAME. 3 ITA NO. 2698/KOL/2013 LAXMI VAYAAPAR PVT. LTD., AY 2005-06 04. THAT THE APPLICANT RESERVE THE RIGHT OF RAISING ANY FURTHER GROUND AND OR GROUNDS AND OR ADDUCTING ANY FURTHER SUBMISSION EITHER ON OR BEFOR E THE FINAL DATE OF HEARING LIKELY TO BE FIXED BY YOUR OFFICE. THE LD. AR REITERATED THE SUBMISSIONS MADE BEFORE T HE LOWER AUTHORITIES AND STATED THAT THE ASSESSEE HAS DULY GOT ITS ACCOUNTS AUDITED ON 1 2.09.2005 AND COMPLIED WITH ROC FORMALITIES. IT WAS A BONA FIDE BELIEF PLACED BY T HE ASSESSEE ON ITS ERSTWHILE ACCOUNTANT WHICH CANNOT BE DOUBTED WITH. IN RESPONSE TO THIS, THE LD. DR ARGUED THAT IT IS VERY UNLIKELY THAT ASSESSEE HAVING CLAIMED TO HAVE COMPL IED WITH ROC FORMALITIES IN TIME AND NOT COMPLIED WITH INCOME TAX FORMALITIES. HE PLACE D RELIANCE ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF METRO AGENCIES VS. DCIT REPORTED IN (2014) 45 TAXMANN.COM 97 (KER) IN SUPPORT OF HIS CONTENTIONS. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS STATED HEREINABOVE REMAINED UNDISPUTED AND HE NCE, THE SAME ARE NOT REITERATED FOR THE SAKE OF BREVITY. WE FIND THAT THE REASONING GI VEN BY THE ASSESSEE THAT IT HAD PLACED RELIANCE ON ITS ERSTWHILE ACCOUNTANT IS NOT SUBSTA NTIATED BY ANY EVIDENCE. THE ASSESSEE HAD NOT EVEN FILED ANY AFFIDAVIT FROM THE CONCERNED ACCOUNTANT AND FROM ITS SIDE TO AFFIRM THE STATEMENT CLAIMED TO HAVE BEEN MADE BY IT. ON SPECIFIC QUERY FROM THE BENCH AS TO WHETHER THE ANNUAL REPORT AND BALANCE SHEET WERE FI LED BEFORE REGISTRAR OF COMPANIES IN TIME (AS CLAIMED BY THE ASSESSEE) AND ANY EVIDENCE COULD BE FURNISHED IN THAT REGARD, THE LD. AR FILED CERTAIN DOCUMENTS WHICH ARE NOT RELEVA NT FOR THE YEAR UNDER APPEAL. WE FIND THAT THE CASE LAW RELIED ON BY THE LD. DR I.E. METR O AGENCIES, SUPRA STRENGTHENS THE CASE OF THE REVENUE. IN THE SAID DECISION IT WAS HELD A S UNDER: 5. ULTIMATELY, ONE HAS TO SEE WHETHER THE CAUSE SHOWN BY AN ASSESSEE WOULD CONSTITUTE A GOOD CAUSE FOR THE NON COMPLIANCE IN ORDER TO AVOID HIM FROM PAYING THE PENALTY IMPOSED. IN ORDER TO ASCERTAIN WHETHER THE ASSESSEE ACTED AS A MAN OF AVERAGE INTELLIGENCE AND ORDINARY PRUDENCE, THE FACTS AND CIRCUMSTANCES ALON E HAVE TO BE CONSIDERED. APPARENTLY, THE THREE AUTHORITIES, WHO HAD THE OPPORTUNITY OF LOOKI NG INTO THE FACTUAL SITUATION IN THE PRESENT CASE, HAVE CONSISTENTLY OPINED THAT THERE WAS NO RE ASONABLE CAUSE. EVEN OTHERWISE THE CAUSE SHOWN IS ONLY FOR A PART OF THE ASSESSMENT YEAR, I. E., BEFORE 31.12.2005. THERE IS NOTHING ON RECORD TO SHOW DURING WHAT SPELLS OF 2005 THE ACCOU NTANT WAS ON LEAVE AND FOR HOW MANY DAYS. THERE IS ALSO NOTHING ON RECORD TO SHOW WHETH ER THERE IS ANY OTHER ASSISTANT TO THE ACCOUNTANT WHO SAID TO HAVE BEEN ON LEAVE SO FAR AS THE ASSESSEE'S PARTNERSHIP FIRM. APART FROM THAT, THE CAUSE FOR THE DELAY IS THE ABSENCE O F ACCOUNTANT ON VARIOUS DATES, THEREFORE, THEY COULD NOT FINALISE THE ACCOUNTS IN ORDER TO FI LE THE AUDIT REPORT IN TIME. THERE IS NOTHING ON RECORD TO SHOW THAT AS AND WHEN THE SAID ACCOUNT ANT WHO WAS ON LEAVE RETURNED FOR DUTY 4 ITA NO. 2698/KOL/2013 LAXMI VAYAAPAR PVT. LTD., AY 2005-06 HE HAD FAILED TO ENTER THE ACCOUNTS. EVEN OTHERWISE , ONCE PROPER DOCUMENTS FOR CONDUCTING THE PARTNERSHIP BUSINESS OF THE ASSESSEE ARE MAINTA INED, IT WOULD NOT BE DIFFICULT FOR THE ASSESSEE TO ENGAGE SERVICES OF ANOTHER ACCOUNTANT T O FINALISE THE ACCOUNTS IN ORDER TO FILE RETURNS AND THEN SUBMIT THE AUDIT REPORT. ACCORDING TO HIM, FINALISATION OF ACCOUNTS IS DELAYED TILL DECEMBER, 2005, THEREFORE, AUDIT REPOR T COULD NOT BE SUBMITTED IN TIME. WHETHER TO FINALISE ACCOUNTS OF THE ASSESSEE'S BUSINESS WIT H THE ASSISTANCE OF ANY OTHER PERSON OR NOT WOULD BE THE TEST TO KNOW WHETHER THERE IS SUFFICIE NT OR REASONABLE CAUSE. IN THE ABSENCE OF ENGAGING ANY OTHER ACCOUNTANT TO COMPLETE THE ACCOU NTS AND THEN SUBMIT THE AUDIT REPORT IN TIME, WE FAIL TO UNDERSTAND HOW THE JUDGMENT RELIED UPON BY LEARNED COUNSEL FOR THE APPELLANT WOULD COME TO HIS ASSISTANCE. IN THE CASE REFERRED TO ABOVE, IT WAS A NON COMPLETION OF AUDIT OF THE ACCOUNTS OF A BRANCH AT USA WHICH PREVENTED THE HEAD OFFICE FROM SUBMITTING THE RECORDS. IT WAS NOT POSSIBLE FOR THE HEAD OFFICE IN INDIA TO COMPLETE THE ACCOUNTING AND THEN SUBMIT AUDIT REPORT WITHIN THE TIME PRESCRIBED. BUT, IN THIS CASE IT WAS WITHIN THE REACH OF THE ASSESSEE TO COMPLETE THE PR OCESS OF FINALISATION OF ACCOUNTS AND THEN SUBMIT AN AUDIT REPORT WITHIN THE TIME PRESCRIBED W HICH THEY FAILED TO DO. EVEN OTHER WISE ON FACTS, NO MATERIAL IS PRODUCED BY THE ASSESSEE TO S UBSTANTIATE THE CAUSE SHOWN BY THE ASSESSEE. IN THAT VIEW OF THE MATTER, WE FIND NO GOOD GROUND TO INTERFERE WITH THE REASONING OF THE TRIBUNAL. ACCORDINGLY, THE WRIT APPEAL IS DISMISSED . WE FIND THAT REASONS FOR DELAY ADDUCED BY THE ASSES SEE DOES NOT CONSTITUTE A GOOD AND REASONABLE CAUSE. IT IS VERY UNLIKELY THAT THE ASS ESSEE BEING A COMPANY WOULD BE CONTROLLED BY THE BOARD OF DIRECTORS WHO HAD NOT BO THERED TO UNDERSTAND WHETHER THE INCOME TAX RETURN OF THE COMPANY HAS BEEN FILED IN TIME. IT IS VERY UNLIKELY THAT THEY WOULD REMAIN SILENT WITH REGARD TO DISCHARGE OF THE IR STATUTORY OBLIGATIONS BY PLACING RELIANCE ON THEIR ERSTWHILE ACCOUNTANT AS CLAIMED B Y THE ASSESSEE. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES AND RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF METRO AGENCIES, SUPRA, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A). ACCORDINGLY, GROUN DS RAISED BY THE ASSESSEE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 08.07.201 6 SD/- SD/- (S.S. VISWANETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 8 TH JULY, 2016 JD.(SR.P.S.) 5 ITA NO. 2698/KOL/2013 LAXMI VAYAAPAR PVT. LTD., AY 2005-06 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. LAXMI VAYAAPAR PVT. LTD., 64, SAMB HUNATH PANDIT STREET, KOLKATA-25. 2 RESPONDENT ITO, WD-3(4), KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .