M/s Agricultural Market Committee, Visakhapatnam V. The ITO, Ward-4(1), Visakhapatnam

ITA 270/VIZ/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2624 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-11-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 30-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T L PETER
• Assessee Lawyers: B V RAO
• Keywords: Bonafide belief; Bonafide mistake; Set aside

Judgement Text

ITA 270/VIZ/2010 AMC, VSKP IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 270 /VIZAG/ 20 10 ASSESSMENT YEAR : 2003 - 04 M/S. AGRICULTURAL MARKET COMMITTEE, VISAKHAPATNAM ITO WARD - 4(1) VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO.AAALA 0418L APPELLANT BY: SHRI B.V. RAO, CA RESPONDENT BY: SHRI T.L. PETER, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER : - THIS APPEAL IS PREFERRE D BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) CONFIRMING THE PENALTY OF RS.88,326/ - U/S 271B OF THE I.T. ACT. 2. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. COUNSEL FOR THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS RAISING ALTERNATIVE PLEA THER EIN THAT APPELLANT WAS UNDER A BONAFIDE BELIEF THAT THE PROVISIONS OF SECTION 44AB OF THE IT ACT ARE NOT APPLICABL E IN THE CASE OF ASSESSEE AS ITS INCOME IS EXEMPTED UNDER THE PROVISIONS OF SECTION 10(20) OF THE I.T. ACT. IN SUPPORT OF THIS ALTERNATIVE CO NTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED A RELIANCE UPON THE JUDGEMENT IN THE FOLLOWING CASES. 1. ACIT VS. INDIA MAGNUM FUND 81 ITD 295 2. CIT VS. IQBALPUR CO - OP CANE DEVELOPMENT LTD. 179 TAXMAN 27 3. ITO VS. NARENDRA KUMAR 103 TTJ 5. 3. COPY OF THE ORDERS OF THE TRIBUNAL AND JUDGEMENTS OF THE HIGH COURTS ARE PLACED ON RECORD FOR PERUSAL. IT WAS ALSO CONTENDED BY THE ASSESSEE THAT SINCE IT IS THE FIRST YEAR IN WHICH THE ASSESSEE HAS STARTED ITS ACTIVITIES, HE COULD NOT GET ITS ACCOUNT AUDITED AS PER PROVISIONS OF SECTION 44AB UNDER A BONAFIDE BELIEF THAT HE WAS NOT REQUIRED TO DO SO AS ITS INCOME IS EXEMPTED U/S 10(20) OF THE ACT. ITA 270/VIZ/2010 AMC, VSKP 2 4. THE LD. D.R. ON THE OTHER HAND HAS PLACED A RELIANCE UPON THE ORDER OF THE CIT(A). 5. WE HAVE CAREFULLY PERUSED THE O RDER OF THE AUTHORITIES BELOW AND WE FIND THAT THE GROSS RECEIPTS OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR EXCEEDED RS.40 LAKHS AND THE ASSESSEE WAS UNDER AN OBLIGATION TO GET ITS ACCOUNT AUDITED AND ALSO TO FURNISH A COPY OF THE SAME IN THE PRESCRIBED FORM BEFORE THE SPECIFIED DATE BEFORE THE A.O. AS PER PROVISIONS OF SECTION 44AB OF THE ACT. BUT HE DID NOT DO SO AND THE ASSESSING OFFICER HAS INITIATED AND LEVIED THE PENALTY U/S 271B OF THE ACT. THE CLAIM OF THE A SSESSEE THAT HE WAS UNDER A BONAFIDE IMPRESSION THAT SINCE ITS INCOME IS EXEMPTED U/S 10(20) OF THE ACT HE WAS NOT REQUIRED TO FILE THE RETURN OF INCOME AND FOR THESE REASONS HE DID NOT GET ITS ACCOUNT AUDITED WAS ALSO NOT ACCEPTED BY THE ASSESSING OFFICER . 6. WE HAVE CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES AND JUDGEMENTS REFERRED TO BY THE ASSESSEE AND WE FIND THAT IF THE ASSESSEE IS ABLE TO PROVE ITS BONAFIDE MISTAKE, THE PENALTY U/S 271B SHOULD NOT BE LEVIED AND IN THIS CASE, WE ARE OF THE VIEW THAT BEING THE FIRST YEAR OF BUSINESS , THE ASSESSEE MIGHT BE IN BONAFIDE BELIEF THAT IT WAS NOT REQUIRED TO GET ITS ACCOUNT AUDITED AS ITS INCOME IS EXEMPTED FROM TAX U/S 10(20) OF THE ACT. WE THEREFORE, FIND NO MERIT IN THE PENALTY LEVIED U/S 271B OF THE ACT. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE PENALTY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 07.12 .20 10 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 7 TH DECEMBER , 20 10 ITA 270/VIZ/2010 AMC, VSKP 3 COPY TO 1 M/S. AGRICULTURAL MARKET COMMITTEE, VISAKHAPATNAM 2 ITO WARD - 4(1), VISAKHAPATNAM 3 THE CI T, VISAKHAPATNAM 4 THE CIT (A) , VI SAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM