Shri Rakesh Hiralal Prajapati, Surat V. The Income Tax Officer, Ward-6(3), Surat

ITA 2740/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9359 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 29-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANTOSH KARNANI
• Assessee Lawyers: RAKESH R SHAH
• Keywords: Gift

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ./ ITA.NO.2740/AHD/2015 / ASSTT. YEAR: 2010-2011 SHRI RAKESH HIRALAL PRAJAPATI 62, SARDAR COMPLEX AT AND PO KADODARA PALSANA, SURAT. VS ITO, WARD-6(3) SURAT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI RAKESH R. SHAH REVENUE BY : SANTOSH KARNANI, SR.DR / DATE OF HEARING : 22/02/2016 / DATE OF PRONOUNCEMENT: 23/02/2016 $%/ O R D E R THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F THE LD.CIT(A)-1, SURAT DATED 27.7.2015 FOR THE ASSTT.YEAR 2010-11 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: THE APPELLANT HAS ALREADY FURNISHED A COPY OF RETU RN OF INCOME ALONG WITH PHYSICAL COPY OF AUDIT REPORT DATED 24.06.2010 SIGNED BY SHRI PANKAJ OSTWAL(CHARTERED ACCOUNTANT),WHOSE CERTIFICA TE OF PRACTICE WAS CANCELLED W.E.F. 03.09.20LO.THE DATE OF AUDIT R EPORT MENTIONED IN E-RETURN AS '24.09.2010' WAS A TECHNICAL ERROR. THERE IS NO QUESTION OF FAILURE ON PART OF APPELLAN T TO GET HIS BOOKS OF ACCOUNT AUDITED U/S 44AB BEFORE SPECIFIED DATE. ITA NO.2740/AHD/2015 2 3. BRIEF FACTS AS EMERGING OUT OF THE ORDER OF THE AO ARE REPRODUCED HEREINBELOW: 3. THE ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2010-11 DECLARING TOTAL INCOME AT RS.3,32,200/- ON 24.09 .2010. THE ASSESSEE ENGAGED IN TRADING ACTIVITY OF GIFT A RTICLES UNDER THE NAME & STYLE OF 'AMBICA NOVELTY STORE- KADODARA'. THE ASSESSEE HAS SHOWN TOTAL TURNOVER AT RS.2,83,61,073/- IN HIS E-R ETURN FIELD BY HIM. THE AO HAS OBSERVED THAT BECAUSE THE TOTAL TURNOVER WAS EXCEEDING THE THRESHOLD LIMIT OF RS.60 LACS, THE ASSESSEE WAS EXP ECTED TO GET HIS BOOKS OF ACCOUNTS AUDITED U/S.44AB OF THE ACT AND FURNISH THE AUDIT REPORT IN FORM NO.3CB & 3CD, DULY SIGNED &. VERIFIED BY AN ACCOUNTANT SPECIFIED UNDER SUB-SECTION(2) OF SECTION 288 OF IT ACT ON OR BEFORE 31.10.2010. HOWEVER, INFORMATION WAS RECEIVED FRO M MEMBER, CBDT AND SPECIAL SECRETARY TO GOVERNMENT OF INDIA, THAT THE ASSESSEE HAS MISUSED THE MEMBERSHIP NUMBER OF CA SHRI PANKAJ OST WAL TO FILE TAX AUDIT REPORT FOR THE YEAR UNDER REFERENCE. THEREFOR E, ON RECEIPT OF SAID INFORMATION, A SHOW CAUSE NOTICE U/S.2716 OF THE AC T WAS ISSUED. IN RESPONSE, THE ASSESSEE SUBMITTED THE REPLY VIDE LET TER DATED 30.08.2012 AS UNDER:- 'PLEASE NOTE THAT WE HAVE GOT OUR ACCOUNTS AUDITED AND FILED OUR I.T. RETURN BY M/S. A.K. OSTWAL & CO., C-408. ITC., MAJU RAGATE, RING ROAD, SURAT AND SIGNED BY MR. PANKAJ OSTWAL (MEM.NO. -.40 0017, FRN: 107200W) PARTNER OF A.K. OSTWAL & CO. THE COPY OF MEMBERSHIP CERTIFICATE AND COPY OF RETI REMENT OF MR. PANKAJ OSTWAL FROM OUR FIRM ISSUED BY ICAI IS ENCLO SED HEREWITH FOR YOUR READY REFERENCE. THIS BEING THE GENUINE AUDIT CARRIED OUT BY M/S. A. K. OSTWAL AND COMPANY, CHARTERED ACCOUNTANTS. THIS MAY PLEASE BE NOTED. IN THE ABOVE CIRCUMSTANCES, PLEASE DROP THE PENALTY PROCEEDINGS. HOWEVER, IF YOU REQUIRE SOME OTHER CLARIFICATION IN THE MATTER KINDLY LET US KNOW.' 3.1 ALONGWITH THE ABOVE REPLY, THE ASSESSEE FUR NISHED COPY OF RETURN FILED ALONGWITH COMPUTATION OF TOTAL INCOME, AUDIT REPORT DATED 24.06.2010 SIGNED BY SHRI PANKAJ OSTWAL, COP Y OF LETTER FROM ICAI REGARDING ADMISSION OF SHRI PANKAJ OSTWAL AS FELLOW MEMBER ITA NO.2740/AHD/2015 3 AND ANOTHER COPY OF LETTER DATED 06.01.2011 OF ICAI REGARDING ACCEPTANCE OF RETIREMENT OF SHRI PANKAJ OSTWAL W.E. F. 03.09.2010. IN OTHER WORDS, THE CERTIFICATE OF PRACTICE (COP) OF S HRI PANKAJ OSTWAL WAS CANCELLED W.E.F. 03.09.2010 FROM THEN ONWARDS - HE WAS NOT ELIGIBLE TO SIGN ANY AUDIT REPORT. AO WROTE A LETTER TO SHRI PANKAJ OSTWAL TO SEEK CLARIFICATION IN THE MATTER, HOWEVER NO REPLY WAS RECEIVED FROM SHRI PANKAJ OSTWAL. 3.2 THE AO HAS OBSERVED IN PARA 5 OF THE PENALT Y ORDER THAT IN THE E- RETURN FILED BY THE ASSESSEE, THE DATE OF AUDIT REP ORT WAS MENTIONED AS 24.09.2010 AND NAME OF AUDITOR WAS MENTIONED AS PAN KAJ OSTAWAL WITH MEMBERSHIP NO.400017. HOWEVER, HIS COP WAS CAN CELLED W.E.F. 03.09.2010. THUS, AS PER AO THE IMPUGNED AUDIT REPO RT WAS NOT VALID BECAUSE NOT SIGNED BY AN ACCOUNTANT LEGALLY AUTHORI ZED TO SIGN THE AUDIT REPORT. ALTHOUGH THE ASSESSEE FILED AUDIT REP ORT DATED 24.06.2010 VIDE HIS SUBMISSION DATED 30.08.2012 WHI CH WAS REJECTED BY AO AS NOT BEING AUTHENTIC. IN VIEW OF THIS, THE AO HELD THAT THE ASSESSEE FAILED TO GET HIS BOOKS OF ACCOUNT AUDITED U/S.44AB OF THE ACT R.W.S. 288(2) OF THE ACT AND THEREBY RENDERED HIMSE LF LIABLE FOR PENAJTY U/S.271B OF THE ACT AND LEVIED THE PENALTY OF RS.1, 00,000/-. THE ASSESSEE HAS FIELD APPEAL AGAINST THIS PENALTY ORDE R. 4. BEFORE THE LD.CIT(A), THE ASSESSEE SUBMITTED ADD ITIONAL EVIDENCE WHICH WERE SENT TO THE AO FOR REMAND REPORT, AND THE AO H AS SUBMITTED HIS REMAND REPORT. AFTER CONSIDERING THE REMAND REPORT AND AR GUMENTS OF THE LD.AR, THE LD.CIT(A) CONFIRMED THE ACTION OF THE AO. IT IS PE RTINENT TO REPRODUCE THE FINDINGS OF THE LD.CIT(A), WHICH ARE HEREINBELOW: DISCUSSION AND APPELLATE DECISION: 4.3 ALL THE MATERIAL MADE AVAILABLE IS DULY CON SIDERED ALONGWITH THE REMAND REPORT FILED BY THE ID. AO. IN THIS CASE THE MOOT POINT INVOLVED IS RELATING TO ACTUAL DATE OF AUDIT REPORT AND WHET HER THE AUDIT WORK WAS DONE BY SHRI PANKAJ OSTWAL, CA BEFORE HE SURREN DERED HIS CERTIFICATE OF PRACTICE (COP). THE ASSESSEE WAS GIV EN MORE THAN ENOUGH OPPORTUNITY BY THE AO TO PRODUCE SHRI PANKAJ OSTWAI AND EVEN ONCE AGAIN BY THE PRESENT AO AT MY INSTANCE DURING THE REMAND PROCEEDINGS. THE CLAIM OF THE THEN PARTNER SHRI A.K . JAIN THAT SHRI PANKAJ OSTWAL HAS LEFT SURAT AND SETTLED IN BHILWAR A IS MERELY AN ALIBI ITA NO.2740/AHD/2015 4 TO AVOID HIS EXAMINATION BY THE AO. I FAIL TO UNDER STAND IF THE ASSESSEE CAN OBTAIN HIS AFFIDAVIT THEN WHY THE ASSESSEE CANN OT INSIST UPON HIS PRESENCE IN PERSON BEFORE AO. IN ABSENCE OF EXAMINA TION ON OATH OF SHRI PANKAJ OSTWAI, AFFIDAVIT IS NOTHING BUT A SELF -SERVING DOCUMENT WHICH CANNOT BE RELIED UPON AS AN ADMISSIBLE EVIDEN CE. THE STATEMENT GIVEN BY SHRI KANTI NATHUBHAI SUMRA HAS NO BEARING ON THE ISSUE BECAUSE ENTIRE ISSUE HINGES ON THE VERACITY OF AUDI T REPORT DATED 24.06.2010. AS STATED BY THE AO, HE RECEIVED INFORM ATION FROM MEMBER, CBDT ABOUT THE MISUSE OF MEMBERSHIP OF SHRI PANKAJ OSTWAL, CA A SERIOUS ALLEGATION WHICH HAS NOT BEEN PROVED WRONG. CONSIDERING THE FACTS IN ITS ENTIRETY, I AM OF CONS IDERED VIEW THAT THE ASSESSEE HAS FAILED TO ESTABLISH THAT HE ACTUALLY O BTAINED THE AUDIT REPORT ON 24.06.2010 FROM SHRI PANKAJ OSTWAL, CA, T HEREFORE, THE AO WAS FULLY JUSTIFIED IN IMPOSING PENALTY OF RS.1,00, 000/- U/S.271B OF THE ACT. HENCE, THE GROUND OF APPEAL IS DISMISSED. 5. I HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AT THE OUTSET, IT IS PERTINENT TO REPRODUCE THE REM AND REPORT DATED 5.2.2015 AVAILABLE IN PARA 4.1 OF THE LD.CIT(A) AS UNDER: 'ENQUIRIES MADE IN THE CASE: VIDE YOUR ABOVE OFFICE LETTER; YOUR HONOUR HAS DIRE CTED THE UNDERSIGNED TO VERIFY THE CORRECTNESS OF THE CLAIM THAT AUDIT W AS CARRIED OUT ON OR BEFORE 24/-6/2010 OR NOT. IT WAS ALSO DIRECTED TO E XAMINE THE CORRECTNESS OF THE CONTENTS OF AFFIDAVIT OF SHRI KA NTI NATHUBHAI SUMRA. IT WAS A/SO DIRECTED TO EXAMINE SHRI PANKAJ MAHENDR A OSTWAL. AS PER THE DIRECTIONS, NOTICES U/S.133(6)/131 WAS I SSUED TO SHRI PAN-KAJ MAHENDRA OSTWAL AND SHIR KANTI NATHUBHAI SUMRA. THE Y WERE REQUIRED TO PRODUCE DOCUMENTARY EVIDENCE TO ASCERTA IN CORRECTNESS OF THEIR CLAIM. STATEMENT OF SHRI KANTI NATHUBHAI SUMR A WAS RECORDED ON OATH BY THIS OFFICE, HOWEVER SHRI PANKAJ MAHENDRA O STWAL COULD NOT EXAMINED AS HE HAD LEFT SURAT AND SETTLED IN BHILWA RA, RAJASTHAN. VIDE FETTER DATED OS.02.2O1S, SHRI A.K, JAIN, HIS PARTNE RS HAS SUBMITTED THAT AS SHRI PANKAJ MAHENDRA OSTWAL IS NOT AVAILABL E, AS PER TELEPHONIC TALK WITH HIM, HE HAS FURNISHED REPLY AL ONGWITH DOCUMENTARY EVIDENCE IN CONNECTION WITH THE CASE. SHRI A.K. JAIN HAS PRODUCED EXTRACTS OF LOG BOOK OF AUDIT OF 'A.K. OSTWAL AND CO.' COPIES OF SOME OF THE AUDIT REPORTS WERE CALLED FOR TO ITA NO.2740/AHD/2015 5 EXAMINE THAT WHETHER SHRI PANKAJ OSTWAL HAS CARRIED OUT AUDIT WORK OR NOT. THE SAME WERE FURNISHED AND WERE EXAMINED BY T HIS OFFICE. IT WAS SEEN THAT UNDER HIS SEAL AND SIGNATURE, SHRI PANKAJ OSTWAL HAD CARRIED OUT AUDIT. FROM PERUSAL OF THE COPY OF AUDIT REPORT OF THE ASSESSEE, IT WAS SEEN THAT THE DATE OF AUDIT HAS BEEN MENTIONED AS 24/06/2010. SHRI A.K. JAIN HAS PRODUCED COPY OF LETTER, ISSUED BY 'THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA', DATED 05/01/2011. VIDE THIS LETTER, ICAI HAS INTIMATED M/S. A.K. OSTWAL AND CO. THAT CE RTIFICATE OF PRACTICE OF SHRI PANKAJ OSTWAL HAS BEEN CANCELLED W.E.F. 03/ 09/2010. STATEMENT OF SHRI KANTI NATHUBHAI SUMRA WAS RECORDE D ON OATH BY THIS OFFICE. VIDE HIS STATEMENT; SHRI KANTI NATHUBHAI SU MRA HAS SUBMITTED THAT HE WAS A STAFF OF M/S. A.K. OSTWAL AND CO FOR THE PERIOD OF FEBRUARY 2009 TO DECEMBER 2010. HE DECLARED THAT AL ONG WITH OTHER WORKS, HE WAS DOING WORK OF E-FILING OF RETURN OF I NCOME OF THE CLIENTS AND DUE TO HEAVY WORK LOAD, HE HAD MADE CLERICAL MI STAKE WHILE UPTOADING RETURN OF INCOME OF THE ASSESSEE AND ENTE RED THE DATE OF AUDIT AS 24/09/2010 IN PLACE OF 24/06/2010. HE FURT HER SUBMITTED THAT WHATSOEVER HAS BEEN DECLARED BY HIM IN HIS AFFIDAVI T IS TRUE AND THE CLERICAL MISTAKE WAS INADVERTENTLY CARRIED OUT BY H IM. SUBMITTED FOR YOUR KIND PERUSAL.' 6. FROM THE PERUSAL OF THE ORDERS, AND FACTS AND CI RCUMSTANCES OF THE PRESENT CASE, IT IS EVIDENT THAT THE PENALTY HAS BE EN LEVIED ONLY ON THE BASIS OF THE INFORMATION FROM THE MEMBER OF CBDT, WHICH HAS NOT BEEN PROVIDED BY THE LD.DR TO ME OR ON RECORD. NO MATERIAL OF WHATS OEVER KIND WAS PLACED ON RECORD BY THE REVENUE AGAINST THE ASSESSEE BEFORE M E. FROM THE PERUSAL OF THE REMAND REPORT, IT IS EVIDENT THAT THE DATE OF A UDIT IS 24.6.2010 AND BY CLERICAL MISTAKE IN THE E-RETURN HAS MENTIONED THE DATE OF AUDIT AS 24.9.2010. THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA VID E LETTER DATED 5.1.2011 HAS INTIMATED THE CA COMPANY THAT CERTIFICATE OF PRACTI CE OF SHRI PANKAJ OSTWAL HAS BEEN CANCELLED W.E.F. 3.9.2010. IN THE CIRCUMS TANCES AND FACTS OF THE CASE AND THE REMAND REPORT OF THE AO ITSELF, AND IN THE ABSENCE OF ANY ADVERSE MATERIAL ON RECORD BROUGHT ON BY THE REVENUE, I AM CONVINCED THAT AUDIT WAS ITA NO.2740/AHD/2015 6 DONE IN TIME ON 24.6.2010 AND IT WAS BY MISTAKE IN E-RETURN, THE AUDIT DATE WAS MENTIONED AS 24.9.2010. THE REVENUE HAS NOT DI SPROVED THE AFFIDAVIT FILED AND NO BASIS HAVE BEEN SPELT OUT WITH REGARD TO THE AFFIDAVITS SHOWING THE SAME AS SELF-SERVING DOCUMENT, WITHOUT PROVING THE SAME AS FALSE. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, NO PENALTY IN SUCH CASE CAN BE LEVIED UNDER SECTION 271B OF THE ACT. ACCORDINGLY, THE IM PUGNED ORDER OF THE LD.CIT(A) IS REVERSED AND ALL THE GROUNDS OF THE AP PEAL OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 23 RD FEBRUARY, 2016 AT AHMEDABAD. SD/- ( B.P. JAIN ) ACCOUNTANT MEMBER AHMEDABAD; DATED 23/02/2016