N J Metal Screens Manufacturing Pvt. Ltd., Baroda V. The Income Tax Officer, Ward-4(1), Baroda

ITA 2792/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9840 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER ./ ITA NO. 2792/AHD/2015 / ASSESSMENT YEAR: 2009-10 N J METAL SCREEN MANUFACTURING PVT LTD, NEAR CHHANI ROAD, BARODA .. APPELLANT PAN : AAACN 6803 D VS INCOME TAX OFFICER, WARD 4 (1), BARODA .. RESPONDENT ASSESSEE(S) BY : SHRI TUSHAR HEMANI , AR REVENUE BY : SHRI RAKESH JHA , SR - DR / DATE OF HEARING 28/12/2015 /DATE OF PRONOUNCEMENT 06/01/2016 / O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -2, VADODARA, DATED 07.07.2015 FOR ASSESSMENT YEAS 2009 -10. 2. IN THIS APPEAL, THE SOLE GROUND RAISED BY THE ASSESSEE READS AS UNDER: 1. LEVY OF PENALTY TO THE TUNE OF RS.1 LAC U/S 271B OF THE ACT. ON THE FACTS AND CIRCUMSTANCES OF YOUR APPELLANTS CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING ACTION OF LD. AO OF IMPOSING PENALTY U/S 271B OF THE ACT NOT APPRECIATING FACT THAT BOOKS OF ACCOUNTS OF APPELLA NT WERE NOT MAINTAINED IN PROPER FORM AND AS A RESULT OF WH ICH, (SMC) ITA NO. 2792/AHD/2015 N J METAL SCREENS MANUFACTRUING PVT LTD VS. ITO AYS : 2009-10 2 THE BOOKS WERE NOT AUDITED UNDER COMPANIES ACT, 195 6 BY THE STATUTORY AUDITORS AND AS A RESULT OF WHICH, TH E BOOKS WERE NOT AUDITED U/S 44AB OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PRIVATE LIMITED COMPANY ENGAGED INTO THE BUSINESS OF MANUFA CTURING OF PERFORATED METAL SCREENS AND JOB WORK. IN THE PRESE NT CASE, THE ASSESSING OFFICER LEVIED PENALTY OF RS.1 LAC U/S 27 1B OF THE INCOME-TAX ACT, SINCE THE ASSESSEE FAILED TO GET IT S BOOKS OF ACCOUNT AUDITED AS REQUIRED U/S 44AB OF THE ACT AND THE PENALTY IMPOSED BY THE ASSESSING OFFICER WAS CONFIR MED BY THE CIT(A) IN APPEAL. ACCORDING TO THE ASSESSEE, THERE WAS A FAMILY DISPUTE WITH REGARD TO THE OPERATION, ADMINISTRATIO N, CONTROL AND MANAGEMENT OF THE COMPANY FOR THE LAST FEW YEAR S. ON ACCOUNT OF INCREASE IN SUCH DISPUTE, A CIVIL SUIT I .E. CIVIL SUIT NO.1173/2009 WAS FILED AGAINST THE COMPANY BEFORE T HE CIVIL COURT AT BARODA, WHICH IS STILL PENDING. THE ASSES SEE SUBMITTED THAT OWING TO SUCH DISPUTE, THE BOOKS OF ACCOUNTS OF EARLIER YEARS WERE NOT FINALIZED AND NOT AUDITED. SINCE BALANCES OF EARLIER YEARS WERE NOT CARRIED FORWARD CORRECTLY , BOOKS OF ACCOUNTS OF THE YEAR UNDER CONSIDERATION WERE ALSO NOT FINALIZED AND WERE NOT MAINTAINED IN A MANNER THAT THE SAME C OULD BE AUDITED EITHER UNDER THE COMPANIES ACT, 1956 OR UND ER THE (SMC) ITA NO. 2792/AHD/2015 N J METAL SCREENS MANUFACTRUING PVT LTD VS. ITO AYS : 2009-10 3 INCOME-TAX ACT, 1961. AS A RESULT, THE ASSESSEES B OOKS OF ACCOUNTS FOR THE YEAR UNDER CONSIDERATION COULD NOT BE AUDITED AS PRESCRIBED U/S 44AB OF THE ACT. IT WAS POINTED OUT BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THI S ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. T EA KING, REPORTED IN (2002) 123 TAXMAN 162 (GUJ), WHEREIN, T HE ASSESSEE, A REGISTERED PARTNERSHIP FIRM, WAS CARRYI NG ON BUSINESS IN TEA AND IT FILED RETURNS OF INCOME FOR THE ASSESSMENT YEARS IN QUESTION AFTER A SURVEY UNDER S ECTION 133A. THE BOOKS OF ACCOUNTS WERE NOT AUDITED. SO, THE ASSESSING OFFICER LEVIED PENALTY U/S 271B FOR ALL T HE YEARS, I.E., 1986-87 TO 1989-90. THE APPELLATE AUTHORITY CONFIR MED THE PENALTY FOR THE ASSESSMENT YEAR 1985-86 ON THE GROU ND THAT THE ASSESSEE FAILED TO GET THE ACCOUNTS AUDITED WIT HIN THE STIPULATED PERIOD. BUT FOR THE SUBSEQUENT YEARS, T HE LEVY OF PENALTY WS SET ASIDE ON THE GROUND THAT SINCE THE B OOKS OF ACCOUNT FOR THE PRECEDING ASSESSMENT YEARS WERE NOT READY AND WERE NOT UP-TO-DATE, IT WAS NOT POSSIBLE FOR THE AS SESSEE TO GET THE ACCOUNT BOOKS AUDITED FOR THE SUBSEQUENT YEARS THROUGH THE SAME WERE WRITTEN. UNDER THESE FACTS AND CIRCUM STANCES, (SMC) ITA NO. 2792/AHD/2015 N J METAL SCREENS MANUFACTRUING PVT LTD VS. ITO AYS : 2009-10 4 THE MATTER WAS CARRIED BEFORE THE HONBLE HIGH COUR T AND THE HONBLE HIGH COURT HAS HELD AS UNDER:- LOOKING TO THE FACTS AND CIRCUMSTANCES, IT COULD N OT BE SAID THAT ANY QUESTION OF LAW AROSE IN THE MATTER. THE INSTANT CASE WAS A CASE WHERE THE ASSESSEE COULD NO T COMPLY WITH THE PROVISIONS BECAUSE THERE WAS NO AUD IT FOR THE PRECEDING YEAR. FOR SUBSEQUENT YEARS THOUGH TH E BOOKS OF ACCOUNT WERE READY, THE SAME COULD NOT BE AUDITED. THE TRIBUNAL AND THE COMMISSIONER (APPEALS ) FOUND THAT THE AUDIT COULD NOT BE COMPLETED BECAUSE THE BOOKS OF ACCOUNT FOR THE FIRST YEAR WERE NOT READY. THUS, THE TRIBUNAL WAS JUSTIFIED. 4. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR, SO FOLLOWING T HE SAME REASONING I AM NOT INCLINED TO CONCUR WITH THE FIND INGS OF THE LD. CIT(A); BECAUSE NO PENALTY CAN BE LEVIED U/S 27 1B IN A CASE WHERE AN ASSESSEE COULD NOT COMPLY WITH THE PROVISI ONS OF SECTION 44AB OF THE ACT SINCE THERE WAS NO AUDIT OF PRECEDING ASSESSMENT YEARS. ACCORDINGLY, THE ASSESSING OFFIC ER IS DIRECTED TO DELETE THE PENALTY IN QUESTION. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE COURT ON 6TH JANUARY, 2016 AT AHMEDABAD. SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER AHMEDABAD; DATED 06/01/2016 BIJU T., PS (SMC) ITA NO. 2792/AHD/2015 N J METAL SCREENS MANUFACTRUING PVT LTD VS. ITO AYS : 2009-10 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' ' # / CONCERNED CIT 4. ' ' # ( ) / THE CIT(A) 5. &'( ! , ' ! , / DR, ITAT, AHMEDABAD 6. (- . / GUARD FILE. / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) !', / ITAT, AHMEDABAD