M/s. Tahera International, Surat V. The Income Tax Officer, Ward 5(4), Surat

ITA 2796/AHD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9715 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 14-12-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RASOON KABRA
• Section: 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD . . , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.2796/AHD/2013 ( / ASSESSMENT YEAR : 2003-04) M/S TAHERA INTERNATIONAL 301, ISHWERKRUPA BUILDING, KHARWA MOHOLLA, NANPURA, SURAT 395001 / VS. ITO, WARD-5 (4), SURAT ./ ./ PAN/GIR NO. : AACFT 3368 A ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : MS. URVASHI SHODHAN, A.R / RESPONDENT BY : SHRI RASOON KABRA, SR. D.R. / DATE OF HEARING 14/12/2016 / DATE OF PRONOUNCEMENT 21/12/2016 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN FILED AGAINST THE CONFIRMATION OF PENALTY ORDER LEVIED BY AO OF RS. 1,00,000/- INVOKING PROVISIONS OF SECTION 271B FOR FAILURE ON PART OF THE APPELLANT TO GET BOOKS OF ACCOUNTS AUDITS AS PER THE PROVISIONS OF SECTION 44AB OF THE ACT. LD.CIT(A) FAILED TO APPRECIATE THAT IN ABSENCE OF BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT THERE WILL NOT ARISE THE QUESTION OF APPLICABILITY OF PROVISIONS OF SECTION 44AB OF THE ACT, SO AS TO ATTRACT ANY PENALTY U/S 271B OF THE ACT. LD. CIT(A) ERRED IN NOT DELETING PENALTY LEVIED BY AO. ITA NO.2796/AHD/2013 TAHERA INTERNATIONAL VS. ITAT ASST.YEAR 2003-04 - 2 - 2. THE FACTS OF THE CASE ARE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF IMPORT OF POLYESTER FILAMENT YARN DUTY FREE UNDER THE COVER OF ADVANCE LICENSE AND EXPORTING THE SAME AFTER MANUFACTURING OF TWISTED POLYESTER FILAMENT YARN. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SEEN THAT THE ASSESSEE HAS IMPORTED 3,05,421/- KG OF YARN VALUED AT RS.2,21,96,821/-@ OF APPROXIMATELY RS.72.6 PER KG. THE IMPORTED YARN WAS SOLD UNDER THE HIGH SEA SALES AGREEMENT TO SHRI JAGDISH PRASAND GARG AT A PREMIUM OF RS.18 PER KG, WHICH INCLUDES RS.0.50 PER KG. COMMISSION PAID TO COMMISSION AGENT SHRI KIRAN KUMAR VIRMANI. 3. THE TOTAL SALE CONSIDERATION OF YEARN DURING THE YEAR UNDER CONSIDERATION IS RS.2,76,94,439/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SEEN THAT THE ASSESSEE HAS RECEIVED TOTAL RECEIPT OF RS.2,76,94,439/- ON SALE OF YARN. HOWEVER, THE ASSESSEE HAS NOT GOT ITS ACCOUNTS AUDITED. AS PER PROVISION OF SECTION 44AB IN A CASE WHERE SUCH PERSON IS REQUIRED BY OR UNDER ANY OTHER LAW TO GET HIS ACCOUNTS AUDITED, IT SHALL BE SUFFICIENT COMPLIANCE WITH THE PROVISIONS OF THIS SECTION IF SUCH PERSON GETS THE ACCOUNTS OF SUCH BUSINESS OR PROFESSION AUDITED UNDER SUCH LAW BEFORE THE SPECIFIED DATE AND THAT DATE THE REPORT OF THE AUDIT AS REQUIRED UNDER SUCH OTHER LAW AND A FURTHER REPORT IN THE FORM PRESCRIBED UNDER THIS SECTION. HENCE, THE ASSESSEE WAS LIABLE TO GET HIS ACCOUNT AUDITED AS REQUIRED BY OR UNDER THE PROVISIONS OF SECTION 44AB OF THE I.T. ACT, 1961 ON OR BEFORE THE FILING OF HIS RETURN OF INCOME I.E. BEFORE 30.09.2009. HOWEVER, THE ASSESSEE HAS NOT GOT HIS ACCOUNTS AUDITED ON OR BEFORE THE DUE DATE I.E. 30.09.2009. ITA NO.2796/AHD/2013 TAHERA INTERNATIONAL VS. ITAT ASST.YEAR 2003-04 - 3 - 4. THUS, THE ASSESSEE BECAME LIABLE FOR PENALTY U/S 271B OF THE IT ACT. THEREFORE, VIDE THIS OFFICE LETTER DATED 21.12.2011, THE ASSESSEE WAS REQUESTED TO SHOW CAUSE AS TO WHY PENALTY AS PER PROVISION OF SECTION 271B OF THE ACT SHOULD NOT BE LEVIED FOR THE DEFAULT COMMITTED U/S 44AB OF THE IT ACT. THE ASSESSEE HAS FILED WRITTEN SUBMISSION VIDE ITS LETTER DATED 30.01.2012, WHICH IS REPRODUCED AS UNDER. ASSESSEE DID NOT FILE RETURN OF INCOME AS INCOME WAS NOT TAXABLE AND BECAUSE OF THE SEIZURE OF THE BOOKS OF ACCOUNTS AND DOCUMENTS. EVEN YOUR HONOR WAS PASSED THE ASSESSMENT ORDER ON THE BASIS OF JUST INFORMATION RECEIVED FROM DRI AND YOU DID NOT OBTAIN ANY DOCUMENTS OR BOOKS OF ACCOUNTS FROM THE SAID AUTHORITIES. ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNTS. WHEN BOOKS OF ACCOUNTS ARE NOT MAINTAINED, IT IS NOT POSSIBLE TO OBTAIN THE AUDIT REPORT AS REQUIRED U/S 44AB OF THE IT ACT, 1961 AND SO PROVISIONS OF SECTION 271B ARE NOT ATTRACTED. 5. LD.AO WAS NOT SATISFIED WITH THE CONTENTION OF THE ASSESSEE BUT THE SAME WAS NOT ACCEPTABLE FOR THE REASON STATED HEREUNDER. (I) THE TOTAL SALE CONSIDERATION OF YARN DURING THE YEAR UNDER CONSIDERATION IS RS.2,76,94,439/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SEEN THAT THE ASSESSEE HAS RECEIVED TOTAL RECEIPT OF RS.2,76,94,439/- ON SALE OF YARN. HOWEVER, THE ASSESSEE HAS NOT GOT ITS ACCOUNTS AUDITED. AS PER PROVISIONS OF SECTION 44AB OF THE IT ACT, THE ASSESSEE IS REQUIRED TO GET ITS ACCOUNT AUDITED BY AN ACCOUNTANT BEFORE THE SPECIFIED DATE AND FURNISH BY THAT DATE REPORT OF SUCH AUDIT IN THE PRESCRIBED FROM DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED. IT IS SEEN THAT THE ASSESSEE HAS NOT FURNISHED THE AUDIT REPORT ON OR BEFORE TIME STIPULATED U/S 139(1). THUS, THE ASSESSEE HAS NOT GOT ITS ACCOUNT AUDITED FROM AN ACCOUNTANT AS REQUIRED U/S 44AB AND ALSO FAILED TO FURNISH THE REPORT OF SUCH AUDIT IN PRESCRIBE PROFORMA FORM NO.3CB & 3CD AS REQUIRED U/S 44AB R.W.S. 271B OF ITA NO.2796/AHD/2013 TAHERA INTERNATIONAL VS. ITAT ASST.YEAR 2003-04 - 4 - THE I.T. ACT. THEREFORE, THE ASSESSEE COMMITTED DEFAULT WITHIN THE MEANING OF SECTION 271B OF THE I.T.ACT. (II). IN VIEW OF THE ABOVE, THE ASSESSEE HAS BECOME LIABLE FOR PENALTY U/S 271B OF THE I.T. ACT FOR FAILURE TO GET ITS ACCOUNTS AUDITED AND TO FURNISH THE REPORT OF SUCH AUDIT AS REQUIRED U/S 44AB. AS PER PROVISIONS OF SECTION 271B, THE AMOUNT OF PENALTY SHALL BE SUM EQUAL TO % OF THE TOTAL SALES, TURN OVER OR GROSS RECEIPTS AS THE CASE MAY BE OR A SUM OF 1 LAC WHICHEVER IS LESS. DURING THE YEAR, THE GROSS RECEIPT OF THE ASSESSEE WAS RS.2,76,94,439/-. THEREFORE, PENALTY LEVIABLE IS WORKED OUT TO RS.1,00,000/-. ACCORDINGLY, PENALTY U/S 271B OF RS.1,00,000/- IS HEREBY LEVIED FOR FAILURE OF THE ASSESSEE TO GET ITS ACCOUNTS AUDITED U/S 44AB OF THE ACT AND FURNISH THE SAME WITHIN THE SPECIFIED THE DATE. 6. AGAINST THE SAID ORDER ASSESSE/APPELLANT PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD.CIT(A) BUT NO WAY IT IS PERTAINED TO MENTION HERE THAT LD.CIT(A) GAVE HIS FINDING STATING THAT ITS RETURN OF INCOME COULD NOT FILED BECAUSE OF SEIZURE OF BOOKS OF ACCOUNTS AND DOCUMENTS. THEREFORE, THE APPELLANTS EXPLANATION IS THAT IT DID NOT MAINTAIN BOOKS OF ACCOUNTS ARE NOT CORRECT. THE SEIZURE BOOKS OF ACCOUNTS BY THE DRI AUTHORITIES CANNOT BE A VALID REASON FOR NOT GETTING THE AUDIT DONE AS THE APPELLANT WAS AT LIBERTY TO OBTAIN COPIES OF THE SAME AND GET ITS BOOKS OF ACCOUNTS AUDITED. THE SAID EXERCISE WAS NOT DONE BY THE APPELLANT EVEN WHEN NOTICE U/S 148 OF THE ACT WAS ISSUED. 7. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER AND LD.AR ALSO STATED JUDGMENT 222 ITR 691 GAUHATI HIGH COURT. IN OUR CONSIDERED OPINION THAT ASSESSEE WAS RIGHTLY FOR NOT GETTING ITS RECORD AUDITED BECAUSE BOOKS OF ACCOUNTS WERE IN THE POSSESSION OF DRI AND ITS EXPLANATION WAS JUSTIFIABLE, IN SUCH CIRCUMSTANCES PENALTY CANNOT BE SUSTAINED. THEREFORE, ORDER OF THE CIT(A) FOR IMPOSING OF PENALTY IS SET ASIDE. ITA NO.2796/AHD/2013 TAHERA INTERNATIONAL VS. ITAT ASST.YEAR 2003-04 - 5 - 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON /12/2016 SD/ SD/- . . ( ) ( ) ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 21/12 /2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-I, SURAT. 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY