Ambalal Sarabhai Enterprises Limited, Baroda V. The Dy.CIT.,Circle-1(1), Baroda

ITA 2896/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9141 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-03-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 15-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: M K PATEL
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NOS: 2895 & 2896/AHD/2015 (ASSESSMENT YEAR: 2011-12) AMBALAL SARABHAI ENTERPRISES LTD. DR. VIKRAM SARABHAI MARG, WADI WADI, BARODA 390023 V/S DY. COMMISSIONER OF INCOEM-TAX CIRCLE-1, BARODA (APPELLANT) (RESPONDENT) PAN: AABCA6893K APPELLANT BY : SHRI M.K. PATEL, AR RESPONDENT BY : SMT. SONIA KUMAR, SR. D.R. ( )/ ORDER DATE OF HEARING : 15-03-2016 DATE OF PRONOUNCEMENT : 16 -03-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NOS. 2895 & 2896/AHD/2015 ARE APPEALS BY THE AS SESSEE PREFERRED AGAINST TWO SEPARATE ORDERS OF THE LD. CI T(A)-I, VADODARA DATED 03.08.2015 PERTAINING TO A.Y. 2011-12. ITA NOS. 289 5 & 2896/AHD/2015 . A.Y. 2011-1 2 2 2. ITA NO. 2895/AHD/2015 IS AGAINST THE LEVY OF PENALT Y U/S. 271B OF THE ACT AMOUNTING TO RS. ONE LAC AND ITA NO. 2896/AHD/2 015 IS AGAINST THE LEVY OF PENALTY U/S. 271F AMOUNTING TO RS. 5,00 0/-. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. ITA NO. 2895/AHD/2015 PENALTY U/S. 271B OF THE ACT. THE A.O HAS LEVIED THE PENALTY U/S. 271B OF THE ACT ON FINDING THAT THE ASSESSEE HAS FAILED TO GET ITS BOOKS OF ACCOUNTS AUDITED IN TIME AS PER THE PROVISIONS OF SECTION 44AB OF THE ACT. 4. WHEN THE ASSESSEE WAS ASKED TO SHOW CAUSE WHY PENAL TY SHOULD NOT BE LEVIED. ASSESSEE EXPLAINED THE CIRCUMSTANCES WHI CH LED TO THE DELAY IN AUDIT. IT WAS EXPLAINED THAT THE COMPANY WAS STR UGGLING OF ITS DIFFICULT TIME AND THE OPERATIONS OF THE COMPANY AR E NOT NORMAL. IT WAS BROUGHT TO THE NOTICE OF THE A.O THAT COMPANYS OPE RATIONS ARE CLOSED ON ACCOUNT OF AGITATION BY THE LABOUR AND THERE IS TOTAL DEADLOCK AT COMPANYS FACTORY CAMPUS WHERE ACCOUNTING RECORDS A RE KEPT. IT WAS STRONGLY CONTENDED THAT THE COMPANY WAS PREVENTED B Y REASONABLE AND SUFFICIENT CAUSE FOR NOT GETTING THE AUDIT ON T IME AS PER THE PROVISIONS OF THE ACT, THEREFORE, NO PENALTY SHOULD BE LEVIED. 5. THE EXPLANATION OF THE ASSESSEE WAS DISMISSED BY T HE A.O, WHO WAS OF THE FIRM BELIEF THAT THE ASSESSEE HAS COMMITTED A DEFAULT WITHOUT ANY REASONABLE CAUSE AND WENT ON TO LEVY PENALTY OF RS. ONE LAC. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. ITA NOS. 289 5 & 2896/AHD/2015 . A.Y. 2011-1 2 3 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERA TED THE FACTS AND THE SUBMISSIONS AS MENTIONED BEFORE THE LOWER AUTHORITI ES. THE LD. COUNSEL DREW OUR ATTENTION TO THE PAST HISTORY OF THE ASSES SEE STATING THAT IN ALL THE PREVIOUS THREE ASSESSMENT YEARS. THE ASSESS EE HAS BEEN FILING ITS RETURN OF INCOME BEYOND THE DATE AND ALSO THE A UDIT REPORTS WERE ALSO NOT ON TIME. IT IS THE SAY OF THE LD. COUNSEL THAT SINCE EARLIER YEARS AUDITS WERE NOT COMPLETED ON TIME HAS RESULTED IN D ELAY IN SUBSEQUENT YEARS ALSO. THEREFORE, THE ASSESSEE WAS PREVENTED B Y REASONABLE CAUSE. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 7. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. WE FIND THAT IN THE IMMEDIATE PR ECEDING ASSESSMENT YEAR I.E. A.Y. 2010-11, THE AUDIT REPORT IS DATED 0 7.02.2012 AND THE RETURN WAS FILED ON 29.03.2012. IN OUR CONSIDERED O PINION, IF THE ACCOUNTS OF THE EARLIER YEAR ARE NOT AUDITED, SUBSE QUENT YEARS AUDIT CANNOT BE TAKEN UP. SINCE THE AUDIT OF EARLIER ASSE SSMENT YEAR WAS DELAYED, THE DELAY IN THE AUDIT FOR THE YEAR UNDER CONSIDERATION WAS INEVITABLE. THUS THE DELAY IS BACKED BY REASONABLE AND SUFFICIENT CAUSE; THE LEVY OF PENALTY U/S. 271B OF THE ACT IS UNJUSTIFIED. WE ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CIT(A ) AND DIRECT THE A.O TO DELETE THE PENALTY OF RS. ONE LAC. APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 8. ITA NO. 2896/AHD/2015 PENALTY U/S. 271F OF THE ACT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE A.O NOTIC ED THAT THE DUE DATE FOR FURNISHING THE RETURN FOR THE ASSESSEE WAS 30.09.2011 WHEREAS THE ASSESSEE FILED RETURN ON 17.01.2013. IN VOKING THE ITA NOS. 289 5 & 2896/AHD/2015 . A.Y. 2011-1 2 4 PROVISIONS OF THE SECTION 271F OF THE ACT, THE A.O ASKED THE ASSESSEE WHY PENALTY SHOULD NOT BE LEVIED FOR FURNISHING THE RETURN LATE. 9. IN ITS REPLY, THE ASSESSEE EXPLAINED THE CIR CUMSTANCES WHICH PROMPTED THE DELAY IN FILING OF THE RETURN OF INCOM E. IT WAS EXPLAINED THAT DUE TO CONTINUOUS AGITATION OF THE LABOURS AT THE FACTORY PREMISES OF THE ASSESSEE, THE RETURNS COULD NOT BE PREPARED ON TIME. THE EXPLANATION OF THE ASSESSEE DID NOT FIND FAVOUR WIT H THE A.O WHO WAS OF THE FIRM BELIEF THAT THERE WAS NO REASONABLE CAU SE FOR DELAY IN FILING THE RETURN AND ACCORDINGLY LEVIED PENALTY OF RS. 5, 000/-. 10. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. BEFORE US, THE COUNSEL FOR THE ASSESSE E STATED THAT IN THE EARLIER ASSESSMENT YEARS ALSO. THE ASSESSEE COULD N OT FILE RETURN ON TIME AND SINCE EARLIER YEARS, RETURN WERE PENDING T HEREFORE, THE ASSESSEE COULD NOT HAVE FILED THE RETURN FOR THE YE AR UNDER CONSIDERATION ON TIME. IT IS THE SAY OF THE LD. COU NSEL THAT ASSESSEE WAS PREVENTED BY REASONABLE AND SUFFICIENT CAUSE AN D, THEREFORE, THE PENALTY SHOULD BE DELETED. 11. THE LD. D.R. SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND THAT THE RETURN OF INCOME FOR A.Y. 2010-11, AS SESSEE FILED ON 29.03.2012, THE DUE DATE FOR FILING THE RETURN FOR THE IMPUGNED ASSESSMENT YEAR IS 30.09.2011. OBVIOUSLY, THE ASSES SEE COULD NOT HAVE FILED THE RETURN FOR THE YEAR UNDER CONSIDERAT ION ON 30.09.2011, SINCE THE RETURN OF INCOME FOR THE IMMEDIATELY PREC EDING ASSESSMENT YEAR WAS PENDING. ITA NOS. 289 5 & 2896/AHD/2015 . A.Y. 2011-1 2 5 12. IN OUR CONSIDERED OPINION, THE ASSESSEE WAS PREVENT ED BY REASONABLE AND SUFFICIENT CAUSE FOR NOT FILING THE RETURN ON TIME. WE THEREFORE, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O TO DELETE THE IMPUGNED PENALTY. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 16 - 03 - 2016 SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD