M/s. Meeza Hotels & Resorts Pvt. Ltd., Bharuch V. The Income Tax Officer, Ward-2, Bharuch

ITA 3046/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0012 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 20-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIA
• Keywords: Reasonable cause
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO. 3046/AHD/2013 (ASSESSMENT YEAR: 2007-08) M/S. MEEZA HOTELS & RESORTS PVT. LTD., HOTEL REVA REGENCY, 2 ND FLOOR, BOMBAY SHOPPING CENTRE, STATION ROAD, BHARUCH 392 001 APPELLANT VS. ITO, WARD-2, BHARUCH RESPONDENT PAN: AABCM3573A / BY ASSESSEE : NONE / BY REVENUE : SHRI DEEPAK SUTARIA, SR.D.R. /DATE OF HEARING : 23.09.2016 /DATE OF PRONOUNCEMENT : 29.11.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2007-08 ARISES AGAINST THE CIT(A)-VI, BARODAS ORDER DATED 12.09.2013, IN APPE AL NO. CAB- VI/109/2010-11, IN PROCEEDINGS UNDER SECTION 271B O F THE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITA NO.3046/AHD/2013 M/S. MEEZA HOTELS & RESORTS PV T. LTD. VS. ITO) A.Y. 2007-08 - 2 - 2. THE ASSESSEES SOLE SUBSTANTIVE GROUND CHALLENGE S ACTION OF BOTH THE LOWER AUTHORITIES IN LEVYING SECTION 271B PENALTY O F RS.42,065/- ON ACCOUNT OF ITS FAILURE IN GETTING ACCOUNTS AUDITED FOLLOWED BY FURNISHING OF AUDIT REPORT THEREOF TO THE ASSESSING OFFICER WITHIN THE REQUIRED TIME LIMIT U/S.44AB OF THE ACT. 3. THIS ASSESSEE IS A COMPANY ENGAGED IN HOSPITALIT Y BUSINESS. IT ALSO DERIVES INCOME FROM SITE JOB CHARGES. THE ASSESSEE S TOTAL TURN OVER OF THE RELEVANT PERIOD YEAR READS A GROSS FIGURE OF RS.84, 80,973/-. IT FILED RETURN ON 31.03.2009. THE SAME STOOD PROCESSED. THE ASSESSI NG OFFICER TOOK UP SCRUTINY THEREAFTER. HE NOTICED THAT THE ASSESSEE HAD FAILED IN GETTING ITS ACCOUNT AUDITED BEFORE THE DUE DATE OF FILING RETUR N AS STIPULATED U/S.44AB READ WITH EXPLANATION (II) THERETO. HE THUS ISSUE D THE IMPUGNED SECTION 271B PENALTY NOTICE. 4. THE ASSESSEE FILED REPLY DATED 11.02.2010 INTER ALIA PLEADING THAT IT HAD OBTAINED THE STATUTORY AUDIT REPORT ON 23.03.2009 F OR THE IMPUGNED ASSESSMENT YEAR ENDING ON 31.03.2007. IT ATTRIBUTE D THE ABOVE DELAY TO THE FACT THAT SOME ROBBERS ATTACKED AND LOOTED ITS DIRE CTOR MR. AZIM KHAN ON 18.01.2007 ON HIS VISIT TO RAJASTHAN RELATING TO A SUB CONTRACT WORK SITE OF AN UNDERGROUND PIPE LINE OBTAINED IN NOVEMBER 2005 NEA R M.P. BOARDER. THE ASSESSEE STATED THAT THIS JOB WAS OVER IN DECEMBER 2006. IT STARTED WINDING UP IN JANUARY 2007 WHEREIN THE SAID INCIDENT OCCURR ED. IT LODGED A POLICE COMPLAINT DATED 19.01.2007 IN KOTA. THE POLICE AUT HORITIES PARTLY RECOVERED ITS BOOKS AND DOCUMENTS AFTER A PERIOD OF 4-5 MONTH S. THE ASSESSEES CASE ACCORDINGLY WAS THAT IT HAD TO GET THE ACCOUNTS AUD ITED BEFORE THE DUE DATE OF FILING RETURN ON 30.11.2007 WHICH COULD NOT BE DONE UP TO 23.03.2009 BECAUSE OF THE SAID REASON. THE ASSESSEE HIGHLIGHT ED THE FACT THAT BARRING SOME NOMINAL DISALLOWANCES/ADDITIONS OF SECTION 43B AND CERTAIN EXPENSES, ITA NO.3046/AHD/2013 M/S. MEEZA HOTELS & RESORTS PV T. LTD. VS. ITO) A.Y. 2007-08 - 3 - THE ASSESSING OFFICER HAD FRAMED REGULAR ASSESSMENT IN ITS CASE ON 24.12.2009 ACCEPTING THE INCOME ALREADY RETURNED. IT ACCORDINGLY CLAIMED THAT THERE EXISTED A REASONABLE CAUSE ON ACCOUNT OF ITS NOT GETTING RELEVANT BOOKS AUDITED AS PER SECTION 44AB OF THE ACT. THE ASSESSING OFFICER REJECTED ALL THESE PLEAS IN PENALTY ORDER. HE OBSE RVED THAT THERE WAS A LOT OF TIME GAP BETWEEN PART RECOVERY OF DOCUMENT AND ULTI MATE AUDIT OF THE BOOKS. HE WAS OF THE VIEW THAT SECTION 44AB IS A MANDATORY PROVISION TO BE READ IN CONSUMPTION WITH SECTION 271B OF THE ACT IN QUESTIO N. ALL THIS RESULTED IN THE IMPUGNED PENALTY BEING LEVIED @0.5% OF THE TOTA L TURNOVER COMING TO RS.42,065/- IN QUESTION. THE CIT(A) CONFIRMS ASSES SING OFFICERS ACTION. 5. WE HAVE GONE THROUGH THE CASE FILE. THERE IS NO DISPUTE THAT ASSESSEE HAS FILED ITS RETURN ON 31.03.2009 AFTER GETTING IT S BOOKS AUDITED ON 23.03.2009. THE ASSESSING OFFICER HAS NOT BEEN DEP RIVED OF THE RELEVANT BOOKS SO FAR AS FRAMING OF A REGULAR ASSESSMENT IN ASSESSEES CASE IS CONCERNED. BOTH THE LOWER AUTHORITIES HOWEVER PENALIZED THE ASSESSEE ON ACCOUNT OF THE FACT THAT IT FAILED TO GET ITS BOOKS AUDITED U/S.271B R.W.S.44AB OF THE ACT I.E. ITS BOOKS HAVE NEITHER BEEN AUDITED NO R FURNISHED TO THE ASSESSING OFFICER WITHIN THE ABOVE STIPULATED TIME. NEITHER OF THE LOWER AUTHORITIES RAISES ANY QUESTION MARK SO FAR AS ASSESSEES EXPLA NATION THAT SOME ASSAILANTS ROBBED ITS DIRECTOR SHRI AZIM KHAN IN JANUARY 2007 BY PARTING AWAY WITH RELEVANT DETAILS WHICH COULD BE PARTLY RECOVERED IN THE MONTH OF MAY 2007. WE OBSERVE IN THESE PECULIAR FACTS THAT THESE MISSI NG DOCUMENTS FORMED A SUFFICIENT REASON FOR THE ASSESSEE TO RECONSTRUCT A LL THE LINKS /DETAILS PERTAINING TO ITS BUSINESS AFFAIRS WHICH COULD BE AUDITED IN M ARCH 2009 FOLLOWED BY ITS RETURN FILED ON 31.03.2009(SUPRA). LD. DEPARTMENTA L REPRESENTATIVE AT THIS STAGE SUBMITS THAT SECTION 271B IS IN THE NATURE OF MANDATORY PROVISION. WE FIND THIS PLEA TO BE ENTIRELY MISCONCEIVED. IT IS MADE CLEAR THAT WE ARE DEALING WITH A PENALTY PROVISION IN A FISCAL STATUT E WHEREIN LEVY OF PENALTY IS ITA NO.3046/AHD/2013 M/S. MEEZA HOTELS & RESORTS PV T. LTD. VS. ITO) A.Y. 2007-08 - 4 - NOT AUTOMATIC. WE REFER TO SECTION 274 OF THE ACT CLEARLY PROVIDING THAT NO PENALTY IN THIS CHAPTER IS TO BE IMPOSED UNLESS THE ASSESSEE HAS BEEN HEARD BY WAY OF AFFORDING A REASONABLE OPPORTUNITY. WE OPIN E IN THIS STATUTORY BACKDROP THAT A REASONABLE OPPORTUNITY NOT ONLY MEA NS THAT AN ASSESSEE IS TO BE HEARD BUT ALSO IT IS TO BE CONSTRUCTED THAT HE C AN ALWAYS SHOW A REASONABLE CAUSE IN FAILING TO ENSURE COMPLIANCE OF THE STATUT ORY PROVISIONS. WE HAVE ALREADY CONCLUDED THAT ABOVE ROBBERY INCIDENT FORMS A REASONABLE CAUSE ON ASSESSEES PART WHICH DELAYED NOT ONLY FINALIZATION OF ITS BOOKS OF ACCOUNTS BUT ALSO THE RETURN IN QUESTION AS INDICATED HEREIN ABOVE. WE THUS DELETE THE IMPUGNED PENALTY OF RS.42,065/- IMPOSED U/S.271B OF THE ACT. 6. THIS ASSESSEES APPEAL IS ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF NOVEMBER, 2016.] SD/- SD/- (N. K. BILLAIYA) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD: DATED 29/11/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0