Kartick Das Bairagya , Purba Bardhaman V. ITO,WARD1(1)/Bwn, Burdwan

ITA 305/KOL/2023

AI Insights

The case revolves around the penalty imposed on Kartick Das Bairagya by the Income Tax Officer, Ward-1(1), Burdwan, under section 271B of the Income Tax Act, 1961, for failing to get his accounts audited and furnish an audit report as required under section 44AB for the assessment year 2015-16. The assessee, engaged in retail dealings in building materials and also involved in share trading, reported a loss from share transactions but did not audit his accounts as his turnover from such transactions exceeded Rs. 1 crore for the first time. The assessee contended that he was unaware of the share dealings and thus did not know the need for an audit. The CIT(A) upheld the penalty, leading to the appeal before the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125290 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-05-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 02-04-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief
• Section: 273B; 271B; 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH KOLKATA BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.305/Kol/2023 Assessment Year: 2015-16 Kartick Das Bairagya G. T. Road, Birhata More, Dist. PurbaBardhaman, West Bengal-713101 (PAN: ADRPB3534A) Vs. Income Tax Officer, Ward-1(1), Burdwan (Appellant) (Respondent) Present for: Appellant by : Shri Soumitra Choudhury, Advocate Respondent by : Shri G. HukughaSema. CIT, DR Date of Hearing : 25.05.2023 Date of Pronouncement : 30.05.2023 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assesseeis against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide Order No. ITBA/NFAC/S/250/2022-23/1049267122(1) dated 31.01.2023 against the penaltyorder of ITO, Ward-1(1), Burdwan u/s. 271B of the Income- tax Act, 1961 (hereinafter referred to as the “Act”), dated 19.04.2018 for AY 2015-16. 2. Assessee is in appeal before the Tribunal against the order passed u/s. 271B of the Act imposing penalty of Rs.1,50,000/- for failure to get accounts audited and to furnish a report of such audit as required u/s. 44AB of the Act. 2 ITA No.305/Kol/2023 Kartick Das Bairagya, AY: 2015-16 3. Brief facts of the case are that assessee is in the business of retail dealings in building material on commission basis. Assessee filed his return of income on 14.09.2015, reporting total income of Rs.2,60,678/-. During the course of assessment, Ld. AO noted that assessee has done share transactions through broker Kripa Securities Pvt. Ltd. in which assessee had suffered a loss of Rs.4,38,446/-. Ld. AO noted that assessee entered into intra-day share trading and suffered this loss. Since the income from share trading is below 8% of the total turnover, Ld. AO was of the view that assessee should have got his accounts audited u/s. 44AB of the Act and furnished a report of such audit. Since assessee failed on this count, Ld. AO initiated the proceedings of penalty u/s. 271B of the Act. 3.1. In the course of penalty proceedings, assessee submitted that he was completely unaware of the share dealings done by the broker. Assessee had not done any such share dealings in the past and that he was not informed by the broker for the said share dealings which otherwise would have led the assessee to ascertain the quantum of loss in share dealings and arrive at short term or long term gain or loss on this account. In the course of hearing, assessee collected Form No. 10DB from the broker which showed the loss in the share dealings. It was contended that Ld. AO did not allow sufficient time to get the audit done in respect of the share dealings and furnish a report thereon. Assessee also submitted that in the course of assessment, the income was assessed at Rs.2,74,000/- in respect of income from business as reported in the return filed by the assessee. However, disregarding the submissions made by the assessee, Ld. AO imposed penalty of Rs.1,50,000/- u/s. 271B of the Act. Aggrieved, assessee went in appeal before the Ld. CIT(A), who confirmed the penalty so imposed. Aggrieved, assessee is in appeal before the Tribunal. 3 ITA No.305/Kol/2023 Kartick Das Bairagya, AY: 2015-16 4. Before us, Ld. Counsel for the assessee reiterated the submissions made before the authorities below. An affidavit dated 10.02.2023 is also placed on record deposing the facts and circumstances of the case which led to the failure on the part of the assessee to get the accounts audited and furnish a report of such audit. Ld. Counsel further submitted that delay in preparing the audit report occurred since impugned year is the first year where the turnover of the assessee exceeded Rs. 1 Cr. on share dealings for which the assessee was not aware of, to get the accounts audited u/s. 44AB of the Act. Assessee got the accounts audited u/s. 44AB and obtained the audit report for the same.Ld. Counsel emphasized that assessee was under this bona fide belief owing to the fact that turnover in share dealings had exceeded Rs. 1 Cr. for the first time and would be subjected to audit, failure of which would lead to penalty u/s. 271B of the Act. Ld. Counsel submitted that assessee is eligible to the protection provided in sec. 273B of the Act since he was under a bona fide belief that provisions of sec. 44AB were not applicable to him. According to him, explanation offered by the assessee constitutes reasonable cause as there was no wilful default on the part of the assessee. 5. Per contra, Ld. CIT DR placed reliance on the orders of the authorities below to emphasize that penalty has been rightly imposed and should be confirmed. 6. We have heard the rival submissions and perused the material available on record. Section 271B of the Act provides that if any person fails to get his accounts audited in respect of an assessment year or furnish a report of such audit as requiredu/s. 44AB, the AO may direct that such person shall pay, by way of penalty, a sum equal to one-half per cent of the total sales, turnover or gross receipts, as the case may be, or a sum of Rs.1,50,000/-, whichever is less. However, no penalty shall 4 ITA No.305/Kol/2023 Kartick Das Bairagya, AY: 2015-16 be imposable on the person if he proves that there was a reasonable cause for the failure, as provided u/s. 273B of the Act. 6.1. Before us, it is submitted that assessee is dealing in retail trading of building material on commission basis. The impugned year is the first year wherein his gross receipts/turnover exceeded the threshold prescribed u/s. 44AB of the Act and was under a bonafide belief that there was no requirement of any audit in this respect. Subsequently, assessee got the accounts audited in respect of his share transaction and obtained the report as required u/s. 44AB of the Act. Further, assessee has furnished an affidavit to state that he was not in the knowledge of the share transactions in his name as the same was done by his broker. Considering the facts and circumstances of the case and explanation offered by the assessee which constitutes a reasonable cause as envisaged u/s. 273B of the Act, we hold that impugned penalty is not sustainable and is hereby deleted. Grounds taken by the assessee are allowed. 7. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 30th May, 2023. Sd/- Sd/- (Rajpal Yadav) (Girish Agrawal) Vice President Accountant Member Dated: 30th May, 2023 JD, Sr. P.S. Copy to: 1. The Appellant: 2. The Respondent 3. CIT(A), National Faceless Appeal Centre (NFAC), Delhi 4. CIT , 5. DR, ITAT, Kolkata Bench, Kolkata //True Copy// By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata