Rawal Pindi Jewellers Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 307/DEL/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5817 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 22-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 21-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: HARDIPENDER SI NGH
• Keywords: Unexplained cash credit; Difference of opinion
• Section: 143(3); 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI R.C. SHARMA I.T.A. NO.307/DEL/2010 ASSESSMENT YEAR: 2004-05 RAWAL PINDI JEWELLERS PVT. LTD., VS. INCOME-TAX OFF ICER, 2298, CLOCK TOWER, SUBZI MANDI, WARD 15(3), DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI HARDIPENDER SINGH, A DV. RESPONDENT BY: SHRI HK LAL, SR. DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 20.10.2009 PASSED FOR ASSESSMENT YEAR 2004-05. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE PENALTY OF RS. 1,00,000 IMPOSED UNDE R SEC. 271-B OF THE INCOME-TAX ACT, 1961. THE BRIEF FACTS OF THE CASE A RE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 29.10.2004 DECLARING AN INCOME OF RS.36,70,360. A SURVEY UNDER SEC. 133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 31 ST OCTOBER, 2003. ASSESSING OFFICER HAS FRAMED THE ASSESSMENT UNDER SEC. 143(3) ON 29.12.20 06. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HE FOUND THAT TAX AUDIT REPORT FILED BY THE 2 ASSESSEE DID NOT CONTAIN REQUISITE ANNEXURE AND IT WAS NOT ON REQUISITE FORM. HE ISSUED A NOTICE UNDER SEC.234 READ WITH SEC. 271 -B AND INVITED EXPLANATION OF THE ASSESSEE AS TO WHY PENALTY UNDER SEC. 271-B BE NOT LEVIED UPON THE ASSESSEE FOR NOT FURNISHING COMPLETE TAX A UDIT REPORT WITH THE RETURN. THE ASSESSEE HAS CONTENDED THAT IT HAS FILE D THE COMPLETE AUDIT REPORT ALONG WITH ANNEXURE. IT APPEARS THAT ORIGINAL DOCUM ENT HAVE BEEN MISPLACED BY THE ASSESSING OFFICER AND, THEREFORE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ANOTHER SET WAS SUPPLIED TO THE ASSESS ING OFFICER. THE ASSESSEE CONTENDED THAT IT HAS GOT ITS ACCOUNTS AUDITED WITH IN THE DUE DATE AND THE AUDIT REPORT WAS SUBMITTED ALONG WITH THE RETURN WI THIN DUE DATE. IF THERE IS SOME DISCREPANCY IN THE FORM ETC. THEN IT IS THE LA PSE AT THE END OF THE AUDITOR AND NOT AT THE END OF THE ASSESSEE. THE ASSESSEE FU RTHER CONTENDED THAT THE ASSESSING OFFICER HAS POINTED OUT THAT FIVE DEFECTS IN THE AUDIT REPORT. THE FIRST DEFECT IS THAT THE ASSESSEE IS FOLLOWING MERC ANTILE SYSTEM OF ACCOUNTANCY BUT WITH RESPECT TO INSURANCE CHARGES A ND ELECTRICAL MAINTENANCE ETC., IT HAS ADOPTED CASH SYSTEM. THIS ASPECT HAS NOT BEEN DISCLOSED IN THE AUDIT REPORT. THE ASSESSEE HAD PAI D 700 RUPEES TOWARDS TRAFFIC VIOLATION CHARGES. THE AUDITOR HAS NOT REPO RTED THIS ASPECT IN THE AUDIT. THERE WERE MANY DEFECTS IN THE ACCOUNT OF MEENA BHA SIN. THESE DEFECTS 3 WERE NOT POINTED OUT IN THE AUDIT REPORT. THE DEFEC TS HAVE BEEN DEALT WITH SEPARATELY IN THE ASSESSMENT PROCEEDINGS. VIOLATION OF SEC. 269-T HAS BEEN MADE AND THE AUDITORS HAVE NOT POINTED OUT SUCH VIO LATION. THE PAYMENTS TO THE PERSONS SPECIFIED UNDER SEC. 40A(2)(B) OF THE A CT HAS BEEN MADE AND IT IS NOT POINTED OUT IN THE ANNEXURES APPENDED WITH THE AUDIT REPORT. IN THE OPINION OF THE ASSESSING OFFICER, ASSESSEE HAS FILE D INCOMPLETE AUDIT REPORT, THEREFORE, IT IS TO BE CONSTRUED THAT IT FAILED TO COMPLY WITH STATUTORY REQUIREMENT CONTEMPLATED UNDER SEC. 44AB OF THE ACT . HE VISITED THE ASSESSEE WITH PENALTY UNDER SEC. 271-B OF THE ACT A ND IMPOSED A PENALTY OF RS.1 LAC. 2. APPEAL TO THE LEARNED CIT(APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 3. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. ON PERUSAL OF THE ASSESSMENT ORDER PLACED ON RECORD BY THE ASSESSEE, WE FIND THAT ASSESSING OFFICER HAS DE TERMINED THE TOTAL TAXABLE INCOME OF RS.87,53,340 AS AGAINST THE DECLARED INCO ME OF RS.36,70,360. HE HAS MADE THE ADDITIONS OF SMALL DENOMINATION ON 36 COUNTS. THE MAJOR ADDITIONS ARE IN RESPECT OF UNEXPLAINED CASH CREDIT S UNDER SEC. 68 OF THE ACT AND CERTAIN TRADING ADDITIONS. APART FROM THESE 5-6 ITEMS, ALL OTHER ADDITIONS 4 ARE OF PETTY AMOUNTS. IN RESPECT OF THESE PETTY ISS UES, HE FOUND CERTAIN DISCREPANCY IN THE AUDIT REPORT VIS--VIS THE MATER IAL FOUND DURING THE COURSE OF SURVEY. THE CHARGE AGAINST THE ASSESSEE IS THAT IT FAILED TO SUBMIT THE AUDIT REPORT ON THE PRESCRIBED PROFORMA ALONG WITH THE AN NEXURES. THE CONTENTION OF THE ASSESSEE IS THAT IT HAS GOT ITS ACCOUNTS AUD ITED WELL IN TIME AND SUBMITTED THE AUDIT REPORT ALONG WITH ANNEXURES. TH E COPIES OF THE ANNEXURES IN THE DUPLICATE SET WAS MADE AVAILABLE TO THE ASSE SSING OFFICER IN THE ASSESSMENT PROCEEDINGS. FOR REJECTING THIS EXPLANAT ION OF ASSESSEE, THAT IT HAS SUBMITTED THE COMPLETE ANNEXURES ALONG WITH THE AUD IT REPORT AND THOSE ANNEXURES HAVE BEEN MISPLACED AT THE END OF ASSESSI NG OFFICER, LEARNED ASSESSING OFFICER MADE A REFERENCE TO THE REPLY OF ASSESSEE DATED 11 TH SEPTEMBER 2006 GIVEN IN THE ASSESSMENT PROCEEDINGS. THIS REPLY HAS REPRODUCED BY THE ASSESSING OFFICER WHICH READS AS UNDER: ANOTHER SET OF ENCLOSURES TO THE TAX-AUDIT REPORT IS ENCLOSED. THE INCONVENIENCE CAUSED IS REGRETTED. IT IS PRAYED LEN IENT VIEW MAY KINDLY BE TAKEN. ACCORDING TO THE ASSESSING OFFICER, ASSESSEE NOWHER E ALLEGED THAT IT HAS FILED ALL THE ANNEXURES WITH THE RETURN. CONSIDERIN G THE STAND OF ASSESSEE IN THE PENALTY PROCEEDINGS IN THE LIGHT OF THIS REPLY, IT CANNOT GOAD ANY 5 AUTHORITY TO SAY THAT ASSESSEE HAD ADMITTED NON FIL ING OF ANNEXURES IN THE ASSESSMENT PROCEEDINGS. ON THE ASKING OF THE ASSESS ING OFFICER, IT HAS FILED THE DUPLICATE SET BUT THIS CANNOT LEAD TO A CONCLUS ION THAT ASSESSEE HAS ADMITTED ABOUT NON-FILING OF THE ANNEXURES ALONG WI TH ORIGINAL RETURN. 4. TAKING INTO CONSIDERATION THE STAND OF ASSESSEE AND THE MATERIAL ON RECORD, WE ARE OF THE OPINION THAT THERE MAY BE SOM E DISCREPANCY AT THE END OF THE AUDITOR IN PREPARING THE AUDIT REPORT. THERE MAY BE DIFFERENCE OF OPINION ABOUT THE NATURE OF THE REPORT AT THE END O F THE ASSESSING OFFICER VIS- -VIS THE AUDITOR BU8T ONE THING IS CLEAR THAT ASSE SSEE HAS GOT ITS ACCOUNTS AUDITED AND SUBMITTED THE AUDIT REPORT WITHIN DUE D ATE. SECTION 44AB(A) OF THE ACT REQUIRES AN ASSESSEE WHOSE TOTAL SALES/TURN OVER OR GROSS RECEIPTS AS THE CASE MAY BE, IN BUSINESS EXCEED OR EXCEEDS RS. 40 LACS IN ANY PREVIOUS YEAR THEN THAT ASSESSEE IS SUPPOSED TO GET ITS ACCO UNTS AUDITED BY AN ACCOUNTANT BEFORE THE SPECIFIED DATE AND FURNISH TH E SUCH REPORT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH AC COUNTANT. THE ASSESSEE HAS OBTAINED THE AUDIT REPORT AS PER PRESCRIBED PRO FORMA. IT IS DULY SIGNED AND VERIFIED BY THE ACCOUNTANT. THE ONLY ALLEGATION OF THE ASSESSING OFFICER IS THAT CERTAIN ANNEXURES WERE NOT SUBMITTED AND CE RTAIN FACTORS WERE NOT REPORTED BY THE AUDITORS. THE ASSESSEE HAS EXPLAINE D THOSE DEFECTS IN ITS REPLY 6 AND POINTED OUT THAT PAYMENT OF RS.700 AS TRAFFIC V IOLATION WAS NOT REPORTED BY THE AUDITOR, KEEPING IN VIEW SMALLNESS OF THE AM OUNTS. AS FAR AS OTHER DEFECTS POINTED OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS, REPRODUCED IN THE PENALTY ORDER ARE CONCERNED, THES E HAVE DULY BEEN CONSIDERED BY THE AUDITOR AND COMMENTED IN THE AUDI T REPORT. TAKING INTO CONSIDERATION ALL THESE ASPECTS, WE ARE OF THE OPIN ION THAT ASSESSEE HAS NOT COMMITTED A DEFAULT WITHIN THE MEANING OF SEC. 44AB FOR WHICH IT DESERVES TO BE VISITED WITH PENALTY UNDER SEC. 271-B OF THE ACT. THE REPORT WAS OBTAINED FROM THE EXPERT UNDER A BONA FIDE BELIEF. IF THERE ARE SOME MINOR DISCREPANCIES ARE POINTED OUT BY THE ASSESSING OFFI CER ON THE QUALITY OF THE AUDIT REPORT THAT WOULD NOT BE SUFFICIENT TO IGNORE THE OTHER ASPECTS OF GETTING THE ACCOUNTS AUDITED AND FILING THE AUDIT REPORT. 5. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW THE AP PEAL OF THE ASSESSEE AND DELETE THE PENALTY. DECISION PRONOUNCED IN THE OPEN COURT ON 31.03.20 10 ( R.C. SHARMA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31/03/2010 MOHAN LAL 7 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR:ITAT ASSISTANT REGISTRAR