V KASTRI, CHENNAI V. ITO, NCW5(1), CHENNAI

ITA 3198/CHNY/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2682 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 26-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R ANITHA IRS
• Keywords: Reasonable cause; Set aside
• Section: 273B; 143(3); 271B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 3198/CHNY/2018 ! ' / ASSESSMENT YEAR : 2013-2014. SMT. V. KASTRI, PROP: OM MURUGA ENTERPRISES, 13/3, 1 ST , CHINNAMETUPALAYAM, KALADIPET, CHENNAI 600 079. VS. THE INCOME TAX OFFICER, NON-CORPORATE WARD 5(1), CHENNAI. [PAN AHEPK 5079L] ( / APPELLANT) ( /RESPONDENT) # $ % / APPELLANT BY : SHRI. K. RAVI, ADVOCATE &' # $ % /RESPONDENT BY : MS. R. ANITHA, IRS, JCIT. ( ) $ * /DATE OF HEARING : 02-03-2020 +,'! $ * /DATE OF PRONOUNCEMENT : 10-03-2020 / O R D E R PER INTURI RAMA RAO , ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-5, CHENNAI (CIT(A) FOR SHORT) DATED 27.09.2018 FOR THE ASSES SMENT YEAR (AY) 2013-2014. ITA NO. 3198/18 :- 2 -: 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) IS CONTRARY TO THE LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. NOTICE U/S.274 R.W.S. 271B IS VAGUE AND THEREFOR E THE PENALTY PROCEEDINGS SHOULD BE HELD AS VOID AB-INITIO. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N SUSTAINING THE PENALTY OF RS.1,50,000/- FOR TECHNICAL DEFECT A ND WITHOUT CONSIDERING THE FACT THAT THERE WAS COMPLIANCE IN S PIRIT OF SECTION 44AB. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N UPHOLDING THE PENALTY OF RS. 1,50,000/- WITHOUT ADDRESSING VA RIOUS CONTENTIONS RAISED BY THE APPELLANT AND WITHOUT GIVING ANY CONS IDERATION TO SECTION 273B OF THE INCOME TAX ACT, 1961. 5. THE ASSESSING OFFICER HAD WITH HIM THE SIGNED AN D DATED COPY OF THE TAX AUDIT REPORT FILED ON 17/10/2013 AND THE C- FILED TAX AUDIT REPORT ON 17/10/2014. THEREFORE, THE ASSESSING OFFI CERS OBSERVATION THAT, HE IS NOT ABLE TO ASCERTAIN WHETHER TAX AUDIT WAS ACTUALLY CARRIED OUT BEFORE THE DUE DATE, IS PERVERSE. 6. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE PER MITTED TO BE RAISED DURING THE HEARING OF THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL AND PROPRIETOR OF M /S.OM MURUGA ENTERPRISES. THE RETURN OF INCOME FOR THE AY 2013-1 4 WAS FILED ON 31.03.2013 DISCLOSING TOTAL INCOME OF RS. 4,31,510 /-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER NOTICED THAT ASSESSEE ADMITTED TURNOVER OF C6,19,15,038/-, HOWE VER, FAILED TO FILE TAX AUDIT REPORT AS PRESCRIBED U/S.44AB OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT). THEREFORE, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S.271B OF THE ACT. IN RESPONSE TO SHO W CAUSE NOTICE ITA NO. 3198/18 :- 3 -: DATED 28.08.2014, HE CONTENDED THAT PRESCRIBED AUDI T REPORT COULD NOT BE UPLOADED DUE TO TECHNICAL DIFFICULTIES, HOWEVER, THE SAME WAS FILED MANUALLY ON 17.10.2013. HOWEVER, THE ASSESSING OFFI CER WAS OF THE VIEW THAT TAX AUDIT REPORT WAS NOT FURNISHED IN THE PRESCRIBED MANNER, THEREFORE PROCEEDED WITH LEVY OF PENALTY OF C1,50,0 00/-. 4. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDER HAD CONFIRMED THE LEVY OF P ENALTY. 5. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), TH E APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. IT IS CONTESTED THAT TAX AUDIT REPORT COULD NOT BE UPLOADED IN ELECTRONIC MO DE ON ACCOUNT OF TECHNICAL DIFFICULTIES. HOWEVER, THE SAME WAS FIL ED MANUALLY ON 17.10.2013. THUS, IT WAS SUBMITTED THAT TAX AUDIT REPORT IN THE PRESCRIBED MANNER COULD NOT BE UPLOADED ON ACCOUNT OF REASONS BEYOND THE CONTROL OF THE ASSESSEE. 6. ON THE OTHER HAND, THE LD. SR. DEPARTMENTAL REPRESE NTATIVE PLACED RELIANCE ON THE ORDERS OF LOWER AUTHORITIES. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE ONLY ISSUE IN THE PRESENT APPEAL RELATE S TO LEVY OF PENALTY U/S.271B OF THE ACT. ADMITTEDLY, TAX AUDIT REPORT WAS FILED MANUALLY ON 17.10.2013. THUS, TAX AUDIT REPORT WAS VERY MUCH A VAILABLE BEFORE THE ITA NO. 3198/18 :- 4 -: ASSESSING OFFICER AT THE TIME OF MAKING OF THE ASSE SSMENT AND NO PREJUDICE CAN BE SAID TO HAVE BEEN CAUSED TO THE R EVENUE ON ACCOUNT OF BELATED SUBMISSION OF TAX AUDIT REPORT. THE RA TIO OF DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF P . SENTHIL KUMAR VS. PCIT (2019) 416 ITR 0336 IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE, WHEREIN IT WAS HELD AT PARAS 10 TO 12 AS FOLLOWS. 10. ADMITTEDLY, THE REASONS ASSIGNED BY THE ASSES SEE HAVE NOT BEEN FOUND TO BE FALSE NOR WITH ANY MALA FIDE INTEN TION, THE REASONS WERE ASSIGNED. THEREFORE, THIS COURT IS OF THE VIEW THAT THE EXPLANATION OFFERED BY THE ASSESSEE CAN BE TAKEN AS A REASONABLE CAUSE FOR HIS FAILURE TO FILE THE AUDIT REPORT WITH IN TIME. WE ARE ALSO AWARE THAT THE ASSESSMENT WAS COMPLETED UNDER SECTI ON 143(3) OF THE ACT ONLY ON 29.3.2015 AND ON THAT DATE, THE AUD IT REPORT WAS VERY MUCH AVAILABLE WITH THE ASSESSIN G OFFICER. 11. THE HONBLE APEX COURT, IN THE CASE OF HINDUSTA N STEEL LIMITED VS. STATE OF ORISSA [REPORTED IN (1972) 83 ITR 26], CONSIDERED THE VALIDITY OF LEVY OF PENALTY UNDER THE PROVISIONS OF THE ORISSA SALES TAX ACT, 1947. ONE OF THE QUESTIONS, WHICH WAS FRAM ED FOR CONSIDERATION WAS AS TO WHETHER IMPOSITION OF PENAL TY FOR FAILURE TO REGISTER AS A DEALER WAS JUSTIFIED. THE HONBLE APE X COURT POINTED OUT THAT THE LIABILITY TO PAY PENALTY DOES NOT ARIS E MERELY UPON PROOF OF DEFAULT IN REGISTERING AS A DEALER, THAT AN ORDE R IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF QUASI CRIMINAL PROCEEDING AND THAT PENALTY WILL NOT ORDIN ARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. IT WAS FURTH ER HELD THAT WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORI TY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVA NT CIRCUMSTANCES AND THAT EVEN IF A MINIMUM PENALTY IS PRESCRIBED, T HE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED I N REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FRO M A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN TH E MANNER PRESCRIBED BY THE STATUTE. 12. THOUGH THE ABOVE DECISION ARISES UNDER THE ORIS SA SALES TAX ACT, 1947, THE RATIO DECIDENDI OF THE SAID DECISION COUL D VERY WELL BE APPLIED TO THE ASSESSEES CASE. WE FIND THAT THE NO N FILING OF THE TAX ITA NO. 3198/18 :- 5 -: AUDIT REPORT BEFORE 30.9.2012 IS A TECHNICAL BREACH AND ADMITTEDLY, THE ASSESSEE FILED THE AUDIT REPORT ALONG WITH THE RETURN OF INCOME ON 31.3.2013 AND THAT THE ASSESSMENT WAS FRAMED BY THE ASSESSING OFFICER ONLY ON 29.3.2015, ON WHICH DATE, THE AUDIT REPORT WAS VERY MUCH ON THE FILE OF THE ASSESSING OFFICER. THUS, WE ARE OF THE VIEW THAT THE EXPLANATION OFFERED BY THE ASSESSEE CAN BE ACCEPTED AS A REASONABLE CAUSE FOR HIS FAILURE TO FILE THE AUDIT REPORT WITHIN TIME AND THE CASE ON HAND IS NOT A FIT CASE FOR IMPOSING PENALTY ON THE APPELLANT. IN VIEW OF THE ABOVE FACTS AND LEGAL POSITION, WE A RE OF THE CONSIDERED OPINION THAT LEVY OF PENALTY U/S.271B OF THE ACT IS NOT WARRANTED. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER A UTHORITIES AND DIRECT THE ASSESSING OFFICER TO DELETE LEVY OF PENALTY MAD E U/S.271B OF THE ACT. THUS, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.3198/CHNY/2018 FOR ASSESSMENT YEAR 2013-2014 STA NDS ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.3198/CHNY/2018 FOR ASSESSMENT YEAR 2013-2014 STA NDS ALLOWED. ORDER PRONOUNCED ON 10TH DAY OF MARCH, 2020, AT C HENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ------.) / CHENNAI ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER / / DATED:10TH MARCH, 2020 KV 0- $-& *12-32'* / COPY TO: - 1 . # / APPELLANT 3. - ( 4*-56 / CIT(A) 5. 278 -& * 9 / DR 2. &' # / RESPONDENT 4. - ( 4* / CIT 6. 8:-;) / GF