M/s. Trisuns Commodities Pvt.Ltd., Ahmedabad V. The Income tax Officer, Ward-8(4), Ahmedabad

ITA 326/AHD/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9332 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-08-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 18-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHI P M SHUKLA
• Assessee Lawyers: NIMESH VAYAWALA
• Keywords: Recovery proceedings; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI T.K. SHARMA, JUDICIAL MEMBER AND N.S. SAINI, ACCOUNTANT MEMBER) ITA.NO.326/AHD/2007 [ASSTT.YEAR : 2004-2005] M/S.TRISUNS COMMODITIES PVT. LTD. 601, ANURAG APARTMENT B/H. VIDHYA MANDIR SCHOOL USMANPURA, AHMEDABAD. VS. ITO, WARD-8(1) AHMEDABAD. ASSESSEE BY : SHRI NIMESH VAYAWALA REVENUE BY : SHI P.M.SHUKLA O R D E R PER T.K. SHARMA, JUDICIAL MEMBER : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE CIT(A)-XIV, AHMDEDABAD DAT ED 04-09-2006 BY WHICH THE CIT(A) CONFIRMED THE PENALTY OF RS.1,00,000/- L EVIED BY THE AO UNDER SECTION 271(1)(B)OF THE INCOME-TAX ACT, 1961. 2. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E, THE LEARNED COUNSEL CONTENDED THAT THERE WAS A DELAY IN FILING OF TAX A UDIT REPORT UNDER SECTION 44AB AND THE SAID DELAY OF 58 DAYS WAS UNINTENTIONA L BECAUSE OF CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE. THERE WAS A SEARCH BY THE DIRECTORATE OF REVENUE IN OTHER CONCERNS I.E TRISUN S CHEMICALS LTD. AND THE ACCOUNTS OF THAT COMPANY WERE SEIZED BY THE DIR DEP ARTMENT IN MARCH 2004 AND THEREFORE, THE ACCOUNTS OF THE ASSESSEE COULD N OT BE RECONCILED AND THE REMAINED UN-FINALIZED; THAT THE MANAGEMENT WAS HELP LESS AND COULD NOT GET THE ACCOUNTS AUDITED IN TIME AND AFTER RECEIVING ALL TH E DETAILS, THE ACCOUNTS WERE AUDITED AND THE TAX AUDIT WAS FINALIZED IN DECEMBER , 2004. THE COUNSEL OF THE ASSESSEE FURTHER EXPLAINED THAT THE RETURN OF INCOM E WAS FILED ON 27-1-2005 ALONG WITH TAX AUDIT REPORT UNDER SECTION 44AB. IT WAS AVAILABLE TO THE AO WHILE FRAMING THE ASSESSMENT IN THE ASSESSMENT YEAR UNDER APPEAL. THE PAGE - 2 ITA.NO.326/AHD/2007 -2- COUNSEL OF THE ASSESSEE RELYING ON THE DECISION OF THE HONBLE TRIBUNAL IN THE CASE OF ACIT VS. GAYATRI TRRADERS, 58 ITD 121 CONTE NDED THAT THE PENALTY UNDER THIS SECTION IS NEITHER MANDATORY NOR A MUST AND IF THE ASSESSEE IS ABLE TO SHOW REASONABLE CAUSE FOR HIS FAILURE TO COMPLY WIT H REQUIREMENT OF SECTION 144AB NO PENALTY IS LEVIABLE. THE EXPRESSION REAS ONABLE CAUSE REQUIRES TO BE INTERPRETED LIBERALLY IN A FAIR AND REASONABLE M ANNER SO AS TO ADVANCE CAUSE OF JUSTICE. RELIANCE WAS PLACED ON THE DECISION O F AHMEDABAD TRIBUNAL IN THE CASE OF ACIT VS. ROOP TEXTILES, 86 TAXMAN 123 IN SU PPORT OF SUBMISSION. 3. ON THE OTHER HAND, LEARNED DR SUPPORTED THE ORDE R OF LOWER AUTHORITIES. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THR OUGH THE ORDERS OF THE AUTHORITIES BELOW. AS THE FACTS EMERGE, THERE WAS SEARCH BY DRI IN THE CASE OF TRISUNS CHEMICALS LTD. ON 12-1-2004 AND 5-3-2004. SHRI L.T.KHUSHLANI, DIRECTOR OF THE ASSESSEE COMPANY WAS ARRESTED. HE WAS RELEASED ON BAIL ON 7-5- 2004 WITH DIRECTION TO APPEAR BEFORE DRI TWICE IN A MONTH. ADDED TO THIS, OTHER DIRECTOR OF THE COMPANY SHRI TRIKAMCHAND KHUS HLANI WAS EXPIRED DUE TO CANCER. FURTHER, THE ASSESSEE GROUP WAS INVOLVED I N THE RECOVERY PROCEEDINGS BEFORE THE DRT AND ALSO WITH BIFR/AIFR ETC. AS THE GROUP COMPANIES WERE INCURRING HEAVY LOSS. COUPLED WITH THESE SITUATION S, IT WAS STATED BY THE SHRI L.T.KHUSHALANI IN THE AFFIDAVIT THAT THERE WAS INDI FFERENT ATTITUDE FROM THE CHARTERED ACCOUNTANTS WHO WERE LOOKING AFTER THE WO RK OF TAX AUDIT REPORT WHICH ALSO ATTRIBUTED THE REASONS FOR DELAY. THESE SUBMISSIONS OF THE ASSESSEE, IN OUR VIEW, CANNOT BE OUT-RIGHTLY REJECTED OR DISB ELIEVED SO AS TO IMPOSE PENALTY UNDER SECTION 271B FOR INFRACTION OF THE RU LE. WE ARE OF THE VIEW THAT WHEN THE AUTHORITIES MORE SO QUASI-JUDICIAL AUTHORI TIES, CONFERRED WITH DISCRETIONARY POWER, SUCH POWER WILL HAVE TO BE JUD ICIOUSLY AND REASONABLY EXERCISED SO AS TO MEET ENDS OF SUBSTANTIAL JUSTICE . THE REASONS STATED BY THE ASSESSEE IN OUR OPINION ARE REASONABLE ENOUGH TO CO NDONE THE DELAY IN FILING THE TAX AUDIT REPORT. THEREFORE, WE DO NOT FIND MERIT IN THE IMPOSITION PENALTY PAGE - 3 ITA.NO.326/AHD/2007 -3- UNDER SECTION 271B ON THE ASSESSEE BY BOTH THE REVE NUE AUTHORITIES, WHICH WE REVERSE AND DELETE. ACCORDINGLY WE ALLOW THE APPEAL OF THE ASSESSEE. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 31 ST AUGUST, 2009. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (T.K. SHARMA) JUDICIAL MEMBER PLACE : AHMEDABAD DATE : 31-08-2009 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR, ITAT, AHMEDABAD