Natarajan Nallathambi, CHENNAI V. ITO, CHENNAI

ITA 361/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6476 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 10-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN MARY BA
• Assessee Lawyers: A ANANTHA PADMANABHA ALSE
• Keywords: Reasonable cause

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , , % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.361/MDS/2017 & & /ASSESSMENT YEAR: 2013-14 SHRI NATARAJAN NALLATHAMBI, NEW NO.46 (OLD NO.119), RAMANAICKEN STREET, ROYAPURAM, CHENNAI-600 113. [PAN: AACPN 7887 J] VS. THE INCOME TAX OFFICER, NON-CORPORATE WARD-5(2), CHENNAI-600 006. ( ) /APPELLANT) ( *+) /RESPONDENT) ) , / APPELLANT BY : MR.A.ANANTHA PADMANABHA- ALSE, CA *+) , /RESPONDENT BY : MS.ANN MARY BABY, JCIT , /DATE OF HEARING : 23.05.2017 , /DATE OF PRONOUNCEMENT : 01.08.2017 / O R D E R PER S. JAYARAMAN , ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F THE CIT(A)-5, CHENNAI, IN ITA NO.35/CIT(A)-5/2015-16 DATED 07.12. 2016. 2. MR.NATARAJAN NALLATHAMBI, PROPRIETOR OF M/S.OPS FIRM, A DHALL MERCHANT FILED HIS RETURN FOR THE AY 2013-14 ON 30. 09.2013 ADMITTING A ITA NO.361/MDS/2017 :- 2 -: TOTAL INCOME OF RS.5,59,330/-. THE AO FOUND THAT T HE TURNOVER OF THE ASSESSEE COMPANY IS AT RS.4,24,45,140/-. AS PER SE C.44AB, THE ASSESSEE HAS TO FURNISH A TAX AUDIT REPORT ON OR BEFORE 30.0 9.2013 BUT HE HAS NOT DONE SO. THE AO SERVED A NOTICE U/S.271B ON 08.01. 2015 CALLING FOR ASSESSEES OBJECTIONS. THE ASSESSEE REPLIED THAT F OR THE TAX AUDIT REPORT THERE WAS AN ACTION EITHER E-FILING OR FILE MANUAL IN THE TAPAL. HE NORMALLY CHECKS FOR FILING WHICH IS NORMALLY RECORDED IN THE COMPUTER WITH DATE OF REPORT, DATE OF FILING, ETC. AS THERE WAS A HARD DI SK CRASH, THE DATA WAS LOST AND THE TAX AUDIT REPORT WAS NOT FILED INADVER TENTLY. ON RECEIPT OF THE NOTICE, WE FOUND THE OMISSION AND WE ARE FILING HER EWITH TAX AUDIT REPORT IN FORM-3CB AND FORM-3CD. KINDLY CONSIDER THE OMIS SION AS A MISTAKE WITHOUT ANY DELIBERATE INTENTION AND CONDONE THE DE LAY/FILING THE TAX AUDIT REPORT. DISSATISFIED, THE AO LEVIED PENALTY U/S.27 1 AT RS.1,50,000/-. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A). 3. THE STATUTORY AUDITOR OF THE ASSESSEE PLEADED BE FORE THE LD.CIT(A) THAT THERE WAS A CRASH IN HIS COMPUTERS LEADING TO DATA BEING CORRUPTED WHICH COULD NOT BE RETRIEVED IMMEDIATELY. HE HAD A HEART ATTACK IN THE YEAR 2011. SINCE THEN HE COULD NOT ATTENDED TO HIS WORK REGULARLY AND HAD TO DEPUTE HIS SUB-ORDINATES AND WAS SUPERVISING THE WORK DONE THEM. THUS, THERE WAS A LACK OF FOLLOW UP DUE TO HIS ILLN ESS. THE HARD DISK CONTAINING THE DATA WAS SENT TO BANGALORE FOR DATA RECOVERY WHICH WAS NOT RECEIVED FOR LONG TIME. EVEN MANUAL TAX AUDIT REPO RT COULD NOT BE FILED AS TAX AUDIT REPORT COMPULSORILY HAS TO BE E-FILED. O N RECEIPT OF NOTICE FROM ITA NO.361/MDS/2017 :- 3 -: THE AO, THE DATA RELATING TO THE ASSESSEE WAS ONCE AGAIN FED AND HE FILED THE TAX AUDIT REPORT ON 20.10.2014 ALONG WITH A LET TER EXPLAINING THE REASON FOR NOT FILING. ON RECEIPT OF HARD DISK AND DATA, E-FILED THE TAX AUDIT REPORT ON 03.03.2015. THE STATUTORY AUDITOR PLEADED THAT HE HAS FILED ASSESSEES RETURN ON 30.09.2013, AFTER AUDIT, WITHI N THE DATE. ALL THE TAXES WERE PAID AND NO TAXES ARE DUE A MANUAL TAX A UDIT REPORT WAS ALSO FILED ON 20.10.2010 AS SOON AS THE RECEIPT OF PENAL TY NOTICE FROM THE AO DATED 08.10.2014, THERE WAS NO LOSS OF REVENUE TO T HE DEPARTMENT AND NON-FILING OF TAX AUDIT REPORT WAS ONLY A TECHNICAL ERROR AS THE ASSESSEE HAS GIVEN THE DETAILS RELATING TO TAX AUDIT REPORT DATE, NAME OF THE AUDITOR, ETC, IN HIS RETURN OF INCOME. SIMILAR DEFAULT IN F ILING THE TAX AUDIT REPORT HAPPENED IN HIS WIFE MRS.NALLATHAMBI KASTURI PAN AA IPK 7859 B ALSO FOR THIS AY, THE AO LEVIED PENALTY U/S.271B IN HER CASE , WHICH WAS CONFIRMED BY THE LD.CIT(A). HOWEVER, WHEN SHE MADE AN APPEAL TO ITAT, CHENNAI, THE HONBLE ITAT STRUCK DOWN THE PENALTY ETC. HOWE VER, THE LD.CIT(A) DISMISSED THE APPEAL FOR THE REASON, INTER-ALIA, TH AT THE ASSESSEE HAS NOT STATED THE ILL-HEALTH OF THE AUDITOR BEFORE THE AO. AGGRIEVED, THE ASSESSEE FILED THIS APPEAL PLEADING, INTER-ALIA, THAT THE LD .CIT(A) FAILED TO SEE THE REASON DELAY IN FILING THE TAX AUDIT REPORT, THOUGH ALL THE FACTS ARE AVAILABLE WITH HIM. THE ASSESSEE HAD NO CONTROL OV ER FILING THE TAX AUDIT REPORT AND IT WAS NOT HIS FAULT FOR DELAY IN E-FILI NG TAX AUDIT REPORT BY THE AUDITOR. MOREOVER, THE ASSESSEE IS A VERY SENIOR C ITIZEN, AGED ABOUT 74 YEARS, ALSO HAS AGE RELATED PROBLEMS AND HE COULD N OT FOLLOW UP FILING OF AUDIT REPORT. THE ASSESSEES PRESENT HEALTH CONDIT ION IS MORE PRECARIOUS ITA NO.361/MDS/2017 :- 4 -: AS HE HAD HEART ATTACK IN MAY, 2016. THE AO FAILED TO AGREE THAT THERE WAS A REASONABLE CAUSE IN THE DELAY IN FILING OF TA X AUDIT REPORT BY THE AUDITOR AS HE HAS ALSO FALLEN ILL AND COULD NOT ATT END OFFICE REGULARLY, THERE WAS MALFUNCTIONING OF COMPUTER AND LOSS OF DATA DUE TO HARD DISK CRASH, ETC. THE LD.CIT(A) ALSO FAILED TO CONSIDER THE REA SONABLE CAUSE, ETC. FURTHER, HE RELIED UPON VARIOUS CASE LAWS VIZ. GAYA THRI COAL SUPPLY CO-63- ITD-237, AMAN KUMAR GUPTA VS. ITO., ITAT-CHANDIGARH , CIT VS. L.S.LAKSHMANASWAMY, HIGH COURT OF MADRAS, CIT VS.U. P.RAJYA SAHAKARI EVAM BHOOMI VIKAS LIMITED [2013] 353 ITR 152 (ALL), RAJASTHAN STATE ELECTRICITY BOARD VS. ITAT [2003] 262 ITR 262/130 T AXMAN, THANJAVUR SILK HANDLOOM WEAVERS COOPERATIVE PRODUCTION & SALE S SOCIETY LIMITED VS. UNION OF INDIA [2003] 263 ITR 334/132 TAXMAN 84 6, ETC. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL PLACED ON RECORD AND THE JUDICIAL DECISIONS CITED SUPRA. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE DHALL MERCHANDISE AND HIS ACCOUNTS W ERE AUDITED U/S.44AB. THE ASSESSEE REGULARLY FILING RETURNS BU T FOR AY 2013-14, THOUGH THE ACCOUNTS WERE AUDITED THE TAX AUDIT REPO RT WAS NOT SUBMITTED ALONG WITH RETURN OF INCOME BUT WAS SUBMITTED AS SO ON AS THE AO ISSUED SHOW CAUSE NOTICE FOR THE LEVY OF PENALTY U/S.271B. THE AO HAS ALSO ACCEPTED HIS RETURN AND ITS RESULTS. THE LD.AR SUP PORTED HIS ARGUMENTS WITH THE MEDICAL REPORTS FROM THE HOSPITALS WHERE T HE CHARTERED ACCOUNTANT UNDERGONE TREATMENT. ON SIMILAR FACTS, THIS TRIBUNAL IN THE CASE OF SMT.NALLATHAMBI KASTHURI, ASSESSEES WIFE, IN ITA ITA NO.361/MDS/2017 :- 5 -: NO.1371/MDS/2016 DATED 16.01.2017 HELD THAT THE CI RCUMSTANCES WERE BEYOND THE CONTROL OF THE ASSESSEE THOUGH RETURN OF INCOME WAS FILED ON 09.10.2013, THE LD. AR EXPLAINED THAT DUE TO TECHNI CAL DIFFICULTIES AND HARD DISK CRASH THE INFORMATION COULD NOT BE FILED IMMEDIATELY AND THE CHARTERED ACCOUNTANT HANDLING THE CASE WAS PASSING THROUGH MAJOR ILLNESS. THEREFORE, WE FOUND THERE IS A REASONABLE CAUSE IN THE ACTION OF THE ASSESSEE FOR NOT FILING THE AUDIT REPORT ALONG WITH THE RETURN OF INCOME AND THE ASSESSEE HAS FLIED THE RETURN OF INCOME AND PAID THE INCOME TAX BEFORE FILING THE TAX AUDIT REPORT. CONSIDERING THE APPARENT FACTS AND THE REASONABLE CAUSE OF ILLNESS OF CHARTERED ACCOUNTANT AND TECHNICAL SOFTWARE PROBLEMS AND JUDICIAL DECISIONS, WE SET AS IDE THE ORDER OF CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENA LTY AND THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 5. SINCE THE FACTS ARE SIMILAR, FOLLOWING THE ABOVE DECISION, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY AND THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 1 ST , 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) ( S. JAYARAMAN ) /ACCOUNTANT MEMBER ITA NO.361/MDS/2017 :- 6 -: /CHENNAI, 2 /DATED: AUGUST 1 ST , 2017. TLN , *34 54 /COPY TO: 1. ) /APPELLANT 4. 6 /CIT 2. *+) /RESPONDENT 5. 4 * /DR 3. 6 ( ) /CIT(A) 6. & /GF