Shenoy Cinemax, Cochin V. DCIT, Cochin

ITA 374/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58228 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 04-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: RADHESH BHATT
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

1 ITA NO.374/COCH/2010 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI SANJAY ARO RA (AM) I.T.A. NO. 374/COCH/2010 (ASSESSMENT YEAR 2005-06) SHENOY CINEMAX VS DY.CIT, CIR.2(2) BROADWAY, ERNAKULAM ERNAKULAM PAN : AAKFS2523E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RADHESH BHATT RESPONDENT BY: MS. VIJAYAPRABHA DATE OF HEARING : 27-12-2011 DATE OF PRONOUNCEMENT : 20-01-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX(A)-II, KOCHI DATED 31-03-2010 AND PERTAI NS TO ASSESSMENT YEAR 2005-06 CONFIRMING THE LEVY OF PENALTY U/S 271B OF THE ACT. 2. SHRI RADHESH BHATT, THE LD.REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT THE DUE DATE FOR FILING THE RETURN OF INCOME IS 31-10-2 005. HOWEVER, THE ASSESSEE FILED THE RETURN OF INCOME ALONG WITH THE AUDIT REPORT ON 06- 02-2006. THEREFORE, THERE WAS A DELAY OF ABOUT THREE MONTHS. ACCORDING TO THE LD.R EPRESENTATIVE, THE AUDIT REPORT WAS OBTAINED ON 31-01-2006. ACCORDING TO THE LD.REPRES ENTATIVE, THE ASSESSEE WAS MAINTAINING THE ACCOUNTS IN THE COMPUTER. DURING T HE RELEVANT ACCOUNTING YEAR THERE WAS A FAILURE OF THE COMPUTER SYSTEM IN THE ASSESSE ES PREMISES. THERE WAS SERIOUS DAMAGE TO THE HARD DISK. CONSEQUENTLY THE ASSESSEE HAD TO RE-ENTER THE DATA IN ORDER 2 ITA NO.374/COCH/2010 TO FINALISE THE ACCOUNTS AND COMPLETE THE AUDIT. T HEREFORE, THE DELAY WAS DUE TO DAMAGE TO THE HARD DISK. ACCORDING TO THE LD.REPRE SENTATIVE, THIS DELAY IS BEYOND THE CONTROL OF THE ASSESSEE. THEREFORE, THERE WAS A RE ASONABLE CAUSE IN FILING THE AUDIT REPORT ALONG WITH THE RETURN OF INCOME ON 06-02-200 6. THEREFORE, LEVY OF PENALTY IS NOT JUSTIFIED. 3. ON THE CONTRARY, MS. VIJAYAPRABHA, THE LD.DR SUB MITTED THAT THE ASSESSEE WAS EXPECTED TO FILE THE AUDIT REPORT ALONG WITH THE RE TURN OF INCOME ON 31-10-2005. HOWEVER, THE AUDIT REPORT ITSELF WAS OBTAINED ON 31 -01-2006 AND IT WAS FILED ON 06-02- 2006. ACCORDING TO THE LD.REPRESENTATIVE, THE DAMA GE TO HARD DISK IN THE COMPUTER CANNOT BE A REASONABLE CAUSE FOR DELAY IN FILING TH E AUDIT REPORT AS REQUIRED UNDER THE INCOME-TAX ACT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION ON EITHE R SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE COULD NOT COMPLETE THE AUDIT DUE TO DAMAGE TO ITS HARD DISK AND THE AS SESSEE HAD TO RE-ENTER THE ENTIRE ACCOUNTING ENTRY IN THE COMPUTER ONCE AGAIN. NOW A DAYS ALMOST ALL THE BUSINESS CONCERNS ARE MAINTAINING THEIR ACCOUNTS IN THE COMP UTER. WHEN THERE IS A DAMAGE TO THE COMPUTER, THE ASSESSEE COULD NOT RETRIEVE THE A CCOUNTS FROM THE COMPUTER. THEREFORE, IT IS TO BE RE-ENTERED, AFTER GETTING TH E COMPUTER REPAIRED OR REPLACING THE HARD DISK. THEREFORE, IN OUR OPINION, THERE WAS A REASONABLE CAUSE IN NOT GETTING THE AUDIT REPORT WITHIN THE TIME LIMIT PRESCRIBED UNDER THE ACT. THE INCOME-TAX ACT REQUIRES THE ASSESSEE TO FILE THE AUDIT REPORT ALONG WITH TH E RETURN OF INCOME. IT IS WELL SETTLED PRINCIPLES OF LAW THAT FILING OF AUDIT REPORT IS MA NDATORY. HOWEVER, THE TIME LIMIT FOR FILING THE AUDIT REPORT IS DISCRETIONARY. THEREFOR E, EVEN THOUGH THERE WAS A LITTLE DELAY FOR FILING THE AUDIT REPORT, IF IT IS FILED BEFORE THE COMPLETION OF THE ASSESSMENT IT CANNOT BE SAID THAT THE INTEREST OF THE REVENUE IS PREJUDI CED IN ANY WAY. THE AUDIT REPORT IS ONLY TO ASSIST THE ASSESSING OFFICER TO COMPUTE THE CORRECT TAXABLE INCOME. IN THIS CASE, ADMITTEDLY, THE AUDIT REPORT WAS FILED ALONG WITH T HE RETURN OF INCOME. THEREFORE, THE 3 ITA NO.374/COCH/2010 DELAY IN FILING THE AUDIT REPORT COULD NOT HAVE HAM PERED THE ASSESSMENT PROCEEDINGS IN ANY WAY. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE OPINION THAT WITHOUT THE PRESCRIBED PERIOD THERE WAS REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE ACT IN NOT FILING THE AUDIT REPORT. THEREFORE, THI S IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271B OF THE ACT. ACCORDINGLY, THE ORDERS OF THE LO WER AUTHORITY ARE SET ASIDE AND THE PENALTY LEVIED U/S 271B IS DELETED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF JANUARY, 2012. SD/- SD/- (SANJAY ARORA) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 20 TH JANUARY, 2012 PK/- COPY TO: 1. SHENOY CINEMAX, BROADWAY, ERNAKULAM C/O VARMA & VAR MA, CAS, COCHIN-16 2. THE DY.CIT, CIR.2(2), ERNAKULAM 3. THE COMMISSIONER OF INCOME-TAX(A)-II, KOCHI 4. THE COMMISSIONER OF INCOME-TAX, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH