WESTERN INDIA MARINE CORPORATION, MUMBAI V. ASST CIT 17(3), MUMBAI

ITA 4039/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71981 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 02-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 08-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: Y K WADIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AN D DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 4039/MUM/2012 ASSESSMENT YEAR: 2006-07 M/S. WESTERN INDIA MARINE CORPORATION 11, GANPATHI BAUG, OFF. TOKARSI JIVRAJ ROAD, SWEREE, MUMBAI-.400 015 VS. ACIT 17(3) PIRAMAL CHAMBERS, LALBAUG, PAREL MUMBAI. 400 012 (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :-AAAFW 0148 H APPELLANT BY : SHRI Y. K. WADIA RESPONDENT BY : SHRI PITAMBAR DAS DATE OF HEARING : 05.12.2013 DATE OF PRONOUNCEMENT : 18.12.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-19, MUMBAI DATED 05.03.2012 CONFIRMING THE PENALTY LEVI ED BY THE AO U/S 271 B OF THE INCOME TAX ACT FOR THE ASSESSMENT YEAR 2006-07. 2. THE RELEVANT FACTS ARE THAT THE ASSESSEE, A PART NERSHIP FIRM ENGAGED IN THE BUSINESS OF SURFACE COATINGS, CHIPPING, PAINTING, REPAIRING AND SAND BLASTING OF VESSELS HAD FILED ITS RETURN OF INCOME ALONG WITH AUDIT REPORT IN FORM NO 3CB AND 3CD ON 28.07.2007. AS THE ASSESSEE HAD NOT FILED THE AUDIT REPORT WITH THE DE PARTMENT ON OR BEFORE 31.10.2006, WHICH IS THE STATUTORY DUE DATE, A PENALTY OF RS.1 LACK W AS LEVIED BY THE AO U/S 271 B OF THE ACT. THE AO DID NOT CONSIDER THE FACT THAT THE BOOKS OF ACCOUNTS WERE FINALLY AUDITED AND THE AUDIT REPORT WAS FILED ON 28.07.2007 WITH THE DELAY OF 8 MONTHS. ON APPEAL, THE LD.CIT(A) CONFIRMED THE LEVY OF PENALTY AS THE FILING OF THE TAX AUDIT REPORT WITHIN THE DUE DATE IS STATUTORY OBLIGATION AND THE ASSESSEE CANNOT TAKE I T LIGHTLY. THE LD.CIT(A) FURTHER OBSERVED THAT ILLNESS OF THE ACCOUNTANT COULD NOT BE AN EXCU SE FOR NOT FILING THE AUDIT REPORT IN TIME. AGGRIEVED BY THE IMPUGNED ORDER THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO. 4039/MUM/2012 M/S. WESTERN INDIA MARINE CORPORATION ASSESSMENT YEAR: 2006-07 2 2. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS THE CONTENTION OF THE ASSESSEE THAT THE ACCOUNTANT OF THE ASSESSEE MR. ROHINTON H. BAHRUCHA HAS BEEN SUFFERING FROM SERIOUS BACK TROUBLE AND NOT ATTENDE D THE OFFICE REGULARLY DURING THE PERIOD AND SINCE HE HAS BEEN HANDLING THE SAID WORK, IN HI S ABSENCE THERE IS NO OTHER PERSON CAPABLE OF HANDLING THE ACCOUNTS RELATED WORK. AUDI T REPORT HAS BEEN FINALLY FILED ON 28.07.2007. THEREFORE, THE DELAY IN FILING THE AUDI T REPORT IS ON ACCOUNT OF GENUINE AND VALID REASON. CONSIDERING THE FACTS AND CIRCUMSTANCES IN TOTO, WE ARE OF CONSIDERED OPINION THAT THE CAUSE FOR DELAY IN FILING THE AUDIT REPORT WITH IN THE DUE DATE AS REQUIRED BY THE ACT IS GENUINE AND CANNOT BE DOUBTED. IN THIS CONNECTION, IT IS PERTINENT TO MENTION THAT IN THE CASE OF HINDUSTAN STEEL LTD. VS CIT OF ORISSA (83 ITR 26) (SC) IT HAS BEEN HELD THAT PENALTY SHOULD NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL T O DO SO. THE AO HAS TO EXERCISE HIS DISCRETION JUDICIOUSLY. AN ORDER IMPOSING PENALTY F OR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDING, AND P ENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFI ANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO S O. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATT ER OF DISCRETION OF THE AUTHORITY AND THE SAME TO BE EXERCISED JUDICIALLY AND ON A CONSIDERAT ION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY C OMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN 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 THE MANNER PRESCRIBED BY STATU TE. APPLYING THE RATIO TO THE FACTS OF THE PRESENT CASE WE ARE OF THE VIEW THAT THE LD.CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE AO AND THE SAME IS DELETED. 3. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF DECEMBER, 2013. SD/- SD /- (D. KARUNAKARA RAO) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 18.12.2013. *SRIVASTAVA ITA NO. 4039/MUM/2012 M/S. WESTERN INDIA MARINE CORPORATION ASSESSMENT YEAR: 2006-07 3 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR G BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.