M/s. G.N. Dairies Ltd., New Delhi V. DCIT, New Delhi

ITA 4052/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3956 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 31-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: D V TANEJA
• Keywords: Additional evidence; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH C DELHI ] BEFORE SHRI I. P. BANSAL, JM AND SHRI K. D. RA NJAN, AM I. T. A. NO. 4052 (DEL) OF 2010 ASSESSMENT YEAR : 2006-07. M/S. G. N. DAIRIES LTD., DY. COMMISSIONER OF INCOME-TAX, 914, KIRTI SHIKHAR DISTT. CENTRE, VS. C I R C L E : 12 (1), J A N A K P U R I, N E W D E L H I. N E W D E L H I 110 058. P A N / G I R NO. AAC CG 0016 B. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI D. V. TANEJA, C. A.; DEPARTMENT BY : MS. MONA MOHANTY, SR. D. R. O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 20 06-07 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)-XV, NEW DELHI. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS FOLLOW S:- 1. LD. CIT (APPEALS) HAS ERRED IN FACT AND LAW IN CONFIRMING PENALTY OF RS.1,00,000/- LEVIED UNDER SECTION 271B. THE AUDIT WAS COMPLETED UNDER SECTION 44-AB ON 1/09/2006; 2. THE APPELLANT WAS PREVENTED BY A SUFFICIE NT AND REASONABLE CAUSE IN NOT FURNISHING AUDIT REPORT APPELLANT WAS UNDER BONAFID E BELIEF THAT AUDIT WAS DONE BEFORE DUE DATE AND REPORT SHOULD ACCOMPANY THE RET URN THE REPORT WAS FILED 2 I. T. A. NO. 4052 (DEL) OF 2010 ON 30/03/2007, ALONG WITH BALANCE SHEET AND THEREBY CONFIRMING PENALTY IMPOSED IS BAD IN LAW; 3. THE OBSERVATION IS OPPOSED TO FACTS AND C OMPLETE EVIDENCE WAS FURNISHED BEFORE LD. AO ALONG WITH AFFIDAVIT AND TH US CONFIRMATION OF PENALTY IS BAD IN LAW; 4. THE OBSERVATION THAT THE EVIDENCES FILED BY THE APPELLANT ARE ADDITIONAL EVIDENCES WHICH WERE NOT BEFORE THE AO, SO THE EVIDENCES CANNOT BE TAKEN INTO CONSIDERATION. THE APPELLANT HAS ALS O NOT BROUGHT ON RECORD ANY EVIDENCE REGARDING THE FACT THAT AN EXPLANATION WAS SUBMITTED BEFORE THE AO. NO REASON HAVE ALSO BEEN SUBMITTED BY THE APPELLANT AS TO WHY THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED, IS OPPOSED TO FACTS AND COMPLETE EVIDENCE WAS FURNISHED BEFORE LD. AO ALONG WITH AFFIDAVIT AN D THUS CONFIRMATION OF PENALTY IS BAD IN LAW. 3. THE ONLY ISSUE FOR CONSIDERATION RELATES TO LEVY OF PENALTY OF RS.1,00,000/- UNDER SECTION 271B OF THE I. T. ACT, 1961. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE RETURN OF INCOME WAS FILED ON 30 TH MARCH, 2007. THE BOOKS OF ACCOUNTS OF THE ASSESSE E WERE TO BE AUDITED UNDER SECTION 44AB OF THE ACT. THE TAX AUDIT REPORT WAS NOT FILED BY THE ASSESSEE WITHIN THE DUE DATE PRESCRIBED UNDER THE ACT. THE ASSESSING OFFICER IS SUED SHOW CAUSE NOTICE TO EXPLAIN AS TO WHY PENALTY UNDER SECTION 271B OF THE ACT SHOULD NOT BE IMPOSED. THE ASSESSEE DID NOT FILE ANY REPLY. ACCORDINGLY, THE ASSESSING OFFICER IMPOSED PENALTY OF RS.1,00,000/- UNDER SECTION 271-B OF THE ACT. 4. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED TH AT THE ASSESSEE COMPANY GOT ITS ACCOUNTS AUDITED UNDER SECTION 44-AB AND OBTAINED AUDIT REPO RT ON 1/09/2006. THE ASSESSEE GOT INCOME- TAX RETURN PREPARED IN TIME AND AS PER COMPUTATION OF INCOME, A REFUND OF RS.2,66,835/- WAS DUE. THERE WAS CHANGE IN SENIOR STAFFS AND THE INCOME TA X RETURN PREPARED IN TIME WAS LEFT IN THE DRAWER. ONLY ON 20 TH MARCH, 2007 WHEN NEW STAFF WAS ENGAGED, THE RETURN OF INCOME WAS FILED. IMMEDIATELY THEREAFTER ON 31 ST MARCH, 2007 INCOME-TAX RETURN WITH AUDIT REPORT ET C. WAS FILED. AN AFFIDAVIT OF THE DIRECTOR, CONFIRMING THESE FACT S WAS ALSO SUBMITTED DURING THE COURSE OF APPELLATE PROCEEDINGS. IN VIEW OF THESE FACTS IT W AS SUBMITTED THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT AND REASONABLE CAUSE IN FILING THE INCOM E-TAX RETURN LATE ON 31 ST MARCH, 2007 THOUGH THE AUDITED ACCOUNTS AND THE AUDITORS REPORT DATED 1/09/2006 AND DIRECTORS REPORT WERE PREPARED 3 I. T. A. NO. 4052 (DEL) OF 2010 ON TIME. THE LD. CIT (APPEALS) CONSIDERED THE SUBM ISSIONS MADE BY THE ASSESSEE. HE ALSO NOTED THAT IN ASSESSMENT YEAR 2004-05 PENALTY WAS IMPOSED UNDER SECTION 271-B WHICH WAS DELETED BY THE ITAT. THE FACTS OF THE CASE FOR ASSESSMENT YEA R 2006-07 AS COMPARED TO ASSESSMENT YEAR 2004-05 WERE DIFFERENT IN SO FAR AS AN EXPLANATION FOR THE DELAY WAS FILED FOR ASSESSMENT YEAR 2004-05 BEFORE THE ASSESSING OFFICER WHEREAS IN ASS ESSMENT YEAR 2006-07 NO EXPLANATION REGARDING THE DELAY WAS FILED BEFORE THE ASSESSING OFFICER. THE ASSESSEE HAD FILED ADDITIONAL EVIDENCE WHICH WAS NOT BEFORE THE ASSESSING OFFICER AND, THEREFORE, THE SAME COULD NOT BE TAKEN INTO CONSIDERATION. IT WAS ALSO NOTED THAT THE ASS ESSEE HAS NOT BROUGHT ON RECORD ANY EVIDENCE REGARDING THE FACT THAT AN EXPLANATION WAS SUBMITTE D BEFORE THE ASSESSING OFFICER. NO REASONS WERE SUBMITTED AS TO WHY THE ADDITIONAL EVIDENCE WA S TO BE ADMITTED. THE LD. CIT (APPEALS), THEREFORE, CONFIRMED THE LEVY OF PENALTY. 5. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED T HAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE AS THE SENIOR STAFF WHO WAS DEA LING WITH THE INCOME-TAX MATTERS LEFT THE JOB. THE ASSESSEE HAD FILED AFFIDAVIT IN SUPPORT O F HIS CONTENTION. ON THE OTHER HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE LD. CIT (APPE ALS). 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. PENALTY UNDER SECTION 271B CANNOT BE IMPOSED ON A P ERSON FOR ANY FAILURE IF HE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE. IN TH E INSTANT CASE, THE ASSESSEE HAD FILED AFFIDAVIT IN SUPPORT OF HIS CONTENTION THAT THE SENIOR STAFF, WH O WAS DEALING WITH THE TAX MATTERS HAD LEFT THE JOB WITHOUT INTIMATING THE DIRECTORS OF THE COMPANY . IN ASSESSMENT YEAR 2004-05 PENALTY UNDER SECTION 271B WAS DELETED BY THE ITAT ON IDENTICAL F ACTS. IT WAS ALSO HELD THAT THE DEPARTMENT COULD NOT BRING ANY MATERIAL ON RECORD THAT THE AVE RMENTS OF THE MANAGING DIRECTOR CONTAINED IN THE AFFIDAVIT WERE EITHER FALSE OR UNTRUE. THE FAC TS OF THE CASE FOR THIS YEAR ARE IDENTICAL TO THE FACTS OF THE CASE FOR ASSESSMENT YEAR 2004-05 EXCEP T THAT IN THAT YEAR THE ASSESSEE FILED REPLY BEFORE THE ASSESSING OFFICER. SINCE THE DEPARTMENT HAS NOT CONTROVERTED THE CONTENTS OF THE AFFIDAVIT, IN OUR CONSIDERED OPINION, THE EXPLANATI ON OFFERED BY THE ASSESSEE APPEARS TO BE 4 I. T. A. NO. 4052 (DEL) OF 2010 REASONABLE AND THEREFORE, IN OUR CONSIDERED OPINION PENALTY UNDER SECTION 271B OF THE ACT IS NOT IMPOSABLE. WE, ACCORDINGLY, DELETE THE PENA LTY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 13 TH MAY, 2011. SD/- SD/- [ I. P. BANSAL ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13 TH MAY, 2011. * MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.