M/s. Agarwal Transport Corporation, Cuttack V. ITO, Ward-2(1), Cuttack

ITA 406/CTK/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 7966 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 28-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SAHU; SOMNATH SAHU S
• Keywords: Reasonable cause; TDS
• Section: 273B; 201; 12; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO S . 406&407 /CTK/201 9 ( / ASSESSMENT YEAR S : 20 1 2 - 201 3 & 2013 - 2014 ) M/S AGARWAL TR ANSPORT CORP. AT: BAGHA MANGALA LANE, MANGALABAG, PO: BUXI BAZAR,CUTTACK - 753001 VS. ITO, WARD - 2(1),CUTTACK ./ PAN NO. : A AFF A 2795 K ( / APPELLANT ) : ( / RESPONDENT ) /ASSESSEE BY : SHRI S.N.SAHU & S HRI SOMNATH SAHU , ADV OCATES /REVENUE BY : SHRI SUBHENDU DUTTA , DR / DATE OF HEARING : 2 8 / 11 /2019 / DATE OF PRONOUNCEMENT : 16 / 1 2 /2019 / O R D E R PER L.P.SAHU , A M : TH ESE TWO APPEAL S FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , CUTTACK , DATED 07.09.2018 & 31.08.2018 FOR THE ASSESSMENT YEAR S 201 2 - 2013 & 2013 - 2014 . 2. THE SOLE ISSUE INVOLVED IN BOTH THE APPEALS OF THE ASSESSEE IS WITH REGARD TO CONFIRMING THE PENALTY LEVIED U/S.271A OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM EXECUTION OF TRANSPORTATION WORKS IN THE NAME & STYLE OF M/S AGARWALA TRANSPORT AND FILED ITS RETURN OF INCOME ON 27.09.2012 FOR THE A.Y.2012 - 2013 DECLARING TOTAL INCOME AT RS.11,6 1,300/ - . SIMILARLY, THE ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y.2013 - 2014 ON 21.09.2013 ITA NO S . 406&407 /CTK/201 8 2 DECLARING TOTAL INCOME AT RS.10,67,380/ - . BOTH THE CASE S OF THE ASSESSEE W ERE SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS NOT FILED BOOKS OF ACCOUNT, THEREFORE, THE AO ESTIMATED THE NET PROFIT @1% OF THE GROSS TRANSPORTATION RECEIPTS AND ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.38,02,740/ - FOR THE ASSES SMENT YEAR 2012 - 2012. SIMILARLY, THE AO ASSESSED THE TOTAL INCOME OF THE ASSESSEE FOR ASSESSMENT YEAR 2013 - 2014 AT RS.1,20,76,270/ - AFTER ESTIMATING NET PROFIT @5% OF THE TOTAL GROSS RECEIPTS . SUBSEQUENTLY, THE AO INITIATED PENALTY PROCEEDINGS U/S.271A OF THE ACT LEVYING PENALTY OF RS.25,000/ - EACH FOR BOTH THE ASSESS MENT YEARS UNDER CONSIDERATION AND PASSED PENALTY ORDER ACCORDINGLY. 4. AGAINST THE PENALTY PROCEEDINGS INITIATED U/S.271A OF THE ACT, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A), HOWEVER, THE CIT(A) DISMISSED THE APPEALS OF THE ASSESSEE OBSERVING THAT IN ABSENCE OF MAINTENANCE OF BOOKS OF ACCOUNTS AS PRESCRIBED U/S.44A A OF THE ACT, THE INCOME OF THE ASSESSEE CANNOT BE ACCURATELY COMPUTED AND UPHELD THE ACTION OF AO. 5. NOW, AGAINST THE ABOV E ORDER OF CIT(A), THE ASSESSEE IS IN FURTHER APPEALS BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 6. BEFORE US, LD. AR SUBMITTED THAT THE CIT(A) HAS ERRED IN CONFIRMING THE PENALTY LEVIED U/S.271A OF THE ACT BY THE AO WITHOUT ITA NO S . 406&407 /CTK/201 8 3 REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE U/S.145(3) OF THE ACT. IT WAS THE FURTHER CONTENTION OF LD. AR THAT THE ASSESSEE HAS SUBMITTED THE BANK ACCOUNTS, WORK BILL STATEMENT AND OTHER LEDGER ACCOUNTS BEFORE BOTH THE AUTHORITIES BELOW FOR DETERMINATION OF INCOME OF THE ASSESSEE. IT WAS ALSO CONTENDED THAT NO SPECIFIC BOOKS OF ACCOUNT FOR CONTRACT WORK BUSINESS HAVE BEEN PRESCRIBED U/S.44A A OF THE ACT READ WITH RULE 6F OF THE I.T.RULES, 1962. HOWEVER, WITHOUT CONSIDERING THE SUBMISSION AND DOCUMENTS PRODUCED BY THE ASSESSEE, LEVY O F PENALTY U/S.271A OF THE ACT IN BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION DESERVE TO BE QUASHED. IN THIS REGARD, LD. AR RELIED ON THE FOLLOWING CASE LAWS : - I) ACIT VS. AGGARWAL CONSTRUCTION COMPANY, (2007) 107 TTJ (CHD) 623; AND II) HARILAL DHANWANI VS. ITO (1993) 45 TTJ (DEL) 437. 7. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW. HE FURTHER SUBMITTED THAT THE LEVY OF PENALTY UNDER THIS SECTION IS MANDATORY IN THE CASE OF NOT MAINTAINING BOOKS OF ACCOUNTS. THE ASSESSEE COULD NO T PRODUCE THE BOOKS OF ACCOUNT AS REQUIRED BY THE AO. THE LD. AO GAVE OPPORTUNITY FOR PRODUCTION OF BOOKS OF ACCOUNTS IN SPITE OF THAT HE DID NOT COMPLY. AS PER THE SECTION 44AA OF THE ACT, THE ASSESSEE IS REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNTS. FOR NO N - COMPLYING THE MANDATORY PROVISIONS, THE PENALTY MUST BE LEVIED. ITA NO S . 406&407 /CTK/201 8 4 8. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE AO HAS LEVIED PENALTY U/S.271A OF THE ACT FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION TAKING A VIEW THAT THE ASSESSEE WAS REQ U IRED TO KEEP AND MAINTAIN S U CH BOOKS OF ACCO U NTS AND OTHER DOC U MENTS AS MAY ENABLE THE AO TO COMP U TE THE TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME - TAX ACT . AS THE ASSESSEE FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 44AA OF THE ACT BY NOT MAINTAINING THE REG U LAR BOOKS OF ACCO U NTS, THE CIT(A) ALSO CONFIRM ED THE PENALTY LEVIED U /S 271 A OF THE ACT . ON PERUSAL OF THE PENALTY ORDER DATED 30.09.2016 FOR THE ASSESSMENT YEAR 2013 - 2014 , THE AO IN 2 ND PARA OF LAST PAGE HAS MENTIONED THAT THE AUDITOR IN THE AUDI T REPORT HAS CERTIFIED IN FORM 3CD THAT THE ASSESSEE MAINTAINS VARIOUS BOOKS OF ACCOUNT VIZ. CASH BOOK & LEDGER. IN THE ASSESSMENT ORDER ALSO, THE AO IN PARA 2.1 NOTED THAT THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED AND PRODUCED AUDIT REPORT, COPY OF ACKNOWLEDGEMENT OF E - RETURN FILED, COPIES OF BANK ACCOUNT DETAILS, VAKALATANAMA & COPY OF SERVICE TAX RETURN. HOWEVER, THE ONLY DISPUTE RAISED BY BOTH THE AUTHORITIES BELOW THAT THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNT, WHEREAS T HE AO HAS HIM SELF ADMITTED THAT THE RETURN OF INCOME FILED WAS ACCOMPANIED BY AUDIT REPORT AND OTHER DOCUMENTS. THE ASSESSEE HAS PRODUCED THE TAX AUDIT REPORT WHICH HAS BEEN ACCEPTED BY THE AO. THE AUDITOR HAS ITA NO S . 406&407 /CTK/201 8 5 ALSO CERTIFIED THAT THE VARIOUS BOOKS HAVE BEEN MAINTAINED. THE REVENUE HAS NOT BROUGHT ANY COGENT MATERIAL ON RECORD SO AS TO ESTABLISH THAT THE ASSESSEE HAS NOT MAINTAINED BOOKS AND SUCH DOCUMENTS AS REQUIRED U/S.44AA OF THE ACT OR THE RULES MADE THEREUNDER . THEREFORE, THE PENALTY LEVIED U/S.271A FOR BOTH THE A SSESSMENT YEARS UNDER CONSIDERATION CANNOT BE SUSTAINED ON THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 9 . ON FURTHER PERUSAL OF THE ASSESSMENT AS WELL AS APPELLATE ORDER, WE FIND THAT BOTH THE AUTHORITIES BELOW HAVE ONLY POINTED OUT THAT THE ASSESSEE HAS FAILED TO PRODUCE BOOKS OF ACCOUNTS BEFORE THE AO . IN THIS REGARD, THE ASSESSEE HAS EXPLAINED WITH REASONABLE CAUSE FOR NON - PRODUCTION OF THE SAME BEFORE THE AO, WHICH HAS BEEN INCORPORATED IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2012 - 2013 IN P ARA 2.1. , AS UNDER : - 2.1 IN RESPONSE TO THE ABOVE, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED ON 15/12/2014 AND PRODUCED BANK STATEMENT, AUDIT REPORT AND CONFIRMATIONS FROM THE UNSECURED LOAN CREDITORS, DETAILS OF TDS MADE ON PAYMENT OF INTEREST TO UNSECURED LOAN CREDITORS AND ALSO PROOF OF PAYMENT OF OUTSTANDING SERVICE TAX PAYABLE AMOUNTING TO RS.7,15,404/ - . AS REGARDS PRODUCTION OF BOOKS OF ACCOUNT AS MAINTAINED BY THE ASSESSEE, THE AUTHORIZED REPRESENTATIVE VIDE HIS WRITTEN SUBMISSION DTD. 15/12/2014 SUBMITTED AS UNDER : - 'IN RESPONSE TO YOUR QUERY REGARDING THE PRODUCTION OF BOOKS OF ACCOUNT, THE ASSESSEE BEGS TO SUBMIT THAT THE ACCOUNTANT OF THE ASSESSEE WAS ASKED ABOUT THE BOOKS OF ACCOUNT. THE ACCOUNTANT REPLIED THAT THE BOOKS OF ACCOUNT ARE WITH THE AUDITOR, BUT WHEN THE ASSESSEE INQUIRED WITH THE AUDITOR ABOUT THE BOOKS OF ACCOUNT, THE AUDITOR REPLIED THAT IT WAS RETURNED BACK IMMEDIATELY AFTER THE AUDIT WAS OVER. AS THE BOOKS OF ACCOUNT ARE MISPLACED AND ARE NOT TRACEABLE AT PRE SENT, IT IS DIFFICULT ON THE PART OF THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT,' ITA NO S . 406&407 /CTK/201 8 6 THEREFORE, FOR THIS REASON ALSO THE ASSESSEE GETS IMMUNITY FROM THE PROVISIONS OF SECTION 273B OF THE ACT . IN THE LIGHT OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE PENALTY IMPOSED BY THE AO UNDER SECTION 271A OF THE ACT FOR BOTH THE ASSESSMENT YEARS CONSIDERATION . ACCORDINGLY, WE SET ASI DE THE ORDER OF THE CIT(A) AND CANCEL THE IMPUGNED PENALTY LEVIED FOR THE ASSESSMENT YEARS 2012 - 2013 & 2013 - 2014 . THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ACCORDINGLY ALLOWED. 10 . IN THE RESULT, BOTH APPEAL S OF THE ASSESSEE ARE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 16 / 1 2 / 201 9 . SD/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 16 / 1 2 /201 9 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - M/S AGARWAL TRANSPORT CORP. AT: BAGHA MANGALA LANE, MANGALABAG, PO: BUXI BAZAR,CUTTACK - 753001 2. / THE RESPONDENT - ITO, WARD - 2(1),CUTTACK 3. ( ) / THE C IT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//