Shri Krishan Mohan, Faridabad V. ITO, Faridabad

ITA 41/DEL/2015

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0749 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 02-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 41/DEL/2015 (ASSESSMENT YEAR: 2007 - 08 ) KRISHAN MOHAN, PROPIETOR OF M/S. SITA RAM & SON, C/O. VIJAY KUMAR GUPTA, ADVOCATE, OPP JAIN MANDIR, FARIDABAD PAN: AFJPK0137J VS. ITO, WARD - II(3), FARIDABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY KUMAR GUPTA, ADV SHRI NARESH KR. AGGARWAL, CA REVENUE BY: SHRI AMIT JAIN, SR. DR DATE OF HEARING 26/07 / 2018 DATE OF PRONOUNCEMENT 0 4 / 1 0 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A), FARIDABAD DATED 21.10.2014, WHEREIN, THE PENALTY U/S 271B OF THE ACT OF RS. 73137/ - IS CONFIRMED. 2. THE BRIEF FACTS OF THE CASE IS THAT FOR ASSESSMENT YEAR 2007 - 08 THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING AND COMMISSION AGENT FOR PURCHASE OF FOOD GRAIN FROM PARTIES SITUATED OUTSIDE PALWAL ANAJ MANDI. THE ASSESSEE PURCHASED PADDY FROM LOCAL MAR KET ON BEHALF OF FOUR DIFFERENT PARTIES AND LATER ON AFTER PACKING THE PADDY IN GUNNY BAGS ETC IT WAS DIS PATCHED TO THESE FOUR PARTIES. THE FOUR PARTIES REIMBURSED THE APPELLANT ASSESSEE THE PRICE PAID FOR PADDY ALONG WITH ALL ACTUAL EXPENSES INCURRED BY T HE ASSESSEE ON THEIR BEHALF. APPELLANT ALSO CHARGED COMMISSION INCOME @1% OF THE TOTAL PURCHASE PRICE FROM THESE PARTIES. FROM THE ABOVE FACTS , THE ASSESSEE FILED HIS RETURN OF INCOME ON 19.12.2007 SHOWING INCOME OF RS. 1 , 58 , 360/ - . DURING THE COURSE ASSESS MENT PROCEEDINGS THE AO NOTED THAT TURNOVER AS PER SALES TAX PAGE | 2 RETURN OF THE ASSESSEE IS RS. 1 , 46 , 27 , 433/ - AND THE ASSESSEE HAS NOT GOT ITS ACCOUNT AUDITED U/S 44AB OF THE ACT. THEREFORE, NOTICE U/S 271B OF THE ACT WAS ISSUED TO THE ASSESSEE WHICH WAS REPLIED ON 26.02.2011 STATING ABOVE EXPLANATION . THE LD AO REJECTED THE CONTENTION OF THE ASSESSEE AND NOTED THAT THE ASSESSEE FAILED TO GOT ITS ACCOUNTS AUDITED UNDER THE PROVISIONS OF SECTION 44AB OF THE ACT AND THEREFORE, 0.5% OF THE TURNOVER WAS LEVIED AS PENALTY OF RS. 73137/ - U/S 271B OF THE ACT. THE ASSESSEE CHALLENGED THE ORDER BEFORE THE LD CIT(A) WHO CONFIRMED THE PENALTY HOLDING THAT THERE IS NEITHER A REASONABLE CAUSE AND THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE. 3. THE ASSESSEE IS IN APPE AL BEFORE US , REITERATED THE SAME SUBMISSION AND STATED THAT PENALTY U/S 271B IS SUBJECT TO A REASONABLE CAUSE U/S 273B OF THE ACT. IN THE PRESENT CASE HE STATED THAT ASSESSEE HAS MERELY ACTED AS KACHA ARAHTIA IN FOOD GRAINS BUSINESS AND ACCORDING TO CIR CULAR 542 DATED 17.03.1986 IS NOT REQUIRED TO GET HIS ACCOUNTS AUDITED. CRUX OF HIS SUBMISSION IS THAT WHETHER THE ASSESSEE IS KACHA ARATIA OR PACCHA ARAHTIA IN THE PRESENT TRANSACTION. IF HE IS A KACCHA ARAHTIA THEN HE IS NOT REQUIRED TO GET ITS ACCOUNT A UDITED AND IF HE IS HELD TO BE PACCA ARATHIA THEN HE SHOULD HAVE GOT HIS ACCOUNT AUDITED. NONETHELESS HIS SUBMISSION WAS THAT IN THE PRESENT CASE IT IS IN DISPUTE WHETHER THE ASSESSEE IS REQUIRED TO GET HIS ACCOUNTS AUDITED OR NOT AND THIS ISSUE SHOULD BE A REASONABLE CAUSE IN ASCERTAINING HIS ACTIVITIES WHETHER HE IS KACHA ARATHIA OR PACCA ARATHIA. HE STATED THAT THIS IS A REASONABLE CAUSE FOR FAILURE TO GET ITS ACCOUNTS AUDITED. 4. THE LD DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE ONLY ISSUE IN DISPUTE IS WHETHER THE ASSESSEE IS KACCHA ARAHTIA OR PACCHA ARATHIA FOR FOOD GRAIN BUSINESS. THE ASSESSEE HAS STATED THAT HE HAS PURCHASED PADDY ON ACCOUNT OF FOUR PARTIES, RECOVERED COST OF PADDY AND ALL EXPENDITURE OF THOSE FOUR PARTY AND FURTHER CHARGED COMMISSION @1% FROM THOSE PARTIES AS HIS INCOME. IN THE PRESENT CASE FROM FACTS STATED IT IS APPARENT THAT ASSESSEE HAS NOT TAKE N A RISK AND REWARD OF PADDY PURCHASE ON HIS ACCOUNT. HE HAS MERELY PAGE | 3 SOLD THE CROPS TO THE SAME FOUR PERSONS AT PURCHASE PRICE COST , WHICH IS SHOWN IN SALES TAX RETURN AS TURNOVER. EVEN OTHERWISE THERE IS NO DOUBT WHETHER ON THE SET OF THE FACTS STATED BEF ORE US THE ASSESSEE COULD NOT BE A PACCHA ARATHIA BUT A KACCHA ARATHIA S UCH A DOUBT IN THE PRESENT TRANSACTION ITSELF SHOWS THAT THERE IS A REASONABLE CAUSE FOR FAILURE TO GET HIS ACCOUNT AUDITED U/S 44AB OF THE ACT. IN VIEW OF THIS , WE ARE OF THE OPINION THAT ASSESSEE HAS A REASONABLE CAUSE FOR FAILURE U/S 271B , HENCE, HE CANNOT BE PENALIZED. IN THE RESULT , WE REVERSE THE FINDING OF THE LOWER AUTHORITIES AND DIRECT THE LD AO TO DELETE THE PENALTY U/S 271B OF THE ACT. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 4 / 1 0 / 2018 . - S D / - - S D / - ( AMIT SHUKLA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 4 / 1 0 / 2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI