RADHA DEVELOPERS, UDUPI V. ASST CIT CEN CIR 34, MUMBAI

ITA 4336/MUM/2012

• Counselvise Citation: 433619914 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 04-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 25-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN DR
• Assessee Lawyers: H S RAHEJA
• Keywords: Search and seizure; Reasonable cause
• Section: 273B; 133A

Judgement Text

, , , , E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . , ! '# ! '# ! '# ! '#, ,, , $ $ $ $ BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI AMIT SHUK LA, JM . / ITA NO. 4336/MUM/2012 ( & ' (' / ASSESSMENT YEARS : 200708 ) M/S. SAI RADHA DEVELOPERS C.J. COMPLEX, 3 RD FLOOR, SUPER BAZAR, K.M. MARG, UDUPI-576101 .. )* / APPELLANT & V/S ACIT CEN - 34 1 ST FLOOR, AAYAKAR BHAVAN, M.K. RD. MUMBAI 400020 .... +,)* / RESPONDENT ) . / PERMANENT ACCOUNT NUMBER AAYFS8343N & '.! / 0 / ASSESSEE BY : SHRI H.S. RAHEJA (AR) 1 / 0 / REVENUE BY : SHRI ASGHAR ZAIN (DR) & / ! / DATE OF HEARING 04.03.2015 ' 23( / ! / DATE OF ORDER 04.03.2015 ' ' ' ' / ORDER ! '# ! '# ! '# ! '#, ,, , 4 4 4 4 / PER AMIT SHUKLA, J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 30 TH APRIL 2012, PASSED BY THE LEARNED COMMISSIONER (APPEALS)41, MUMBAI, IN RELATION TO THE PENALTY PROC EEDINGS U/S.271B OF THE ACT, FOR THE ASSESSMENT YEAR 2007-08. THE ASSE SSEE IS MAINLY M/S.SAI RADHA DEVELOPERS 2 AGGRIEVED BY THE LEVY OF PENALTY OF RS.1,00,000/- U/ S.271B FOR DELAY IN FILING OF AUDIT REPORT U/S.44AB, WITHIN DUE DATE. 2. THE BRIEF FACTS OF THE CASE ARE THAT, SEARCH AND SEIZURE ACTION U/S.132(1) WAS CARRIED OUT IN THE CASE OF RAVI SHETTY GROUP OF CASES ON 26.7.2007. A SURVEY U/S.133A OF THE ACT, WAS ALS O CARRIED OUT SIMULTANEOUSLY IN THE CASE OF THE ASSESSEE WHICH IS A PARTNERSHIP FIRM. DURING THE COURSE OF THE SURVEY PROCEEDINGS VARIOUS PAPERS AND DOCUMENTS WERE IMPOUNDED BY THE INVESTIGATION WING. TH E ASSESSING OFFICER IN THE COURSE OF THE ASSESSMENT PROCEEDINGS FO R THE IMPUGNED ASSESSMENT YEAR NOTED THAT, THE ASSESSEE HAS FILED THE AUDIT REPORT U/S.44AB DATED 29.9.2008 ALONG WITH RETURN OF INCOME, WHICH WAS FILED ON 30.9.2008. SINCE THE AUDIT REPORT IS DATED 29.9.200 8 AND FILED ON 30.9.2008, THEREFORE, IT WAS BEYOND THE DUE DATE OF FILING OF RETURN OF INCOME FOR THE A.Y. 2007-08. ACCORDINGLY, THE AO INI TIATED THE PENALTY PROCEEDINGS U/S.271B. DURING THE COURSE OF PENALTY PR OCEEDINGS, THE ASSESSEE SUBMITTED THAT IN THE SURVEY PROCEEDINGS ALL THE RELEVANT PAPERS WERE IMPOUNDED AND IT TOOK A LOT OF TIME TO PR OCURE THE COPIES OF THE IMPOUNDED MATERIAL FROM THE INVESTIGATION DEPAR TMENT. DUE TO THIS FACT, THERE WAS A DELAY IN FINALISING ACCOUNTS AN D CONSEQUENTLY IN PREPARING THE AUDIT REPORT U/S.44AB. IMMEDIATELY AFTER GETTING THE COPIES OF IMPOUNDED MATERIAL/PAPERS,THE AUDIT WAS DON E AND AUDIT M/S.SAI RADHA DEVELOPERS 3 REPORT WAS PREPARED U/S.44AB ON 29.9.2008 AND ON THE NEXT DATE, THE AUDIT REPORT WAS FILED ALONGWITH RETURN OF INCOME. TH US, IT WAS SUBMITTED THAT, IN VIEW OF THE PROVISIONS OF SECTION 273B, NO PENALTY SHOULD BE LEVIED AS THERE WAS A REASONABLE CAUSE IN NOT FILING THE AUDIT REPORT IN TIME. THE ASSESSING OFFICER, HOWEVER, HELD THAT THE AUDIT REPORT SHOULD HAVE BEEN COMPLETED BY 30 TH SEPTEMBER 2007 FOR THE FINANCIAL YEAR 31.3.2007 AND THERE IS A CLEAR CUT D ELAY OF 14 MONTHS, THEREFORE, THE PENALTY U/S.271B HAS TO BE LEVIED. ACCOR DINGLY, HE LEVIED THE PENALTY OF RS.1,50,000/-. 3. BEFORE THE LD. CIT(A), THE ASSESSEE REITERATED ITS SU BMISSION, WHICH WERE AS UNDER; A SEARCH & SEIZURE U/S.132. OF THE I.T. ACT WAS CO NDUCTED ON THE BUSINESS AND. RESIDENTIAL PREMISES OF THE PARTNER OF THE APPELLANT FIRM ON 26.07.2007. IN THE SAID ACTION THE BUSINESS PREMISE OF THE APPELLANT FIRM W AS COVERED U/S. 133A OF THE INCOME TAX ACT, 1961. DURING THE COURSE OF SURVEY, ORIGINAL AGREEMENTS HAVE BEEN IMPOUNDED ALONG WITH OTHER DOCUMENTS. AS THE CASE IS COVERED BY THE INVESTIGATION DEPARTMENT FROM MUMBAI, IT BECOME S MORE CUMBERSOME TO DEAL WITH THE POST SEARCH/SURVEY PROC EEDINGS. UNDER THESE CIRCUMSTANCES, IT TOOK TIME TO TAKE COPIES OF THE IMPOUNDED MATERIALS FROM THE INVESTIGATION DEPARTMENT AND FINALISE THE ACCOUNTS. FURTHER, THE AUDITORS WERE ALSO INSISTING FOR THE COPIES OF THE AGREEMENTS AND OTHER DOCUMENTS FOR AUDITING THE ACCOUNTS. AND IN THE MEANWHILE THE DUE DATE FOR FILING OF THE RETURN EXPIRED -TO COMPLY WITH THE REQUIREMENTS OF THE INVESTIGATION DEPARTMENT, AS THE PARTNER MR. MANOHAR SHETTY HAS ALSO TO VISIT MUMBAI INCOME TAX OFFICE CONNECTION WITH THE POST S EARCH / SURVEY PROCEEDINGS. THE AUDITORS, THE ASSESSEE COULD NOT OBTAIN THE AUD IT REPORT AS REQUIRED U/S. 44AB M/S.SAI RADHA DEVELOPERS 4 WITH THE PRESCRIBED TIME FOR FILING OF THE RETURN. IT IS ALSO IMPORTANT TO MENTION HERE THAT SUBSEQUENTLY THE CASE OF THE AFTER GETTING THE COPIES OF THE IMPOUNDED MATERIALS, AND COMPLYING WITH THE REQUIREMENTS OF A PPELLANT HAS ALSO BEEN CENTRALIZED FROM UDUPI TO MUMBAI, WHICH HAS ALSO AFFECTED THE H ANDLING OF THE COMPLIANCE PROCEDURE FOR THE INCOME TAX REQUIREMENTS. THE SAME HAS RESULTED INTO DELAY IN OBTAINING THE AUDIT REPORT. SECTION 273-B PROVIDES AN EXCEPTION WHERE SUCH PENA LTIES SHOULD NOT BE IMPOSED THE CASE WHERE THE ASSESSEE PROVES THAT THE RE WAS A REASONABLE CAUSE FOR THE FAILURE TO PERFORM STATUTORY OBLIGATION. AC CORDINGLY FOLLOWING THE SECTION 273- B, WE STATE THAT THE APPELLANT IN THE PRESENT CASE PROVES THAT THERE WAS REASONABLE CAUSE FOR HIS FAILURE FOR NOT OBTAINING THE AUDIT O F HIS ACCOUNTS AS DUE TO SURVEY PROCEEDINGS VARIOUS IMPORTANT DOCUMENTS LIKE ORIGIN AL AGREEMENTS AND OTHER DOCUMENTS HAVE BEEN IMPOUNDED BY THE INCOME TAX DEP ARTMENT WHICH HAS RESULTED INTO DELAY IN GETTING THE ACCOUNTS AUDITED AS THE AUDITOR HAS INSISTED FOR THESE DOCUMENTS FOR COMPLETION OF THE AUDIT. FURTHE R THE ASSESSEE SUBMITS THAT THE SEARCH/SURVEY BEING CONDUCTED BY THE INCOME TAX DEP ARTMENT FROM MUMBAI, THE PARTNER OF THE APPELLANT FIRM TO VISIT REGULARLY TO MUMBAI FOR THE POST SEARCH / SURVEY PROCEEDINGS. THIS HAS RESULTED INTO DELAY IN FINALI ZATION OF THE ACCOUNTS AND GETTING THE ACCOUNTED AUDITED AND RELIED ON THE FOLLOWING D ECISIONS: AZADI BACHOO ANDOLAN VS. UNION OF INDIA (2001) 252 ITR 471(DELHI) HINDUSTAN STEEL LTD VERSUS STATE OF ORISSA (83 1. T. R. 26) THE APPELLANT SUBMIT THAT THE PENALTY LEVIABLE U/S. 271B IS RS. 1,00,000/- AND THE ASSESSING OFFICER HAS LEVIED THE PENALTY OF RS. 1,50,000/-, WHICH IS BEYOND THE SUM SPECIFIED U/S. 2718. IT APPEARS THAT THE AS SESSING OFFICER HAS LEVIED THE PENALTY U/S. 2718 AS AMENDED BY THE FINANCE ACT, 20 10, WHICH IS APPLICABLE FROM 1.4.2011 I.E. FROM A.Y. 2011-12. AS THE ASSESSMENT YEAR COVERED UNDER APPEAL IS A. Y. 2007-08, THEREFORE THE REVISED SUM OF PENALTY UNDER SECTION 2718 WOULD NOT BE APPLICABLE TO THE APPELLANT. THE APPELLANT THERE FORE SUBMIT THAT AMOUNT OF PENALTY LEVIED U/S 271B MAY RESTRICTED TO RS.1,00,000/-. M/S.SAI RADHA DEVELOPERS 5 4. THE LD. CIT(A) TOO CONFIRMED THE PENALTY ON THE GR OUND THAT, THERE IS NO SPECIFIC REASON GIVEN BY THE ASSESSEE FO R THE DELAY OF 14 MONTHS, EXCEPT FOR REITERATED THE FACT THAT DUE TO SEARCH OPERATION AND DELAY IN GETTING COPIES OF MATERIAL AND DOCUMENT FROM THE INVESTIGATION. HOWEVER, HE REDUCED THE PENALTY TO RS.1, 00,000/- 5. AFTER HEARING BOTH THE PARTIES, IT IS NOTED FROM THE RECORDS THAT, FOR THE ACCOUNTING YEAR ENDING ON 31 ST MARCH 2007, THE DUE DATE OF FILING OF RETURN OF INCOME FOR THE A.Y.2007-08 WAS 3 0.9.2007. BY THIS DATE, THE AUDIT REPORT U/S.44AB WAS ALSO TO BE FILED. HOWEVER, BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME, SURVEY/S EARCH ACTION HAD TAKEN PLACE ON 26.7.2007, DURING THE COURSE OF WHICH, VARIOUS DOCUMENTS AND PAPER WERE IMPOUNDED BY THE INVESTIGATIO N WING. THE ASSESSEE WAS ORIGINALLY ASSESSED TO TAX IN UDIPI AN D IN WORKED OF SURVEY/SEARCH THE FILES WERE TRANSFERRED TO MUMBAI ON CENTRALIZATION OF THE CASES. THEREAFTER, THE ASSESSEE APPLIED FOR OBTAI NING THE COPIES OF THE PAPERS AND THE DOCUMENTS FROM THE INVESTIGATION WING . AFTER OBTAINING PROCURING THE DOCUMENTS/PAPERS, THE ASSESS EE COULD FINALISED ITS ACCOUNT AND CONSEQUENTLY AUDIT WAS CA RRIED OUT AND REPORT U/S.44AB WAS PREPARED. THE SAID AUDIT REPORT WAS COM PLETED ON 29.9.2008 WHICH WAS FILED ON 30.9.2008 ALONGWITH TH E RETURN OF INCOME. THIS RESULTED INTO DELAY OF 14 MONTH. IF WE CONSIDER THE ENTIRE M/S.SAI RADHA DEVELOPERS 6 FACTS AND CIRCUMSTANCES LIKE, TRANSFER OF FILES FROM U DIPI TO MUMBAI AND THEN OBTAINING THE PHOTOCOPIES OF DOCUMENTS FROM THE DEPA RTMENT, THEN THE DELAY OF 14 MONTHS CANNOT BE SAID TO BE UNREAS ONABLE TIME. SECTION 273B STIPULATES THAT NO PENALTY UNDER VARIOUS SECTIONS, INCLUDING U/S.271B SHALL BE IMPOSED, IF THE ASSESSEE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE. DESPITE THE FACT THAT ASSESSEES HAS ELABORATE EXPLAINED ITS GENUINE AND B ONAFIDE REASONS FOR THE DELAY IN OBTAINING THE AUDIT REPORT, THE AUTHOR ITIES BELOW HAVE REJECTED THE SAID EXPLANATION OF REASONABLE CAUSE WI THOUT ANY FACTUAL MATERIAL TO REBUT THE SAME OR ANY LEGAL BASIS. UNDER THE FACTS AND CIRCUMSTANCES, WE HOLD THAT THERE WAS A REASONABLE CA USE IN DELAY IN OBTAINING THE AUDIT REPORT AND FILING THE SAME WITHIN THE AMBIT OF SECTION 273B AND THEREFORE, NO PENALTY CAN BE IMPOSED U/S.271B IN THIS CASE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH DAY OF MARCH 2015. SD/- SD/- SD/ - . D. KRUNAKARA RAO ACCOUNTANT MEMBER SD/ - ! ! ! ! '# '# '# '# AMIT SHUKLA JUDICIAL MEMBER MUMBAI, 5& 5& 5& 5& DATED: 04.03.2015 PATEL M/S.SAI RADHA DEVELOPERS 7 ' / +!6 76(! / COPY OF THE ORDER FORWARDED TO : (1) & '.! / THE ASSESSEE; (2) 1 / THE REVENUE; (3) 8() / THE CIT(A); (4) 8 / THE CIT, MUMBAI CITY CONCERNED; (5) 6;< +!& , , / THE DR, ITAT, MUMBAI; (6) <' = / GUARD FILE. ,6! +! / TRUE COPY '& / BY ORDER > / ? 1 / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI