Narayan Pharmaceuticals, Khurda V. ITO, Khurda

ITA 439/CTK/2011

• Counselvise Citation: 43922114 RSA 2011
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 01-11-2011
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: G NAIKR KAR ARS
• Keywords: Reasonable cause
• Section: 131

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 439/CTK/2011 (ASSESSMENT YEAR 2009 - 10) NARAYAN P HARMACEUTICALS, BISWAL STRE E T, AT/P.O.BALUGAON, DIST. KHURDA PAN: AAABS0768 B VERSUS INCOME - TAX OFFICER, KHURDA WARD, KHURDA. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI G.NAIK/ R.KAR, ARS FOR THE RESPONDENT SHRI S.C.MOHANTY, DR DATE OF HEARING : 02.12.2011 DATE OF PRONOUNCEMENT : 16.12.2011 ORDER SH RI K.K.GUPTA, AM : THIS APPEAL BY THE ASSESSEE AGITATES THE CONFIRMATION OF PENALTY LEVIED UNDER THE PROVISIONS OF SECTION 271B OF THE INCOME - TAX ACT,1961 BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS). 2. THE LEARNED COUNSEL FOR THE ASSESSEE INITIAT ING HIS ARGUMENTS SUBMITTED THAT THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR 2009 - 10 IS PENDING AND IS TO BE PASSED BY THE ASSESSING OFFICER TILL 31.12.2011. HOWEVER, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS ON HAVING FOUND THAT THE TAX AUDIT REPORT WAS NOT FILED ALONG WITH THE RETURN OF INCOME WHICH ELECTRONICALLY WAS FILED ON 23.9.2009 VIDE ACKNOWLEDGEMENT AS PLACED IN THE PAPER BOOK. THE AUDIT REPORT HAVING BEEN OBTAINED ON 21.09.2009 WAS MENTIONED IN THE FORM ITR - 5 WAS FILED BEFORE TH E ASST. COMMISSIONER OF INCOME - TAX , CIRCLE 2(1) , BHUBANESWAR ACKNOWLEDGING THAT THE ASSESSEE WAS GOVERNED BY THE PROVISIONS OF SECTION 44AB WHICH WAS TAKEN COGNIZANCE OF BY THE INCOME - TAX OFFICER, KHURDA WARD, KHURDA AS THE AUDIT REPORT NOT HAVING BEEN F ILED WHEN HE SUMMONED THE ASSESSEE UNDER SECTION 131 TO APPEAR ON 21.10.2009. PENALTY WAS INITIATED WHEN IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER ON THE DATE OF HEARING THAT THE ASSESSEE WAS INDISPOSED AND WAS NOT ABLE TO PRESENT HIMSELF FOR EXPLAININ G THE CAUSE FOR NOT ATTACHING ITA NO.439/CTK/2011 2 THE AUDIT REPORT WITH THE E - FILED RETURN OF INCOME. THE ASSESSING OFFICER LEVIED PENALTY OF 1 LAKH VIDE HIS ORDER DT.30.10.2009. 3. AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHO NOTED THAT THE ASSESSING OFFICER ISSUED SUMMONS U/S.131 DT.19.10.2009 CALLING UPON THE ASSESSEE TO GIVE EVIDENCE AND TO PRODUCE EITHER PERSO NALLY OR THROUGH ITS AUTHORISED REPRESENTATIVE A COPY OF THE AUDITED ACCOUNTS IN FORM NO.3CD FOR THE FINANCIAL YEAR 2008 - 09 RELEVANT TO THE ASSESSMENT YEAR 2009 - 10 WHEN IT WAS SUBMITTED THAT THE RETURN WAS FILED WITH THE OFFICE OF THE ASST. COMMISSIONER OF INCOME - TAX , CIRCLE 2(1), BHUBANESWAR AND THE PENALTY HAS BEEN LEVIED BY THE INCOME - TAX OFFICER, KHURDA WARD, KHURDA. THEREFORE, NO CAUSE OF ALARM WAS THERE FOR LEVY OF PENALTY EXPARTE WHICH THE LEARNED CIT(A) NEGATED BY HOLDING THAT THE INDISPOSITION OF THE ASSESSEE TO FURNISH THE AUDIT REPORT COULD NOT BE SAID TO HAVE BEEN FILED ALONG WITH THE RETURN WAS NOT A REASONABLE CAUSE AS GOVERNED BY THE PROVISIONS OF SECTION 273 B. 4. THE LEARNED COUNSEL SUBMITTED THAT THE LEARNED CIT(A) HELD THAT THE ASSESSEE O UGHT TO HAVE FAXED THE AUDIT REPORT AND THEREFORE, THERE WAS NO REASONABLE CAUSE WHICH PREVENTED HIM FOR FILING THE AUDIT REPORT BEFORE THE ASSESSING OFFICER WHEN THE ASSESSING OFFICER DEMANDED THE SAME ON 21.10.2009 . HE CONFIRMED THE PENALTY SO LEVIED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE IN ADDITION TO THE ABOVE SUBMITTED THAT IT HAS BEEN HELD BY VARIOUS JUDICIAL PRONOUNCEMENTS AND ALSO ON THE INSTRUCTION OF CBDT WHE RE IT HAS BEEN CLARIFIED THAT AUDIT REPORT U/S.44AB IS NOT TO BE ATTACHED TO THE RETURN BUT IT CANNOT BE SEPARATELY FILED ON OR AFTER THE DUE DATE OF FILING OF THE RETURN. THE LAW ONLY PROVIDED THAT THE ASSESSEE OUGHT TO OBTAIN AUDIT REPORT BEFORE THE FILING OF THE RETURN WHICH HAD BEEN STATED TO THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A). IT WAS SUBMITTED THAT THE ORIGINAL RETURN WAS FURNISHED AT THE TIME OF ASSESSMENT ITA NO.439/CTK/2011 3 PROCEEDINGS, WHICH THE ASSESSING OFFICER HAD TAKEN COGNIZANCE OF ALONGWITH THE AUDIT REPORT . THEREFORE, THE LAW IS THAT THE AUDIT REPORT OUGHT TO HAVE BEEN OBTAINED B EFORE THE DUE DATE OF FILING OF RETURN WHICH WAS CONCLUSIVELY ADMITTED BY BOTH THE AUTHORITIES BELOW OUGHT NOT TO RESULT IN LEVY OF PENALTY AND CONFIRMATION THEREOF. AS POINTED OUT EARLIER, THE RETURN OF INCOME WAS FURNISHED ELECTRONICALLY AND THEREFORE, I T WAS SUBMITTED THAT THE FIGURES ACCEPTED IN THE RETURN WERE FROM THE AUDITED FINANCIAL STATEMENTS ONLY CLINCHES THE ISSUE THAT THE AUDIT HAD BEEN CONDUCTED WHEN THE ASSESSING OFFICER CHOSE TO BELIEVE THAT THE AUDIT REPORT HAD NOT BEEN OBTAINED TILL 21.10. 2009. IN SUPPORT OF HIS CONTENTION, THE LEARNED COUNSEL HAS FURNISHED THE ACKNOWLEDGEMENT OF THE I.T . DEPARTMENT STATING THAT THE RE TURN HAD BEEN FILED ON 23.9.2009 ON THE FACTS AND FIGURES WHICH WERE DULY AUDITED AGAINST WHICH NO CONTROVERTING MATERIAL HA S BEEN FOUND INSOFAR AS THE ASSESSMENT PROCEEDINGS ARE STILL CONTINUING BASED ON THE BASIS OF THE VERY FIGURES WHEN THE ASSESSEE HAS INTIMATED THAT THE AUDIT REPORT HAD BEEN OBTAINED BEFORE THE DUE DATE OF FILING OF THE RETURN. HE SUBMITTED THAT IN THE ERA OF ELECTRONIC FILING OF RETURN, THE ASSESSEE WAS NOT ABLE TO ATT EST THE SIGNATURE OF THE CA TO ACCOMPANY THE ELECTRONIC RETURN SO FILED HAS BEEN HELD AGAINST HIM WHICH MAY KINDLY BE CONSIDERED AS UNJUSTIFIED, ILLEGAL AND BEYOND NATURAL COMPREHENSION . HE P RAYED THAT THE PENALTY SO LEVIED MAY KINDLY BE DIRECTED TO BE DELETED. 6. THE LEARNED DR SUPPORTED THE ORDER OF THE LEARNED CIT(A) INDICATING THAT THE ASSESSING OFFICER WAS JUSTIFIED IN LEVYING THE PENALTY WHEN THE AUDIT REPORT DT.21.9.2009 WAS NOT FILED W ITH THE RETURN DECLARIN G INCOME OF 7,85,000 WAS FILED ON 23.9.2009 IN THE OFFICE OF THE ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), BHUBANESWAR AND NOT WITH THE INCOME - TAX OFFICER, KHURDA WARD, KHURDA. ITA NO.439/CTK/2011 4 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABL E ON RECORD . CONSIDERING THE FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO FIND THAT THE CONTROVERSY HAS ARISEN BECAUSE OF ADOPTING THE ELECTRONIC MEDIA FILING SYSTEM OF RETURNS WHICH HAS GOT ITS OWN PARAMETER S AND NOT TO BE CONSIDERED IN A MANNER THAT A RE TURN HAS BEEN FILED BEFORE AN ASSESSING OFFICER WHO WAS ONLY TO INITIATE PROCEEDINGS AFTER A SURVEY PROCEEDINGS. IN OTHER WORDS, THE ELECTRONIC MEDIA DOES NOT REQUIRE ANY DOCUMENTS TO BE FILED ALONG WITH THE RETURN INSOFAR AS IT WAS NOT THE CASE OF THE AS SESSING OFFICER THAT THE AUDIT REPORT HAD BEEN OBTAINED AFTER THE DATE OF FILING OF THE RETURN. THE LEARNED COUNSEL HAS SUBMITTED THAT THE ASSESSMENT PROCEEDINGS ARE STILL IN VOGUE WHICH ARE BARRED BY LIMITATION TILL 31.12.2011. PENALTY HAS BEEN LEVIED BEF ORE THAT THEREFORE ONLY INDICATES THAT THE RETURN IF AT ALL COULD BE CONSIDERED AS DEFECTIVE TILL SUCH TIME THE ASSESSING AUTHORITIES HAD NOT VERIFIED THAT THE RETURN IN THE HARD FORM DID NOT HAVE THE PURPORTED AUDIT REPORT STATED TO HAVE BEEN OBTAINED PRI OR TO THE DATE OF FILING OF RETURN ELECTRONICALLY. THE LEARNED CIT(A) THEREFORE WAS NOT JUSTIFIED IN HOLDING A VIEW THAT THE ASSESSING OFFICER WAS JUSTIFIED IN LEVYING THE PENALTY WHEN THE ASSESSEE , DUE TO INDISPOSITION , COULD NOT FURNISH THE AUDIT REPORT BEFORE THE ASSESSING OFFICER ON 21.10.2009. THE ELECTRONICALLY FILED RETURN HAD BEEN ACCEPTED AND ACKNOWLEDGED BY THE ASST. COMMISSIONER OF INCOME - TAX , CIRCLE 2(1),BHUBANESWAR ON 23.10.2009 THEREFORE CLARIFIES THE OBTAINING OF AUDIT REPORT BEFORE THE DATE OF FILING OF THE RETURN WAS DT.21.10.2009 COULD NOT BE D ISPUTED INSOFAR AS THE CBDT HAD CLARIFIED BY CIRCULAR NO.9 OF 2006 DT.10.10.2006 THAT THE REPORT OF AUDIT U/S.44AB WAS NOT TO BE ATTACHED TO THE RETURN AND ASSESSEES CAN FILL OUT THE RELEVANT COLUMN O F THIS FORM ON THE BASIS OF SUCH REPORT. THE LEARNED COUNSEL HAS SUBMITTED THAT THE FIGURES GIVEN IN THE RETURN MATCH THAT THEY ARE FROM THE AUDITED FINANCIAL STATEMENTS AGAINST ITA NO.439/CTK/2011 5 WHICH NO CONTROVERTING MATERIAL HAS BEEN BROUGHT ON RECORD EITHER BY THE ASSES SING OFFICER OR BY THE LEARNED CIT(A). THE INDISPOSITION OF THE ASSESSEE ON 21.10.2009 THEREFORE COULD NOT BE HELD AGAINST IT WHEN THE OTHER PARAMETERS GOVERNING THE FILING OF RETURN AND THE AUDIT REPORT WERE COMPLIED WITH IN ACCORDANCE WITH SECTION 44AB A ND THE INSTRUCTIO N OF THE CBDT. WE DO NOT FIND THE LEVY OF PENALTY U/S.271B AND CONFIRMATION THEREOF BY THE AUTHORITIES BELOW JUSTIFIED. WE HAVE BEEN TOLD THAT THE ASSESSMENT PROCEEDINGS ARE STILL IN VOGUE AND THE ASSESSING OFFICER IS RELYING ON THE FACTS AND FIGURES AS NOTED IN THE E - FILED RETURN MATCHING THE AUDIT REPORT THEREFORE COULD NOT BE SUBJECTED TO INDICATE NON - OBTAINING/ FURNISHING OF AUDIT REPORT. IN THIS VIEW OF THE MATTER, THE PENALTY SO LEVIED U/S.271B IS CANCELLED. 8. IN THE RESULT, THE APPEA L OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 16.12.2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: NARAYAN PHARMACEUTICALS, BISWAL STREET, AT/P.O.BALUGAON, DIST. KHURDA 2. THE RESPONDENT: INCOME - TAX OFFICER, KHURDA WARD, KHURDA. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.