Dhermendra Kumar Contractor, Muzaffarnagar V. ITO, Ward- 1(2), Muzaffarnagar

ITA 5005/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8670 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 16-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: PREM PRAKASH
• Keywords: Reasonable cause
• Section: 40(b); 143(1); 250; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER ITA NO. 5005/DEL/2018 ASSESSMENT YEAR: 2010-11 M/S DHARMENDRA KUMAR CONTRACTOR VS. ITO, WARD 1(2) C/O ASHISH AGARWAL, ADVOCATE MUZAFFARNAGAR 183/2, NORTH CIVIL LINES, MUZAFFARNAGAR-251001 (PAN: AADFD4950H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. PREM PRAKASH, ADVOCATE & SH. ASHISH AGGARWAL, ADVOCATE REVENUE BY : SH. SL ANURAGI, SR. DR. ORDER THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDE R DATED 27.6.2018 OF THE LD. CIT(A), MUZAFFARNAGAR PERTAININ G TO ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS:- I) THAT THE ORDER IS AGAINST LAW AND FACTS ON THE RECORD. II) LD. CIT(A) WAS WRONG IN CONFIRMING PENALTY U/S. 271B OF THE I.T. ACT, 1961 ALTHOUGH THE SAME WAS TIME BARRED. 2 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI RM DERIVES INCOME FROM CIVIL CONTRACTOR BUT THE ITR WAS NOT F ILED BY THE ASSESSEE WITHIN THE TIME ALLOWED AS PER THE PROVISI ONS OF SECTION 139 OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). THE SAME WAS FILED ON 17.2.2014 DECLARING TOTAL INCOME OF RS. 20,000/-. HENCE, THE RETURN COULD NOT BE PROCESSED U /S. 143(1) OF THE ACT. THE ASSESSMENT U/S. 147/143(3) OF THE IN COME TAX ACT, 1961 WAS COMPLETED AT AN INCOME OF RS. 4,40,600/-. AO OBSERVED THAT AS PER THE PROVISIONS OF SECTION 44AB OF THE ACT THE ASSESSEE IS UNDER OBLIGATION TO GET ITS ACCOUNT AUDITED AND THEREFORE, A SHOW CAUSE NOTICE U/S. 271B OF THE ACT WAS ISSUED TO THE ASSESSEE ON 17.3.2016 AND IN COMPLIANCE TO TH E NOTICE, THE ASSESSEE FILED WRITTEN SUBMISSION ON 18.4.2016 R EQUESTING THEREIN TO KEEP THE PENALTY PROCEEDINGS IN ABEYAN CE TILL THE DISPOSAL OF FIRST APPEAL. AGGRIEVED WITH THE ASSESSM ENT ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A), MUZAFFARNAGAR WHO VIDE ORDER DATED 18.5.2017 PARTLY ALLOWED APPEAL OF THE ASSESSEE AND HELD THAT THE AO HAS EST IMATED THE GROSS RECEIPTS AT RS. 1.40 CRORE WITHOUT ANY BASIS AND UPHELD THAT THE AO HAS BEEN JUSTIFIED IN ESTIMATING THE NE T PROFIT @8%. THE AO WAS DIRECTED TO RECOMPUTED NET PROFIT BY TAKING 3 GROSS RECEIPT OF RS. 1.35 CRORE AS DECLARED AND BY ALLOWING FURTHER SALARY TO THE PARTNERS AT THE ENHANCED PRO FIT U/S. 40(B) OF THE ACT. AFTER RECEIPT OF THE ORDER OF THE LD. C IT(A), AGAIN A SHOW CAUSE NOTICE U/S. 271B OF THE ACT DATED 17.8.201 7 WAS ISSUED TO THE ASSESSEE AND IN COMPLIANCE TO THE NO TICE THE ASSESSEE FURNISHED HIS REPLY BY STATING THAT DELAY IN AUDIT OF A/CS WAS DUE TO THE REASON THAT DUE TO SOME FAMILY PROBLEMS OF WORKING PARTNER SH. DHARMENDRA KUMAR, THE AUDIT WAS DONE LATE AND AUDIT WAS DONE VOLUNTARILY AND WITHOUT ANY NOTICE FROM THE DEPARTMENT, HENCE, THE CAUSE IS A REASONABLE CAUSE AND ACCORDINGLY REQUESTED TO CANCEL THE NOTICE. AFT ER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO OBSERV ED THAT THE AO HAS ALREADY ESTABLISHED FOR FAILURE OF THE ASSES SEE TO GET ITS ACCOUNTS AUDITED OR TO FURNISH A REPORT OF SUCH AUD IT AS REQUIRED U/S. 44AB VIDE HIS ASSESSMENT ORDER DATED 17.3.2016 AND THE LD. CIT(A) HAS ALSO CONFIRMED THE MAJOR PA RT OF THE ADDITION MADE BY THE AO AND VIDE WRITTEN SUBMISSION DATED 25.2.2016, THE AR OF THE ASSESSE FIRM SPECIFICALLY SUBMITTED.THE ASSESSEE HAS MAINTAINED ONLY CASH B OOK AND LEDGER. THE ASSESSEE HAS NOT MAINTAINED BILLS AND VOUCHERS REGARDING EXPENSES. ACCORDINGLY, THE AO HELD THAT SINCE THE 4 ASSESSEE HAS FAILED TO COMPLY THE PROVISION OF SEC TION 44AB OF THE ACT AND THEREFORE, IS LIABLE TO BE PENALIZED U/S . 271B OF THE ACT AND MADE THE PENALTY @0.5% OF RS. 67,950/- U/S. 27 1B OF THE ACT VIDE ORDER DATED 30.10.2017. AGAINST THE SAI D PENALTY ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 27.6.2018 HAS DISMISSED THE AP PEAL OF THE ASSESSEE. AGGRIEVED WITH THE IMPUGNED ORDER, ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. DURING THE HEARING, LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT LD. CIT(A) HAS WRONGLY CONFIRMED THE PEN ALTY OF RS. 67,950/- ALTHOUGH THE SAME WAS TIME BARRED. IT WAS FURTHER SUBMITTED THAT THE AUDIT U/S. 44AB OF THE ACT SHOUL D HAVE BEEN DONE UPTO 30.9.2013, BUT AUDIT WAS DONE ON 13.12.2013 AND RETURN WAS FILED ON 17.2.2014 SUOMOTO WITHOUT ANY NOT ICE, HENCE, NO PENALTY U/S. 271-B OF THE ACT CAN BE LEVIE D. TO SUPPORT HIS CONTENTION, HE RELIED UPON THE DECISION OF THE ITAT, COCHIN IN THE CASE OF TT KURUVILLA VS. ACIT (2019) 198 TTJ (COCHIN) (UO) 17. 5 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT HE HAS PASSED A WELL REASONE D ORDER, WHICH DOES NOT NEED ANY INTERFERENCE. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE REC ORDS ESPECIALLY THE IMPUGNED ORDER AS WELL AS THE CASE L AW CITED BY THE LD. COUNSEL FOR THE ASSESSEE. IT IS NOTED THAT THE ASSESSEE HAS NOT FURNISHED ITS RETURN OF INCOME WITHIN THE T IME PRESCRIBED U/S 139 OF THE ACT NOR ACCOUNTS HAVE BEE N GOT AUDITED WITHIN THE PRESCRIBED PERIOD U/S 44AB OF TH E ACT. THE AO HAS ESTIMATED THE TURNOVER OF THE ASSESSEE AT RS .1.40 CRORE IN THE ASSESSMENT PROCEEDINGS U/S 143(3)/147 OF THE ACT PASSED ON 17-03-2016, WHICH HAS BEEN CHALLENGED BY T HE ASSESSEE BY FILING APPEAL U/S 246A OF THE ACT. THE ISSUE OF FINALITY OF THE TURNOVER OF THE BUSINESS OF THE ASS ESSEE WAS DISPOSED OFF VIDE ORDER U/S 250 OF THE ACT DATED 18 -05-2017 IN THE APPEAL FILED AGAINST THE ASSESSMENT ORDER. I FI ND THAT IT IS PROVIDED U/S 275 OF THE ACT THAT WHERE THE RELEVANT ASSESSMENT ORDER OR THE OTHER ORDER IS SUBJECT MATT ER OF APPEAL BEFORE THE LD. COMMISSIONER OF APPEALS U/S 246A OF T HE ACT, PENALTY ORDER HAS TO BE PASSED BEFORE THE EXPIRY OF FINANCIAL 6 YEAR IN THE COURSE OF WHICH SUCH PROCEEDINGS HAVE B EEN INITIATED OR WITHIN ONE YEAR FROM THE END OF FINANC IAL YEAR IN WHICH ORDER OF THE COMMISSIONER (APPEALS) IS RECEIV ED BY THE PRINCIPAL CIT - WHICHEVER IS LATER. IN THIS CASE TH E QUANTUM OF PENALTY TO BE IMPOSED U/S 27I-B OF THE ACT WAS DEPE NDENT ON THE OUTCOME OF APPELLATE ORDER U/S 250 OF THE ACT I N THE APPEAL FILED AGAINST THE ASSESSMENT ORDER PASSED BY THE AO . THEREFORE, THE AO HAS VALIDLY KEPT THE PENALTY PROCE EDINGS U/S 27IB OF THE ACT IN ABEYANCE AND HAS DISPOSED OFF TH E SAME BY 30-10-2017 WITHIN THE PRESCRIBED PERIOD AFTER THE D ISPOSAL OF APPELLATE ORDER U/S 250 OF THE ACT. THE ASSESSEE HA S NOT FURNISHED ANY REASONABLE CAUSE FOR NOT GETTING THE ACCOUNTS AUDITED AS REQUIRED U/S 44AB OF THE ACT. IT IS ALSO NOTED THAT THE AO HAS ALREADY ESTABLISHED FOR FAILURE OF THE ASSESSEE TO GET ITS ACCOUNTS AUDITED OR TO FURNISH A REPORT O F SUCH AUDIT AS REQUIRED U/.S 44AB VIDE HIS ASSESSMENT ORDER DATED 1 7.3.2016 AND THE LD. CIT(A) HAS ALSO CONFIRMED THE MAJOR PAR T OF THE ADDITION MADE BY THE AO. IT IS ALSO NOTED VIDE WR ITTEN SUBMISSION DATED 25.2.2016, THE AR OF THE ASSESSEE FI RM SPECIFICALLY SUBMITTED THE ASSESSEE HAS MAINTAI NED ONLY CASH BOOK AND LEDGER. THE ASSESSEE HAS NOT MAINTAINE D BILLS 7 AND VOUCHERS REGARDING EXPENSES.. HENCE, THE CASE L AW CITED BY THE LD. COUNSEL FOR THE ASSESSEE IS DISTINGUISHE D ON FACTS. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF T HE CASE AS EXPLAINED ABOVE, I AM OF THE CONSIDERED VIEW THAT AO HAS RIGHTLY IMPOSED PENALTY U/S 271B OF THE ACT AT RS.6 7,950/- IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THERE FORE, THE SAME WAS RIGHTLY CONFIRMED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHOLD TH E ACTION OF THE LD. CIT(A) ON THE ISSUE OF DISPUTE AND REJECT TH E GROUND RAISED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED ON 09-04-2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE:09/04/2019 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT(A) 5. DR, ITAT BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES