Sri.T.T.Kuruvilla, Alappuzha V. DCIT, Alappuzha

ITA 504/COCH/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5250 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-01-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 26-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: R SRINIVASAN
• Keywords: Reasonable cause
• Section: 273B; 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., J M I .T . A. NO . 5 0 4 / COCH/ 2 01 8 ASSESSMENT YEAR : 201 2 - 13 SHRI T.T. KURUVILLA, PROP. ALLEPPEY PARCEL SERVICE, CULTEN ROAD, VAZHICHERRY JN., ALAPPUZHA. [P AN:AB DPT 4582E] VS. THE ASSISTANT COMMISSIONER OF INCOME - TAX, CIRCLE - 1, ALA PPUZHA. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) A SSESSEE BY SHRI R. SRINIVASAN, CA REVENUE BY SMT. A.S. BINDHU, SR. DR D ATE OF HEARING 22 / 01 / 201 9 DATE OF PRONOUNCEMENT 22 /01/2019 O R D E R PER CHANDRA POOJARI, AM: TH IS APPE AL FILED BY THE ASSESSEE IS DI RECTED AGAINST T HE ORDER OF THE CIT (A), KOTTAYAM DATED 2 7 /0 8 /2018 AND PERTAIN TO THE A SSESSMENT YEAR 2 0 1 2 - 13 . 2 . THE ASSESSEE HAS RAISED THE GROUND WITH REGARD TO LEVY OF PEN ALTY U/S. 271B FOR DELAYED FILING OF RETURN AND AUDIT REPORT BEFORE THE AO. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 201 2 - 13 ON 25/01 /2014 . THE ASSESSMENT U/S. 143(3) OF THE ACT I.T.A. NO . 542 /COCH/ 201 8 2 WAS COMPLETED ON 29/03/201 5. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE GOT HIS ACCOUNTS AUDITED UNDER SECTION 44AB OF THE ACT BELATEDLY ON 25/01/2014. THEREFORE, TH E ASSESSING OFFICER ISSUED NOTICE U/S. 271B OF THE ACT ON 29/03/2015 TO THE ASSESSEE TO EXPLAIN WHY THE PENALTY PROCEEDINGS U/S. 271B OF THE ACT SHOULD NOT BE IMPOSED. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE ASSESSING OFFICER LEVIED PENALTY OF RS.1,50,000/ - U/S. 271B OF THE ACT. 4 . AGAINST THIS, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE PLEADED THAT THE ASSESSMENT PROCEEDINGS U/S. 143(3) DATED 29/03/2015 IS AB - INITIO - VOID AND REFUSED TO GIVE ANY REPLY AS TO THE REASON WHY THE ACCOUNTS WERE NOT AUDITED. IT WAS SUBMITTED THAT THE P ENALTY PROCEEDINGS U/S. 271B OF THE IT ACT IS INDEPENDENT OF ASSESSMENT PROCEDURE AND EVEN IF ASSESSMENT PROCEEDINGS IS DECLARED VOID THE PENALTY PROCEEDINGS U/S. 271B IS NOT VOID. 4.1 THE CIT(A) OBSERVED THAT THE ASSESSEE GOT HIS ACCOUNTS AUDITED O NLY ON 25/01/2014 AS AGAINST THE STIPULATED DUE DATE OF 30/09/2012. THERE WAS A DELAY OF 17 MONTHS FOR WHICH NO EXPLANATION HAS BEEN GIVEN. THEREFORE, THE CIT(A) WAS SATISFIED THAT THIS WAS A FIT CASE FOR IMPOSING PENALTY U/S. 271B OF THE I.T. ACT. THE PENALTY LEVIABLE U/S. 271B IS A SUM EQUAL TO ONE - HALF PERCENT OF THE TOTAL TURNOVER OR A SUM OF RS.1,50,000 WHICH EVER IS LESS. ONE - HALF PERCENT OF I.T.A. NO . 542 /COCH/ 201 8 3 THE ASSESSEES TOTAL TURNOVER (RS.28,16,33,772 X .5%) IS RS.14,08,168/ - ACCORDINGLY, HE CONFIRMED THE LEVY OF PENALTY OF RS.1,50,000/ - . 4.2. DURING THE APPEAL PROCEEDINGS, THE LEARNED AR ARGUED THAT AUDIT REPORT IS ONLY DIRECTORY AND NOT MANDATORY. FURTHER, IN THE SUBMISSIONS FILED, IT WAS STATED AS UNDER: '2. IN THE PENALTY REPLY, YOUR APPELLANT HAD SUBMITTED THAT THOUGH THE ASSESSMENT ITSELF IS AB - INITIO - VOID, AN APPEAL IS PENDING IN THIS REGARD. THAT APART, IT IS ALSO NOW STATED THAT THERE WAS A DELAY IN FILING THE RETURN OF INCOME FOR THE EARLIER ASSESSMENT YEA R 2010 - 11 AND 2011 - 12 WITHOUT WHICH THE RETURN FOR THE ASSESSMENT YEAR 2011 - 13 COULD NOT BE FILED. IN THE MEAN TIME, THERE W AS A SURVEY OPERATION ON THE BUSINESS PREMISES OF THE APPELLANT D U RING THE COURSE OF SURVEY, RETURN OF INCOME WERE FIL ED. THE OFFICER, WITHOUT APPRECIATING ALL THESE BASIC FACTS HAD PROCEEDED TO LEVY PENALTY AND THAT TOO WITHOUT A SPEAKING ORDER. 6. THERE WAS A REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B TO DROP THE PENALTY PROCEEDINGS , SINCE EARLIER YEARS RET URNS WERE PENDING, WHEN ALONE PRESENT YEARS RETURN COULD BE FILED. 7. WHEN THE PREDECESSORS IN THE OFFICE HAS DROPPED THE PROCEEDINGS ON THIS SCORE FOR THE EARLIER YEARS, IT WAS ONLY APPROPRIATE FOR THE ASSESSING OFFICER TO HAVE DROPPED THE PENALTY PROC EEDINGS FOR THE YEAR ALSO. 4.3 THE CIT(A) OBSERVED THAT THE ASSESSEE HAD GOT HIS ACCOUNTS AUDITED ON 25/01/2014 MUCH BEYOND THE DUE DATE APPLICABLE FOR A.Y. 2012 - 13. THE CIT(A) OBSERVED THAT DURING THE PENALTY PROCEEDINGS, THE ASSESSEE HAD NOT ADDUCE D ANY REASONS FOR THE DELAY IN GETTING THE ACCOUNTS AUDITED EXCEPT STATING THAT THE ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT COMPLETED ON 29.03.2015 ARE I.T.A. NO . 542 /COCH/ 201 8 4 VOID AB INITIO. ACCORDING TO THE CIT(A) ASSESSING OFFICER HAD RIGHTLY HELD THAT THE PENALTY PROC EEDINGS ARE INDEPENDENT OF ASSESSMENT PROCEEDINGS. 4.4 THE CIT(A) OBSERVED THAT THE EXPLANATION OF THE LD. AR THAT THE DELAY WAS ON ACCOUNT OF DELAY IN FILING OF RETURN OF INCOME FOR A.YS. 2010 - 11 AND 2011 - 12 WAS NOT SATISFACTORY AND THE PENALTY LEVIAB LE U/S. 271B OF THE ACT IS SUBJECT TO THE REASONABLE CAUSE SHOWN BY THE ASSESSEE U/S. 273B OF THE ACT. IT WAS ALSO OBSERVED THAT THE ASSESSEE GOT HIS ACCOUNTS AUDITED FOR A.Y. 2010 - 11 ON 19.09.2010 AND FOR A.Y. 2011 - 12 ON 15/09/2011. THEREFORE, ACCORDING TO THE CIT(A), IT WAS EVIDENT THAT THE ASSESSEE GOT HIS ACCOUNTS FOR A.YS 2010 - 11 AND 2011 - 12 AUDITED WITHIN THE DUE DATE, IRRESPECTIVE OF THE DATE OF FILING OF RETURN OF INCOME FOR THOSE YEARS. CONSIDERING THESE FACTS, IT WAS EVIDENT THAT THE LD. AR COU LD NOT SHOW REASONABLE CAUSE FOR FAILURE OF THE ASSESSEE TO GET HIS ACCOUNTS AUDITED WITHIN DUE DATE AS PER SECTION 44AB OF THE A C T. HENCE, THE CIT(A) UPHELD THE PENALTY OF RS.1,50,000/ - LEVIED BY THE ASSESSING OFFICER U/S. 2721B OF THE ACT. 5. AGAINST T HIS, THE ASSESSEE IS IN APPEAL BEFORE US. THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A). 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. I.T.A. NO . 542 /COCH/ 201 8 5 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN THIS CASE, THE ASSESSEE WAS REQUIRED TO GET HIS BOOKS OF ACCOUNT AUDITED AND FILED ALONG WITH THE RETURN OF INCOME U/S. 44AB WITH THE DUE DATE OF 30/09/2012 FOR THE ASSESSMENT YEAR 2012 - 13. HOWEVER, THE AUDIT REPORT WAS FURNISHED ONLY ON 25/01/2014. THE CONTENTION OF THE LD. AR WAS THAT THERE WAS A DELAY IN FILING THE RETURN OF INCOME FOR THE EARLIER ASSESSMENT YEARS 2010 - 11 AND 2011 - 12 WITHOUT WHICH THE RETURN FOR THE ASSESSMENT YEAR 2012 - 13 COULD NOT BE FILED. SINCE THE ASSESSEE HAD TO CARRY FOR WARD THE BALANCE FROM EARLIER YEARS TO THE SUBSEQUENT YEARS, IT WAS NOT POSSIBLE TO GET THE BOOKS OF ACCOUNT AUDITED FOR THE ASSESSMENT YEAR 2012 - 13 WHICH IS A REASONABLE CAUSE AS PRESCRIBED U/S. 273B OF THE I . T. ACT. THE LD. AR RELIED ON THE FOLLOWING JU DGMENTS IN SUPPORT OF HIS CONTENTIONS: I) CIT VS. MALAYALAM PLANTATIONS LTD. (1976) (103 ITR 835) (KER.) II) ACIT VS. AMAR CHAND RAJ KUMAR (2004) (89 ITD 96)(ITAT, CHANDIGARH) III) PREM PRAKASH SENAPATI VS. ITO (ITA NO.459&185/CTK/2017 DATED 17/04/2018) )(ITAT, CUTTACK) . 7.1 FROM THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THE ASSESSEE GOT HIS BOOKS OF ACCOUNTS AUDITED ON 25/01/2014 WHICH WAS MADE AVAILABLE O THE ASSESSING OFFICER AND NO PREJUDICE HAS BEEN CAUSED TO THE REVENUE. NOW THE SHORT QUESTION THAT ARISES IS WHETHER IN THIS SCENARIO, PENALTY U/S. 271B OF THE ACT CAN BE LEVIED OR NOT. IN OUR CONSIDERED OPINION, THE ASSESSEE HAD ONLY I.T.A. NO . 542 /COCH/ 201 8 6 COMMITTED TECHNICAL VENIAL BREACH WHICH CREATE D ANY LOSS TO THE EXCHEQUER AS THE AUDIT REPORT WAS AVAILABLE TO THE ASSESSING OFFICER BEFORE THE COMPLETION OF THE ASSESSMENT PROCEEDINGS. THE MADRAS HIGH COURT IN THE CASE OF CIT VS. A.N. ARUNACHALAM (208 ITR 481) IN THE CONTEXT OF FILING OF AUDIT REPORT FOR CLAIMING DEDUCTION U/S. 80J OF THE ACT, OB SERVED THAT ONCE AUDIT REPORT HAS BEEN MADE AVAILABLE BEFORE THE LD. ASSESSING OFFICER BEFORE THE COMPLETION OF ASSESSMENT PROCEEDINGS, THE ASSESSEE SHOULD BE GRANTED DEDUCTION U/S. 80J OF THE ACT. WE OBSERVE THAT TH IS JUDGMENT WAS RENDERED IN THE CONTEXT OF ADJUDICATION OF QUANTUM OF DEDUCTION CLAIMED BY THE ASSESSEE. HENCE, THE SAID ANALOGY CAN VERY WELL BE DRAWN AND USED IN THE PENALTY PROCEEDINGS LIKE THAT OF THE ASSESSEE. TO SUM UP, WE HOLD THAT THE ASSESSEE HAD COMMITTED ONLY TECHNICAL VENIAL BREACH FOR WHICH HE CANNOT BE PENALIZED. IN VIEW OF THE ABOVE, WE ARE INCLINED TO DELETE THE PENALTY MADE BY THE ASSESSEE U/S. 271B OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND JANUARY, 2019 SD/ - SD/ - (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 22 ND JANUARY, 2019 GJ COPY TO: 1 . SHRI T.T. KURUVILLA, PROP. ALLEPPEY PARCEL SERVICE, CULTEN ROAD, VAZHICHERRY JN., ALAPPUZHA. I.T.A. NO . 542 /COCH/ 201 8 7 2. T HE ASSISTANT COMMISSIONER OF INCOME - T AX , CIRCLE - 1, ALAPPUZHA. 3 . THE COMMISSIONER OF INCOME - TAX (AP P EALS) , KOTTAYAM . 4 . THE PR. COMMISSIONER OF INCOME - TAX, KOTTAYAM. 5 . D. R., I.T.A.T., COCHIN BENCH, COCHIN. 6 . GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN S