Shri Rajendra Shah, Bhuj V. The Income Tax Officer, Ward-2, Bhuj

ITA 525/RJT/2012

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0132 (ITAT-RAJKOT)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-12-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 18-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Keywords: Bonafide belief; Reasonable cause

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . .. . . . . . , , , , . .. . . . . . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI B. R. JAIN AM ITA.NO. 525/RJT/2012 / ASSESSMENT YEAR 2008-09 SHRI RAJENDRA SHAH, BHUJ. C/O. KALPESH S. DOSHI & CO., CHARTERED ACCOUNTANTS, 411, COSMO COMPLEX, MAHILA COLLEGE CIRCLE,RAJKOT.-1 PAN : AGGPS 5525 E ( */ APPELLANT) INCOME-TAX OFFICER, WARD-2, BHUJ. +,*/ RESPONDENT -. / ASSESSEE BY SHRI KALPESH DOSHI, C. A. . / REVENUE BY SHRI AVINASH KUMAR, D. R.. . / DATE OF HEARING 07-12-2012 . / DATE OF PRONOUNCEMENT 07 - 12-2012 / / / / ORDER . .. . . . . . , , , , / T. K. SHARMA, J. M. : THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 11-07-2012 OF C IT (A)-II, RAJKOT CONFIRMING THE PENALTY OF RS.37,360/- LEVIED BY AO U/S.271B OF THE I.T. ACT, 1961 FOR THE ASSESSMENT YEAR 2008-09. 2. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS PROPRIETOR OF FOUR CONCERNS ENGAGED IN THE RETAIL T RADE BUSINESS OF SAAREES, ESTATE BROKERAGE, TOURS AND TRAVELS, ETC. FOR THE ASSESSMENT YEAR UNDER APPEAL, HE FILED THE RETURN OF INCOME ON 29-11-2008 DECLARI NG TOTAL INCOME OF RS.4,27,140/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, AO FOUND THE TURNOVER IN EACH OF THE CONCERN WAS AS UNDER:- ITA 525/RJT/2012 2 A. MARUTI ESTATE AGENCY RS.14,60,965/- B MARUTI COMMUNICATION CENTRE RS. 20,500/- C MARUTI TOURS & TRAVELS RS. 3,02,750/- D ABHISARIKA RS.57,41,111/- RS.75,25,326/- 3. AO FURTHER NOTICED THAT THE ASSESSEE HAS FILED A UDIT REPORT U/S.44AB OF THE ACT UNDER PRESCRIBED FORM IN RESPECT OF ONLY ONE PR OPRIETORSHIP CONCERN NAMELY; ABHISARIKA WHERE THE TURNOVER WAS RS.57,41,111/-, THEREFORE AO ISSUED NOTICE FOR DEFAULT U/S.271B OF THE I.T. ACT, 1961. 4. IN REPLY TO SHOW CAUSE NOTICE BEFORE LEVYING THE PENALTY U/S.271B, ASSESSEE CONTENDED THAT HE WAS UNDER BONAFIDE BELIE F THAT REQUIREMENT OF GETTING ACCOUNTS AUDITED IS ONLY IN RESPECT OF THAT BUSINESS WHERE TURNOVER EXCEEDS RS.40 LAKHS. AO REJECTED THIS EXPLANATION AND ALLOWED THE PENALTY OF RS.37,630/- I.E. HALF PERCENT OF TOTAL TURNOVER OF RS.75,25,325/- VIDE ORDER DATED 29-03-2011. 5. ON APPEAL BEFORE LD. CIT(A), ASSESSEE CONTENDED THAT HE WAS UNDER THE BONAFIDE BELIEF THAT THERE IS NO REQUIREMENT OF GET TING THE ACCOUNTS AUDITED U/S.44AB IN RESPECT OF OTHER THREE PROPRIETARY CONC ERNS WHERE TURNOVER WAS LESS THAN RS.40 LAKHS. IT WAS FURTHER SUBMITTED THAT TH ERE IS NO CLARIFICATION IN THE STATUTE THAT IF AN ASSESSEE IS CARRYING ON MORE THA N ONE BUSINESS AN AGGREGATE OF TURNOVER OF ALL THE BUSINESS HAS TO BE ARRIVED F OR THE PURPOSE OF GETTING THE ACCOUNTS AUDITED U/S.44AB OF THE I.T. ACT. AFTER C ONSIDERING THIS SUBMISSION, IN THE IMPUGNED ORDER, THE LD. CIT (A) CONFIRMED THE P ENALTY OF RS.37,630/- LEVIED BY AO U/S.271B OF THE I.T. ACT FOR THE DETAILED REA SON GIVEN IN PARA-5 IN HIS ORDER WHICH READS AS UNDER:- 5. I HAVE CONSIDERED THE FACTS AS BROUGHT OUT IN TH E PENALTY ORDER AND THE SUBMISSION MADE BY THE APPELLANT. FROM THE FAC TS AND SUBMISSIONS MADE DURING THE COURSE OF APPELLATE PROCEEDINGS, IT IS EVIDENCE THAT THE AUDIT IN RESPECT ABHISARIKA HAS BEEN CONDUCTED BY SHRI P. J. VORA & CO. CHARTERED ACCOUNTANTS ON 20 TH JUNE, 2008. THE CRUX OF THE SUBMISSIONS ITA 525/RJT/2012 3 OF THE APPELLANT IS THAT THE APPELLANT WAS UNDER BO NAFIDE BELIEF. HOWEVER, NO EVIDENCE WITH REGARD TO THIS BONAFIDE BELIEF HAS BEEN PROVIDED TO THE ASSESSING OFFICER AS WELL AS TO THE UNDERSIGNED. D ETAILS OF PRECEDING YEARS TURNOVER, EDUCATIONAL QUALIFICATION OF THE AP PELLANT AND OTHER CREDENTIALS OF THE APPELLANT HAVE NOT BEEN SUBMITTE D SO AS TO ENABLE THE ASSESSING OFFICER OR THE UNDERSIGNED DRAW A POSITIV E INFERENCE ON ACCOUNT OF ALLEGED CLAIM OF BONAFIDE BELIEF. IT IS ALSO A FACT THAT APPELLANT IS REPRESENTED BY A QUALIFIED CHARTERED ACCOUNTANT AND THE DEPARTMENT IS SPENDING HUGE AMOUNT ON ADVERTISEMENT IN ALL MEDIA NOW A DAYS TO MAKE AWARE THE ASSESSEE ABOUT THEIR OBLIGATIONS UNDER TH E LAW THROUGH WIFE PUBLICITY. HAD IT BEEN THE CASE OF TEN YEARS AGO, THE BENEFIT OF DOUBT COULD HAVE BEEN GIVEN TO THE APPELLANT FOR IGNORANCE AND BONAFIDE BELIEF, BUT AT THIS STAGE, IT WILL BE WRONG TO DO SO FOR THE FACTS MENTIONED AS ABOVE. FURTHER, THE RELIANCE PLACED BY THE APPELLANT ON TH E DECISIONS IS ALSO WRONG BECAUSE THE FACTS OF THOSE CASES ARE DIFFEREN T EVIDENTLY BECAUSE IN THOSE CASES, BONAFIDES HAVE BEEN PROVED. THUS, THE ACTION OF THE ASSESSING OFFICER IS UPHELD AND THE APPEAL IS DISMI SSED. 6. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE ASSE SSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 7. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF A SSESSEE SHRI KALPESH DOSHI APPEARED AND REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. THE COUNSEL OF THE ASSESSEE SUBMITTED THAT IN RESPECT OF ONE PROPRIETORSHIP NAMELY;ABHISARIKA, WHERE THE TURNO VER WAS MORE THAN RS.40 LAKHS, ASSESSEE HAS GOT ITS ACCOUNT AUDITED. IN RE SPECT OF OTHER THREE PROPRIETORSHIPS, THE TURNOVER WAS LESS THAN RS.40 L AKHS. HE WAS OF THE BONAFIDE BELIEF THAT IN RESPECT OF THESE THREE PROPRIETORSHI P CONCERNS, HE IS NOT REQUIRED TO GET ITS ACCOUNT AUDITED U/S.44AB. THIS CONSTITUTOR Y REASONABLE CAUSE WITHIN THE MEANING OF SEC.271B OF THE I.T. ACT, 1961. IN SUPP ORT OF THIS, RELIANCE WAS ALSO PLACE ON THE DECISION OF KARNATAKA HIGH COURT IN TH E CASE OF ASSISTANT COMMISSIONER OF INCOME-TAX & ANR. VS. DR. K. SATISH SHETTY REPORTED IN (2009) 310 ITR 366 (KAR.) AS AGAINST THIS, THE LD. D.R. V EHEMENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. 8. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. PRIMA FACIE, IT APPEARS THAT AS SESSEE WAS OF THE BONAFIDE BELIEF THAT HE WAS NOT REQUIRED TO GET ITS ACCOUNTS AUDITED IN RESPECT OF THREE ITA 525/RJT/2012 4 OTHER PROPRIETORSHIP CONCERNS NAMELY; (1)MARUTI EST ATE AGENCY, (2)MARUTI COMMUNICATION CENTRE AND (3)MARUTI TOURS & TRAVELS WHERE THE TURNOVER OF EACH PROPRIETARY CONCERNS WAS LESS THAN RS.40 LAKHS. TH ESE THREE CONCERNS ARE DOING SEPARATE AND INDEPENDENT BUSINESS THOUGH PROPRIETOR SHIP IS THE SAME. THIS BELIEF, IN OUR OPINION, IS CONSTITUTORY REASONABLE CAUSE WITHIN THE MEANING OF SEC.271B OF THE I.T. ACT, 1961. THE RATIO OF DECIS ION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF DR. K. SATISH SHETTY (SUPRA) R ELIED BY LD. COUNSEL OF THE ASSESSEE IS SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. 9. FOR THE AFORESAID REASONS, WE CANCEL THE PENALTY OF RS.37,630/- LEVIED BY AO U/S.271B AND CONFIRMED BY LD. CIT(A) IN THE IMPU GNED ORDER IS HEREBY CANCELLED. 10. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS ALLO WED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE ME NTIONED HEREINABOVE. SD/- SD/- ( B. R. JAIN ) ( .. / T. K. SHARMA) / ACCOUNTANT MEMBER /JUDICIAL MEMBER 3/ ORDER DATE 07-12-2012. /RAJKOT . .. . +4 +4 +4 [phone] / COPY OF ORDER FORWARDED TO:- 1. * / APPELLANT-.SHRI RAJENDRA SHAH, BHUJ. 2. +,* / RESPONDENT- THE INCOME-TAX OFFICER, WD.-2, BHUJ. 3. : / CONCERNED CIT-I, RAJKOT. 4. :- / CIT (A)-II, RAJKOT. 5. 4 +, , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , TRUE COPY. ASSTT. REGISTRAR , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.