THE HALDHAR FOODS(P) LTD., FEROZPUR CANTT V. INCOME TAX OFFICER, WARD-III(5), FEROZPUR

ITA 59/ASR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6232 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 05-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: YASHEND ER GARG LD
• Assessee Lawyers: P N ARORA LD
• Keywords: Business income; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL AMRITSAR BENCH, AM RITSAR BEFORE SH. N.S.SAINI, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NOS.59 & 60(ASR)/2018 ASSESSMENT YEARS:2012-13 & 20 13-14 THE HALDAR FOODS (P) LTD., V. ASIF WALA R.O. MOGA ROAD, FEROZEPUR CANTT. [PAN:AABCL 6432D] VS. INCOME TAX OFFICER, WARD-III(5), FEROZEPUR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P.N. ARORA (LD. ADV.) RESPONDENT BY: SH. YASHEND ER GARG (LD. DR) DATE OF HEARING: 20.02.2019 DATE OF PRONOUNCEMENT: 22.03.201 9 ORDER PER N.K.CHOUDHRY, JM: THE AFORESAID APPEALS HAVE BEEN PREFERRED BY THE ASSESSE E/APPELLANT AGAINST THE COMPOSITE ORDER IMPUGNED HEREIN DATED 28 .11.2017 PASSED BY THE LD. CIT(A)-BATHINDA, U/S 250(6) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT), WHEREBY THE LD. CIT(A) AFFIRMED THE PE NALTY IMPOSED BY THE ASSESSING OFFICER U/S 271B OF THE ACT. 2. THE ISSUE INVOLVED IN THESE APPEALS IS IDENTICAL THEREFO RE FOR THE SAKE OF BREVITY HAVE BEEN TAKEN INTO CONSIDERATION SIMULTAN EOUSLY FOR ADJUDICATION AND FACTS OF ITA NO.59/ASR/2018 SHALL BE QUOTED FOR ADJ UDICATION AND THE RESULT OF THE SAME SHALL APPLY MUTATIS MUTANDIS TO ITA NO.60/ASR/2018. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITA NO.5 9/ASR/2018. ITA NOS.59 & 60 /ASR/2018 (A.Y S.2012-13 & 2013-14) HALDAR FOODS (P) LTD. VS. ITO 2 1. THAT THE LEARNED ASSESSING OFFICER-CUM INCOME T AX OFFICER, WARD-III(5), HAS PASSED ORDERS OF PENALTY ON 31.3.2015 TO THE TU NE OF RS.150000/- FOR NOT GETTING BOOKS AUDITED UNDER SECTION 44AB OF THE I.T . ACT, 1961 UNDER SECTION 271(B) OF THE I.T. ACT, 1961 ON CONJECTURES AND SUR MISES. THE SAME MAY KINDLY BE DELETED. 2. THAT THE LEARNED ASSESSING OFFICER-CUM-INCOME T AX OFFICER, WARD-III(5), FEROZEPUR HAS LEVIED THE PENALTY TO THE TUNE OF RS. 150000/- UNDER SECTION 271(B) OF THE I.T. ACT, 1961 WHICH IS WRONG, ILLEGA L AND BASELESS BECAUSE THIS THE ASSESSEE HAS REASONABLE CAUSE FOR NOT GETTING T HE BOOKS AUDITED UNDER SECTION 44AB OF THE I.T. ACT, 1961 IN TIME DUE THE REASONS BEYOND HIS CONTROL. SINCE THE ASSESSEE HAD REASONABLE CAUSE FOR NOT GET TING THE BOOKS OF ACCOUNTS AUDITED HENCE PENALTY LEVIED MAY KINDLY BE DELETED. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FROM THE ASSESSEES AUDIT REPORT DATED 20.03.2014 RECEIVED IN ITS O FFICE ON 31.02.2014 FOR THE F.Y.2011-12 RELEVANT TO THE ASSESSME NT YEAR I.E. 2012- 13, CAME TO KNOW THAT THE ASSESSEE WAS UNDER LEGAL OBLIGA TION TO GET ITS ACCOUNT AUDITED BEFORE THE SPECIFIED DATE I.E. UP TO 30 .09.2012 AS PER THE PROVISIONS OF SECTION 44AB OF THE ACT BECAUSE DURING THE Y EAR UNDER CONSIDERATION, THE GROSS RECEIPTS OF THE ASSESSEE WERE 5,35,3 0,801/-, HOWEVER, THE ASSESSEE HAS FAILED TO DO SO ACCORDINGLY PENA LTY PROCEEDINGS U/S 271B OF THE ACT WERE INITIATED WHILE ISSUING A NOTI CE DATED 13.02.2015. THE ASSESSEE BEFORE THE ASSESSING OFFICER FILED THE REPLY A GAINST THE ACTION FOR IMPOSING PENALTY U/S 271B OF THE ACT. THE ASSESSING OFFICER THOUGH CONSIDERED THE REPLY OF THE ASSESSEE BUT DID NOT GET IMPR ESS AND ULTIMATELY IMPOSED THE PENALTY OF RS.1,50,000/- BEING 0.50% OF G ROSS RECEIPTS BY HOLDING THAT IT CLEARLY INDICATES THAT THE BOOKS OF ACCOU NT HAVE ACTUALLY NOT BEEN GOT AUDITED BY THE STIPULATED DATE AND WITH A V IEW TO GET IMMUNITY FROM THE PENAL CONSEQUENCES IN RESPECT OF COMMITTED DEFAUL T OF FAILURE TO GET ITS BOOKS OF ACCOUNTS AUDITED, THE ASSESSEE HAS MISCONCEIV ED THE FACTS ITA NOS.59 & 60 /ASR/2018 (A.Y S.2012-13 & 2013-14) HALDAR FOODS (P) LTD. VS. ITO 3 WHICH DESERVES NO COGNIZANCE. FOR BREVITY AND READY REFE RENCE, THE CONCLUDING PART OF PENALTY ORDER IS REPRODUCED HEREIN B ELOW:- I.) THE PERUSAL OF THE COPY OF FIR REVEALS THAT F IR WAS LODGED AGAINST THE COMPANY ON 11-01-2012 FOR CRIMIN AL BREACH OF TRUST AND EMBEZZLEMENT OF CERTAIN QUANTIT Y OF RICE WHICH THE ASSESSEE COMPANY FAILED TO SUPPLY TO FOOD CORPORATION OF INDIAN AS PER DIRECTIONS OF THE PUNJ AB STATE CIVIL SUPPLIES CORPORATION LTD. AND NOT BY THE SBI FEROZEPUR FOR NON-PAYMENT OF INTEREST ON THE TERM L OAN AS ALLEGED BY THE ASSESSEE. II.) FURTHERMORE THERE IN NO MENTION IN THE FIR TH AT PREMISES OF THE SAID CONCERN WAS LOCKED. THE ASSESS EE HAS ALSO FAILED TO ESTABLISH THAT THE FACTORY PREMI SES WERE LOCKED AND THE RELEVANT DOCUMENTS/BOOKS OF ACCO UNTS WERE NOT IN ITS POSSESSION. III) NO DETAIL/DOCUMENTARY EVIDENCE AS REGARDS ARR EST OF DIRECTORS OF THE COMPANY AND THEIR SUBSEQUENT RELEA SE ON BAIL HAS BEEN FURNISHED BY THE ASSESSEE TO SUBSTANT IATE ITS CLAIM THAT THERE WAS REASONABLE CAUSE FOR FAILURE T O GET THE BOOKS OF ACCOUNTS AUDITED AS PER PROVISIONS OF SECT ION 44AB OF THE INCOME TAX ACT 1961. IV) THE CASE OF M/S. HINDUSTAN STEEL LTD., STAT E OF ORISSA (1972)83 ITR 26: (1983)144 ITR 259(P&H) REFERRED TO IN BY THE ASSESSEE ALSO DOES NOT HELP THE ASSESSEE AS FAC TS OF THESE CASES ARE DIFFERENT FROM THAT OF ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE FAILED TO PROVE THAT THE RE WAS ITA NOS.59 & 60 /ASR/2018 (A.Y S.2012-13 & 2013-14) HALDAR FOODS (P) LTD. VS. ITO 4 REASONABLE CAUSE FOR FAILURE TO GET ITS ACCOUNTS AU DITED AND THE CAUSE IF ANY WAS THE ONLY ONE THAT ASSESSEE ITS ELF INDULGED IN CRIMINAL PROCEEDINGS FOR BREACH OF TRUS T AND EMBEZZLEMENT WHICH RESULTED IN FAILURE TO GET ITS B OOKS OF ACCOUNTS AUDITED BY THE STIPULATED DATE. V) IN ITS REPLY THE ASSESSEE HAS SUBMITTED THAT FIR WAS LODGED BY THE VIGILANCE DEPARTMENT ON 11-01-2012 WI TH THE RESULT SHELLER WAS LOCKED. THE PERUSAL OF THE R ECORD OF THE ASSESSEE REVEALS THAT ASSESSEE HAS SHOWN TURNOV ER OF RS.5,35,30,801/- IN THE A.Y. 2012-13 AND RS.3,33,08,219/- IN THE A.Y. 2013-14, BUT THE ASSES SEE HAS FAILED TO GIVE ANY PLAUSIBLE EXPLANATION AS TO HOW THE SAID HUGE TURNOVER WAS MADE DURING THE PERIOD UNDER CONSIDERATION WHEN THE PREMISES OF THE ASSESSEE WAS LOCKED. VI) FURTHER MORE, TILL DATE THE ASSESSEE HAS FA ILED TO FILE ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION I .E. FOR THE FINANCIAL YEAR 2011- 12 RELEVANT TO THE ASSESSM ENT YEAR 2012-13. 5. THE ASSESSEE CHALLENGED THE IMPOSITION OF PENALTY BEFORE THE LD. CIT(A), WHO WHILE CONSIDERING THE PENALTY ORDER AND SU BMISSIONS OF THE ASSESSEE AFFIRMED THE PENALTY BY HOLDING AS UNDER: 6. I HAVE GIVEN CAREFUL CONSIDERATION TO THE FACTS OF THE CASE AND IT IS FOR CONSIDERATION THAT THE DELAY FOR BOTH THE AY IS AS U NDER: ASSESSMENT YEAR DUE DATE ACTUAL DATE PERIOD OF DELAY TOTAL TO (GROSS BUSINESS RECEIPTS E MP HA S IS O UR S ) ITA NOS.59 & 60 /ASR/2018 (A.Y S.2012-13 & 2013-14) HALDAR FOODS (P) LTD. VS. ITO 5 2012-13 30/09/2013 (2012 E MP HA S IS O UR S ) 20/03/2014 17 MONTHS 20 DAYS RS. 5,35,30,801 2013-14 30/09/2014 (2013 E MP HA S IS O UR S ) 20/03/2014 5 MONTHS 20 DAYS RS. 3,33,08,219 THE ARGUMENTS OF THE APPELLANT ARE NOT ACCEPTABLE F OR THE FOLLOWING REASONS: A) THE STATUTORY AUDIT WAS GOT COMPLETED IN THE MONTH OF MARCH 2014 WHEN THE ENTIRE FINANCIAL YEAR 2013-14 HAD PASSED. IN THIS PERIOD, FOR THE ENTIRE FINANCIAL YEAR THE APPELLANT WAS ABLE TO MUSTER TURNOVER OF RS. 3,33,08,219/-. IF THE BUSINESS COULD BE RUN NORM ALLY, THERE IS NO REASON THAT THE ACCOUNTS WERE NOT AVAILABLE FOR THE PURPOSES OF AUDIT. B) THE CRIMINAL PROCEEDINGS WERE MOUNTED IN JANUARY 20 12 AND THE BAIL WAS GRANTED IN MAY 2012. EVEN IF THE MEDICAL REASON S OF ONE OF THE DIRECTOR IS ACCEPTED, IT CANNOT BE ACCEPTED THAT TH E OTHER DIRECTOR WAS FREE ENOUGH TO RUN BUSINESS BUT WAS NOT CAPACITY TO GET THE ACCOUNTS AUDITED. C) NEITHER THE DATE OF SEALING OF FACTORY BY THE BANK HAS NOT BEEN PROVIDED NOR ANY DOCUMENT IN ITS SUPPORT HAS BEEN G IVEN. D) THE REASONING GIVEN BY THE ASSESSING OFFICER THAT TH E STATUTORY AUDIT HAS NOT BEEN DONE BY THE APPELLANT IN ORDER TO AVOI D THE CRIMINAL PROCEEDINGS MOUNTED BY THE FOOD AUTHORITIES FOR BRE ACH OF TRUST AND EMBEZZLEMENT OF QUANTITY OF RICE ALSO APPEARS TO BE A POSSIBLE REASON FOR NOT GETTING THE ACCOUNTS AUDITED. 6.1 IN CONSIDERATION OF THE FACTS MENTIONED ABOV E, THE DEFAULT OF NOT GETTING THE ACCOUNTS AUDITED DOES NOT APPEAR TO B E FOR GENUINE REASONS AND FOR THE REASONS BEYOND THE CONTROL OF THE APPEL LANT. ON THE CONTRARY, THE ACCOUNTS WERE NOT AUDITED WITH A SPECIFIC MOTIV E TO SCUTTLE THE CRIMINAL PROCEEDINGS. THE GROUNDS OF APPEAL ARE DISMISSED AN D HENCE THE APPEAL OF THE APPELLANT IS DISMISSED. 6. THE ASSESSEE ON AGGRIEVED BY THE ORDER OF THE LD. CIT( A) PREFERRED THE INSTANT APPEAL. ITA NOS.59 & 60 /ASR/2018 (A.Y S.2012-13 & 2013-14) HALDAR FOODS (P) LTD. VS. ITO 6 7. THE ISSUE INVOLVED IN THE INSTANT APPEALS RELATES TO TH E IMPOSITION OF PENALTY U/S 271B OF THE ACT UPON THE ASSESSEE FOR NOT GET TING AUDITED ITS BOOKS OF ACCOUNT FOR WHICH IT WAS UNDER LEGAL OBLIGATION . IT WAS ARGUED BY THE LEARNED COUNSEL THAT THE ASSESSEE COMPANY IS A PRIVATE LIMITED COMPANY HAVING TWO DIRECTORS NAMELY SH. RAMESH CHANDER AND SH. ASHISH GARG, BEING FATHER AND SON. ON HEARING THE NEWS OF FIR AGA INST THE COMPANY'S DIRECTORS, SH. RAMESH CHANDER SUFFERED SERIOUS SETBACK WHICH RESULTED INTO BECOMING PATIENT OF DEPRESSION AND AFTER INITIATION OF CRIMINAL PROCEEDINGS ON 11.1.2012 BOTH THE DIRECTORS AVOIDED THEIR ARREST H OWEVER, SH. RAMESH CHANDER WAS GOT ARRESTED ON 07.02.2012 BUT GOT BAIL ON 23 RD MAY, 2012. IT WAS FURTHER SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSE SSEE THAT ANOTHER DIRECTOR SH. ASHISH GARG WAS ABLE TO AVOID ARREST. THE FIR WAS LODGED BY THE VIGILANCE DEPARTMENT AND THE STATE BANK OF INDIA , FEROZPUR IN WHICH THE ASSESSEE WAS HAVING CC LIMIT AND SECURED TURN OVER LOAN. B USINESS OF THE COMPANY ALSO CONSIDERABLY GONE DOWN FROM THE SALES OF RS. 5,35,30,801/- FOR THE A.Y.2012-13 TO RS.3,33,08,219/- FOR THE A.Y. 2013-14. THEREFORE, THE CIRCUMSTANCES STATED ABOVE WERE BEYOND THE CONTROL OF THE ASSESSEE WHICH RESULTED INTO DELAY IN GETTING AUDIT THE BOOKS OF ACCOU NT FOR BOTH THE YEARS UNDER CONSIDERATION I.E. 2012-13 AND 2013-14 AND THER EFORE THE AFORESAID REASONS CONSTITUTE A REASONABLE DELAY. 8. ON THE CONTRARY, THE LD. DR RELIED UPON THE ORDERS P ASSED BY THE AUTHORITIES BELOW AND SUBMITTED THAT THE ORDER UNDER CHALLENGE DOES NOT SUFFER FROM ANY PERVERSITY OR ILLEGALITY OR IMPROPRIE TY. 9. HAVING HEARD THE PARTIES AND PERUSED THE MATERIAL AVIA LBLE ON RECORD. LET US TO PERUSE THE RELEVANT PROVISIONS OF LAW APPLICA BLE TO THE INSTANT CASE. ITA NOS.59 & 60 /ASR/2018 (A.Y S.2012-13 & 2013-14) HALDAR FOODS (P) LTD. VS. ITO 7 44AB . EVERY PERSON, (A) CARRYING ON BUSINESS SHALL, IF HIS TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS EXC EED OR EXCEEDS [ONE CRORE RUPEES] IN ANY PREVIOUS YEAR [** *]; OR (B) CARRYING ON PROFESSION SHALL, IF HIS GROSS RECE IPTS IN PROFESSION EXCEED [TWENTY-FIVE LAKH RUPEES] IN ANY [PREVIOUS YEAR; OR (C) CARRYING ON THE BUSINESS SHALL, IF THE PROFITS AND GAINS FROM THE BUSINESS ARE DEEMED TO BE THE PROFITS AND GAINS OF SUCH PERSON UNDER [SECTION 44AE] [OR SECTION 44BB OR SEC TION 44BBB], AS THE CASE MAY BE, AND HE HAS CLAIMED HIS INCOME TO BE LOWER THAN THE PROFITS OR GAINS SO DEEMED TO BE THE PROFITS AND GAINS OF HIS BUSINESS, AS THE CASE MAY BE, IN ANY [PREVIOUS YEAR; OR] [***] [(D) CARRYING ON THE BUSINESS SHALL, IF THE PROFITS AND GAINS FROM THE BUSINESS ARE DEEMED TO BE THE PROFITS AND GAINS OF SUCH PERSON UNDER SECTION 44AD4 AND HE HAS CLAIMED SUCH INCOME TO BE LOWER THAN THE PROFITS AND GAINS SO DE EMED TO BE THE PROFITS AND GAINS OF HIS BUSINESS AND HIS INCOM E EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOM E-TAX IN ANY PREVIOUS YEAR,] GET HIS ACCOUNTS OF SUCH PREVIOUS YEAR [***] AUDITE D BY AN ACCOUNTANT BEFORE THE SPECIFIED DATE AND [FURNISH B Y] THAT DATE THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SI GNED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULA RS AS MAY BE PRESCRIBED: [ PROVIDED THAT THIS SECTION SHALL NOT APPLY TO THE PERSON, W HO DERIVES INCOME OF THE NATURE REFERRED TO IN [***] S ECTION 44B OR [SECTION 44BBA], ON AND FROM THE 1ST DAY OF APRIL, 1985 OR, AS THE CASE MAY BE, THE DATE ON WHICH THE RELEVANT SECTION CAME INTO FORCE, WHICHEVER IS LATER: [PROVIDED FURTHER THAT] IN A CASE WHERE SUCH PERSON IS REQUIRED BY OR UNDER ANY OTHER LAW TO GET HIS ACCOUNTS AUDITED, IT SHALL BE SUFFICIENT COMPLIANCE WITH THE PROVISIONS OF THIS S ECTION IF SUCH PERSON GETS THE ACCOUNTS OF SUCH BUSINESS OR PROFES SION AUDITED UNDER SUCH LAW BEFORE THE SPECIFIED DATE AND [FURNI SHES BY] THAT DATE THE REPORT OF THE AUDIT AS REQUIRED UNDER SUCH OTHER LAW AND A FURTHER REPORT [BY AN ACCOUNTANT] IN THE FORM PRESC RIBED UNDER THIS SECTION. ITA NOS.59 & 60 /ASR/2018 (A.Y S.2012-13 & 2013-14) HALDAR FOODS (P) LTD. VS. ITO 8 EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (I)'ACCOUNTANT' SHALL HAVE THE SAME MEANING AS IN T HE EXPLANATION BELOW SUB-SECTION (2) OF SECTION288 [[(II)'SPECIFIED DATE', IN RELATION TO THE ACCOUNTS OF THE ASSESSEE OF THE PREVIOUS YEAR RELEVANT TO AN ASSESSMENT YEAR , MEANS [THE DUE DATE FOR FURNISHING THE RETURN OF INCOME U NDER SUB- SECTION (1) OF SECTION 139].] 9.1 FROM SUB-CLAUSE(A) OF SECTION 44AB, IT REFLECTS THAT EVE RY PERSON WHO IS CARRYING BUSINESS, IF HIS TOTAL SALES, TURNOVER OR GRO SS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS EXCEED OR EXCEEDS 1 CRORE RUPEES (E ARLIER IT WAS 60 LACS) IN ANY PREVIOUS YEAR THEN SUCH PERSON IS REQUIRED T O GET HIS ACCOUNTS OF SUCH PREVIOUS YEAR AUDITED BY AN ACCOUNTANT BEFORE THE SPECIFIED DATE WHICH IN THE INSTANT CASE WAS 30 TH SEP., 2012 AND FURTHER REQUIRED TO SUBMIT SUCH REPORT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIE D BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED. ACCO RDING TO PROVISION OF SECTION 44AB, THE ASSESSEE WAS UNDER LEGAL OBL IGATION TO GET ITS ACCOUNTS AUDITED BEFORE 30 TH SEPTEMBER, 2012. FURTHER SEC.271B PROVIDES THE PENAL CONSEQUENCES FOR NON-COMPLIANCE OF THE PROVISION S OF SEC.44AB. FOR THE SAKE OF COMPLETENESS AND READY REFERENCE THE REL EVANT PROVISIONS OF SECTION 271B AND 273B OF THE ACT AS APPLICABLE IN THE IN STANT CASE, ARE REPRODUCED HEREIN BELOW. 271B. IF ANY PERSON FAILS ('WITHOUT REASONABLE CAUSE' STANDS OMITTED BY THE T AXATION LAWS (AMENDMENT & MISCELLANEOUS PROVISIONS) ACT,198 6 W.E.F. 10-09-1986) TO GET HIS ACCOUNTS AUDITED IN RESPECT OF ANY PREVIOUS YEA R OR YEARS RELEVANT TO AN ASSESSMENT YEAR OR OBTAIN A REPORT O F SUCH AUDIT AS REQUIRED UNDER SECTION 44AB, THE INCOME-TA X OFFICER MAY DIRECT THAT SUCH PERSON SHALL PAY, BY WAY OF PE NALTY, A SUM EQUAL TO ONE-HALF PER CENT. OF THE TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS, OR OF THE GROSS RECEIPTS IN PROFESSION, IN SUCH PREVIOUS YEAR OR YE ARS OR A SUM OF ONE HUNDRED THOUSAND RUPEES, WHICHEVER IS LESS. ITA NOS.59 & 60 /ASR/2018 (A.Y S.2012-13 & 2013-14) HALDAR FOODS (P) LTD. VS. ITO 9 SECTION 273-B, NOTWITHSTANDING ANYTHING CONTAINE D IN THE PROVISIONS OF 40[CLAUSE (B) OF SUB-SECTION (1) OF] 41[SECTION 271, SECTION 271A, 42[SECTION 271AA,] SECTION 271B42[, SECTION 2 71BA], 43[SECTION 271BB,] SECTION 271C, 44[SECTION 271CA,] SECTION 271D, SECTION 271E, 45[SECTION 271F, 46[SECTION 271 FA,] 46A[SECTION 271FAB,] 47[SECTION 271FB,] 48[SECTION 271G,]] 48A[SECTION 271GA,] 49[SECTION 271H,] 49A[SECTION 2 71-I,] CLAUSE (C) OR CLAUSE (D) OF SUB-SECTION (1) OR SUB- SECTION (2) OF SECTION 272A, SUB-SECTION (1) OF SECTION 272AA] OR 50[SECTION 272B OR] 51[SUB-SECTION (1) 52[OR SUB-SECTION (1A)] OF SECTION 272BB OR] 53[SUB-SECTION (1) OF SECTION 272BBB OR] CLAUSE (B) OF SUB-SECTION (1) OR CLAUSE (B) OR CLAUSE (C) OF SUB-SECTION (2) OF SECTION 273, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE54 FOR THE SAID FAILURE .] 9.2 FROM THE PROVISIONS OF SECTION 271B, IT IS CLEAR THAT I F ANY PERSON FAILS TO GET HIS ACCOUNTS AUDITED IN RESPECT OF ANY PREVIOUS YEA R OR YEARS RELEVANT TO AN ASSESSMENT YEAR OR OBTAIN A REPORT OF SUCH AUDIT AS REQUIRED U/S 44AB, THE ASSESSING OFFICER MAY DIRECT THAT SUCH PERSON SHALL PAY , BY WAY OF PENALTY, A SUM EQUAL TO ONE-HALF PERCENT OF THE TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS OR OF THE GROSS R ECEIPTS IN PROFESSION OR A SUM OF (RS.1,50,000/-) WHICH EVER IS LESS. UPTO 9.9.1986 THERE WAS A PROVISION IN SECTION 271B OF THE ACT THAT IF ANY PERSON WAS ABLE TO ESTABLISH REASONABLE CAUSE THEN HE WAS LIKELY TO GET EXONERATED, BUT BY VIRTUE OF THE TAXATION LAWS (AMENDMENT & MISCELLANEOUS PROVISIONS) ACT, 1986 W.E.F. 10-09-1986), THE PHRASE 'WITHOUT REASONABLE CAUSE' HAS BEEN OMITTED IN ORDER TO MAKE PROVISIONS MORE STRINGENT. HO WEVER SECTION 273-B OF THE ACT PUTS RIDER ON IMPOSITION OF PENALTY AND PR OVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISIONS O F SECTION 271-B, AMONGST OTHER SECTIONS, NO PENALTY SHALL BE IMPOSSIBLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE ITA NOS.59 & 60 /ASR/2018 (A.Y S.2012-13 & 2013-14) HALDAR FOODS (P) LTD. VS. ITO 10 CONCERNED PROVISIONS IF HE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE . IT IS THUS TO BE SEEN THAT AS TO WHETHER THE ASSESSEE HAS BEEN ABLE TO PROVE THAT THERE WAS A REASONABLE CAUSE FOR THE ASSESSEE FOR NOT GETTING ITS ACCOUNTS AUDITED UNDER SECTION 44AB O F THE ACT AND THEN TO FURNISH THE REPORT BY THE SPECIFIED DATE. IN ORDE R TO GET EXONERATE FROM PENAL CONSEQUENCES, THE ONUS IS UPON THE ASSESSEE TO ESTABLIS H REASONABLE CAUSE FOR NON-COMPLIANCE OF LEGAL OBLIGATIONS. 9.3 WHILE COMING TO THE INSTANT CASE WE REALIZED THAT THE ASSESSING OFFICER HAS IMPOSED THE MINIMUM PENALTY I.E. 1,50,000/- AS PRE SCRIBED UNDER THE PROVISIONS APPLICABLE HERETO. THE ASSESSEE CASE IS BASED UPON THE CRIMINAL PROCEEDINGS WHICH RESULTED INTO NON-GETTING AUDIT OF TH E BOOKS OF ACCOUNT. IT IS AN ADMITTED FACT THAT THE FIR WAS LODGED ON 11.01. 2012 AGAINST THE ASSESSEE COMPANY FOR CRIMINAL BREACH OF TRUST, EMBEZZLEMENT OF CERTAIN QUANTITY OF RICE WHICH THE ASSESSEE COMPANY FAILED TO SUPPL Y TO FOOD CORPORATION OF INDIAN (FCI) AS PER DIRECTIONS OF PUNJ AB STATE CIVIL SUPPLIES CORPORATION LTD . AND NOT BY THE SBI FEROZPUR FOR NON-PAYMENT OF INTEREST ON THE TERM LOAN AS CLAIMED BY THE ASSESSEE. FURTHER IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE FAILED TO ESTABLISH THAT THE FACTORY PREMISES WERE LOCKED AND THE RELEVANT DOCUMENTS/BOOKS O F ACCOUNT WERE NOT IN ITS POSSESSION. IT WAS FURTHER OBSERVED BY THE ASSESSI NG OFFICER THAT ALTHOUGH IT WAS CLAIMED BY THE ASSESSEE THAT THE FIR WAS L ODGED BY THE VIGILANCE DEPARTMENT ON 11.01.2012 WHICH RESULTED INTO SELLER LOCKED HOWEVER IT REVEALED THAT THE ASSESSEE HAD SHOWN TURN O VER OF RS.5,35,30,801/- IN THE RELEVANT ASSESSMENT YEAR AND TH EREFORE, THE ASSESSEE HAS FAILED TO GIVE ANY PLAUSIBLE EXPLANATION AS TO HOW THE SAID HUGE TURN OVER WAS MADE DURING THE PERIOD UNDER CONSIDERAT ION WHEN THE PREMISES OF THE ASSESSEE WAS LOCKED. IT WAS FURTHER OBSERVED BY THE ITA NOS.59 & 60 /ASR/2018 (A.Y S.2012-13 & 2013-14) HALDAR FOODS (P) LTD. VS. ITO 11 ASSESSING OFFICER THAT TILL DATE 31 ST AUGUST, 2015 THE DATE OF PASSING THE PENALTY ORDER) THE ASSESSEE FAILED TO FILE ITS RETURN OF INCOME FOR THE F.Y. UNDER CONSIDERATION. THE LD. CIT(A) WHILE CONSIDERING T HE IMPOSITION OF PENALTY OBSERVED IF THE BUSINESS COULD BE RUN NORMALLY T HEN THERE IS NO REASON TO SAY THAT THE ACCOUNTS WERE NOT AVAILABLE FOR T HE PURPOSE OF AUDIT. FURTHER THE CRIMINAL PROCEEDINGS WERE MOUNTED IN JANU ARY, 2012 AND THE BAIL WAS GRANTED IN MAY, 2012 THEREFORE EVEN IF THE MEDICAL REASONS OF ONE OF THE DIRECTOR IS ACCEPTED, IT CANNOT BE ACCEPTED THAT T HE OTHER DIRECTOR WAS FREE ENOUGH TO RUN BUSINESS BUT WAS NOT CAPABLE TO GET THE ACCOUNTS AUDITED. IT WAS FURTHER OBSERVED THAT NEITHER THE DAT E OF SEALING OF FACTORY BY THE BANK NOR ANY DOCUMENT IN ITS SUPPORT HAS BEEN PR OVIDED AND THEREFORE IN CONSIDERATION OF THE FACTS MENTIONED ABOV E, THE DEFAULT OF NOT GETTING THE ACCOUNTS AUDITED DOES NOT APPEAR TO BE FO R GENUINE REASONS AND FOR THE REASONS BEYOND THE CONTROL OF THE APPELLAN T. ON THE CONTRARY, THE ACCOUNTS WERE NOT AUDITED WITH A SPECIFIC MOTIVE TO SCUTT LE THE CRIMINAL PROCEEDINGS. 9.4 WE REALIZE, AS PER PROVISIONS, THE ASSESSEE WAS REQUIRED TO GET ITS ACCOUNTS AUDITED ON OR BEFORE 30-09-2012 AND THE FIR W AS LODGED ON 11.01.2012 BY THE VIGILANCE DEPARTMENT FOR CRIMINAL B REACH OF TRUST AND EMBEZZLEMENT OF CERTAIN QUANTITY OF RICE WHICH THE ASSE SSEE COMPANY FAILED TO SUPPLY TO FOOD CORPORATION OF INDIA AS PER DIRECTIO NS OF PUNJAB STATE CIVIL SUPPLIES CORPORATION LTD, AND IN PURSUANCE THEREOF ON E OF THE DIRECTOR WAS ARRESTED BUT WAS RELEASED ON BAIL IN MAY, 2012 ITSELF W HEREAS THE ASSESSEE WAS UNDER OBLIGATION TO GET ITS ACCOUNTS AUDITED UPTO 30 TH SEP., 2012 FOR THE F.Y.2011-12 AND UPTO 30 TH SEP., 2013 FOR THE F.Y. 2012-13 BUT THE SAME GETS AUDITED ONLY ON 20-04-2014 AND THEREFORE THERE IS HUGE TIME GAP OF 17 MONTHS 20 DAYS AND WHICH IN OUR CONSIDERED VIEW, DOES NO T SEEMS TO BE REASONABLE NEXUS WITH THE CRIMINAL PROCEEDINGS BECAUSE IT IS NOT THE CASE OF ITA NOS.59 & 60 /ASR/2018 (A.Y S.2012-13 & 2013-14) HALDAR FOODS (P) LTD. VS. ITO 12 THE ASSESSEE THAT THE STAFF OF ACCOUNT DEPARTMENT AND/OR T HE PERSONS WHO WERE DEALING WITH THE FINANCIAL TRANSACTIONS OF THE ASSE SSEE COMPANY WERE ALSO ARRESTED AND/OR SUBJECTED TO THE CRIMINAL PROCEEDING S. THE OTHER GROUND I.E. ILLNESS OF ONE OF THE DIRECTOR IS ALSO DOES NOT SEEM S TO BE A REASONABLE CAUSE FOR NON-COMPLIANCE OF LEGAL OBLIGATION BECAUSE IT I S NOT THE CASE OF THE ASSEEEE THAT THE COMPANY IS BEING RUN BY ONE MAN ONLY A ND IT IS ALSO NOT THE CASE OF THE ASSESSEE THAT IT DOES NOT HAVE STAFF OF ACCO UNTS DEPARTMENT FOR COMPLIANCE OF LEGAL OBLIGATIONS, HENCE IN OUR CONSIDE RED VIEW, AS ACCOUNTS DEPARTMENT'S OFFICIALS ALONG WITH ONE OF THE DI RECTORS WERE FREELY AVAILABLE TO HANDLE THE ACCOUNTS AND ADMINISTRATION AN D TO CARRY THE BUSINESS ACTIVITIES OF THE ASSESSEE COMPANY AND THEREFORE W OULD HAVE COMPLIED THE LEGAL OBLIGATIONS AS WELL, AS ENSHRINED UND ER THE ACT. EVEN ON SPECIFIC QUERY AS TO WHETHER THE INCOME IN INCOME TAX RE TURN AND AUDIT REPORT IS SAME OR NOT, NEITHER REPLY NOR AUDIT REPORT FURNISHED. THE ASSESSEE HAS TAKEN THE STAND OF CRIMINAL PROCEEDINGS AND ILLNESS OF ONE OF THE DIRECTORS IN ORDER TO AVOID THE PENAL CONSEQUENCES OF SECT ION 271B OF THE ACT WHICH WE HAVE ALREADY HELD NO NEXUS WITH NON-COMP LIANCE OF LEGAL OBLIGATION. IT IS THUS CLEAR THE ASSESSEE HAS NOT BEEN ABL E TO GIVE ANY SUFFICIENT AND REASONABLE CAUSE FOR NOT GETTING THE ACCOU NTS WHATSOEVER MAINTAINED BY IT AUDITED UNDER SECTION 44AB OF THE A CT AND THEREFORE FAILED TO DISCHARGE THE ONUS. IN THE OVERALL CONSIDERATION AND ANALYZATION AND KEEPING IN VIEW THE SPIRIT OF STRINGENT PROVISIONS, WE ARE OF THE CONSIDERED VIEW THAT THE AUTHORITIES BELOW RIGHTLY INVOKED THE PROVISIONS OF SECTION OF 271-B OF THE ACT AND IMPOSED THE PENALTY IN PECULIAR F ACTS AND CIRCUMSTANCES OF THE CASE, THEREFORE WE DO NOT FIND ANY I MPROPRIETY, ILLEGALITY AND/OR PERVERSITY IN THE IMPUGNED ORDER, HENCE THE SAME IS AFFIRMED. ITA NOS.59 & 60 /ASR/2018 (A.Y S.2012-13 & 2013-14) HALDAR FOODS (P) LTD. VS. ITO 13 10. IN THE RESULT, THE APPEAL I.E. ITA NO. 59 (ASR)/2018 FILED BY THE ASSESSEE STANDS DISMISSED. 11. IN VIEW OF ORDER PASSED IN ITA NO. 59 (ASR)/2018, ITA NO. 60 (ASR)/2018 ALSO STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.03.2019. SD/- SD/- (N.S.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED:22.03.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) SH. HALDAR FOODS (P) LTD., V. ASIF WALA R.O. MOGA RAOD, FEROZEPUR CANTT. (2) THE INCOME TAX OFFICER, WARD-III(5), FEROZ EPUR (3) THE CIT(A), BHATINDA (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER