M/s H.P. Marketing Board, Shimla V. ACIT, Shimla

ITA 59/CHANDI/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5495 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-04-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 20-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KEMWAL
• Keywords: Bonafide belief; Reasonable cause; Set aside
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: A BENCH: CH ANDIGARH BEFORE SHRI D K SRIVASTAVA, AM AND MS. SUSHMA CHOWL A, JM ITA NO. 59 & 60/CHANDI/2011 ASSESSMENT YEAR: 2001-02 & 2002-03 H.P. MARKETING BOARD, SHIMLA V. A.C.I.T. CIRCLE , SHIMLA PAN: AAALH 0087 L APPELLANT BY: SHRI AJAY VAIDYA RESPONDENT BY: SHRI S.S. KEMWAL ORDER PER BENCH: BOTH THE APPEALS FILED BY THE ASSESSEE A RE DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) ON 7.12.2010, ON IDENTICAL GROUNDS WHICH READ AS UNDER: 1 THAT THE RESPONDENT HAS ERRED IN LAW LAND FACT O F THE CASE BY UPHOLDING THE ORDERS OF THE AO IMPOSING PENALTY U/S 271B. THE ORDERS OF THE RESPONDENT IS CONTRARY TO THE LAW, EQUITY AND JUSTICE AND FACTS A ND MATERIAL ON RECORD, DEVOID OF JURISDICTION, ARBITRARY BASED ON CONJECTURES AND SU RMISES. SINCE THE EXPLANATION AS INSERTED IN THE INCOME-TAX ACT W.E.F 1.4.2003 AND P RIOR TO THAT THE APPELLANT WAS TREATED AS LOCAL AUTHORITY AND ITS INCOME WAS EXEMP TED FROM INCOME-TAX AND THE APPELLANT BOAR WAS UNDER BONAFIDE BELIEF THAT THE I NCOME OF THE APPELLANT IS EXEMPTED U/S 10(20) OF THE ACT AND HENCE DID NOT FI LE THE RETURN AND AUDIT REPORT IN THE TIME HENCE ON THIS GROUND THE APPEAL OF THE APPELLANT DESERVES TO BE ALLOWED. 2 THAT THE APPELLANT RESERVE THE RIGHTS TO ADD, AM END, DELETE ANY OR ALL GROUNDS ON OR BEFORE THE APPEAL ARE HEARD. IT IS, THEREFORE, PRAYED THAT THE ORDERS IMPOSING PENALTY WHICH ARE UPHELD BY THE RESPONDENT BE QUASHED AND SET ASIDE. ANY OTH ER RELIEF AS THIS HON'BLE COURT/TRIBUNAL DEEMS FIT MAY ALSO PASSED IN FAVOR O F THE APPELLANT. 2. FACTS AND CIRCUMSTANCES OF THE CASE, THE ISSUES INVOLVED AND THE GROUNDS OF APPEAL IN BOTH THE APPEALS ARE COMMON. BOTH THE APP EALS ARE, THEREFORE, BEING DISPOSED OFF BY A CONSOLIDATED ORDER. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ORIGINAL ASSESSMENTS FOR BOTH THE ASSESSMENT YEARS WERE COMPLETED ON 31.7.2006 U/S 14 3(3)/147 ASSESSING THE TOTAL INCOME AT RS. 54,83,734/- AND 84,14,292/- FOR AYS 2 001-02 AND 2002-03 RESPECTIVELY AS AGAINST NIL INCOME RETURNED BY THE ASSESSEE FOR BOT H THE ASSESSMENT YEARS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE CLAI MED EXEMPTION ON THE GROUND THAT IT WAS A LOCAL AUTHORITY U/S 10(20) OF INCOME-TAX ACT. THE AFORESAID CLAIM WAS REJECTED BY THE AO AGAINST WHICH APPEALS WERE FILED FIRSTLY BEF ORE THE LD. CIT(A) AND THEREAFTER BEFORE THIS TRIBUNAL. BY ITS ORDER DATED 14.9.2007 IN THE ASSESSEES APPEAL BEARING I.T.A NO. 876 & 877/CHANDI/2006, THE ISSUES RAISED IN BOTH THE AP PEALS WERE RESTORED TO THE FILE OF AO WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH IN TH E STATUS OF LOCAL AUTHORITY AND ALSO TO CONSIDER THE CASE OF THE ASSESSEE FOR EXEMPTION U/S 10(20) IN ACCORDANCE WITH LAW. THE AFORESAID DIRECTIONS GIVEN BY THE TRIBUNAL WERE COM PLIED WITH BY THE AO AND RESULTANTLY A FRESH ASSESSMENT ORDER WAS PASSED TREATING THE ASSE SSEE AS LOCAL AUTHORITY. THE ASSESSEE H.P MARKETING BOARD, SHIMLA 59 & 60/CHANDI/2011 2 2 WAS ALLOWED EXEMPTION U/S 10(20) AND CONSEQUENTLY T HE ASSESSEE WAS ASSESSED AT NIL INCOME IN BOTH THE ASSESSMENT YEARS. 4. THE AO HOWEVER NOTICED THAT THE ASSESSEE HAD FAI LED TO GET ITS ACCOUNTS AUDITED U/S 44AB FOR BOTH THE ASSESSMENT YEARS EVEN THOUGH IT EXCEEDED RS.40.00 LAKHS. HE THEREFORE INITIATED PROCEEDINGS FOR LEVY OF PENALTY U/S 271B. AFTER HEARING THE ASSESSEE, THE AO LEVIED THE IMPUGNED PENALTIES AMOUNTING TO R S. 65,930 FOR AY 2001-02 AND RS.83,099/- FOR AY 2002-03. ON APPEAL, THE LD. CIT( A) CONFIRMED THE ACTION OF THE AO. 5. AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT(A) CONFIRMING THE IMPUGNED PENALTIES , THE ASSESSEE IS NOW IN APPEAL BEFORE TH IS TRIBUNAL. IN SUPPORT OF APPEAL, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER PASSED BY THIS TRIBUNAL ON 27.11.2009 IN AGRICULTUR E PRODUCE MARKET COMMITTEE, DHALLI, SHIMLA V. A.C.I.T. SOLAN IN I.T.A. NOS. 1051, 1053 & 1054/CHANDI/2009 AND SUBMITTED THAT THE ISSUE RAISED BY THE ASSESSEE IN THE PRESEN T APPEALS HAS BEEN CONSIDERED AND ADJUDICATED UPON BY THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE. HE FURTHER SUBMITTED THAT THE INCOME OF THE ASSESSEE BEING LOCAL AUTHORITY WAS EX EMPT U/S 10(20) AND THEREFORE THE ASSESSEE WAS UNDER BONA-FIDE BELIEF THAT IT WAS NOT REQUIRED TO GET ITS ACCOUNTS AUDITED OR FURNISH TAX AUDIT REPORT. 6. IN REPLY THE DR SUPPORTED THE ORDER PASSED BY TH E LD. CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. AS RIGHTLY SUBMITTED BY THE LEARNED AUTHORIZED REPRESE NTATIVE FOR THE ASSESSEE, THIS TRIBUNAL HAS CONSIDERED IDENTICAL ISSUE IN AGRICULTURE PRODU CE MARKET COMMITTEE, DHALLI, SHIMLA V. A.C.I.T. SOLAN IN I.T.A. NO. 1051, 1053 & 1054/CHAN DI/2009 AND HELD AS UNDER:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULL Y. SECTION 271B OF THE ACT PRESCRIBES LEVY OF PENALTY IF A PERSON FAILS TO GET HIS ACCOUNTS AUDITED OR FURNISH A REPORT OF SUCH AUDITED ACCOUNTS AS STIPUL ATED U/S 44AB OF THE ACT. SECTION 273B OF THE ACT PROVIDES THAT SUCH PENALTY IS NOT IMPOSABLE IN CASE IF THE ASSESSEE PROVES THAT THERE WAS A REASONABLE CAUSE F OR THE FAILURE. IN THIS CASE, THE ASSESSEE FURNISHED AUDITED ACCOUNTS ALONG WITH THE RETURN OF INCOME, WHICH WAS BELATED. OSTENSIBLE, THE RETURN ALONG WITH THE AUDITED ACCOUNTS WAS SUBMITTED BEYOND THE PERIOD STIPULATED U/S 44AB OF THE ACT. THE CASE OF THE ASSESSEE IS THAT UPTO THE ASSESSMENT YEAR 2002-03, ITS INCOME WAS CONSIDERED EXEMPT BUT WITH THE INSERTION OF EXPLANATION BELOW SECTION 10(20) OF THE ACT BY THE FINANCE ACT, 2002 THE ASSESSEE WAS NOT ACCORDED THE STATUS OF LOCAL AUTHORITY. SUCH AMENDMENT TOOK EFFECT FROM 1.4.2003 . THE ASSESSEE HOWEVER, CLAIMED EXEMPTION U/S 10(20) EVEN FOR THE ASSESSMEN T YEAR 2003-04 AND ONWARD ASSESSMENT YEARS. THE ASSESSEE CLAIMS THAT IT WAS U NDER A BONAFIDE BELIEF THAT THE ASSESSEE BEING SET UP UNDER A CHARTER OF STATE LEGISLATURE, CONTINUED TO BE UNDERSTOOD AS A LOCAL AUTHORITY FOR THE PURPOSE O F EXEMPTION U/S 10(20) OF THE ACT. IN THIS REGARD, THE ASSESSEE SUBMITTED BEFORE THE AO AN THE ORDER OF THE LD. CIT(A) IN THE CASE OF M/S AGRICULTURE PRODUCE MARKE T COMMITTEE, DHALLI, SHIMLA V. A.C.I.T. SOLAN WHEREIN THE CLAIM OF EXEMPTION U/S 1 0(20) WAS UPHELD UNDER SIMILAR CIRCUMSTANCES. THE PLEA OF THE ASSESSEE IS THAT BECAUSE OF ITS BONAFIDE BELIEF OF BEING EXEMPT FROM TAX, NO RETURN WAS FILE D ON THE DUE DATE AND H.P MARKETING BOARD, SHIMLA 59 & 60/CHANDI/2011 3 3 CONSEQUENTLY, THE AUDITED ACCOUNTS PRESCRIBE U/S 44 AB ALSO COULD NOT BE FURNISHED ON SUCH DUE DATE. IN OUR CONSIDERED OPINION, THE PL EA OF THE ASSESSEE IS NOT BEREFT OF BONAFIDES AND THE SAME CONSTITUTES REASONABLE CA USE FOR THE FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 44AB WITHIN THE STIP ULATED PERIOD. FURTHERMORE, THE ASSESSEES REPLY TO THE AO STATING THAT THE AUDITED ACCOUNTS HAVE ALREADY BEEN SUBMITTED ALONGWITH THE RETURN OF INCOME, HAS NOT B EEN DISPUTED AT ANY STAGE. CONSIDERING THE AFORESAID CONSPECTUS OF FACTS, IN O UR VIEW, THE MITIGATING EFFECTS OF SECTION 273B OF THE ACT COME TO THE AID OF THE A SSESSEE AND NO PENALTY U/S 271B IS MERITED IN THE FACTS AND CIRCUMSTANCES OF T HE CASE. HENCE, THE ORDER OF THE LD. CIT(A) IS HEREBY SET ASIDE AND THE AO IS DI RECTED TO DELETE THE PENALTY IMPOSED U/S 271B OF THE ACT. 8. WE ARE IN RESPECTFUL AGREEMENT WITH THE AFORESAI D DECISION. THE FACTS IN THE CASE BEFORE US ARE IDENTICAL WITH THOSE BEFORE THIS TRIB UNAL IN AGRICULTURE PRODUCE MARKET COMMITTEE, DHALLI, SHIMLA V. A.C.I.T. SOLAN (SUPRA) . RESPECTFULLY FOLLOWING THE AFORESAID DECISION, THE IMPUGNED PENALTIES ARE CANCELLED. APP EALS FILED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 8TH APRIL 2011 SD/- SD/- (SUSHMA CHOWLA) (D K SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER CHANDIGARH: THE 8TH APRIL 2011 SURESH COPY TO: 1. THE APPELLANT, H.P. MARKETING BOARD, SHIMLA 2. THE RESPONDENT, A.C.I.T. CIRCLE, SHIMLA 3. THE CIT(A), SHIMLA 4. THE LD. CIT, SHIMLA 5. THE D.R, INCOME-TAX DEPARTMENT, CHANDIGARH TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH