M/s. Nandasan Lemon Co., Ahmedabad V. The Income Tax Officer, Ward-3(4), Ahmedabad

ITA 598/AHD/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1153 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 27-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L SHARMA
• Assessee Lawyers: K I RAVAL
• Keywords: Bonafide belief; Reasonable cause
• Section: 27

Judgement Text

ITA NO 598 /AHD/ 20 1 4 ASSESSMENT YEAR: 2 0 0 8 - 09 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH , AHMEDABAD [CORAM: PRAMOD KUMAR AM AND KUL BHARAT JM ] ITA NO. 598 / AHD / 2 0 1 4 ASSESSMENT YEAR: 200 8 - 09 NANDASAN LEMON CO., ....... .. . ..... APPELLANT 765, BHARUCHI NO KH A NCHO, B/H. MUNIC IPAL KOTHA, DHALGARWAD, AHMEDABAD. [PAN A ADFN 5685 P] VS. INCOME TAX OFFICER , .... ........ .... .. .. .. .... .. RESPONDENT WARD 3(4), AHMEDABAD. APPEARANCES BY: K.I. RAVAL , FOR THE APPELLANT B.L. SHARMA , FOR THE RESPONDENT DATE OF CONCLUDING THE HEARI NG : AUG UST 31 ST , 201 5 DATE OF PRONOUNCING THE ORDER : AUGUST 31 ST , 2015 O R D E R PER PRAMOD KUMAR AM : 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED THE CORRECTNESS OF THE PENALTY OF RS.73,912/ - IMPOSED ON THE ASSESSEE UNDER SECTION 271B OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR 200 8 - 09 . 2. THOUGH THE ASSESSEE HAS RAISED ELABORATE GROUNDS OF APPEAL AND HAS ALSO FILED STATEMENT OF FACTS ACCOMPANYING APPEAL BEFORE US , BUT SHORT GRIEVANCE OF THE ASSESSEE IS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE IMPUGNED PENALTY. ITA NO 598 /AHD/ 20 1 4 ASSESSMENT YEAR: 2 0 0 8 - 09 PAGE 2 OF 4 3. TO ADJUDICATE ON THIS APPEAL , ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. THE A SSESSEE BEFORE US, AS NOTED BY THE ASSESSING OFFICER HIM SELF A T PAGE NO. 2 OF THE ASSESSMENT ORDER IN PARA NO.2.1 , AS C OMMISSION AGENT DEALING MOSTLY IN LEMON. AS IT APPEARS FROM THE MATERIAL BEFORE US , THE UNCONTROVERTED STAND OF THE ASSESSEE IS THAT ASSESSEE HAS PURCHASED GOODS DIRECTLY FROM FARMERS FOR THE ORDER SUPP LY OF VARIOUS DEALERS . I T IS FURTHER ADDED THAT THIS PURCHASE IS MEANT FOR THOSE DEALERS WHO HAVE BOOKED THE ORDER AND HE IS CARE TAKER FOR THE GOODS PURCHASE ON BEHALF OF THOSE DEALERS . F OR THE SERVICES SO RENDERED BY THE ASSESSEE , THE ASSE SSEE GETS COMMISSION OF 5% FROM VARIOUS DEALERS WHO HAVE PLACED HE ORDERS WITH HIM. I T IS UNDISPUTED POSITION THAT EVEN THOUGH THE VOLUME OF SUPPLY ORDER, WITH WHICH THE ASSESSEE WAS ASSOCIATED, IS RS.1,47,82,397/ - DURING THE RELEVANT PREVIOUS YEAR , THE ASSESSEE DID NOT GET HIS BOOKS OF ACCOUNTS AUDITED UNDER SECTION 44AB OF THE ACT. I T W AS IN THIS BACKDROP THAT THE PENALTY UNDER SECTION 271B OF THE ACT WAS IMPOSED ON THE ASSESSEE. IN THE COURSE OF PENALTY PROCEEDINGS , IT MAY BE ADDED , THAT THE ASSESSEE S CONTENTION WAS THAT S TILL HE WAS ONLY WORKING FOR COMMISSION AND HE WAS UNDER BONAFIDE BELIEF THAT HIS TURNOVER WILL BE CONFINED TO THE COMMISSION SO EARNED. THIS STAND SEEMS TO BE IMPLIC IT FROM THE FOLLOWING OBSERVATION MADE IN THE IMPUGNED PENALTY OR DER ITSELF . THE A.O. ALONG WITH ASSESSMENT ORDER ISSUED SHOW CAUSE NOTICE U/ S. 27 1 (1)(C) OF THE ACT, DATED 30.11.2010 TO THE ASSESSEE TO SHOW CAUSE WHY PENAL ACTION U/S.271(1)(C) OF THE ACT, S HOULD NOT BE INITIATED . I N RESPONSE TO THE NOTICE A SSESSEE HA S VIDE LET T ER DATED 13.12.2010 HAS REPLIED THAT ASSESSEE HAS PURCHASED THE GOODS DIRECTLY FROM FARMERS FOR THE ORDER SUPPLY OF VARIOUS DEALERS. HENCE, THIS PURCHASE IS MEANT FOR THOSE DEALERS WHO HAVE BOOKED THE ORDER AND HE IS CARETAKER FOR THE GOOD S PUR CHASE ON BEHALF OF THESE DEALER S AND FOR DOING THIS TYPE OF BUSINESS, HE HAS CHARGED COMMISSION AT 5% ON THE ABOVE PURCHASE FROM HIS VARIOUS DEALERS WHO HAS PLACED THE ORDER FOR HI M. IN THIS WAY FROM THE LONG PERIOD THIS SYSTEM IS ADOPTED BY THE ASSESSEE FOR HIS BUSINESS AND NOT TO CONSIDER A NY SALES AND PURCHASE OF HI S OWN. HENCE, WHILE PREPARING THE BOOKS OF ACCOUNT RELIED ON GOOD FAITH HE HAS NOT CONSIDERED THE SALES AND PURCHASES OF HIS OWN A ND HE HAS NOT MADE HIS ACCOUNT AUDITED U/S. 44AB AND FILED A NY AUDIT REPORT ALONG WITH THE RETURN OF INCOME AND ONLY THE RELIANCE IN GOOD FAITH NOT ANY INTENTION TO EVASION OF TAX IT IS TECHNICAL AND VENIAL BRIEF OF THE ASSESSEE IN GOOD FAITH ON THE RELIANCE OF ABOVE SUBMISSION. HENCE, PENALTY U/S. 271B MAY NOT BE LEVIABLE IN THE INTEREST OF JUSTIFICATION. HE ALSO RELIED IN THE CASE OF CIT VS. VEGETA BLE PRODUCT LTD., 88 ITR 192 - SC ITA NO 598 /AHD/ 20 1 4 ASSESSMENT YEAR: 2 0 0 8 - 09 PAGE 3 OF 4 4. AGGRIEVED BY THE PENALTY SO IMPOSED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD . CIT ( A ) BUT WITHOUT ANY SUCCESS. WHI LE CONFIRMING THE PENALTY ORDER, THE LD . CIT(A) OBSERVED THAT THE ASSESSEE WAS NOT AN AGENT OF APMC , THAT HE WAS PURCHASING AND SELLING LEMON AND THAT , THEREFORE , THE SALE CONSIDERATION IS TO BE TAKEN TO BE TURNOVER OF THE ASSESSEE. LD . CIT ( A ) FURTHER OBS ERVED THAT APPELLANT HAS FAILED TO DEMONSTRATE THAT HE WAS PREVENTED BY ANY REASONABLE CAUSE IN NOT GETTING THE ACCOUNT S AUDITED . T HE PENALTY WAS THUS CONFIRMED. THE ASSESSEE IS NOT SATISFIED BY THE STAND SO TAKEN BY THE LD . CIT (A) AND IS IN FURTHER APP EAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. IT IS ONLY ELEMENTARY THAT NOTWITHSTANDING ANYTHING CONTAINED INTER ALIA IN THE P ROVISIONS OF SECTION 271B OF THE ACT UNDER WHICH THE IMPUGNED PENALTY IS LEVIED, NO PENALTY CAN BE IMPOSED ON THE PERSON FOR ANY FAILURE IN COMPLYING WITH THE RELATED POSITION I F HE PROVES THAT HE IS PREVENTED BY REASONABLE CAUSE FOR THE SAID FAILURE. THE SHORT POINT THAT WE HAVE TO ADJUDICATE IS WHETHER OR NOT THERE WAS A REASONABLE CAUSE FOR THE FAILURE IN GETTING THE BOOKS OF ACCOUNTS AUDITED. I N THIS BACKGROUND , WHEN WE LOOK AT THE UNCONTROVERTED BUSINESS MODEL OF THE ASSESSEE , W E DO NOT FIND ANY REAS ON TO DISPUTE THE BONA FIDE BELIEF OF THE ASSESSEE THAT ONLY THE COMMISSION ELEMENT WHICH IS NOTHING BUT A MARK UP ON THE CO S T OF PURCHASE, WAS TO BE INCLUDED IN THE TURNOVER OF THE ASSESSEE. THIS BELIEF MAY OR MAY NOT BE CORRECT BUT THAT IS NOT MATERIAL IN THE PRESENT CONTEXT. WHILE EXAMINING THE EXPLANATION OF THE ASSESSEE IN THE CONTEXT OF FAILURE TO PERFORM STATUTORY OBLIGATION, ALL THAT IS REQUIRED TO BE SEEN WHETHER SUCH EXPLANATION COULD HOLD GOOD IN THE REAL LIFE SITUATION AND NOT WHAT OUGHT TO HA VE BEEN DONE IN IDEAL SITUATION S . VIEWED THUS, THE EXPLANATION OF THE ASSESSEE WAS REASONABLE AND, IN OUR CONSIDERED VIEW , OUGHT TO HAVE BEEN ACCEPTED BY THE AUTHORITIES BELOW. WE, THEREFORE, ARE OF THE CONSIDERED VIEW THAT THE IMPUGNED PENALTY DESERVES TO BE DELETED. WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. ITA NO 598 /AHD/ 20 1 4 ASSESSMENT YEAR: 2 0 0 8 - 09 PAGE 4 OF 4 6. IN THE RESULT, APPEAL IS ALLOWED. DICTATED AND PRONOUNCED IN THE OPEN COURT TODAY ON 31 ST DAY OF AUGUST, 2015. SD/ - SD/ - KUL BHARAT PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD , THE 31 ST DAY OF AUGUST, 201 5 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD