M/s. Chopra Properties, New Delhi V. ACIT, New Delhi

ITA 6199/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97583 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 19-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 44AD; 143(3); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. A.T.VARKEY, JM AND SH. PRASHANT MAHARI SHI, AM ITA NO. 6199/DEL/2013 ASSTT. YEAR : 2008-09 CHOPRA PROPERTIES D-10, MAIN VIKAS MARG, LAXMI NAGAR NEW DELHI VS ACIT CIRCLE-33(1) NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAAFC8827B APPELLANT BY : SH. RAJIV JAIN, CA RESPONDENT BY : SH. HEMANT GUPTA, SR. DR DATE OF HEARING : 13.10.2015 DATE OF PRONOUNCEME NT : 21.10.2015 ORDER PER PRASHANT MAHARISHI, AM: 01. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) DATED 27.08.2013 CONFIRMING THE PENALTY OF R S. 1,00,000/- U/S 271B OF THE INCOME TAX ACT. 02. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM FILED ITS RETURN OF INCOME ON 30 TH MARCH, 2009 SHOWING TOTAL INCOME OF RS. 58,57,760/- AND ASSESSMENT WAS COMPLE TED U/S 143(3) ON 24 TH NOVEMBER, 2010 AT TOTAL INCOME OF RS. 1,95,51,565/-. DURING THE ASSESSMENT PROCEEDINGS WH ILE PERUSING THE TAX AUDIT REPORT AO OBSERVED THAT THE TAX AUDI T REPORT IS SIGNED ON 30 TH SEPTEMBER 2008. THEREFORE, ACCORDING TO THE AO TAX AUDIT REPORT SHOULD HAVE BEEN OBTAINED BEFORE T HE SPECIFIED DATE I.E. 30 TH SEPTEMBER 2008. THEREFORE, AO ISSUED A SHOW CAUSE NOTICE, WHICH REMAINED UNRESPONDED. ON FURTHER OPPO RTUNITY, THE ITA NO. 61 99/DEL/2013 CHOPRA PROPERTIES. 2 ASSESSEE SUBMITTED THAT THE AUDIT REPORT WAS OBTAIN ED ON 30 TH SEPTEMBER 2008, WHICH WAS WITHIN THE TIME PRESCRIBE D FOR OBTAINING TAX AUDIT REPORT. HOWEVER, AO WAS OF THE VIEW THAT ACCORDING TO PROVISIONS OF SECTION 44AB ASSESSEE IS REQUIRED TO GET HIS ACCOUNTS AUDITED BEFORE S PECIFIED DATE AND NOT ON THE SPECIFIED DATE. THEREFORE, AS ASSESSEE HAS OBTAINED THIS TAX AUDIT REPORT ON 30 TH SEPTEMBER 2008 AND NOT BEFORE 30 TH SEPTEMBER, 2008, THEREFORE, LEVIED PENALTY OF RS. 1,00,000/- U/S 271B OF THE IT ACT. AGAINST THIS, ASSESSEE-PREFERRED APPEAL BEF ORE THE CIT (A) WHO CONFIRMED PENALTY HOLDING THAT ASSESSEE HAS COM MITTED A DEFAULT BY NOT GETTING ITS ACCOUNTS AUDITED BEFORE THE DUE DATE. AGAINST THIS ASSESSEE IS IN APPEAL BEFORE US. 03. LD. AR OF THE APPELLANT SUBMITTED THAT BEFORE SPE CIFIED DATE IN SECTION 44AB MEANS ON OR BEFORE THE SPECIFIED DATE. THEREFORE, HE SUBMITTED THAT THOUGH AUDIT REPORT IS SIGNED ON 30 TH SEPTEMBER 2008 AND THE REQUIREMENT OF LAW IS TO BE CONSTRUED AS TAX AUDIT REPORT REQUIRED TO BE OBTAINED ON OR BEFORE 30 TH SEPTEMBER 2008. HENCE, HE SUBMITTED THAT ASSESSEE HAS OBTAINED TAX AUDIT REPORT IN TIME AND THERE IS NO DEFAULT U/S 271B. FOR THIS PRO POSITION, HE RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CASE OF PREM CHAND NATHMAL KOTHARI VS. KISHANLAL BACHHARAJ VYAS & ORS. DATED 5 TH APRIL 1975 REPORTED IN AIR 1976 BOMBAY 82 WHEREIN RELYING ON THE CHAMBERS DICTIONARY IT HAS BEEN HELD THAT WORD BEFORE MEANS PREVIOUS TO THE EXPIRATION OF. THE REFORE, BEFORE 30 TH SEPTEMBER, 2008 MEANS BEFORE THE END OF 30 TH SEPTEMBER 2008. HE FURTHER RELIED ON THE DECISION OF ALLAHABA D ITAT IN CASE OF CHANDRA KUMAR SETH VS. ITO 62 ITD 106, CIT VS. J AI DURGA ITA NO. 61 99/DEL/2013 CHOPRA PROPERTIES. 3 CONSTRUCTION COMPANY 133 TAXMAN 99 AND CIT VS. V.P. GUPTA AND SONS 172 TAXMAN 344. HE FURTHER SUBMITTED THAT ALTE RNATIVELY, THERE IS DELAY OF ONLY ONE DAY AND BECAUSE OF THE T WO VIEWS POSSIBLE IT SHOULD BE CONSIDERED AS A REASONABLE CA USE IN PENALTY MAY BE DELETED. 04. LD. DR RELIED ON THE DECISIONS OF LOWER AUTHORITIES AND SUBMITTED THAT ASSESSEE HAS FAILED TO OBTAIN TAX AUDIT REPORT BEFORE 30 TH SEPTEMBER 2008 BUT OBTAINED ONLY ON 30 TH SEPTEMBER 2008. THEREFORE, THE PENALTY IS RIGHTLY LEVIED U/S 271B OF THE ACT. 05. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE VARIOUS DECISIONS CITED BEFORE US. IN THIS CAS E IT IS UNDISPUTED THAT ASSESSEE HAS OBTAINED THE TAX AUDIT REPORT ON 30.09.2008. REQUIREMENT OF PROVISION OF SECTION 44AB IS THAT EVERY PERSON,-- (A) CARRYING ON BUSINESS SHALL, IF HIS TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS EXCEED OR EXCEEDS FORTY LAK H RUPEES IN ANY PREVIOUS YEAR ; OR (B) CARRYING ON PROFESSION SHALL, IF HIS GROSS RECEI PTS IN PROFESSION EXCEED TEN LAKH RUPEES IN ANY PREVIOUS YEAR, OR (C) CARRYING ON THE BUSINESS SHALL, IF THE PROFITS AN D GAINS FROM THE BUSINESS ARE DEEMED TO BE THE PROFITS AND GAINS OF SUCH PERSON UNDE R SECTION 44AD OR SECTION 44AE 3OR SECTION 44AF OR SECTION 44BB OR SECTION 44BBB, AS THE CASE MAY BE, AND HE HAS CLAIMED HIS INCOME TO BE LOWER THAN THE PROF ITS OR GAINS SO DEEMED TO BE THE PROFITS AND GAINS OF HIS BUSINESS, AS THE CASE MAY BE, IN ANY PREVIOUS YEAR, GET HIS ACCOUNTS OF SUCH PREVIOUS YEAR AUDITED BY AN A CCOUNTANT BEFORE THE SPECIFIED DATE AND FURNISH BY THAT DATE THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING F ORTH SUCH PARTICULARS AS MAY BE PRESCRIBED: EXPLANATION FOR THE PURPOSES OF THIS SECTION,-- (II) 'SPECIFIED DATE', IN RELATION TO THE ACCOUNTS OF THE ASSESSEE OF THE PREVIOUS YEAR RELEVANT TO AN ASSESSMENT YEAR MEANS THE 30TH DAY O F SEPTEMBER OF THE ASSESSMENT YEAR. ITA NO. 61 99/DEL/2013 CHOPRA PROPERTIES. 4 THEREFORE THE CONTROVERSY IS WHETHER TAX AUDI T REPORT OBTAINED BY ASSESSEE ON 30.09.2008 IS DUE COMPLIANCE OF PROVISI ONS OF SEC. 271B OF THE ACT OR NOT. 06. ABOVE CONTROVERSY HAS BEEN DECIDED BY ITAT ALLAHAB AD BENCH IN CHANDRA KR. SETH VS. ITO 62 IT 106 ON IDENTICAL IS SUE AND DELETED THE PENALTY U/S 271B HOLDING AS UNDER :- 16. THE FULL EXPRESSION IN SECTION 44AB TO BE CONSIDER ED IS NOT JUST 'GET HIS ACCOUNTS OF SUCH PREVIOUS YEAR AUDITED BY AN ACCOUNTANT BEFORE THE SPECIFIED DATE', BUT 'GET HIS ACCOUNTS OF SUCH PREVIOUS YEAR AUDITED BY AN ACCOUN TANT BEFORE THE SPECIFIED DATE AND OBTAIN BEFORE THAT DATE THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM'. THUS, THERE ARE TWO REQUIREMENTS, THE FIRST BEING TO GET THE ACCOUN TS AUDITED AND THE SECOND BEING TO OBTAIN A REPORT OF SUCH AUDIT IN THE PRESCRIBED FOR M I.E. PRESCRIBED IN RULE 6G OF THE INCOME-TAX RULES, 1962. IN THE PRESENT CASE, THE PR ESCRIBED FORMS ARE FORM NO. 3CB AND FORM NO. 3 CD. IT IS NEXT TO BE SEEN WHAT IS TH E DEFAULT, WHICH IS TO BE PENALISED UNDER SECTION 271B OF THE ACT, WHICH STOOD AS UNDER IN THE RELEVANT YEAR : 'S. 271B. FAILURE TO GET ACCOUNTS AUDITED.IF ANY P ERSON FAILS TO GET HIS ACCOUNTS AUDITED IN RESPECT OF ANY PREVIOUS YEAR OR YEARS RE LEVANT TO AN ASSESSMENT YEAR OR OBTAIN A REPORT OF SUCH AUDIT AS REQUIRED UNDER SEC TION 44AB OR FURNISH THE SAID REPORT ALONG WITH THE RETURN OF HIS INCOME FILED UNDER SUB -SECTION (1) OF SECTION 139, OR ALONG WITH THE RETURN OF INCOME FURNISHED IN RESPONSE TO A NOTICE UNDER CLAUSE (I) OF SUB- SECTION (1) OF SECTION 142, THE ASSESSING OFFICER M AY DIRECT THAT SUCH PERSON SHALL PAY, BY WAY OF PENALTY, 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 TH E GROSS RECEIPTS IN PROFESSION, IN SUCH PREVIOUS YEAR OR YEARS OR A SUM OF ONE HUNDRED THOU SAND RUPEES, WHICHEVER IS LESS.' 17. THERE IS A LINK WITH FURNISHING THE REPORT OF AUDI T ALONGWITH THE RETURN OF HIS INCOME FILED UNDER SUB-SECTION (1) OF SECTION 139. THE LAS T DATE FOR OBTAINING A REPORT OF AUDIT WAS CLEARLY 'BY THAT DATE' AND NOT 'BEFORE THAT DAT E'. THE LAST DATE WOULD, THEREFORE, BE 31-7-1988 IN THE PRESENT CASE. NO SPECIFIC PURPOSE WOULD BE SERVED IN GETTING THE ACCOUNTS AUDITED A DAY EARLIER I.E. BY 30-7-1988. I T WOULD, THEREFORE, BE REASONABLE TO INTERPRET THE EXPRESSION 'BEFORE THE SPECIFIED DATE ' AS 'BY THE SPECIFIED DATE'. 18. THE LEARNED COUNSEL HAS RIGHTLY BROUGHT TO OUR NOT ICE THAT A SIMILAR EXPRESSION 'BEFORE THE EXPIRY OF FOUR MONTHS FROM THE END OF T HE PREVIOUS YEAR' WAS USED IN SECTION 139(1)(A) OF THE ACT AS IT STOOD AT THE RELEVANT TI ME, WHICH WAS INTERPRETED BY THE DEPARTMENT IN PRACTICE AS 'BY 31ST JULY' IN THE CAS E OF PREVIOUS YEARS ENDING ON 31ST MARCH. THIS IS BORNE OUT BY C.B.D.T. CIRCULAR NO. 5 49 DATED 31-10-1989 APPEARING AT PAGE 3254 OFCHATURVEDI AND PITHISARIAS INCOME TAX LAW, FOURTH EDITION, VOL. 3, RELEVANT EXTRACT FROM WHICH IS GIVEN BELOW : 'UNDER THE OLD PROVISIONS OF SUB-SECTION (1) OF SEC TION 139, TIME LIMITS FOR FILING THE RETURNS OF INCOME WERE PRESCRIBED DEPENDING UPON WH ETHER OR NOT THE ASSESSEE HAD INCOME FROM BUSINESS OR PROFESSION. IN THE CASE OF PERSONS DERIVING INCOME FROM BUSINESS OR PROFESSION, THE DATE OF FILING THE RETU RN OF INCOME WAS BEFORE THE EXPIRY OF FOUR MONTHS FROM THE END OF THE PREVIOUS YEAR OR BE FORE THE 30TH OF JUNE OF THE RELEVANT ASSESSMENT YEAR, WHICHEVER WAS LATER, I.E., IT COUL D BE EITHER 30TH JUNE OR 31ST JULY. IN THE CASE OF OTHER PERSONS, NOT DERIVING INCOME FROM BUSINESS OR PROFESSION, THE DATE WAS 30TH JUNE. ALSO, ON AN APPLICATION MADE BY THE ASSESSEE IN THE PRESCRIBED FORM, THE ITA NO. 61 99/DEL/2013 CHOPRA PROPERTIES. 5 INCOME-TAX OFFICER WAS EMPOWERED TO EXTEND THE DATE FOR FILING THE RETURN OF INCOME SUBJECT TO CHARGEABILITY OF INTEREST UNDER SECTION 139(8). WITH THE INTRODUCTION OF THE FINANCIAL YEAR (YEAR E NDING 31ST MARCH AS THE UNIFORM PREVIOUS YEAR FOR ALL ASSESSEES, THOSE HAVING INCOM E FROM BUSINESS OR PROFESSION WOULD HAVE BEEN OBLIGED TO FILE THEIR RETURNS BY 31ST JUL Y, AFTER CLOSING THEIR RETURNS BY 31ST MARCH. THIS WOULD HAVE RESULTED IN HEAVY PRESSURE O F WORK ON THE AUDIT PROFESSION, BECAUSE ALL THOSE ASSESSEES, WHO ARE REQUIRED TO GE T THEIR ACCOUNTS AUDITED, WOULD HAVE BEEN OBLIGED TO DO SO WITHIN A SHORT SPAN OF F OUR MONTHS. ALSO, ALL SUCH RETURNS WOULD HAVE BEEN FILED WITH THE DEPARTMENT, MOSTLY T OWARDS THE END OF JULY EVERY YEAR, CAUSING A GLUT OF SUCH RETURNS WITHIN A VERY SHORT PERIOD. TO REMOVE THESE DIFFICULTIES, THE AMENDING ACT, 1987, HAS SUBSTITUTED A NEW SUB-SECTI ON (1), WHICH STAGGERS THE DATES FOR FILING THE RETURNS OF INCOME BY DEFFERENT CLASSES O F ASSESSEES.' 19. WE HAVE ALSO GONE THROUGH CAREFULLY THE DECISIONS OF THE BOMBAY HIGH COURT IN PREMCHAND NATHMAL KOTHARIS CASE (SUPRA). THE HO NBLE HIGH COURT INTERPRETED THE WORD 'BEFORE' IN SECTION 3 OF MAHARASHTRA (VIDARBHA REGION) AGRICULTURAL DEBTORS RELIEF ACT IN THE EXPRESSION 'BEFORE THE 1ST DAY OF APRIL, 1970.' IT WAS OBSERVED THAT THE WORD WILL HAVE TO BE CONSIDERED AND INTERPRETED WITH REF ERENCE TO THE CONTEXT AND THE SUBJECT OF ENACTMENT. IT WAS NO DOUBT TRUE THAT A GENERAL P RINCIPLE OF INTERPRETATION, WHERE THE WORDS OF THE STATUTE ARE PLAIN, PRECISE AND UNAMBIG UOUS, THE INTENTION OF THE LEGISLATURE IS TO BE GATHERED FROM THE LANGUAGE OF THE STATUTE ITSELF AND NO EXTERNAL AID IS ADMISSIBLE TO CONSTRUE THOSE WORDS. IT IS ONLY WHERE THE LANGU AGE IS AMBIGUOUS, UNCERTAIN, CLOUDY OR SUSCEPTIBLE OR MORE THAN ONE MEANING OR SHADES O F MEANING THAT EXTERNAL AID WILL BE PERMISSIBLE. THE FOLLOWING EXTRACT FROM A DECISION OF THE SUPREME COURT IN SHEIKH GULFAN V. SANAT KUMAR AIR 1965 SC 1839 WAS RELIED U PON : 'NORMALLY, THE WORDS USED IN A STATUTE HAVE TO BE C ONSTRUED IN THEIR ORDINARY MEANING, BUT IN MANY CASES, JUDICIAL APPROACH FINDS THAT THE SIMPLE DEVICE OF ADOPTING THE ORDINARY MEANING OF WORDS DOES NOT MEET THE ENDS OF A FAIR A ND A REASONABLE CONSTRUCTION. EXCLUSIVE RELIANCE ON THE BARE DICTIONARY MEANING O F WORDS MAY NOT NECESSARILY ASSIST A PROPER CONSTRUCTION OF THE STATUTORY PROVISION IN W HICH THE WORDS OCCUR. OFTEN ENOUGH, IN INTERPRETING A STATUTORY PROVISION, IT BECOMES NECE SSARY TO HAVE REGARD TO THE SUBJECT- MATTER OF THE STATUTE AND THE OBJECT WHICH IS INTEN DED TO ACHIEVE. THAT IS WHY IN DECIDING THE TRUE SCOPE AND EFFECT OF THE RELEVANT WORDS IN ANY STATUTORY PROVISION, THE CONTEXT IN WHICH THE WORDS OCCUR, THE SUBJECT OF THE STATUTE I N WHICH THE PROVISION IS INCLUDED, AND THE POLICY UNDERLYING THE STATUTE ASSUME RELEVANCE AND BECOME MATERIAL. AS HALSBURY HAS OBSERVED, THE WORDS SHOULD BE CONSTRUED IN THE LIGHT OF THEIR CONTEXT RATHER THAN WHAT MAY BE EITHER THEIR STRICT ETYMOLOGICAL SENSE OR THEIR POPULAR MEANING APART FROM THAT CONTEXT. ' 20. THEREAFTER CERTAIN OTHER PARTS OF THE ACT WERE ALS O EXAMINED AND IT WAS OBSERVED THAT IF ALL THESE SECTIONS WERE READ TOGETHER AND H ARMONIOUSLY, IT WAS OBVIOUS THAT THE WORD BEFORE WAS USED BY THE LEGISLATURE IN THE CO NTEXT OF THE WORD WITHIN MEANING THEREBY NOT LATER THAN. THEREAFTER, IT WAS OBSERV ED THAT EVEN IF THE DICTIONARY MEANING OF THE WORD BEFORE IS TO BE ADHERED TO, THE MEANING OF THE WORD AS GIVEN IN CHAMBERS TWENTIETH CENTURY DICTIONARY IS PREVIOUS TO THE EX PIRATION OF. IF THIS MEANING IS GIVEN, IT WOULD MEAN THAT AN APPLICATION UNDER SECTION 3 OF T HE ACT COULD BE FILED BEFORE THE EXPIRATION OF OR NOT LATER THAN 1ST DAY OF APRIL, 1 970. 21. WE FIND THAT THE RATIO OF THESE DECISIONS IS EQUAL LY APPLICABLE HERE. THE MEANING OF THE WORD BEFORE IN SECTION 44AB OF THE ACT IS CLO UDY AND UNCERTAIN. THE WORD IS POSSIBLE OF TWO MEANINGS, ONE BEING THE COMMON MEAN ING AND THE OTHER AS GIVEN IN CHAMBERS TWENTIETH CENTURY DICTIONARY AS PREVI OUS TO THE EXPIRATION OF. LOOKING TO ITA NO. 61 99/DEL/2013 CHOPRA PROPERTIES. 6 THE OTHER SECTIONS OF THE ACT AS ABOVE AND GIVING H ARMONIOUS CONSTRUCTION AND APPLYING RESPECTFULLY THE RATIO OF THE ABOVE DECISION OF THE BOMBAY HIGH COURT, WE HOLD THAT THE EXPRESSION BEFORE THE SPECIFIED DATE IN SECTION 4 4AB OF THE ACT MEANS ON OR BEFORE THE SPECIFIED DATE. IN THIS VIEW OF THE MATTER, THERE WAS NO DELAY IN AUDIT OF THE ACCOUNTS IN TERMS OF SECTION 44AB OF THE ACT. LD DR HAS NOT DRAWN OUR ATTENTION TO ANY CONTRARY D ECISION. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF CO ORDINATE BENCH WE REVERSE THE ORDER OF CIT (A) AND DELETE THE PENALTY OF RS 1,00,000/- LEVIED U/ S271B OF THE INCOME TAX ACT. 07. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 21/10/2 015) SD/- SD/- (A.T.VARKEY) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTA NT MEMBER DATED: 21/10/2015 *B. RUKHAIYAR* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGISTRAR ITA NO. 61 99/DEL/2013 CHOPRA PROPERTIES. 7 DATE INITIAL 1. DRAFT DICTATED ON 13/10/2015 2. DRAFT PLACED BEFORE AUTHOR 13/10/2015 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 21/10/2015 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.