M/s. Anant Technocrats Private Limited, Nashik V. The Income-Tax Officer, Ward – 1(1), Nashik

ITA 626/PUN/2022

AI Insights

The case involves Anant Technocrats Pvt. Ltd., which appealed against the penalty imposed by the Income Tax Officer (ITO), Ward 1(1), Nashik, for not furnishing the Tax Audit Report (TAR) within the prescribed time limit under section 44AB read with section 139(1) of the Income-tax Act, 1961. The company filed its TAR on March 29, 2018, and its Income Tax Return (ITR) on March 31, 2018, for the assessment year 2017-18. The ITO imposed a penalty of 0.5% of the reported business turnover for the delay. The NFAC upheld this penalty, which led the company to appeal to the ITAT. The ITAT, referencing decisions from the Supreme Court and other High Courts, found that the company had a reasonable cause for the delay and thus, the penalty was not justified.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136325 (ITAT-PUNE)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-12-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 16-08-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause
• Section: 273B; 143(3); 250; 139(1); 271B; 44AB

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे “सी” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 7 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE“C” BENCH, PUNE BEFORE HON’BLE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No.626/PUN/2022 ननधधारण वषा / Assessment Year : 2017-18 Anant Technocrats Pvt. Ltd., G-3, Crown Commercial Complex, Sharanpur Rd, Gandhi Bhavan, Nashik PAN : AACCA8702C . . . . . . . अपऩलधथी / Appellant बनधम / V/s. ITO, Ward 1(1), Nashik . . . . . . . प्रत्यथी / Respondent द्वारा / Appearances Assessee by : Shri Pramod Shingte Revenue by : Shri Suhas Kulkarni सपनवधई की तधरऩख / Date of conclusive Hearing : 27/12/2022 घोषणध की तधरऩख / Date of Pronouncement : 17/02/2023 आदेश / ORDER PER G.D. PADMAHSHALI, AM; The captioned appeal of the assessee for the assessment year [for short “AY”] 2017-18 is directed against the first appellate order of National Faceless Appeal Centre, Delhi [for short “CIT(A) /NFAC”] dt. 14/06/2022 passed u/s 250 of the Income-tax Act, 1961 [for short “the Act”], which ascended out of penalty order dt. 24/12/2019 passed u/s 271B of the Act by the ITO Ward 1(1), Nashik [for short “AO”] for assessment year [for short “AY”] 2017-18. Anant Technocrafts Pvt.Ltd., ITA No.626 /PUN/2022 AY: 2017-18 ITAT-Pune Page 2 of 7 2. Concisely stated the facts of the case are; 2.1 The assesse is a resident private limited company has for AY 2017-18 e-filed its return of income [in short “ITR”] on 31/03/2018 whereas the tax audit report u/s 44AB of the Act [in short “TAR”] was e- filed prior to filing of ITR on 29/03/2018. The assessment in this case was completed u/s 143(3) of the Act triggering the penalty proceedings u/s 271B for non-furnishing of TAR within the prescribed time limit u/s 44AB r.w.s. 139(1) of the Act. 2.2 For the reason the penalty proceedings remained unresponded by assessee company, the Ld. AO proceeded with the material available on records and after recording his satisfaction, culminated the proceedings by imposition of penalty u/s 271B of the Act for @0.5% of reported business turnover of ₹1,46,98,597/- for delayed furnishing of TAR in violation of section 44AB r.w.s. 139(1) of the Act. 2.3 Aggrieved assessee, in an appeal before the Ld. NFAC, tried to substantiate the delayed compliance Anant Technocrafts Pvt.Ltd., ITA No.626 /PUN/2022 AY: 2017-18 ITAT-Pune Page 3 of 7 with the letters obtained from tax auditor and newly appointed accountant, however none of them could inspire any confidence in demonstrating reasonable cause for the purpose of section 273B, consequently, the Ld. CIT(A) approbate the action of imposition in the light of “Metro Agencies Vs DCIT” reported in 45 taxmann.com 97 (Kerala), “River View Bar & Silver Restaurant Vs CIT” reported in 15 taxmann.com 84 (Kerala), “CIT Vs Capital Electronics” reported in 129 taxman 731 (Calcutta). 2.4 Faced with the situation, the appellant assessee came in appeal challenging the action of both the tax authorities below [in short “TAB”] as unjustified. 3. During the course of physical hearing, the learned representative of the assessee [in short “AR”] reiterated like contention taken before Ld. TAB and entreated for deletion of penalty parading delayed compliance for a bonafied reasons. Per contra, the learned departmental representative adverting to page 11-12 of paper book placed on record by the Anant Technocrafts Pvt.Ltd., ITA No.626 /PUN/2022 AY: 2017-18 ITAT-Pune Page 4 of 7 appellant and contended that, plain letters from accountant’s deposition failed to establish the reasonable cause so as to absolve the appellant from the application of penal provisions. It is further submitted that, the appellant in clear terms failed to comply with the provisions of section 44AB and further failed to prove reasonable cause with the evidential material, hence penalty deserves to be confirmed. 4. We have heard the rival contentions of both the parties; and subject to the provisions of rule 18 of Income Tax Appellate Tribunal Rules, 1963 [for short “ITAT, Rules”] perused the material placed on records till the date of conclusive hearing and duly considered the facts of the case in the light of settled legal position and are forewarned to the parties present. 5. Undisputedly, the appellant for the impugned AY having business turnover exceeding prescribed limit has failed to get its books audited u/s 44AB and furnished the report thereof within the time limit Anant Technocrafts Pvt.Ltd., ITA No.626 /PUN/2022 AY: 2017-18 ITAT-Pune Page 5 of 7 envisaged u/s 139(1) of the Act. However before filing its ITR u/s 139(4), the appellant has duly filed the copy of TAR on record considering the same, the regular assessment was framed u/s 143(3) of the Act. In the event of failure to comply with the mandate of section 44AB within the timelines prescribed therein coupled with failure to prove the reasonable cause delayed compliance, the Ld. TAB imposed and sustained the penalty u/s 271B of the Act. 6. The reasoned delay of four days in filing the present appeal in the larger interest of justice is condoned. 7. In this factual matrix, the adjudication calls to decide ‘as to whether the reasons advanced by the appellant are good & reasonable to take shelter u/s 273B of the Act?’ 8. It is well settled law that, section 273B states notwithstanding anything contained in section 271B, no penalty shall be imposed on the assessee for failure to comply with the provisions of section 44AB if Anant Technocrafts Pvt.Ltd., ITA No.626 /PUN/2022 AY: 2017-18 ITAT-Pune Page 6 of 7 the assessee proves that there was a reasonable cause for the said failure. Therefore, the liability to levy penalty can be fastened only on only on the assessee who does not have a ‘reasonable cause’ against the noncompliance of mandate. The burden, of course, is on the assessee to prove such ‘reasonable cause’ with evidential documents so has to take shield against the levy of penalty. 9. In the given facts and circumstance of delayed compliance with the mandates of section 44AB of the Act, we have noted all the reasons furthered by the appellant during assessment and appellate proceedings and find them ‘reasonable’ and convincing for the purpose of section 273B so has to hold the imposition of penalty as unjustified in the light of Hon’ble Supreme Court decision laid in “Hindustan Steel Ltd. Vs State of Orissa” reported in 1970 AIR 253 (SC) as; An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in Anant Technocrafts Pvt.Ltd., ITA No.626 /PUN/2022 AY: 2017-18 ITAT-Pune Page 7 of 7 defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of authority to be exercised judiciously and on the consideration of all relevant circumstances even if minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, where there is technical or venial breach of the provision of the Act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statue” (Emphasis supplied) 10. Thus, in the light of aforestated settled legal position, we set-aside the order of Ld. NFAC and direct the Ld. AO to delete the penalty. Resultantly, the appeal of the appellant assessee succeeds. In terms of rule 34 of ITAT Rules, 1963 the order is pronounced in the open court on this Friday 17 th day of February, 2023. -S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 17th day of February, 2023. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1. अपऩलधथी / The Appellant. 2.प्रत्यथी / The Respondent. 3. The NFAC, Delhi (India) 4. The CIT(1) Nashik (Ka-India) 5. DR, ITAT, Pune “C” Bench, Pune. 6. गधर्ाफ़धइल / Guard File. आदेशधनपसधर / By Order, वररष्ठ ननजऩ सनिव / Sr. Private Secretary आयकर अपऩलऩय न्यधयधनधकरण, पपणे / ITAT, Pune.