GEMINI OILS P. LTD, MUMBAI V. ITO 2(1)(4), MUMBAI

ITA 6514/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8619 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 11-01-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 21-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K NAYAK
• Keywords: Search and seizure; Reasonable cause; Set aside

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, G BENCH, MUMBAI. [ CORAM: PRAMOD KUMAR, AM AND V. DURGA RAO, JM ] I.T.A NO.6514/ MUM/2009 ASSESSMENT YEAR: 1999-2000 GEMINI OILS P. LTD. .. APPELLANT 2 ND FLOOR, SADHNA RAYON HOUSE, DR. DADABHOY NAROJI ROAD, FORT, MUMBAI. PA NO.AAACG 1407 C VS INCOME TAX OFFICER WARD 2(1)(4) ,. RESPONDEN T AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. G.S.PIKALE, FOR THE APPELLANT A.K.NAYAK, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CALLED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 28 TH OCTOBER, 2009, CONFIRMING THE PENALTY OF ` .1,00,000 LEVIED BY THE AO U/S. 271B OF THE ACT FOR THE ASSESSMENT Y EAR 1999-2000. 2. BRIEFLY STATED THE MATERIAL FACTS ARE LIKE THIS. IN THIS CASE, A SEARCH AND SEIZURE ACTION WAS CONDUCTED AT THE PREMISES OF THE ASSESSE E ON 6.8.1999 AND THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDER ATION WERE SEIZED BY THE DEPARTMENT. IN THE FIRST ROUND OF APPEAL, THE ITA T SET ASIDE THE ISSUE TO THE FILE OF 2 THE AO WITH A DIRECTION TO VERIFY THE CLAIM OF THE ASSESSEE WHETHER THE AUDIT WAS COMPLETED IN TIME ON THE GROUND THAT THE BOOKS OF A CCOUNT WERE SEIZED BY THE DEPARTMENT. TO GIVE EFFECT TO THE ITAT ORDER, IN R ESPONSE TO THE ASSESSING OFFICERS QUERY, NO ONE ATTENDED EXCEPT SUBMITTING A LETTER D ATED 2.3.2007, WHEREIN, THERE WAS NO MENTION WHETHER THE BOOKS OF ACCOUNT WERE LY ING WITH THE DEPARTMENT. THE AO NOTICED THAT THE ASSESSEE HAD FILED THREE LETTER ADDRESSED TO DDI(INV) CALLING FOR RETURN OF BOOKS OF ACCOUNT OF THE COMPANY. BUT FRO M THESE LETTERS, IT WAS NOT CLEAR WHICH BOOKS OF ACCOUNT WERE BEING ASKED TO BE RETUR NED AS THERE WAS NO ACKNOWLEDGEMENT. IN THIS BACKDROP, THE AO WAS OF T HE VIEW THAT THE ASSESSEE HAS COMMITTED DEFAULT WITHIN THE MEANING OF SECTION 271 B OF THE ACT AND, ACCORDINGLY, LEVIED THE PENALTY OF ` .1,00,000. BEING AGGRIEVED, THE ASSESSEE CARRIED TH E MATTER IN APPEAL BEFORE THE CIT (A). 3. BEFORE THE CIT (A), IT WAS, INTER ALIA, SUBMITTE D BY THE ASSESSEE AS UNDER:- I) A SEARCH & SEIZURE ACTION WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 6.8.1999 AND THE BOOKS OF ACCOUNTS WERE SEIZED BY THE DEPARTMENT. II) THE ASSESSEE REQUESTED THE DEPARTMENT TO RETURN THE BOOKS OF ACCOUNT AS THE SAME WERE REQUIRED FOR FINALIZATION OF ACCOU NTS. THE BOOKS OF ACCOUNT WERE FINALLY RELEASED BY THE DEPARTMENT TO THE ASSESSEE ON 25.11.1999. III) THE CHARTERED ACCOUNTANT OF THE ASSESSEE REFUSED TO GIVE THE TAX AUDIT REPORT AS HE WAS APPREHENSIVE ABOUT THE INVOLVEMENT OF THE ASSESSEE IN THE SEARCH & SEIZURE ACTION IV) THE ASSESSEE WAS PREVENTED BY REASONABLE CAUSE FROM HAVING THE TAX AUDIT REPORT CONDUCTED & THE SAME FILED WITH THE DE PARTMENT WITHIN THE TIME PERMITTED BY SECTION 44AB. 4. AFTER CONSIDERING THE ABOVE SUBMISSIONS OF THE A SSESSEE, THE CIT (A) CONFIRMED THE PENALTY ON THE GROUND THAT THE ONLY F INDING OF THE ITAT WHETHER THE 3 BOOKS OF ACCOUNT WERE LYING WITH THE DEPARTMENT COU LD NOT BE SUBSTANTIATED BY THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEF ORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE CIT (A) AND CONTENDED T HAT DUE THE SAID FACTS AND CIRCUMSTANCES, THE ASSESSEE COULD NOT GET THE ACCOU NT AUDITED IN TIME. LEARNED COUNSEL SUBMITTED THAT BEFORE THE CIT (A), THE ASSS SEE HAD ALSO FILED AN AFFIDAVIT IN SUPPORT OF THE NON-FILING THE AUDIT REPORT THAT THE CA. HAD SOME APPREHENSION ON SIGNING THE AUDIT REPORT BECAUSE OF SEARCH AND SE IZURE. HE SUBMITTED THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 30.3.200 1 ALONGWITH TAX AUDIT REPORT DATED 19.3.2001. LEARNED COUNSEL ALSO FILED A COP Y OF DECISION DATED 26 TH SEPTEMBER, 2006 OF A CO-ORDINATE BENCH OF THIS TRIB UNAL IN THE CASE OF NISHA SYNTHETIC LIMITED V ITO, (ITA NO.7433/M/2003), COPY OF WHICH IS PLACED ON RECORD AND, WHEREIN, ON SIMILAR FACTS, THE DELETED THE PEN ALTY. ON THE OTHER HAND, LEARNED D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELO W. 6. HAVING CONSIDERED THE RIVAL CONTENTIONS AND HAVI NG PERUSED THE MATERIAL ON RECORD, WE ARE OF THE OPINION THAT THE PENALTY DESE RVES TO BE DELETED. WE FIND THAT A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF N ISHA SYNTHETIC LIMITED (SUPRA) ON SIMILAR FACTS, DELETED THE PENALTY, INTER ALIA, OBS ERVING AS FOLLOWS:- . ADMITTEDLY, IN THIS CASE, AT THE TIME OF FILI NG THE RETURN OF INCOME, THE SAME WAS NOT ENCLOSED. BUT LATER ON, T HE SAME WAS FILED. BEFORE THE CIT (A) THE ASSSSEE HAD ALSO FIL ED AN AFFIDAVIT IN SUPPORT OF THE NON-FILING THE AUDIT REPORT THAT THE CA. REFUSED TO SIGN THE AUDIT REPORT BECAUSE THE SEARCH AND SEIZU RE ACTION WAS CARRIED OUT BY THE DEPARTMENT ON THE GROUP CONCERNS OF THE ASSESSEE. AS PER THE CONTENTS OF THE AFFIDAVIT, IT CAN BE SEEN THAT THE CONCERNED C.A. WAS APPREHENSIVE ABOUT THE INVOL VEMENT OF THE SAID COMPANY IN THE SAID ACTION. THIS CONSTITUTES A REASONABLE CAUSE FOR NOT FILING THE AUDIT REPORT U/S.44AB ALON GWITH THE RETURN OF INCOME. CONSIDERING THE TOTALITY OF THE FACTS A ND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE LD CIT (A) OUGHT TO HAVE DELETED THE PENALTY OF ` `` ` .1,00,000/- U/S.271B ON THE BASIS OF THIS AFFIDAVIT. IN VIEW OF THIS, WE , THEREFORE, DIRECT THE AO TO DELETE ` `` ` .1,00,000/- LEVIED U/S.271B OF THE I.T.ACT, 1961 . 4 SINCE THE FACTS ARE IDENTICAL IN THE PRESENT CASE, RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE AO TO DELETE ` .1,00,000 LEVIED U/S.271B OF THE ACT. 7 IN THE RESULT, THE APPEAL STANDS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 19 TH JANUARY, 2011 SD/- (V. DURGA RAO ) (JUDICIAL MEMBER) SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI, DATED 19 TH JANUARY, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),4, MUMBAI 4. COMMISSIONER OF INCOME TAX, II , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH G, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI 5 6