PRECISION SHEARS & KNIVES P.LTD, MUMBAI V. ITO WD 1(2)(4), MUMBAI

ITA 6606/MUM/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0693 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-12-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 03-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Opportunity of being heard
• Section: 147; 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 6606/MUM2011 ( / ASSESSMENT YEAR : 2000 - 01 M/S. PRECISION SHEARS & KNIVES PVT. LTD., 2/C, LAWRENCE & MAYO HOUSE, 276, DR. D.N. ROAD, FORT, MUMBAI - 400 001 / VS. THE ITO, WARD 1(2)(4), AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. : AACCP 2722M ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI VIMAL PUNMIYA / RESPONDENT BY : SHRI NEIL PHILIP / DATE OF HEARING : 18 . 0 5 .2015 / DATE OF PRONOUNCEMENT : 20 .0 5 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 2 , MUMBAI DT. 1 2. 7 .201 1 PERTAINING TO ASSESSMENT YEAR 200 0 - 0 1. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING PENALTY U/S. 271B OF THE ACT. ITA. NO. 6606/M/2011 2 3. THE ASSESSEE IS A COMPANY IN WHICH PUBLIC ARE NOT INTERESTED. THE ASSESSEE IS A GARMENT TRADER. IN THIS CASE, THE ASSESSMENT WAS MADE U/S. 144 OF THE ACT R.W. SEC. 147 VIDE ORDER DT. 17.3.2006. WHILE SCRUTINIZING THE RETURN OF INCOME, THE ASSESSING OFFICER NOTICED THAT THE TURNOVER OF THE ASSESSEE EXCEEDED THE MAXIMUM AMOUNT PRESCRIBED U/S. 44AB OF THE ACT FOR GETTING THE ACCOUNT AUDITED AND NOTICING THAT THE ASSESSEE HAS FAILED TO GET ITS ACCOUNT AUDITED , T HE PENALTY PROCEEDINGS U/S. 271B OF THE ACT WAS INI TIATED. AN OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY SHOULD NOT BE LEVIED U/S. 271B OF THE ACT. ON RECEIVING NO PLAUSIBLE REPLY , THE AO PROCEEDED BY LEVYING PENALTY AT RS. 77,927/ - . 4. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE QUANTUM ADDITIONS HAVE BEEN RESTORED TO THE FILE OF THE AO THEREFORE THERE EXIST NO ASSESSMENT ORDER FOR THE LEVY OF PENA LTY. IN SUPPORT, THE LD. COUNSEL RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF CASH FLOW INVESTMENT (I) LTD VS ITO IN ITA NO. 4146/M/2012, CIT VS SHAH ALLOYS LTD (2013) 35 TAXMANN.COM 532 (GUJARAT HC) AND ITO VS KATARIA LOGISTICS, ITA NO. 2825 /AHD/2011. THE LD. COUNSEL FURTHER STATED THAT THE PENALTY IS BAD IN LAW AS IT IS IN CONTRAVENTION TO THE PROVISIONS OF SEC. 274 OF THE ACT. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE G IVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDICIAL DECISIONS RELIED UPON BY THE LD. COUNSEL. THE UNDISPUTED FACT IS THAT THE ENFORCEMENT DIRECTORATE TOOK ITA. NO. 6606/M/2011 3 ACTION AGAINST THE ASSESSEE ON 29.12.2012 TAKING AWAY ALL THE PA PERS, BOOKS AND VOUCHERS ETC. IT IS ALSO A FACT THAT DIRECTOR OF THE COMPANY WAS ARRESTED. THE ISSUE BEFORE US IS CAN THIS BE CONSIDERED A REASONABLE AND SUFFICIENT CAUSE FOR NOT GETTING THE BOOKS OF ACCOUNT AUDITED. WE ARE IN ASSESSMENT YEAR 2000 - 01. THE DUE DATE FOR FILING THE RETURN OF INCOME WAS 30.11.2000 WHICH MEANS THAT THE ASSESSEE WAS SUPPOSE TO GET THE BOOKS OF ACCOUNT AUDITED BEFORE 30.11.2000. MORE SO , BECAUSE ASSESSEE IS ALSO A PRIVATE LIMITED COMPANY AND AS PER THE PROVISIONS OF THE COMP ANY LAW, ASSESSEE WAS MANDATORILY REQUIRED TO GET THE BOOKS OF ACCOUNT AUDITED. ENFORCEMENT DIRECTORATE TOOK ACTION ON 29.12.2000 WHICH MEANS THAT THE ASSESSEE HAD GROSSLY FAILED TO GET ITS BOOKS OF ACCOUNT AUDITED ON OR BEFORE THE DUE DATE I.E. 30.11.200 0 MUCH BEFORE THE BOOKS AND OTHER DOCUMENTS WERE IMPOUNDED BY ENFORCEMENT DIRECTORATE. THE ASSESSEE FAILS ON THIS GROUND. 8. BEFORE US, THE LD. COUNSEL HAS RELIED UPON CERTAIN JUDICIAL DECISIONS (SUPRA) IN SUPPORT OF HIS CONTENTION THAT QUANTUM ADDITION S HAVE BEEN SET ASIDE THEREFORE NO PENALTY IS LEVIABLE. WE DO NOT AGREE WITH THIS CONTENTION OF THE LD. COUNSEL BECAUSE LEVY OF PENALTY U/S. 271B OF THE ACT IS NOTHING TO DO WITH THE RETURN OF INCOME OR THE QUANTUM ADDITIONS. ONCE, THE TURNOVER EXCEEDS THE LIMIT PRESCRIBED U/S. 44AB OF THE ACT, THE ASSESSEE HAS TO GET ITS BOOKS OF ACCOUNT AUDITED. AS MENTIONED ELSEWHERE, THE ASSESSEE BEING A PRIVATE LIMITED COMPANY , IT WAS OTHERWISE UNDER STATUTORY OBLIGATION TO GET ITS BOOK AUDITED. THE DECISION RELIE D UPON BY THE ASSESSEE DO NOT SUPPORT THE PROVISIONS OF LAW. HOWEVER HAVING SAID ALL THAT, WE FIND THAT THE PENALTY HAS BEEN LEVIED BY ITO 1(2) - 4, MUMBAI. THE RELEVANT PROVISIONS OF SEC. 274 READ AS UNDER: (1) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHALL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD, OR HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. ITA. NO. 6606/M/2011 4 (2) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHALL BE MADE -- (A) BY THE INCOME - TAX OFFICER, WHERE THE PENALTY EXCEEDS TEN THOUSAND RUPEES ; (B) BY THE ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER, WHERE THE PENALTY EXCEEDS TWENTY THOUSAND RUPEES, EXCEPT WITH THE PRIOR APPROVAL OF THE JOINT COMMISSIONER. (3) AN INCOME - TAX AUTHORITY ON MAKING AN ORDER UNDER THIS CHAPTER IMPOSING A PENA LTY, UNLESS HE IS HIMSELF THE ASSESSING OFFICER, SHALL FORTHWITH SEND A COPY OF SUCH ORDER TO THE ASSESSING OFFICER. 8.1. A PERUSAL OF THE ABOVE SECTION CLEARLY SHOWS THAT THE AO HAD TO TAKE PERMISSION FROM THE JOINT COMMISSIONER BEFORE LEVYING THE PENA LTY AS THE AMOUNT OF PENALTY EXCEEDED RS. 10,000/ - . THERE IS NOTHING IN THE ORDER OF THE PENALTY WHICH COULD SHOW THAT THE ITO HAS TAKEN PRIOR PERMISSION FROM THE JOINT COMMISSIONER. WHEN A STATUTE REQUIRED A THING TO BE DONE IN A CERTAIN MANNER, IT SH ALL BE DONE IN THAT MANNER ALONE. WHEN A PARTICULAR AUTHORITY HAS BEEN DESIGNATED TO RECORD HIS SATISFACTION ON ANY PARTICULAR ISSUE, THEN IT IS THAT AUTHORITY ALONE WHO SHOULD APPLY HIS INDEPENDENT MIND TO RECORD HIS SATISFACTION AND SATISFACTION SO RECO RDED SHOULD BE INDEPENDENT AND NOT BORROWED OR DICTATED SATISFACTION. CONSIDERING THE FACTS OF THE CASE , IN THE LIGHT OF THE PROVISIONS OF SEC. 274 OF THE ACT, WE HAVE NO HESITATION TO HOLD THAT THE AO HAS LEVIED PENALTY INCONTRAVENTION TO THE PROVISIONS OF SEC. 274 OF THE ACT AND , THEREFORE , THE ORDER OF THE FIRST APPELLATE AUTHORITY IS LIABLE TO BE SET ASIDE. WE DIRECT THE AO TO DELETE THE PENALTY SO LEVIED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. OR DER PRONOUNCED IN THE OPE N COURT ON 20 TH MAY , 2015 SD/ - SD/ - ( JOGINDER SING ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 20 TH MAY , 2015 . . ./ RJ , SR. PS ITA. NO. 6606/M/2011 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI