Smt. Asha Jain, New Delhi V. ITO, New Delhi

ITA 6853/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2924 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Keywords: Bonafide belief
• Section: 154; 139

Judgement Text

1 ITA NO. 6853/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G. D. AGRAWAL, PRESIDENT AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 6853/DEL/201 4 ( A.Y 2008-09) ASHA JAIN PROP JAYNCO ASSOCIATES, 2860, BEHIND G. B. ROAD, NEW DELHI AALPJ2109C (APPELLANT) VS ITO WARD-25(1) NEW DELHI (RESPONDENT) APPELLANT BY SH. SUBHASH SINGHAL, CA RESPONDENT BY SH. RAVI KANT GUPTA, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 03/11/2014 PASSED BY CIT(A)-XXV, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE ITO/CIT (A) ERRED IN NOT FOLLOWING GUIDELINES I N FULL AS GIVEN IN CBDT CIRCULAR 5/2007 DT 26.07.2007 IN PARA 6(I) AND RULE 12(2) OF I.T. RULES. IT CLEARLY MENTIONED THAT NO PENALTY U/S 271 B SHALL BE INITIATED OR LEVIED FOR NOT FURNISHING THE AUDIT REPORT ON OR BE FORE THE DUE DATE. 2. SEC 273 B OF I.T. ACT PROVIDE THAT WHERE REASONABL E CAUSE IS PROVED FOR FAILURE REFERRED TO IN THE SAID PROVISIONS, NO PENALTY U/S 271 B NEEDS TO BE IMPOSED. THIS IS A FIT CASE FOR SUCH A WAIVER. T HERE EXISTED A BONAFIDE AND REASONABLE BELIEF THAT TAX AUDIT REPORT IS NOT TO BE FILED/SENT WITH ITR AS PER CBDT CIRCULAR AND IT MADE THE CONFUSION. DATE OF HEARING 05.02.2018 DATE OF PRONOUNCEMENT 12.03.2018 2 ITA NO. 6853/DEL/2014 3. INITIATION OF PENALTY THOUGH NOT COMPULSORY IN RES PECT OF SECTION 271 B WITH THE ASSESSMENT ORDER, BUT IT MUST BE INITIAT ED WHILE THE AO IS IN SEISIN OF THE ASSESSMENT PROCEEDINGS AND NOT AFTERW ARDS. THIS HAS BEEN DONE AFTER 5 YEARS FROM THE DATE OF ITR WHEREAS IN 45 ITD 262 (AHD) EVEN 16 MONTHS DELAY WAS HELD TO BE UNREASONABLE TO DELE TE THE PENALTY. 4. RETURN WAS FILED ON 30/09/2008 UNDER SEC 139 (1). SECTION 139(9) PRESCRIBE THAT IN CASE OF ANY DEFECT / DEFICIENCY ( INCLUDING TAX AUDIT REPORT U/S 44 AB), THE AO MUST GIVE AN OPPORTUNITY OF 15 D AYS TO TAX PAYER TO REMOVE THE DEFECT / DEFICIENCY. NO SUCH OPPORTUNITY WAS EVER GIVEN BY THE ITO MAKING HIS ACTION OF STRAIGHTLY LEVYING THE PEN ALTY, UNJUST AND IMPROPER. 5. IN THE LIGHT OF DECISION IN HINDUSTAN STEEL LTD VS STATE OF ORISSA 83 ITR 26(SE),EVEN IF A MINIMUM PENALTY IS PRESCRIBED FOR ANY DEFAULT ON THE PART OF TAX PAYER TO ACT IN A SPECIFIED MANNER, BUT IN CASE IT FOR SOME TECHNICAL OR VENIAL REASON AND TAX PAYER ACTED UNDE R A BONAFIDE BELIEF AND NOT IN CONSCIOUS DISREGARD OF LAW NOR TO GRIND ANY BENEFIT, NO PENALTY SHOULD BE IMPOSED IN SUCH A CASE. THE FACTS OF THIS CASE FULLY MATCH WITH THE VIEW OF APEX COURT AND IT IS PRAYED, PENALTY SO IMPOSED BE KINDLY DELETED. 3. RETURN OF INCOME OF SOLE PROPRIETORSHIP BUSINESS OF TRADING IN MACHINERY PARTS AND ELECTRICAL GOODS WAS FILED ONLINE ON 30/0 9/2008 IN ITR-4. IT WAS HER FIRST ONLINE RETURN AND AS PER RULE 12(2) WHICH PER MITTED INDIVIDUALS, HUF, FIRM AND COMPANIES TO FILE ONLINE RETURN ALSO. SO, THE RETURN IN THIS CASE WAS FILED ONLINE. THE TURNOVER DECLARED IN ITR WAS RS. 5,35,50,337/- AND THE REQUIREMENT OF TAX AUDIT WAS APPLICABLE. RULE 12(2) OF INCOME TAX RULES PROHIBITED FILING OF ANY STATEMENT OR AUDIT REPORT WITH THE ITR. SO, THE TAX AUDIT REPORT THOUGH OBTAINED FROM C.A. COULD NOT BE FILED WITH ITR. THERE WAS A COLUMN IN ONLINE ITR FORM ABOUT TAX AUDIT. BEING FI LING THE ONLINE ITR FORM FOR THE FIRST TIME, THE OPTION THERE WAS WHETHER SECTIO N 44 AB IS APPLICABLE OR NOT. DUE TO OVERSIGHT, INEXPERIENCE OR IGNORANCE, NO OPT ION WAS OPTED IN ONLINE FORM. THE ITO ACCEPTED IT TO BE A CASE OF DENIAL TO A STATUTORY OBLIGATION. THE ITO IN HIS ORDER OF PENALTY CITED A CIRCULAR NO. 5 OF 2007 AND HELD THAT PENALTY PROCEEDING U/S 271 B HAS NO LIMITATION SO AS TO INI TIATION, IT CAN BE IMPOSED EVEN BEFORE THE ASSESSMENT IS FINALIZED AND ALTERNA TIVELY THE PENALTY PROCEEDING 3 ITA NO. 6853/DEL/2014 U/S 271 B CAN BE INITIATED SEPARATELY. THUS, THE PE NALTY U/S 271B WAS IMPOSED ON THE ASSESSEE. 4. BEING AGGRIEVED BY THIS, THE ASSESSEE FILED APPE AL BEFORE THE CIT(A) AND THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITS THAT ONLINE RETURN OF INCOME FOR THE FIRST TIME WAS FIELD FOR ASST, YEAR 2008-09 ON 30/09/2008 AND IT W AS ACCEPTED U/S 143(1). AS PER CBDT CIRCULAR 5/2007 DT. 26.07.2007 AND I.T. RU LES, IT WAS NOT POSSIBLE TO FILE PHYSICALLY OR ONLINE TAX AUDIT REPORT DONE U/S 44 AB. AS THIS CASE WAS NOT A SCRUTINY ASSESSMENT, IT COULD NOT FILED AT THAT STA GE ALSO. SO FILING OF TAX AUDIT REPORT WAS NOT POSSIBLE IN ANY MANNER. ONLINE RETUR N FORM ASK FOR OPTION WHETHER TAX AUDIT U/S 44 AB IS APPLICABLE OR NOT (Y ES OR NO) AND IF ONE OPTS FOR NO, ALL SUBSEQUENT COLUMNS ARE CLOSED. THE LD. AR F URTHER SUBMITTED THAT FILING ONLINE RETURN FOR THE FIRST TIME, INEXPERIENCED LAD Y TAX-PAYER COMMITTED AN ERROR BY MARKING NO FOR TAX AUDIT IN ITR WHERE AS T AX AUDIT REPORT WAS ALREADY WITH HER. IT WAS MAINLY GUIDED BY CBDT CIRCULAR WHI CH REPEATEDLY TOLD TO FILE TAX AUDIT REPORT BUT TO KEEP IT WITH YOURSELF. THE ERROR WAS ACCIDENTAL, DUE TO INEXPERIENCE TO A NEW PROCEDURAL SET UP AND WITH NO INTENTION TO GRIND ANY BENEFIT NOR WILLFUL / DELIBERATE OR SO. THE LD. AR SUBMITTED THAT THE ITO ALSO KEPT QUIET AND WHEN HE WAS ASKED FOR RECTIFICATION U/S 154 HE WOKE UP AFTER A DELAY OF 5 YEAR OF ITR AND INITIATE PENALTY PROCEED INGS AT THAT TIME. NO NOTICE U/S 139(9) WAS EVER ISSUED BY ITO ALLOWING THE TAX- PAYER AN OPPORTUNITY TO CORRECT THE DEFECT/ DEFICIENCY, WHEREAS TAX AUDIT R EPORT IS COVERED IN THAT SECTION. 6. THE LD. DR RELIED UPON THE ORDER OF THE PENALTY AND CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT CAN BE SEEN THAT NO NOTICE U/S 139(9) W AS EVER ISSUED BY ITO 4 ITA NO. 6853/DEL/2014 ALLOWING THE TAX-PAYER AN OPPORTUNITY TO CORRECT TH E DEFECT/ DEFICIENCY, WHEREAS TAX AUDIT REPORT IS COVERED IN THAT SECTION WAS PRE PARED BY THE ASSESSEE WELL BEFORE THE PENALTY PROCEEDINGS. IN THIS CASE IN ALL EARLIER YEARS AND SUBSEQUENT YEARS, TAX AUDIT WAS ALWAYS THERE AND IT WAS ALWAYS FILED WITH THE DEPARTMENT. THIS YEAR TOO, THE TAX AUDIT WAS DULY CONDUCTED AND ITS REPORT WAS OBTAINED BY THE ASSESSEE MUCH BEFORE THE LAST DATE. BUT DUE TO MENTIONING NO IN ONLINE COLUMN, THE ITO OBSERVED IT TO BE FAILURE TO FURNIS H THE TAX AUDIT REPORT. THE PHYSICAL FILING OF TAX AUDIT REPORT WAS PROHIBITED BY RULE 12 (2) OF I.T RULES. SO, FILING OF TAX AUDIT REPORT IN PAPER FORMAT WAS NOT POSSIBLE. THE GOVERNMENT HAD NOT PRESCRIBED ANY OTHER MODE (AS HAS BEEN DONE FRO M A.Y. 2013-14 ONWARDS) THROUGH WHICH IT WAS POSSIBLE TO FILE THE TAX AUDIT REPORT. THE DEFAULT OF FAILURE TO FURNISH TAX AUDIT REPORT IN SUCH AN EVENT, HOW F AR CAN BE APPLIED IN THE INSTANT CASE. IN OTHER WORDS, WHEN FURNISHING OF TA X AUDIT REPORT WAS NOT POSSIBLE IN PAPER FORM NOR IN ONLINE FORMAT, THE DE FAULT OF FURNISHING OF TAX AUDIT REPORT CANNOT BE UPHELD. THE CONTENTIONS OF T HE LD. AR ARE JUST AND PROPER. BOTH ASSESSING OFFICER AS WELL AS THE CIT( A) HAS FAILED TO TAKE COGNIZANCE OF THESE FACTS. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MARCH, 2018 . SD/- SD/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) PRESIDENT JUDICIAL MEMBER DATED: 12/03/2018 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5 ITA NO. 6853/DEL/2014 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 06/02/2018 PS 2. DRAFT PLACED BEFORE AUTHOR 06/02/2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2018 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 12.03.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 1 2 .03.2018 PS 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.