MINAXI CLOTH PREOCESSORS P.LTD, MUMBAI V. ITO 4(2)(4), MUMBAI

ITA 6892/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5103 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 11-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 6892/MUM/2011 ASSESSMENT YEAR: 2007-08 M/S.MINAXI CLOTH PROCESSORS PVT. LTD. C/O. SHANKARLAL JAIN & ASSOCIATES, 12, ENGINEER BUILDING, 265, PRINCESS STREET MUMBAI- 400 002 PAN : AAACM 5810 B VS. ITO 4(2)(4) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SATISH JAIN RESPONDENT BY : SHRI S.S. RANA DATE OF HEARING : 24.10.2013 DATE OF PRONOUNCEMENT : 20.11.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A)-8, MUMBAI DATED 03.08.2011 CONFIRMING THE PENALTY OF RS.21,340/- LEVIED BY THE AO U/S 271B OF THE INCOME TAX ACT FOR THE AS SESSMENT YEAR 2007-08. 2. THE RELEVANT FACTS ARE THAT THE ASSESSEE, A COMP ANY ENGAGED IN THE BUSINESS OF CLOTH TRADING WHILE FILING THE E-RETURN HAD SHOW N IN THE P&L A/C ITS TURN OVER/ASSETS AT RS.42,67,927/-. THE ASSESSEE DID NOT GET THE ACCOUNTS OF THE PREVIOUS YEAR AUDITED BY AN ACCOUNTANT BEFORE THE SPECIFIED DATE AND FURNISH BY THAT DATE, THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DUL Y SIGNED AND VERIFIED BY SUCH AN ACCOUNTANT AND SETTING-FORTH SUCH PARTICULARS AS PE R THE REQUIREMENT OF THE PROVISIONS OF SECTION 44ABOF THE ACT. SINCE THE ASS ESSEE HAS NOT COMPLIED WITH THE SAID REQUIREMENT, THE AO TREATED THE ASSESSEE AS A DEFAULTER U/S 271B OF THE ACT ITA NO. 6892/MUM/2011 M/S.MINAXI CLOTH PROCESSORS PVT. LTD. ASSESSMENT YEAR : 2007-08 2 AND LEVIED A PENALTY OF RS.21,340/- WHICH WAS CALCU LATED AT @ 0.5% OF THE TOTAL TURN OVER/RECEIPTS. ON APPEAL THE LD.CIT(A) CONFIRMED TH E LEVY OF PENALTY. AGGRIEVED BY THE IMPUGNED ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 3. BEFORE US, THE LD.AR HAS STATED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SALES TURN OVER OF 35.73 LACKS AND THE RECEIPTS BY WAY OF OTHER INCOME OF RS.6.95 LACKS INCLUDING THE INTEREST INCOME OF R S.6.3 LACKS. SINCE THE BUSINESS TURN OVER ARISING OUT OF SALES IS BELOW 40 LACKS, THE AS SESSEE BEING IN A BONA FIDE BELIEF HAS THOUGHT THAT THERE IS NO REQUIREMENT OF FULFILL ING THE MANDATORY REQUIREMENT OF SECTION 44AB. FURTHER, IN SUPPORT OF THE PROPOSITIO N THAT THE PENALTY CANNOT BE LEVIED IN SUCH CIRCUMSTANCES THE LD.AR HAS RELIED ON THE D ECISIONS OF THE ITAT IN THE CASES OF PATEL AMBALAL SOMNATH SARKAR VS. [ITO 100 TTJ (A HMADABAD) 735] (II) CIT VS. SAJUNA COOPERATIVE CREDIT & SERVICES SOCIETY LTD. [ 307 ITR 340 (P&H)]. ON THE OTHER HAND THE LD.DR HAS RELIED ON THE ORDERS OF THE AO A ND THE LD.CIT(A). 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IT IS NOT DISPUTED THAT DURING THE AY UNDER CONSIDERATION, AS SESSEE HAS SALES TURNOVER OF RS.35.73 LAKHS; RECEIVED INTEREST ON LOANS ADVANCED OF RS.6.37 LAKHS; SHORT-TERM CAPITAL GAIN OF RS.36,201/- AND RENT OF RS.21,000/- . INTEREST HAS BEEN RECEIVED ON THE LOANS ADVANCED AND NOT ON LATE-PAYMENTS FROM CU STOMERS. ASSESSEE WAS HAVING A BONA FIDE BELIEF THAT SUCH INTEREST IS NOT A TRAD ING RECEIPTS. IN SUBSEQUENT ASSESSMENT YEARS I.E. 08-09 TO 12-13 THERE WAS TURN OVER IN ALL THE YEARS EXCEEDING THE LIMIT FIXED U/S 44AB AND HAS DULY GOT ITS ACCOU NTS AUDITED U/S 44AB. ALSO, IT IS VERY CLEAR THAT THE TOTAL TURN OVER OF THE ASSESSEE AS SHOWN IN THE P&L A/C IS RS.42,67,927/- WHICH IS ABOVE 40 LACKS AND HENCE IT ATTRACTS THE MANDATORY REQUIREMENT OF SECTION 44AB. HOWEVER, CONSIDERING T HE ENTIRE FACTUAL MATRIX, FAILURE OF THE ASSESSEE TO FULFILL THE MANDATORY REQUIREMEN T OF SECTION 44AB OF THE ACT IS SOLELY ON THE REASON THAT THE ASSESSEE IS UNDER THE MISTAKEN BELIEF THAT THE SELLING LIMIT OF 40 LAKHS PRESCRIBED BY THE SAID PROVISION IS ONLY APPLICABLE TO BUSINESS TURNOVER, WHICH IN THE CASE OF ASSESSEE IS BELOW 40 LAKHS. IT IS PERTINENT TO MENTIONED THAT THE ITAT IN THE CASE OF PATEL AMBALA L SOMNATH SARKAR VS ITO REPORTED IN 26 SOT 61 HAS HELD THAT INTEREST INCOME CREDITED P&L A/C IS OTHER INCOME OF THE ASSESSEE AND ALTERNATIVELY FURTHER HE LD THAT THE ASSESSEE IS HAVING ITA NO. 6892/MUM/2011 M/S.MINAXI CLOTH PROCESSORS PVT. LTD. ASSESSMENT YEAR : 2007-08 3 BONA FIDE BELIEF FOR NOT GETTING ITS ACCOUNT AUDITE D. IN THE CASE OF CIT VS. SAJUNA COOPERATIVE CREDIT & SERVICES SOCIETY LTD, THE PUNJ AB & HARYANA HIGH COURT HAS HELD THAT THE ASSESSEE HAS NOT GOT ITS ACCOUNT AUDITED A S ITS SALES TURNOVER EXCLUDING INTEREST IS LESS THAN 40 LAKHS AND SUCH AN ACT IS A MISTAKE OF BONA FIDE BELIEF OF THE ASSESSEE. CONSIDERING THAT THE FACTS OF THE SAID DE CISIONS ARE SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEE IN THE PRESENT CASE, WE A RE OF THE CONSIDERED VIEW THAT THE MISTAKE/FAULT OF THE ASSESSEE IS DUE TO THE AFOREME NTIONED BONA FIDE BELIEF AND THEREFORE THE AUTHORITIES BELOW ARE NOT JUSTIFIED I N LEVYING/ CONFIRMING THE IMPUGNED PENALTY. IN VIEW OF THAT MATTER, WE DELETE THE PENA LTY. WE ORDER AND DIRECT ACCORDINGLY. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF NOVEMBER, 2013. SD/- SD/- (SANJAY ARORA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 20.11.2013. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.