B.D. LEASING & FINANCE LTD, MUMBAI V. ASST CIT 6(1), MUMBAI

ITA 7355/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1656 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-01-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 27-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK KUMAR SINHA
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 7355/MUM/2010(A.Y.2006-07) M/S.B.D.LEASING & FINANCE LTD., POONAM CHAMBERS, A-WING, 502-B, SHIV SAGAR ESTATE, DR. A.B.ROAD, WORLI, MUMBAI - 400 018. PAN:AAACB 1834E (APPELLANT) VS. THE ACIT 6(1), AAYKAR BHAVAN, MK ROAD, MUMBAI - 20. (RESPONDENT) APPELLANT BY : SHRI K.GOPAL RESPONDENT BY : SHRI DEEPAK KUMAR SINH A DATE OF HEARING : 01/01/2013 DATE OF PRONOUNCEMENT : 04/01/2013 ORDER PER I.P.BANSAL, J.M THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-14, MUMBAI DATED 8/7/2010 FOR ASSESSMENT YEAR 2006- 07. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER: 1. THE LEARNED CIT(A) ERRED IN LAW IN LEVYING THE PENALTY OF RS.1,00,000/- U/S. 271B OF THE ACT. 2. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR O THERWISE AMEND ALL OR ANY OF THE ABOVE-MENTIONED GROUNDS OF APPEAL. 2. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE O N 31/3/2008 THROUGH ELECTRONIC MEDIA . THE ASSESSEE HAD OBTAINED THE A UDIT REPORT IN FORM 3 CA ON 1/8/2006, COPY OF WHICH HAS BEEN FILED AT PAGES 20 TO 35 OF THE PAPER BOOK. THE AO INVOKED PROVISIONS OF SECTION 271B AND 271F OF THE INCOME TAX ACT,1961(THE ACT) VIDE NOTICE DATED 12/6/2009, THE REPLY OF WHICH WAS GIVEN BY THE ASSESSEE VIDE LETTER DATED 25/6/2009, COPY OF W HICH IS PLACED AT PAGES 36 ITA NO. 7355/MUM/2010(A.Y.2006-07) 2 TO 37 OF THE PAPER BOOK. TO CONTEND THAT PENALTY U NDER SECTION 271B IS NOT APPLICABLE, THE ASSESSEE RELIED UPON A CBDT CIRCULA R NO.9/2006 DATED 10/10/2006, WHEREIN IT HAS BEEN STATED THAT IN A CA SE WHERE RETURN IS FILED ELECTRONICALLY, THE ASSESSEE WOULD NOT BE REQUIRED TO FILE ANY DOCUMENT PHYSICALLY,(INCLUDING TAX AUDIT REPORT). THEREFORE , IT WAS CONTENDED THAT TAX AUDIT REPORT THOUGH OBTAINED BEFORE DUE DATE OF FIL ING THE RETURN, WAS NOT FILED WITH THE DEPARTMENT AS RETURN WAS ELECTRONICALLY F ILED. TO CONTEND THAT PENALTY UNDER SECTION 271F IS NOT APPLICABLE, THE A SSESSEE STATED THE REASONABLE CAUSE TO BE FINANCIAL CONSTRAINS DUE TO WHICH ASSESSEE COULD NOT DEPOSIT THE SELF ASSESSMENT TAX. HOWEVER, AO PROC EEDED TO LEVY PENALTY UNDER SECTION 271B WHICH HAS BEEN CONFIRMED BY LD. CIT(A) . THE ASSESSEE IS AGGRIEVED, HENCE IN APPEAL. 3. AFTER NARRATING THE FACTS, RELYING UPON THE FOLL OWING PORTION OF THE AFOREMENTIONED CIRCULAR, IT WAS CONTENDED BY LD.A. R THAT ASSESSEE DID NOT COMMIT ANY DEFAULT UNDER THE PROVISIONS OF SECTION 271B OF THE ACT AS IT WAS NOT UNDER AN OBLIGATION TO FILE AUDIT REPORT.: (I) THE REPORT OF AUDIT UNDER SECTION 44A IS NOT TO BE ATTACHED WITH THE RETUR4N. IT SHOULD NOT BE FURNISHED SEPARATELY ALS O BEFORE OR AFTER THE DUE DATE. HOWEVER, AN ASSESSEE SHOULD GET THE REPO RT OF AUDIT FROM AN ACCOUNTANT UNDER SAID SECTION BEFORE THE DUE DATE O F THE FURNISHING OF THE RETURN AND SHOULD FILL OUT THE RELEVANT COLUMNS OF THESE FORMS ON THE BASIS OF SUCH REPORT. THE ASSESSEE SHOULD RETAIN THE REPORT WITH HIMSELF. IT MAY BE FURNISHED IN ORIGINAL DURING THE ASSESSME NT PROCEEDINGS. NO PENALTY UNDER SECTION 271B SHALL BE INITIATED OR L EVIED FOR NOT FURNISHING THE TAX AUDIT REPORT ON OR BEFORE THE DUE DATE. HO WEVER, IF THE AUDIT REPORT HAS NOT BEEN OBTAINED BEFORE THE DUE DATE, P ROVISIONS OF SECTION 271B SHALL BE ATTRACTED. HE FURTHER SUBMITTED THAT NO PENALTY HAS BEEN LEVIE D BY THE AO FOR BELATED FILING OF THE RETURN UNDER SECTION 271F WHICH MEANS THAT AO HAS ACCEPTED THE FINANCIAL CONSTRAINS OF THE ASSESSEE AS REASONABL E CAUSE. HE SUBMITTED THAT IF IT IS SO, PENALTY COULD NOT BE LEVIED UNDER SECTIO N 271B ALSO AS THE ASSESSEE HAS TO BE CONSIDERED TO BE PREVENTED BY REASONABLE AND SUFFICIENT CAUSE. THUS ITA NO. 7355/MUM/2010(A.Y.2006-07) 3 IT WAS SUBMITTED BY LD. AR THAT PENALTY HAS WRONGLY BEEN CONFIRMED BY LD. CIT(A) AND HIS ORDER SHOULD BE SET ASIDE AND PENALT Y SHOULD BE DELETED. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF AO AS WELL AS LD. CIT(A). HE CONTENDED THAT ASSESSEE WAS UNDER OBLIG ATION TO FILE THE AUDIT REPORT WITHIN THE DUE DATE OF FILING THE RETURN. T HE ASSESSEE DID NOT SUBMIT THE RETURN WITHIN THE DUE DATE AND, THEREFORE, AO WAS R IGHT IN LEVYING THE PENALTY AND LD. CIT(A) HAS RIGHTLY CONFIRMED THE SAME. 5. WE HAVE HEARD BOTH PARTIES AND THEIR CONTENTIONS HAVE CAREFULLY BEEN CONSIDERED. THE FACTS STATED ABOVE ARE NOT IN DISP UTE. THE RETURN HAS BEEN FILED BY THE ASSESSEE BY ELECTRONIC MEDIA ON 31/3/2 008. THE RETURN FILED BY THE ASSESSEE IS BELATED RETURN. FOR LATE FILING TH E RETURN, THE AO HAD ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271F OF THE ACT. THE ASSESSEE STATED THE REASONABLE CAUSE AS BEING UNDER FINA NCIAL CONSTRAINS. NO PENALTY HAS BEEN STATED TO BE LEVIED UNDER SECTION 271F OF THE ACT. THE PENALTY FOR FAILURE TO FILE AUDIT REPORT ALONGWITH RETURN OF IN COME IS DESCRIBED IN SECTION 271B OF THE ACT. ACCORDING TO SECTION 271B IF ASSE SSEE FAILS TO GET ITS ACCOUNT AUDITED IN RESPECT OF ANY PREVIOUS YEAR OR FURNISHE D REPORT OF SUCH AUDIT AS REQUIRED UNDER SECTION 44AB THE AO MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, AND THE SUM SHOULD NOT EXCEED RS . 1.00 LAC OR % OF THE TOTAL SALE / TURNOVER/ GROSS RECEIPTS. UNDER SECT ION 273B PENALTY CANNOT BE IMPOSED IN CERTAIN CASES, WHICH INTER-ALIA INCLUDE SECTIONS 271B AND 271F, IF ASSESSEE IS ABLE TO PROVE THAT THERE WAS A REASONAB LE CAUSE FOR THE SAID FAILURE. IN THE PRESENT CASE ASSESSEE VIDE LETTER DATED 25/6 /2009 HAS PLEADED BEFORE THE AO THAT IT WAS NOT UNDER OBLIGATION TO FILE THE AUDIT REPORT AND SUCH CONTENTION OF THE ASSESSEE WAS SUPPORTED BY THE AFO REMENTIONED CIRCULAR THE RELEVANT PORTION OF WHICH HAS ALREADY BEEN PRODUCED IN THE ABOVE PART OF THIS ORDER. IN THE AFOREMENTIONED CIRCULAR IT HAS BEEN CLEARLY MENTIONED THAT IN A CASE RETURN IS FILED ELECTRONICALLY THE OBLIGATION OF THE ASSESSEE WAS LIMITED TO GET THE REPORT OF AUDIT BEFORE THE DUE DATE OF FILI NG THE RETURN AND RETAIN THE ITA NO. 7355/MUM/2010(A.Y.2006-07) 4 SAID REPORT WITH THE ASSESSEE ITSELF AND SUCH REPO RT IN ORIGINAL COULD BE FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE A SSESSEE IN THE PRESENT CASE HAS OBTAINED THE AUDIT REPORT BEFORE DUE DATE OF FI LING THE RETURN. AS THE RETURN WAS FILED ELECTRONICALLY EVEN THOUGH THE SAID RETUR N WAS BELATEDLY FILED, THE ASSESSEE WAS NOT UNDER AN OBLIGATION TO SUBMIT THE AUDIT REPORT WHICH CAN BE SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. THE ASSESSEE IS SUPPORTED BY AFOREMENTIONED CIRCULAR. IN ANY CASE, DEFAULT OF THE ASSESSEE IS ONLY TECHNICAL DEFAULT AND THE ASSESSEE IS SAVED BY THE PROVISIONS OF SECTION 273B OF THE ACT AS RELIANCE ON THE AFOREMENTIONED C IRCULAR CAN BE CONSIDERED TO BE A REASONABLE CAUSE FOR THE ALLEGED FAILURE. 5.1 PENALTY ALSO CANNOT BE CONSIDERED TO BE JUSTIFI ED AS THE DEFAULT OF THE ASSESSEE OF FILING BELATED RETURN IS A SEPARATE D EFAULT FOR WHICH THE PENALTY IS LEVIABLE UNDER SECTION 271F AND THE AO DID NOT LEV Y PENALTY FOR THE SAID DEFAULT. IF THE ACTION OF THE ASSESSEE FOR FILIN G THE BELATED RETURN IS SAVED BY SECTION 273B OR NO ACTION HAS BEEN TAKEN BY THE DEP ARTMENT UNDER THAT SECTION THEN PENALTY CANNOT ALSO BE LEVIED UNDER SECTION 271B OF THE ACT. 5.2 FOR THE REASONS DISCUSSED ABOVE, WE DELETE THE PENALTY AND APPEAL FILED BY THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 4 TH DAY OF JAN.2013 SD/- SD/- (RAJENDRA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 4 TH JAN.2013 ITA NO. 7355/MUM/2010(A.Y.2006-07) 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R B BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.