SHYAMSUNDER BANSILAL MANDHANE, WASHIM V. ACIT, AKOLA CIRCLE, Akola

ITA 86/NAG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1328 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 16-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AGNES P THOMAS
• Assessee Lawyers: S G GANDHI
• Keywords: Question of law; Reasonable cause
• Section: 133A; 148

Judgement Text

1 ITA NOS. 86 TO 89/NAG/2015 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) S.NO. ITA NO. ASSTT.YEAR. 1. 86/NAG/2015 2005 - 06. 2. 87/NAG/2015 2006 - 07. 3. 88/NAG/2015 2007 - 08. 4. 89/NAG/2015 2008 - 09. SHYAMSUNDER BANSILAL MANDHANE, ASSTT. COMMISSIONER OF INCOME - TAX, MALEGAON, DIS T. WASHIM. VS. AKOLA CIRCLE, AKOLA. PAN AKKPM7131J. APPELLANT. RESPONDENT. APPELLANT BY : SHRI S.G. GANDHI. RESPONDENT BY : S MT. AGNES P. THOMAS. DATE OF HEARING : 11 - 08 - 2016 DATE OF PRONOUNCEMENT : 11 TH AUGUST, 2016 O R D E R THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF LEARNED CIT(APPEALS) FOR THE CONCERNED ASSESSMENT YEARS. 2. THE ONLY ISSUE RAISED IN THESE APPEALS IS THAT THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271B OF THE I.T. ACT AS UNDER : ASSTT. YEAR. AMOUNT. 2005 - 06 RS. 57,060/ - 2006 - 07 RS. 1,00,000/ - 2007 - 08 RS.1,00,000/ - 2008 - 09 RS.1,00,000/ - 2 ITA NOS. 86 TO 89/NAG/2015 3. IN THIS CASE A SURVEY WAS CONDUCTED U/S 133A OF THE I.T. ACT ON 18 - 08 - 2009. DURING THE SURVEY THE ASSESSEE ADMITTED THAT HE HAS NOT FILED HIS RETURN OF INCOME FOR THESE ASSESSMENT YEARS. THE ASSESSEE ALSO ACCEPTED THAT NO BOOKS OF ACCOUNTS AND VOUCHERS WERE MAINTAINED. NOTICE U/S 1 48 DATED 31 - 08 - 2009 WAS ISSUED. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 - 09 - 2009 ALONG WITH AUDIT REPORT U/S 44AB. SINCE THE ASSESSEE HAD NOT FILED THE AUDIT REPORT BEFORE THE DUE DATE OF FILING OF RETURN AS MANDATED IN THE ACT, PENALTY PROCEEDINGS U/ S 271B WERE INITIATED. THE ASSESSEE RESPONDED IN THIS REGARD AS UNDER : I AM WHOLE & SOLE RUNNING THIS BUSINESS AND ALL THE ACTIVITY WAS CONDUCTED BY ME. APRIL TO OCTOBER IS PERIOD IN WHICH THE SESSION OF OUR BUSINESS IS GOING ON AND I DONT HAVE FAITH O N ANY PERSON TO CONDUCT THE BUSINESS OR ACCOUNT ON MY BEHALF. HENCE DUE TO WORK LOAN WE DONT HAVE PREPARE BOOKS OF ACCOUNTS TO GET THEM FOR AUDIT UNDER I.T. ACT, 1961 ON OR BEFORE DUE DATE. I HAVE ACCEPTED THAT MISTAKE WAS DONE FROM OUR SIGHT THAT THE BOO KS OF ACCOUNTS NOT PREPARE WITHIN TIME, BUT THAT MISTAKE WAS DUE TO ONLY WORK LOAD DURING THE PERIOD. 5. THE A.O. WAS NOT CONVINCED. THE AO LEVIED THE PENALTY HOLDING AS UNDER: I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSION OF THE ASSESSEE AND SAME IS ACCEPTABLE. THE ASSESSEE ALL ALONG STATING ON THE FACT THAT, THE ASSESSEE IS BUSY AND DO NOT RELY ON OTHER PEOPLE TO CONDUCT BUSINESS. THE EXCUSE GIVEN BY HIM IS A LAME EXCUSE AND CANNOT BE CONSIDERED AS A REASONABLE CAUSE. IT IS WORTH WHILE MENTION HERE THAT, THE ASSESSEE NEVER GOT HIS ACCOUNTS AUDITED U/S 44AB FROM A.Y. 2005 - 06 TO A.Y. 2008 - 09. HENCE THE ASSESSEE IS A CHRONICLE DEFAULTER. HENCE, THE ASSESSEE WILFULLY COMMITTED DEFAULT FOR NOT GETTING HIS ACCOUNTS AUTIED AS REQUIRED U/S 44AB OF THE I.T. A CT, 1961. ACCORDINGLY, ASSESSEE HAS FAILED TO GET HIS ACCOUNTS AUDITED AND SUBMIT THE TAX AUDIT REPORT WITHIN TIME, THEREFORE, PENALTY PROCEEDINGS U/S 271B WERE INITIATED AND PROPOSED FOR LEVY. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPI NION THAT THIS IS A FIT CASE FOR LEVYING PENALTY U/S 271B AS THE ASSESSEE WILFULLY COMMITTED THE DEFAULT AND THE SAME MISTAKE WAS COMMITTED 4 YEARS IN A ROW. 3 ITA NOS. 86 TO 89/NAG/2015 6. UPON ASSESSEES APPEAL IN THIS REGARD, LEARNED CIT(APPEALS) CONFIRMED THE ADDITION. 7. AGAINST THE ABOVE ORDER, ASSESSEE IS IN APPEAL BEFORE THE ITAT. 8. LEARNED COUNSEL OF THE ASSESSEE PLEADED THAT THE ASSESSEE HAS FURNISHED THE AUDIT REPORT DURING THE ASSESSMENT PROCEEDINGS. HENCE THE ASSESSEE SHOULD NOT BE VISITED WITH PENALTY U/S 271B OF THE I .T. ACT. FURTHER MORE AS A REASONABLE CAUSE FOR FAILURE FOR THE SUBSEQUENT YEARS OF 2006 - 07, 2007 - 08 AND 2008 - 09 LEARNED COUNSEL STATED THAT SINCE EARLIER YEARS ACCOUNTS WERE NOT READY AND AUDITED, SUBSEQUENT YEARS AUDIT COULD NOT HAVE BEEN DONE UNTIL TH E PREVIOUS YEARS ACCOUNTS WERE UP - TO - DATE. IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEE HAS PLACED RELIANCE UPON HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF CIT VS. TEA KING 123 TAXMAN 162 FOR THE PROPOSITION THAT IT COULD BE CONSIDERED REASONAB LE CAUSE FOR SUBSEQUENT YEARS FAILURE IN SUCH CASES FOR THE REASON THAT PRECEDING YEARS ACCOUNTS WERE NOT UP - TO - DATE. 9. PER CONTRA LEARNED D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 10. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. I FIND THAT SECTION 44AB MANDATES THAT THE AUDIT REPORT U/S 44AB HAVE TO BE FURNISHED BY SPECIFIED PERSONS BEFORE THE SPECIFIED DUE DATES ALONG WITH THE RETURN. IN THIS CASE IT IS EVIDENT THAT THE AUDIT REPORT WAS OBTAINED AFTER THE DUE DATE O F FILING THE RETURN. HENCE THE ASSESSEE COMES UNDER THE AMBIT OF PENALTY PROVISIONS U/S 271B OF I.T. ACT. HENCE IN MY CONSIDERED OPINION THERE IS NO REASONABLE CAUSE FOR FAILURE FOR THE ASSESSMENT YEAR 2005 - 06 BEING THE FIRST YEAR IN THE PRESENT CASE. HOWE VER, FOR THE SUBSEQUENT YEARS THE ORDER OF HONBLE GUJARAT HIGH COURT SUPPORTS THE ASSESSEES PLEA THAT THERE WAS REASONABLE CAUSE FOR FAILURE FOR SUBSEQUENT YEARS INASMUCH AS PRECEDING YEARS ACCOUNTS WERE NOT UP - TO - DATE AND AUDITED. IN THIS REGARD I MAY GAINFULLY REFER TO THE SAID DECISION AS UNDER : HEAD NOTES 4 ITA NOS. 86 TO 89/NAG/2015 SECTION 271B, READ WITH SECTION 44AB, OF THE INCOME - TAX ACT, 1961 - PENALTY - FOR FAILURE TO GET ACCOUNTS AUDITED ASSESSMENT YEARS 1985 - 86 TO 1989 - 90 - ASSESSEE - FIRM FILED RETURN OF INCOME AF TER A SURVEY UNDER SECTION 133 A ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271 B FOR ALL YEARS AS BOOKS OF ACCOUNT WERE NOT AUDITEDAPPELLATE AUTHORITY CONFIRMED PENALTY FOR FIRST ASSESSMENT YEAR, I.E., 1985 - 86, BUT SET ASIDE LEVY OF PENALTY FOR SUBSEQ UENTYEARS - WHETHER IT COULD BE SAID THAT ASSESSEE COULD NOT COMPLY WITH PROVISIONS FOR SUBSEQUENT YEARS BECAUSE THERE WAS NO AUDIT FOR PRECEDING YEAR AND AS SUCH NO PENALTY COULD BE IMPOSED ON ASSESSEE FOR SUBSEQUENT YEARS - HELD, YES FACTS THE ASSESSEE, A REGISTERED PARTNERSHIP FIRM, WAS CARRYING ON BUSINESS IN TEA. IT FILED RETURNS OF INCOME FOR THE ASSESSMENT YEARS IN QUESTION AFTER A SURVEY UNDER SECTION 13 3A. THE BOOKS OF ACCOUNT WERE NOT AUDITED. SO THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271 B FOR ALL THE YEARS, I. E., 1986 - 87 TO 1989 - 90. THE APPELLATE AUTHORITY CONFIRMED THE PENALTY FOR THE ASSESSMENT YEAR 1985 - 86 ON THE GROUND THAT THE ASSESS EE FAILED TO GET THE ACCOUNTS AUDITED WITHIN THE STIPULATED PERIOD. BUT FOR THE SUBSEQUENT YEARS, THE LEVY OF PENALTY WAS SET ASIDE ON THE GROUND THAT SINCE THE BOOKS OF ACCOUNT FOR THE PRECEDING ASSESSMENT YEARS WERE NOT READY AND WERE NOT UP - TO - DATE, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO GET THE ACCOUNT BOOKS AUDITED FOR THE SUBSEQUENT YEARS THOUGH THE SAME WERE WRITTEN. ON AN APPLICATION UNDER SECTION 256(2) : HELD LOOKING TO THE FACTS AND CIRCUMSTANCES, IT COULD NOT BE SAID THAT ANY QUESTION OF LAW AROSE IN THE MATTER. THE INSTANT CASE WAS A CASE WHERE THE ASSESSEE COULD NOT COMPLY WITH THE PROVISIONS BECAUSE THERE WAS NO AUDIT FOR THE PRECEDING YEAR. FOR SUBSEQUENT YEARS THOUGH THE BOOKS OF ACCOUNT WERE READY, THE SAME COULD NOT BE AUDITED. THE TRIBUNAL AND THE COMMISSIONER . (APPEALS) FOUND THAT THE AUDIT COULD NOT BE COMPLETED BECAUSE THE BOOKS OF ACCOUNT FOR THE FIRST YEAR WERE NOT READY. THUS, THE TRIBUNAL WAS J USTIFIED. 11. IN THE LIGHT OF THE AFORESAID DISCUSSION AND PRECEDENT, I HOLD THAT THERE IS NO INFIRMITY IN THE LEVY OF PENALTY U/S 271B FOR ASSESSMENT YEAR 2005 - 06. 5 ITA NOS. 86 TO 89/NAG/2015 HOWEVER, FOR SUBSEQUENT ASSESSMENT YEARS ON THE TOUCH STONE OF HONBLE GUJARAT HIGH COU RT DECISION CITED ABOVE, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE LEVY OF PENALTY. 12. IN THE RESULT, APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 2005 - 06 IS DISMISSED AND THE APPEALS FOR ASSESSMENT YEARS 2006 - 07, 2007 - 08 AND 2008 - 09 AR E ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF AUGUST,2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 11 TH AUGUST, 2016. COPY FORWARDED TO : 1. SHYAMSUNDER BANSILAL MANDHANE, MAIN ROAD, AT POST & TQ. MALEGAON, DIST. WASHIM. 2. A.C.I.T., AKOLA CIRCLE, AKOLA. 3. C.I.T. - I, NAGPUR. 4. CIT(APPEALS), - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.