Aman Kumar Gupta, Nabha V. ITO, Nabha

ITA 917/CHANDI/2011

• Counselvise Citation: 91721514 RSA 2011
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 15-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N K GARG
• Keywords: Bonafide belief; Reasonable cause
• Section: 273B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMD CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER ITA NO. 917/CHD/2011 ASSESSMENT YEAR: 2007-08 SHRI AMAN KUMAR GUPTA, VS THE ITO, S/O LATE SHRI BALRAJ GUPTA, NABHA NABHA PAN NO. AAPPG4955R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.GARG RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 22.11.2011 DATE OF PRONOUNCEMENT : 24.11.2011 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), PATIALA DATED 14.7.2011 IN CONFIRMING THE P ENALTY OF RS. 93,535/- IMPOSED U/S 271B OF THE INCOME TAX ACT, 1961 (IN SH ORT 'THE ACT') RELATING TO ASSESSMENT YEAR 2007-08. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A GOVT. CONTRACTOR AS WELL AS RUNNING THE BUSINESS OF RETAI L TRADE OF SUBMERSIBLE PUMPS AND OTHER SANITARY ITEMS. THE ASSESSEES TUR NOVER EXCEEDED RS. 40 LACS HENCE THE ACCOUNTS WERE DULY AUDITED BY THE CH ARTERED ACCOUNTANT. FURTHER, THE AUDIT REPORT OF THE ACCOUNTANT WAS OBT AINED ON 9.10.2000 I.E. 2 BEFORE THE DUE DATE TO OBTAIN THE AUDIT REPORT ON O R BEFORE 31.10.2007. IN THIS CASE, THE TOTAL TURN OVER OF THE ASSESSEE WAS RS. 1,87,06,908/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 2 9.12.2009 FOR A TOTAL INCOME OF RS. 3,97,650/-. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE AS SESSEE HAD FAILED TO FILE THE RETURN OF INCOME BY DUE DATE U/S 139(1) NOR AU DIT REPORT U/S 44AB WAS FILED ON OR BEFORE THE DUE DATE. CONSEQUENTLY , PENALTY PROCEEDINGS U/S 271B OF THE ACT WERE INITIATED FOR VIOLATION OF PROVISIONS OF SECTION 44AB OF THE ACT. PENALTY NOTICE U/S 271B OF THE AC T WAS ISSUED ON 29.12.2009 REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY U/S 271B OF THE ACT SHOULD NOT BE IMPOSED. IN RESPONSE TO THE ABOVE NOTICE, THE ASSESSEE SUBMITTED AS UNDER:- THIS IS REFERENCE TO YOUR NOTICE U/S 271B DATED 3. 5.2010 REGARDING FAILED TO COMPLY WITH THE PROVISIONS OF S ECTION 44AB FOR THE ASSESSMENT YEAR 2007-08 IN THE CASE OF SHRI AMAN KUMAR GUPTA, NABHA. IT IS HEREBY SUBMITTED TH AT THE AUDIT REPORT U/S 44AB FOR THE ASSESSMENT YEAR 2007- 08 WAS OBTAINED ON 9.10.2007 AND THE DUE DATE TO OBTAIN TH E AUDIT REPORT WAS 31.10.2007. THE PARTICULARS OF AUDIT WE RE DULY FILLED IN THE RELEVANT COLUMNS OF THE I.T. RETURN F ORM. IT IS CLEARLY MENTIONED IN THE CIRCULAR NO.5/2007 DATED 26.7.2007 THAT THE ASSESSEE SHOULD RETAIN THE REPOR T WITH HIMSELF. IT MAY BE FURNISHED IN ORIGINAL DURING THE ASSESSMENT PROCEEDINGS. NO PENALTY U/S 271B SHALL BE INITIATED OR LEVIED FOR NOT FURNISH THE TAX AUDIT R EPORT ON OR BEFORE THE DUE DATE. HOWEVER, IF THE AUDIT REPORT HAS NOT BEEN OBTAINED BEFORE THE DUE DATE, PROVISIONS OF SE CTION 271B SHALL BE ATTRACTED. FURTHER CIRCULAR NO. 5/2007 DATED 26.7.2007 CLARIFI ES THAT THE AUDIT REPOT U/S 44AB IS NOT TO BE ATTACHED WITH THE RETURN. IT SHOULD NOT BE FURNISHED SEPARATELY ALSO BEFORE OR 3 AFTER THE DUE DATE. HOWEVER, AN ASSESSEE SHOULD GE T THE REPORT OF AUDIT FROM AN ACCOUNTANT UNDER SAID SECTI ON BEFORE THE DUE DATE OF THE FURNISHING OF THE RETURN AND SH ALL 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 U/S 271B SHALL BE INITIATE D OR LEVIED FOR NOT FURNISHING THE TAX AUDIT REPORT ON OR BEFOR E THE DUE DATE. HOWEVER, IF THE AUDIT REPORT HAS NOT BEEN OB TAINED BEFORE THE DUE DATE, PROVISIONS OF SECTION 271B SHA LL BE ATTRACTED. SO YOU ARE REQUESTED TO DROP THE PENALTY PROCEEDINGS U/S 271B AND OBLIGE. 3. THE ASSESSING OFFICER DID NOT ACCEPT THE ABOVE E XPLANATION OF THE ASSESSEE STATING THAT CIRCULAR NO. 5/2007 DATED 26. 7.2007 OF THE CBDT IS NOT RELEVANT TO THE FACTS OF THE PRESENT CASE. ACC ORDING TO ASSESSING OFFICER, THE ASSESSEE FAILED TO FURNISH HIS RETURN OF INCOME ON OR BEFORE THE SPECIFIED DATED 31.10.2007 AS PROVIDED U/S 139( 1) OF THE ACT. THE ASSESSING OFFICER OBSERVED THAT IN THIS CASE THE AS SESSEE HAS FILED HIS RETURN OF INCOME IN PAPER FORM ON 31.3.2008 WHICH W AS LATE BY FIVE MONTHS. ACCORDING TO ASSESSING OFFICER, IF THE ASS ESSEE HAS FILED HIS RETURN OF INCOME ON OR BEFORE I.E. 31.10.2007 THAN THE FACTS OF THE ABOVE MENTIONED CIRCULAR WOULD HAVE RELEVANT. THE ASSESS ING OFFICER HAS CATEGORICALLY HELD THAT THE ASSESSEE HAS FAILED TO FURNISH HIS AUDIT REPORT U/S 44AB OF THE ACT ON OR BEFORE THE SPECIFIED DATE I.E. 31.10.2007. HE, THEREFORE, IMPOSED PENALTY OF RS. 93,535/- U/S 271 B OF THE ACT. 4. ON APPEAL, THE CIT(A) CONFIRMED THE PENALTY FOR THE REASONS STATED IN PARA 3.4 OF THE IMPUGNED ORDER AND HENCE THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4 5. BEFORE US, SHRI N.K.GARG LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE AUDIT REPORT U/S 44AB WAS OBTAINED ON 9.10 .2007 AND DUE DATE TO OBTAIN THE AUDIT REPORT FOR THE ASSESSMENT YEAR 200 7-08 WAS 31.10.2007. SHRI N.K.GARG, LD. COUNSEL FOR THE ASSESSEE DREW OU R ATTENTION TO CBDT CIRCULAR NO. 5/2007 DATED 26.7.2007. PARA 6(I) OF THE ABOVE CIRCULAR READS AS UNDER:- 6.(I) THE REPORT OF AUDIT UNDER SECTION 44AB IS NOT TO BE ATTACHED WITH THE RETURN. IT SHOULD NOT BE FURNISH ED SEPARATELY ALSO BEFORE OR AFTER THE DUE DATE. HOWEVER, AN ASSE SSEE SHOULD GET THE REPORT OF AUDIT FROM AN ACCOUNTANT UNDER SA ID SECTION BEFORE THE DUE DATE OF 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 TH E ASSESSMENT PROCEEDINGS. NO PENALTY UNDER SECTION 271B SHALL B E INITIATED OR LEVIED FOR NOT FURNISHING THE AUDIT REPORT ON OR BEFORE THE DUE DATE. HOWEVER, IF THE AUDIT REPORT HAS NOT BEE N OBTAINED BEFORE THE DUE DATE, PROVISIONS OF SECTION 271B SHA LL BE PARA 6.1 HIGHLIGHTED. 6. SHRI N.K. GARG, LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT IN THE ABOVE CIRCULAR, IT WAS CLARIFIED / MENTIONED THAT T HE ASSESSEE SHOULD RETAIN REPORT WITH HIMSELF. IT COULD BE FURNISHED IN ORIG INAL DURING ASSESSMENT PROCEEDINGS. THE CIRCULAR ALSO PROVIDED THAT NO PE NALTY U/S 271B OF THE ACT SHALL BE INITIATED OR LEVIED FOR NON FURNISHING THE TAX AUDIT REPORT ON OR BEFORE THE DUE DATE. IT IS ALSO MENTIONED IN TH E ABOVE CIRCULARS THAT HOWEVER,, IF AUDIT REPORT HAS NOT BEEN OBTAINED BEF ORE THE DUE DATE, PROVISIONS OF SECTION 271B SHALL BE ATTRACTED. SHR I N.K. GARG, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN VIEW OF THE ABOVE CIRCULAR THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT HE WAS NO T REQUIRED TO FURNISH 5 THE AUDIT REPORT ON OR BEFORE THE DUE DATE. THE BO ARD HAS ALSO CLARIFIED THAT THE ASSESSEE SHOULD RETAIN THE REPORT WITH HIM SELF. IT MAY BE FURNISHED IN ORIGINAL DURING THE ASSESSMENT PROCEED INGS. SHRI N.K.GARG LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE AUDIT REPORT WAS OBTAINED PRIOR TO THE SPECIFIED DATE OF FILING THE RETURN. THE REPORT OF THE ACCOUNTANT WAS OBTAINED ON 9.10.2007. THIS FACT HA S NOT BEEN DISPUTED BY THE LOWER AUTHORITIES. SHRI N.K. GARG SUBMITTED THAT IN VIEW OF THE ABOVE CIRCULAR, THE ASSESSEE ENTERTAINED A BELIEF T HAT HE IS NOT REQUIRED TO FURNISH THE AUDIT REPORT SEPARATELY BEFORE OR AFTER THE DUE DATE OF FILING OF THE RETURN. THUS, THERE WAS A REASONABLE CAUSE WHI CH PREVENTED THE ASSESSEE FROM FURNISHING THE AUDIT REPORT ON OR BEF ORE THE PRESCRIBED DATE I.E. 31.10.2007. 7. SHRI AKHILESH GUPTA, LD. DR STRONGLY SUPPORTED T HE ORDERS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. SECTION 273B OF THE ACT PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISION S OF SECTION 271B OF THE ACT, NO PENALTY SHALL BE IMPOSABLE ON THE PERSO N OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. IN THE INSTANT CASE, THE ASSESSEE HAS PLEADED THAT IN VIEW OF THE CBDT CIRCULAR NO. 5/2007 DATED 26.7.2007, THE ASSESSEE ENTERTAINED A BELIEF THAT HE WAS NOT REQUIRED TO FURNISH THE AUDIT REPORT ON OR BEFORE T HE SPECIFIED DATE I.E. 31.10.2007. IT IS AN ADMITTED CASE THAT THE ASSESS EE HAS OBTAINED THE AUDIT REPORT ON 9.7.2007 I.E. BEFORE THE SPECIFIED DATE O F FILING THE RETURN AND THE AUDIT REPORT. PARA 6(I) OF THE AFORESAID CIRCU LAR OF THE BOARD PROVIDED 6 THAT THE REPORT OF AUDIT U/S 44AB IS NOT TO BE ATTA CHED WITH THE RETURN. THE BOARD HAS ALSO CLARIFIED THAT THE AUDIT REPORT MAY BE FURNISHED IN ORIGINAL DURING THE ASSESSMENT PROCEEDINGS. IT IS ALSO CLARIFIED BY THE BOARD THAT NO PENALTY U/S 271B OF THE ACT SHALL BE INITIATED OR LEVIED FOR NOT FURNISHING THE TAX AUDIT REPORT ON OR BEFORE TH E DUE DATE. IN OUR VIEW, THE CIRCULAR DATED 26.7.2007 REFERRED TO ABOVE, CER TAINLY RELEVANT TO THE FACTS OF THE PRESENT CASE. IN OUR VIEW, THE ARGUME NTS RAISED BY SHRI N.K.GARG, LD. COUNSEL FOR THE ASSESSEE HAS A MERIT AND, THEREFORE, WE HOLD THAT THERE WAS A REASONABLE CAUSE FOR NOT FURN ISHING THE AUDIT REPORT ON OR BEFORE THE SPECIFIED DATE. WE, THEREFORE, CA NCEL THE PENALTY LEVIED U/S 271B OF THE ACT. 9. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF NOVEMBER, 2011. SD/- SD/- (D.K.SRIVASTAVA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 24 TH NOVEMBER, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR