Prachin Land Infra Pvt. Ltd., Raigad V. ITO, Ward-2, Panvel

ITA 917/PUN/2013

• Counselvise Citation: 91724514 RSA 2013
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 26-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 917/PN/2013 (ASSTT.YEAR : 2007-08) PRACHIN LAND INFRA PVT. LTD., B-1,ASHOKA GARDEN, MAHATMA PHULE ROAD, PANVEL, RAIGAD .. APPELLANT PAN NO.AADCP2876K VS. ITO, WARD-2, PANVEL .. RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI P.L. PATHADE DATE OF HEARING : 26-11-2013 DATE OF PRONOUNCEMENT : 26-11-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 16- 01-2013 OF THE CIT(A)-I, THANE RELATING TO ASSESSME NT YEAR 2007-08. 2. DESPITE SERVICE OF NOTICE NONE APPEARED ON BEHAL F OF THE ASSESSEE. AN ADJOURNMENT PETITION SEEKING ADJOURNMENT OF THE CAS E WAS FILED WHICH WAS REJECTED AND THE APPEAL WAS TAKEN UP FOR HEARING. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF LAND ACQUISITIONS AND DEVELOPERS . THE ASSESSEE E-FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR O N 30-03-2009. ALTHOUGH THE TOTAL SALES SHOWN WAS AT RS.72,49,812/ - THE AUDIT REPORT MENTIONS THE DATE OF AUDIT AS 11-02-2009 AS AGAINST THE DUE DATE OF FILING OF SUCH AUDIT REPORT WAS 31-10-2007. THE ASSESSING OF FICER FURTHER NOTED THAT 2 A SURVEY WAS CONDUCTED U/S.133A AT THE PREMISES OF THE ASSESSEE COMPANY ON 10/11-01-2008 AND IT WAS FOUND DURING THE SURVEY TH AT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE INCOMPLETE FOR THE IMPUGNED AS SESSMENT YEAR. THEREFORE, HE WAS OF THE OPINION THAT THE ASSESSEE HAD NOT GOT ITS BOOKS OF ACCOUNT AUDITED AS PER THE PROVISIONS OF SECTION 44 AB WITHIN THE SPECIFIED TIME. THE ASSESSING OFFICER, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY U/S.271B SHALL NOT BE IMPOSED ON IT FOR FAILURE TO GET ITS BOOKS OF ACCOUNT AUDITED WITHIN THE SPECIFIED TIME, I.E.3 1-10-2007. 3.1 THE ASSESSEE SUBMITTED THAT THEY HAD ENTERED IN TO AN AGREEMENT WITH M/S. MARATHON PRACHIN INFRASTRUCTURE PVT. LTD. FOR THE SALE OF 1250 ACRES OF LAND AT A PREDETERMINED PRICE. DURING THE F.Y. 200 6-07 RELEVANT TO A.Y. 2007-08, THEY COULD SELL LAND TO THE ABOVE GROUP ON LY TO THE EXTENT OF 145 ACRES ONLY. THE REMAINING LAND COULD NOT BE SOLD T O THE ABOVE GROUP DUE TO THE SHARP RISE IN THE PRICE OF THE LAND IN THAT ARE A AND THEY COULD NOT PURCHASE AND ACQUIRE THE BALANCE LAND AND HAND IT OVER TO TH E GROUP ON AGREED PRICE. THE NEGOTIATIONS WERE STARTED WITH M/S. MARATHON PR ACHIN INFRASTRUCTURE PVT. LTD. FOR REVISING THE PRICES AND THE CONTRACT. TIL L THE DATE OF FINALIZATION OF THE ACCOUNTS AND AUDIT, NO AGREEMENT COULD BE REACH ED WITH THE ABOVE GROUP REGARDING THE PRICES AT WHICH THE LANDS WOULD BE TR ANSFERRED AND THE CONTRACT WAS AT STAKE ABOUT ITS FURTHER CONTINUATION. ACCOR DING TO THE ASSESSEE, DUE TO SUCH UNCERTAINTIES ABOUT THE PROFITS ON THE BUSINES S TRANSACTIONS, NO INCOME COULD BE RECOGNISED AND THEREFORE THE BOOKS OF ACCO UNTS WERE INCOMPLETE ON THE DATE OF SURVEY AND ACCOUNTS WERE NOT AUDITED. 3.2 IT WAS FURTHER SUBMITTED THAT DURING THE COURSE OF SURVEY AT THE PREMISES OF THE COMPANY, ONE OF THE PARTNERS SHRI R AJESH DAKE IN 3 ANTICIPATION OF THE TOTAL LANDS TO BE SOLD/TRANSFER RED TO M/S. MARATHON PRACHIN INFRASTRUCTURE PVT. LTD. AT REVISED PRICE NEGOTIATI ONS, ESTIMATED THE GROSS MARGINS @RS.50,000/- PER ACRE AND ON THIS BASIS, TH E BOOKS OF ACCOUNTS WERE COMPLETED AND AUDITED. IN THE CIRCUMSTANCES, IT WA S NOT POSSIBLE TO GET THE ACCOUNTS AUDITED ON OR BEFORE THE DUE DATE OF TAX A UDIT, I.E. 31-10-2007. THEREFORE, THERE WERE SUFFICIENT AND BONAFIDE REASO NS FOR NOT GETTING THE ACCOUNTS AUDITED ON OR BEFORE THE DUE DATE OF TAX A UDIT. 4. HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE AND LEVIED PENALTY OF RS.3 6,249/- FOR VIOLATION OF THE PROVISIONS OF SECTION 44AB. 5. BEFORE THE CIT(A) THE ASSESSEE REITERATED THE SA ME SUBMISSIONS AND WAS WITHOUT ANY SUCCESS. NOW THE ASSESSEE IS IN AP PEAL BEFORE US. 6. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. WE FIND THE ASSESSING OFFICER IN THE INSTANT CASE LEVIED PENALTY OF RS.36,249/- FOR OBTA INING THE AUDIT REPORT ON 11-02-2009 AS AGAINST THE STATUTORY DUE DATE OF RS. 31-10-2007. WE FIND THE LD.CIT(A) UPHELD THE PENALTY SO LEVIED BY THE ASSES SING OFFICER REJECTING THE EXPLANATION OF THE ASSESSEE GIVING THE BONAFIDE REASONS FOR NOT GETTING THE ACCOUNTS AUDITED BEFORE THE STATUTORY DUE DATE. FROM THE STATEMENTS OF FACTS FILED BY THE ASSESSEE, WE FIND THE ASSESSING OFFICER ASSESSED THE INCOME AT RS.61,37,420/- AS AGAINST THE INCOME DECLARED AT RS.55,62,383/- BY MAKING ADDITION OF RS.5,75,033/- WHICH CONSISTS OF DISALLOWANCE OF DONATION OF RS.5 LAKHS AND PRELIMINARY EXPENSES OF RS.75,003/-. IN OTHER WORDS, THE VARIOUS OTHER EXPENSES AND INCOME DECLAR ED BY THE ASSESSEE HAS BEEN ACCEPTED AND THE ASSESSEE HAS NOT PREFERRED AN Y APPEAL AGAINST THE SAME 4 ADDITION. THE ASSESSEE HAS GOT ITS BOOKS OF ACCOUN TS AUDITED ON 11-02-2009 AND FILED THE RETURN OF INCOME ON 30-03-2009, WHICH IS NOT IN DISPUTE. WE FIND THE ASSESSING OFFICER LEVIED THE PENALTY U/S.2 71B FOR DELAY IN GETTING THE AUDIT REPORT U/S.44AB. 6.1 WE FIND SOME FORCE IN THE SUBMISSION OF THE ASS ESSEE BEFORE THE ASSESSING OFFICER AS WELL AS THE CIT(A) REGARDING T HE REASONS FOR NOT GETTING THE ACCOUNTS AUDITED BEFORE THE STATUTORY DATE ON T HE GROUND THAT TILL THE DATE OF FINALIZATION OF THE ACCOUNTS AND AUDIT NO AGREEM ENT COULD BE REACHED WITH M/S. MARATHON PRACHIN INFRASTRUCTURE PVT. LTD. REGA RDING THE PRICES AT WHICH THE LANDS WOULD BE TRANSFERRED AND THE CONTRACT WAS AT STAKE ABOUT ITS FURTHER CONTINUATION. DUE TO SUCH UNCERTAINTIES ABOUT THE PROFITS ON THE BUSINESS TRANSACTIONS NO INCOME COULD BE RECOGNISED AND THER EFORE THE BOOKS OF ACCOUNTS WERE INCOMPLETE ON THE DATE OF SURVEY AND ACCOUNTS WERE NOT AUDITED. IT HAS BEEN HELD IN VARIOUS DECISIONS THA T MERE FAILURE TO FILE AUDIT REPORT IN TIME WILL NOT JUSTIFY LEVY OF PENALTY AS POWER US.271B IS DISCRETIONARY (HONBLE MADRAS HIGH COURT IN THE CAS E OF THANJAVUR SILK HANDLOOM WEAVERS CO-OPERATIVE PRODUCTION AND SALES SOCIETY LTD. VS. UNION OF INDIA REPORTED IN 263 ITR 334). SIMILAR V IEW HAS BEEN TAKEN BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CAPITAL ELECTRONICS (GARIAHAT) REPORTED IN 261 ITR 4. SINCE IN THE INS TANT CASE, THERE IS NO ABSOLUTE DEFAULT AND THE ASSESSEE HAS FILED AUDIT R EPORT ALTHOUGH BELATEDLY, WE ARE OF THE CONSIDERED OPINION THAT THERE WAS BON AFIDE REASONS FOR NOT GETTING THE ACCOUNTS AUDITED BEFORE THE STATUTORY D UE DATE AND THEREFORE THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271B OF T HE I.T. ACT. IN THIS VIEW OF THE MATTER, WE SET-ASIDE THE ORDER OF THE CIT(A) AN D DIRECT THE ASSESSING OFFICER TO CANCEL THE PENALTY LEVIED U/S.271B OF TH E I.T. ACT. 5 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF, I.E. ON 26 TH NOVEMBER, 2013. SD/- SD/- (R.S. PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 26 TH NOVEMBER, 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, THANE 4. THE CIT-I, THANE 5. D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE