M/s. Maxpro Associates, Raigad V. Asst. CIT, Panvel Circle, Panvel

ITA 918/PUN/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5272 (ITAT-PUNE)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 26-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: PRAVIJ PATIL
• Keywords: Business income; Reasonable cause
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NOS.918 & 919/PN/2013 A.Y. 2006-07 & 2007-08 M/S. MAXPRO ASSOCIATES, B-1, ASHOKA GARDEN, MAHATMA PHULE ROAD, PANVEL, DIST. RAIGAD PAN: AAMFM7500R APPELLANT VS. ASST. CIT, PANVEL CIRCLE, PANVEL, DIST. RAIGAD RESPONDENT APPELLANT BY : SHRI PRAVIJ PATIL RESPONDENT BY : SHRI S.P . WALIMBE DATE OF HEARING: 26.11.2013 DATE OF ORDER : 27.11.2013 ORDER PER SHAILENDRA KUMAR YADAV, J.M: BOTH THESE APPEALS PERTAINS TO SAME ASSESSEE FOR A .Y. 2006- 07 AND 2007-08, SO THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE. THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GROUND S IN BOTH THE APPEALS. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING PENALTY OF RS. 1,00,000/- UNDER SECTI ON 271B OF THE INCOME TAX ACT, 1961 WITHOUT CONSIDERIN G THE FACTS OF THE CASE. PROVISIONS OF THE ACT OUGHT TO H AVE BEEN PROPERLY CONSTRUED AND REGARD BEING HAD TO FAC TS OF THE CASE, NO SUCH PENALTY SHOULD HAVE BEEN LEVIED. REASONS ASSIGNED BY HIM ARE WRONG, TOTALLY UNREASON ABLE AND ILLOGICAL TO JUSTIFY THE PENALTY OF RS. 1,00,00 0/- LEVIED BY HIM. THE SAID PENALTY IS BAD IN LAW. 2 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN ARRIVING AT THE CONCLUSION OF CONFIRMING PENALTY WITHOUT CONSIDERING THE FACTS AND SUBMISSIO N MADE BEFORE HIM DURING THE APPELLATE PROCEEDINGS. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN REJECTING THE EXPLANATION OF REASONABLE CAUSE FU RNISHED BY THE APPELLANT WHICH PREVENTED HIM TO GET THE ACC OUNTS AUDITED BEFORE SPECIFIED DATE. PROVISIONS OF THE AC T OUGHT TO HAVE BEEN PROPERLY CONSTRUED AND REGARD BEING HA D TO FACTS OF THE CASE, NO SUCH PENALTY SHOULD HAVE BEEN LEVIED BY HIM. 4. THE APPELLANT CRAVE LEAVE TO ADD, AMEND, ALTER AND / OR VARY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM DELAING IN SALE / PURCHASE OF LANDED PROPERTY. THE ASSESSE E FILED ITS ORIGINAL RETURN OF INCOME FOR A.Y. 2006-07 AT LOSS OF RS.35,765/- ON 30.03.2007. A SURVEY U/S. 133A OF I.T ACT WAS C ARRIED OUT AT THE PREMISES OF THE ASSESSEE FIRM ON 10-11/01/2008. DUE TO SURVEY OPERATION, THE ASSESSEE FIRM DECLARED AN ADD ITIONAL INCOME OF RS. 2,09,57,320/- AND AFTER REVISING THE RETURN OF INCOME, THE ASSESSMENT IN THIS CASE WAS COMPLETED AT AN INCOME OF RS. 1,81,99,570/-. IT WAS FOUND DURING THE SURVEY THAT THE BOOKS OF ACCOUNTS OF THE FIRM WERE INCOMPLETE ON THE DATE OF SURVEY FOR THE PERIOD RELEVANT TO A.Y. 2006-07 ALTHOUGH THE TOTAL TURNOVER OF THE ASSESSEE FIRM EXCEEDED RS. 40 LAKHS. THEREFORE, ACC ORDING TO ASSESSING OFFICER, THE ASSESSEE FIRM DID NOT GET IT S BOOKS OF ACCOUNTS AUDITED AS PER THE PROVISIONS OF SECTION 4 4AB OF IT ACT, 1961 WITHIN THE SPECIFIED TIME AND LIABLE FOR PENAL TY U/S.271B OF THE IT ACT, 1961. 2.1 IN RESPONSE TO THE SHOW CAUSE NOTICE BY ASSESSI NG OFFICER, THE ASSESSEE SUBMITTED THAT THE STAND OF ASSESSEE H AS BEEN THAT PROVISIONS OF SECTION 44AB ARE APPLICABLE ONLY IN C ASE WHERE TOTAL TURNOVER OR THE GROSS RECEIPTS AS PER BOOKS OF ACCO UNTS EXCEEDED 3 RS. 40 LAKHS. IN THEIR CASE, THE TOTAL SALES OR THE GROSS RECEIPTS DID NOT EXCEED RS.40 LAKHS, THEREFORE, THE PROVISIONS O F SECTION 44AB WERE NOT APPLICABLE. ACCORDING TO THE ASSESSEE FIR M, THE INCOME OF RS. 2,09,57,320/- DISCLOSED AT THE TIME OF SURVE Y WAS NOT CREDITED IN THE BOOKS OF ACCOUNT BEFORE 31/10/2006 AND THEREFORE THE SAME COULD NOT BE CONSIDERED FOR THE PURPOSE OF SECTION 44AB AS GROSS TURNOVER OR GROSS RECEIPTS. ACCORDING TO THE ASSESSEE FIRM, THE INCOME PERTAINING TO THIS YE AR HAS BEEN CREDITED IN THE BOOKS OF ACCOUNTS ON THE DATE OF SU RVEY ON ACCOUNT OF ADDITIONAL INCOME DECLARED. THIS INCOME HAS BEEN CREDITED MUCH LATER AFTER THE SPECIFIED DATE OF AUD IT AND UNDER NO CIRCUMSTANCES FIRM COULD HAVE GOT THE BOOKS OF ACCO UNTS AUDITED BY 31/10/2006. ON THE SPECIFIED DATE, THE TURNOVER OF THE ASSESSEE FIRM DID NOT EXCEED RS. 40 LAKHS. 2.2 THE ASSESSING OFFICER DID NOT AGREE WITH THE S TAND OF THE ASSESSEE, HE FOUND THAT THE ASSESSEE DID NOT GET IT S BOOKS OF ACCOUNTS AUDITED THROUGH TURNOVER OF THE ASSESSEE A BOVE 40 LAKHS ABOVE DURING THE SURVEY AND THE ASSESSEE WAS AWARE OF THE FACT THAT IT WAS ITS DUTY TO GET THE ACCOUNTS AUDIT ED AS PER THE PROVISIONS OF SECTION 44AB. SO, HE VIOLATED THE PR OVISIONS OF SECTION 44AB AND LIABLE FOR PENALTY U/S.271B. 2.3 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHO RITY, WHO CONFIRMED THE ORDER OF CIT(A) AND SAME HAS BEEN OPP OSED BEFORE US. NONE HAVE APPEARED ON BEHALF OF ASSESSEE. HOW EVER, LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. SO MATTER IS BEING DECIDED EXPA RTE ON THE BASIS OF ARGUMENT OF LEARNED DEPARTMENTAL REPRESENT ATIVE AND MATERIAL ON RECORD. 2.4 AFTER GOING THROUGH THE SUBMISSION OF LEARNED D EPARTMENTAL REPRESENTATIVE AND MATERIAL ON RECORD, WE FIND THAT AS PER 4 PROVISIONS OF SECTION 44AB OF I.T ACT, IT IS CLEAR THAT IF A PERSON CARRYING ON BUSINESS AND HIS TOTAL SALES, TURNOVER OR GROSS RECEIPTS AS THE CASE MAY BE IN ITS BUSINESS EXCEED OR EXCEEDS RS.40 LAKHS IN ANY PREVIOUS YEAR, SHALL GET HIS ACC OUNTS OF SUCH PREVIOUS YEAR AUDITED BY AN ACCOUNTANT BEFORE THE S PECIFIED DATE AND FURNISH BY THAT DATE SUCH AUDIT IN THE PRESCRIB ED FORM DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED. ACCORDING TO ASS ESSEE, INCOME PERTAINING TO THIS HAD BEEN CREDITED IN PROFIT AND LOSS ACCOUNT AFTER SURVEY ON ACCOUNT OF DECLARATION OF ADDITIONA L INCOME. THIS INCOME HAS BEEN CREDITED MUCH LATER AFTER SPECIFIED DATE OF AUDIT AND UNDER NO CIRCUMSTANCES, ASSESSEE COULD HAVE GOT BOOKS OF ACCOUNTS AUDITED BY 31.10.2006. ASSESSEE COULD NOT ANTICIPATE ON SPECIFIED DATE THAT TURNOVER OF THE ASSESSEE EXC EEDED RS.40 LAKHS. THE ASSESSEE AT THE RELEVANT POINT OF TIME WAS PREVENTED BY REASONABLE CAUSE FOR NOT GETTING ITS ACCOUNTS AU DITED AS PER PROVISIONS OF SECTION 44AB. HE WAS UNDER THE BONAF IDE BELIEF AT RELEVANT POINT OF TIME THAT HIS INCOME HAS NOT EXCE EDED THE PRESCRIBED LIMIT AS PER PROVISIONS OF SECTION 44AB OF I.T ACT. 3. IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT ASSESSEE WAS PREVENTED OR REASONABLE CAUS E IN NOT GETTING ACCOUNTS AUDITED BEFORE PRESCRIBED DATE AS PER PROVISIONS OF SECTION 44AB. ACCORDINGLY, ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY IMPOSED U/S. 271B OF I.T ACT. 4. SAME ISSUE AROSE IN A.Y. 2007-08. FACTS BEING S IMILAR, ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY IMPOSED U/S. 271B OF I.T ACT. 5. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED AS INDICATED ABOVE. 5 PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 27 TH OF NOVEMBER, 2013. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH NOVEMBER 2013 GCVSR COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A), THANE 4) THE CIT, THANE 5) THE DR, B BENCH, I.T.A.T., PUNE. 6) GUARD FILE //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE