Shri Hemant Ramchandra Dake, Raigad V. ITO, Ward-2, Panvel

ITA 920/PUN/2013

• Counselvise Citation: 92024514 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: Reasonable cause

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. 920/PN/2013 (ASSTT.YEAR : 2007-08) HEMANT RAMCHANDRA DAKE, B-1, ASHOKA GARDEN, MAHATMA PHULE ROAD, PANVEL, DIST : RAIGAD PAN NO. AFQPD1101C .. APPELLANT 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 17- 01-2013 OF THE CIT(A)-I, THANE RELATING TO ASSESSME NT YEAR 2007-08. 2. LEVY OF PENALTY OF RS.38,489/- U/S.271B BY THE A SSESSING OFFICER AND UPHELD BY THE CIT(A) IS THE ONLY ISSUE RAISED BY TH E ASSESSEE IN THE GROUNDS OF APPEAL. 3. AN ADJOURNMENT PETITION SEEKING ADJOURNMENT OF T HE CASE WAS FILED WHICH WAS REJECTED AND THE APPEAL WAS TAKEN UP FOR HEARING. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION UNDER NAME AND STYLE OF M/S. DAKE CONSTRUCTIONS. THE ASSESSEE FILED HIS RETURN OF INCOME ON 30-03-2009 DECLARING INCOME OF RS.8,51,340/-. ALTHOUGH THE GR OSS CONTRACT RECEIPTS WAS 2 RS.76,97,818/- THE DATE OF AUDIT REPORT MENTIONED I N THE AUDIT REPORT SUBMITTED ALONGWITH RETURN OF INCOME WAS 16-01-2009 AS AGAINST THE STATUTORY DUE DATE OF 31-10-2007. THE ASSESSING OF FICER NOTED THAT A SURVEY ACTION U/S.133A OF THE ACT WAS CARRIED OUT AT THE P REMISES OF THE ASSESSEE FIRM ON 10/11-01-2008 AND IT WAS FOUND DURING THE S URVEY THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE INCOMPLETE FOR THE PER IOD RELEVANT TO THE A.Y. 2007-08. THEREFORE, THE ASSESSING OFFICER WAS OF T HE OPINION THAT THE ASSESSEE HAS NOT GOT ITS BOOKS OF ACCOUNT AUDITED A S PER PROVISIONS OF SECTION 44AB. HE, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY U/S.271B SHALL NOT BE LEVIED. 4.1 IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSI NG OFFICER, IT WAS EXPLAINED THAT THE ACCOUNTANT OF THE ASSESSEE LEFT THE JOB DURING F.Y. 2006- 07. SINCE THE BOOKS OF ACCOUNTS WERE NOT COMPLETE HE WAS NOT SURE ABOUT THE GROSS RECEIPTS FOR THE YEAR AND ON FINALISATION OF THE ACCOUNTS HE FOUND THAT THE GROSS RECEIPTS HAS EXCEEDED RS.40 LAKHS FOR THE PERIOD RELEVANT TO A.Y. 2007-08. AFTER APPOINTING ANOTHER ACCOUNTANT, THE ACCOUNTS WERE FINALISED AND THE AUDIT REPORT WAS OBTAINED. THEREFORE, THER E WAS A REASONABLE CAUSE IN NOT OBTAINING THE AUDIT REPORT BEFORE THE STATUT ORY DUE DATE. IT WAS FURTHER EXPLAINED THAT THIS IS THE FIRST YEAR FOR COMPLIANC E OF SECTION 44AB AND THEREFORE THE PENALTY PROCEEDINGS U/S.271B SHOULD B E DROPPED. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION GI VEN BY THE ASSESSEE AND LEVIED PENALTY OF RS.38,489/- U/S.271B OF THE I.T. ACT WHICH WAS UPHELD BY THE CIT(A). 4.2 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 3 5. WE HAVE CONSIDERED THE ARGUMENTS OF THE LD. DEPA RTMENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF THE ASSESS ING OFFICER AND THE CIT(A). IN THE INSTANT CASE, WE FIND THE ASSESSEE HAS OBTAINED THE AUDIT REPORT ON 16-01-2009 AS AGAINST THE STATUTORY DUE D ATE OF 31-10-2007. THERE IS NO ABSOLUTE DEFAULT BY THE ASSESSEE. THE EXPLAN ATION OF THE ASSESSEE THAT THE ACCOUNTANT HAS LEFT THE JOB IN THE MIDDLE OF TH E F.Y. 2006-07 HAS NOT BEEN CONTROVERTED BY THE REVENUE. WE, THEREFORE, F IND SOME FORCE IN THE SUBMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFF ICER AND THE CIT(A) THAT THERE WAS A REASONABLE CAUSE ON HIS PART FOR NOT GE TTING THE ACCOUNTS AUDITED BEFORE THE STATUTORY DUE DATE. IT HAS BEEN HELD IN VARIOUS JUDICIAL DECISIONS THAT MERE FAILURE TO FILE AUDIT REPORT IN TIME WILL NOT JUSTIFY LEVY OF PENALTY SINCE POWER U/S.271B IS DISCRETIONARY. IN THE INST ANT CASE, DUE TO THE LEAVING OF SERVICE BY THE ACCOUNTANT THE ACCOUNTS OF THE AS SESSEE COULD NOT BE FINALISED IN TIME FOR WHICH THERE WAS DELAY IN GETT ING THE AUDIT REPORT AND FINALLY THE ASSESSEE HAS OBTAINED THE AUDIT REPORT ON 16-01-2009. FURTHER, THE RETURNED INCOME AT RS.8,51,340/- HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE ASSESSMENT. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271B OF THE I.T. ACT, 1961. WE, THEREFORE, SET-ASIDE THE ORDER OF T HE CIT(A) AND DIRECT THE ASSESSING OFFICER TO CANCEL THE PENALTY. 6. 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 4 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