Shri Govindkumar H. Varma, Ahmedabad V. The ACIT, Central Circle-2(4), Ahmedabad

ITSSA 348/AHD/2014

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3214 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 19-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Keywords: Business income; Question of law; Reasonable cause; Revised return
• Section: 44AD; 273B; 143(3); 153A; 14A; 131; 132; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER SN IT(SS)A AY APPELLANT RESPONDENT 1 342/AHD/2014 2009-10 ASHIK DHIRAJLAL SANGHVI, A-14, TIRTHBHUMI APARTMENT, OPP. LAW GARDEN, ELLISBRIDGE, AHMEDABAD-380006 PAN : ATJPS 9279 F ACIT, CENTRAL CIRCLE-2(4), AHMEDABAD 2 343/AHD/2014 2008 - 09 SHRI VISHWANATH H. VARMA, PROP. VISHNU ENTERPRISES, D/176, PADMAVATINAGAR SOCIETY, NIKOL ROAD, NARODA, AHMEDABAD PAN : ABUPV 9902 H ACIT, CENTRAL CIRCLE-2(4), AHMEDABAD 3 344/AHD/2014 2009-10 SHRI VISHWANATH H. VARMA, AHMEDABAD PAN : ABUPV 9902 H ACIT, CENTRAL CIRCLE-2(4), AHMEDABAD 4 345/AHD/2014 2005-06 SHRI GOVINDKUMAR H. VERMA, D/178, PADMAVATINAGAR SOCIETY, NIKOL ROAD, NARODA, AHMEDABAD PAN : ABUPV 9901 E ACIT, CENTRAL CIRCLE-2(4), AHMEDABAD 5 346/AHD/2014 2006 - 07 SHRI GOVINDKUMAR H. VERMA, AHMEDABAD PAN : ABUPV 9901 E ACIT, CENTRAL CIRCLE-2(4), AHMEDABAD 6 347/AHD/2014 2007 - 08 SHRI GOVINDKUMAR H. VERMA, AHMEDABAD PAN : ABUPV 9901 E ACIT, CENTRAL CIRCLE-2(4), AHMEDABAD 7 348/AHD/2014 2008-09 SHRI GOVINDKUMAR H. VERMA, AHMEDABAD PAN : ABUPV 9901 E ACIT, CENTRAL CIRCLE-2(4), AHMEDABAD ASSESSEE BY : SHRI P.M. MEHTA, AR REVENUE BY : SHRI PRASOON KABRA, SR DR / DATE OF HEARING : 04/05/2017 / DATE OF PRONOUNCEMENT: 17/05/2017 / O R D E R PER BENCH : APPEAL BEARING IT(SS)A NO. 342/AHD/2014 IN THE CASE OF ASHIK D. SANGHVI IS DIRECTED AGAINST THE ORDER OF CIT(A)-III , AHMEDABAD DATED 14.07.2014 FOR AY 2009-10; APPEALS BEARING IT(SS)A NOS. 343 & 344/AHD/2014 ARE DIRECTED AGAINST THE COMMON ORDER OF CIT(A)-III , AHMEDABAD DATED 22.07.2014 FOR AYS 2008-09 & 2009-10 AND APPEALS BE ARING IT(SS)A NOS. 345 TO ITSSA NOS.342TO348/AHD/2014 ASSESSEE- ASHIK D SANGHVI, GOVINDKUMAR H VERMA & VISHWANATH H. VARMA- AYS : 2005-06 TO 2009-10 - 2 348/AHD/2014 ARE DIRECTED AGAINST THE COMMON ORDER OF THE CIT(A)-III, AHMEDABAD DATED 22.07.2014 FOR ASSESSMENT YEARS 200 5-06 TO 2008-09. SINCE ALL THESE APPEALS PERTAIN TO SAME GROUP AND ALMOST IDENTICAL ISSUES WERE RAISED IN THESE APPEALS; THEREFORE, THESE WERE HEARD TOGET HER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIE NCE. 2. THE ASSESSEE(S) HAS RAISED FOLLOWING IDENTICAL S UBSTANTIVE GROUNDS IN THEIR APPEALS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E DEPARTMENTAL AUTHORITIES HAVE ERRED IN REGARDING IT AS A CASE FIT FOR LEVYIN G PENALTY U/S 271B OF THE ACT WHEN THE APPELLANT HAS OBTAINED AND FURNISHED PARTI CULARS OF AUDIT REPORT U/S 44AB FOR THE ASSESSMENT YEAR IN CONSIDERATION. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE CIT(A) HAS ERRED IN CONFIRMING LEVY OF PENALTY U/S 271B OF THE ACT WIT HOUT APPRECIATING THE FACTS THAT DETAILS OF TAX AUDIT OBTAINED MUCH PRIOR TO DA TE OF FILING ORIGINAL RETURN OF INCOME WAS DULY MENTIONED IN RETURN OF INCOME FILED U/S 153A OF THE ACT AND LEVY OF PENALTY U/S 271B SHOULD BE WITH REFERENCE T O RETURN OF INCOME FILED PURSUANT TO NOTICE U/S 153A AND NOT FILED U/S 139 O F THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN LEVYING PENALTY ON THE GROUND THAT THE APPELLANT HA D MALAFIDE INTENTION OF NOT FURNISHING THE DETAILS OF TAX AUDIT IN THE ORIGINAL RETURN OF INCOME WHEREAS THE FACTS IN CASE OF THE APPELLANT CLEARLY PROVE THE SU CH DETAILS WERE NOT MENTIONED IN ORIGINAL RETURN OF INCOME FOR TECHNICAL ERROR ON TH E PART OF APPELLANT AS HE HAD NO INTENTION TO CLAIM LOSS FROM SAID SHARE BUSINESS . 3. BOTH THE LD. COUNSELS ARE AD IDEM THAT THESE APPEALS INVOLVE IDENTICAL FACTS IN RAISING THE ABOVE SUBSTANTIVE GROUNDS. WE THUS TAKE UP IT(SS)A NO.342/AHD/2014 FOR AY 2009-10 IN THE CASE OF ASHIK D. SANGHVI AS THE LEAD CASE. 4. BRIEFLY STATED FACTS, AS CULLED OUT FROM THE REC ORD, ARE THAT A SEARCH ACTION U/S 132 OF THE ACT WAS CARRIED OUT IN THE GROUP CAS ES OF SANGHVI GROUP ON 09.03.2011. NOTICE UNDER SECTION 153A OF THE ACT W AS ISSUED ON 21.08.2012 REQUIRING THE ASSESSEE TO FILE RETURN WITHIN 30 DAY S ON THE DATE OF RECEIPT OF NOTICE. IN RESPONSE THERETO, ASSESSEE FILED RETURN ON 08.10.2012 DECLARING INCOME ITSSA NOS.342TO348/AHD/2014 ASSESSEE- ASHIK D SANGHVI, GOVINDKUMAR H VERMA & VISHWANATH H. VARMA- AYS : 2005-06 TO 2009-10 - 3 OF RS.6,24,930/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT CAME INTO THE NOTICE THAT THE ASSESSEE HAS CARRIED OUT SHARE TRAD ING ACTIVITIES ALSO DURING THE ASSESSMENT YEAR; HOWEVER, IN THE ORIGINAL RETURN F ILED BY THE ASSESSEE ON 19.03.2010, INCOME FROM SHARE TRADING ACTIVITIES WA S NOT DISCLOSED. AS PER THE AUDITED BALANCE-SHEET, LD. ASSESSING OFFICER OBSERV ED THAT THE ASSESSEE WAS HAVING A TURNOVER OF RS.3,81,08,708/-; HOWEVER, THE TAX AUDIT REPORT UNDER SECTION 44AB OF THE ACT WAS NOT FURNISHED ALONG WIT H THE ORIGINAL RETURN OF INCOME. ACCORDINGLY, A SHOW-CAUSE NOTICE UNDER SEC TION 274 R.W.S. 271B OF THE ACT WAS ISSUED. DURING THE COURSE OF HEARING WITH REGARD TO THE PENALTY PROCEEDINGS UNDER SECTION 271B R.W.S. 274 OF THE AC T, THE ASSESSEE SUBMITTED THAT IT HAS INCURRED HEAVY LOSSES IN THE SHARE TRAD ING ACTIVITIES. TAX AUDIT WAS DULY CARRIED OUT AND COMPLETED BY THE CHARTERED ACC OUNTANT AND THE TAX AUDIT REPORT WAS OBTAINED ON 22.09.2009 FOR THE FY 2008-09 WHICH IS WELL WITHIN THE STATUTORY TIME LIMIT FIXED FOR THE TYPE OF ASSESSEE, I.E., 30.09.2009. HOWEVER, THE AUDIT REPORT WAS NOT ATTACHED WITH THE ORIGINAL RETURN OF INCOME BECAUSE ASSESSEE DID NOT DISCLOSE THE SHARE TRADING LOSS OF RS.53,02,761/- IN THE ORIGINAL RETURN. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE THE ASSESSING AUTHORITY THAT THE RETURN OF INCOME HAS B EEN REVISED AND TAX AUDIT REPORT HAS BEEN ATTACHED WITH THE RETURN OF INCOME, WHICH MAY BE TREATED AS SUFFICIENT COMPLIANCE OF FURNISHING OF TAX AUDIT RE PORT AND AS THE ASSESSEE WAS HAVING A REASONABLE CAUSE FOR NOT FILING TAX AUDIT REPORT, PENALTY UNDER SECTION 271B SHOULD NOT BE LEVIED BY VIRTUE OF PROVISIONS O F SECTION 273B WHICH REFERS TO THE CIRCUMSTANCES IN WHICH PENALTY MAY NOT BE IM POSED IF THE ASSESSEE IS ABLE TO PROVE THAT THERE IS A REASONABLE CAUSE FOR THE SAID FAILURE. 5. HOWEVER, LD. ASSESSING OFFICER WAS NOT CONVINCED WITH THE REPLY OF THE ASSESSEE AND WENT AHEAD TO IMPOSE PENALTY UNDER SEC TION 271B AT RS.1,00,000/- BY OBSERVING THAT THE ASSESSEE DID NOT SUBMIT THE D ETAILS OF THE BUSINESS IN THE RETURN IN SPITE OF THE FACT THAT THE ASSESSEE HAS P REPARED AUDITED BOOKS OF ACCOUNTS AND HENCE THIS IS NOT A TYPOGRAPHICAL OR C LERICAL ERROR AS THE ASSESSEE ITSSA NOS.342TO348/AHD/2014 ASSESSEE- ASHIK D SANGHVI, GOVINDKUMAR H VERMA & VISHWANATH H. VARMA- AYS : 2005-06 TO 2009-10 - 4 HAS NOT SHOWN THE TRANSACTIONS RELATED TO THE SHARE TRADING BUSINESS IN THE RETURN OF INCOME. 6. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE TH E LD. CIT(A) BUT DID NOT SUCCEED AS LD. CIT(A) CONFIRMED THE PENALTY BY OBSE RVING AS FOLLOWS:- 13. I HAVE CAREFULLY EXAMINED THE CASES RELIED UP ON BY THE APPELLANT BUT THE FACTS IN THE APPEAL UNDER CONSIDERATION ARE ENTIREL Y DIFFERENT AND NOT IDENTICAL AS RELIED UPON BY THE A:PPERANT. IN THE APPEAR UNDER C ONSIDERATION, AS PER THE APPELLANT' THE AUDIT WAS DONE WELL IN TIME BUT THE APPELLANT DELIBERATELY CHOSEN NOT TO SHOW THE SHARE BUSINESS LOSS IN THE ORIGINAL BELATED RETURN OF INCOME AND ALSO CHOSEN NOT TO SUBMIT THE AUDIT REPORT AND THE OTHER RELEVANT INFORMATION TO THE AUDIT IN THE REVISED RETURN OF THE INCOME, REA SON BEST KNOWN TO HIM. 14. THERE ARE VARIOUS JUDICIAL PRONOUNCEMENTS WHICH HAVE DEALT WITH THE ISSUE OF PENALTY U/S 271B AND JUSTIFIED THE LEVY OF PENALTY U/S. 271B. FEW ARE DISCUSSED BELOW HAVING IDENTICAL OR SIMILAR ISSUES :- 1. IN THE CASE OF ANAHAITA NALIN SHAH (43 TAXMANN .COM 206) THE ITAT MUMBAI BENCH A HELD THAT 'SECTION 271B IS ON ENABLING PROVISION EMPOWERING T HE ASSESSING OFFICER TO DIRECT PAYMENT OF PENALTY FOR NON-COMPLIANCE WITH T HE PROVISIONS OF SECTION 44 AB. SECTION 271B HAS TO BE READ WITH PROVISIONS OF SECTION 44AB. SECTION 44AB REQUIRES ASSESSEES TO GET THEIR ACCOUNTS AUDIT ED BY ON ACCOUNTANT BEFORE THE SPECIFIED DATE AND FURNISH BY THE DATE, THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUC H ACCOUNTANT. SECTION 271B STIPULATES IMPOSITION OF PENALTY IF AN ASSESSE E FAILS TO FURNISH SUCH REPORT A HARMONIOUS CONSIDERATION OF BOTH THE PROVI SIONS REQUIRES THE ASSESSEE TO ASSIGN REASONABLE CAUSE HIS 'FAILURE'. REASONABLE CAUSE OF FAILURE DEPENDS ON THE FACTS AND CIRCUMSTANCES OF THE CASE CONCERNED. THE EXERCISE OF POWER UNDER SECTION 27IB IS DISCRETIONARY, NOT MAND ATORY. WORD USED IN THE SECTION IS 'MAY' AND NOT 'SHALL. COURTS EXPECT THE ASSESSING OFFICERS TO EXERCISE THE DISCRETION JUDICIALLY AND TAKE A DECIS ION, ABOUT IMPOSING PENALTY, AFTER CONSIDERING ALL THE RELEVANT CIRCUMS TANCES. THE QUESTION OF PENALTY FOR NONCOMPLIANCE CANNOT BE INQUIRED INTO W ITHOUT READING THE PROVISIONS OF SECTIONS 271B AND 273B TOGETHER AS BO TH ARE INTEGRALLY CONNECTED. AS THE PROOF RELATING TO REASONABLE CAUS E IS A MATTER OF FACTUAL DETAILS, SO BURDEN HAS BEEN CAST UPON THE ASSESSEE TO PRODUCE EVIDENCE IN THIS REGARD. IN THE INSTANT CASE THE ASSESSEE HAD ENTERED IN TO SPECULATIVE BUSINESS OF THE SHARES, THAT THE TRANSACTIONS ENTERED IN TO BY HER WERE MORE THAN THE PRESCRIBED MONETARY LIMIT AS ENVISAGED BY THE PROVI SIONS OF SECTION 44AB, THAT NO BONA FIDE REASONS WAS FURNISHED BY THE ASSE SSEE, FOR NOT GETTING THE BOOKS OF ACCOUNT AUDITED, BEFORE THE ASSESSING OFFI CER OR THE FIRST APPELLATE ITSSA NOS.342TO348/AHD/2014 ASSESSEE- ASHIK D SANGHVI, GOVINDKUMAR H VERMA & VISHWANATH H. VARMA- AYS : 2005-06 TO 2009-10 - 5 AUTHORITY. THE WORDS TOTAL TURNOVER INDICATE THE AG GREGATE PRICE OF THE COMMODITIES RECEIVED BY AN ASSESSEE DURING THE COUR SE OF HIS TRADING OR BUSINESS ACTIVITIES. IT DOES NOT DIFFERENTIATE BETW EEN COMMODITIES SOLD UNDER THE HEAD SPECULATIVE BUSINESS/NORMAL BUSINESS. TRAN SFER OF IMMOVABLE OR MOVABLE PROPERTY BY WAY OF INVESTMENT IS NOT INCLUD ED BY THE PROVISIONS OF SECTION 44AB. PROVISIONS OF THE ACT ORE CLEAR THAT ALL REVENUE RECEIPTS ARE COVERED BY THE WORDS TURNOVER, WHEREVER CAPITAL REC EIPTS ARE NOT TO BE CONSIDERED A PART OF THE TURNOVER FOR THE PURPOSES OF THE SAID SECTION. IN OTHER WORDS, RECEIPTS WHICH ARE NOT RELATABLE TO BUSINESS AND MAY FALL UNDER THE EXPRESSION INCOME TO BE SUBJECTED TO TAX AS INCOME FROM OTHER SOURCES DO NOT FORM PART OF TOTAL TURNOVER. CONSIDERING THE PRINCI PLES GOVERNING THE IMPOSITION OF PENALTY UNDER SECTION 271B AND THE FA CTS OF THE CASE THE ASSESSING OFFICER WAS JUSTIFIED IN LEVYING PENALTY FOR NOT GETTING HER BOOKS OF ACCOUNT AUDITED. THUS, CONFIRMING THE ORDER OF T HE FIRST APPELLATE AUTHORITY, LEVY OF PENALTY WAS UPHELD.' 15. IN THE CASE OF MADHUBAN CHEMICALS & FERTILIZERS LTD, 157 ITR 374 THE HON'BLE HIGH COURT OF RAJASTHAN, JAIPUR BENCH HAS H ELD THAT U/S 139(1) OF THE IT ACT, 1961 ,THE APPELLANT WAS REQUIRED TO FILE TH E RETURN OF INCOME ON OR BEFORE 31 ST DECEMBER, 1991 BUT IT WAS NOT FILED WITHIN THE DU E DATE. BELATED RETURN WAS FILED ON 31/12/1992 BUT THE AUDIT REPORT WAS NOT FI LED THEREWITH. THE APPELLANT FILED RETURN OF THIS VERY ASSESSMENT YEAR ON 30/8/1 993 AND THEREWITH THE AUDIT REPORT WAS ENCLOSED AND HELD THAT THE CONDUCT OF AS SESSEE OF WITHHOLDING AUDIT REPORT, THOUGH IT WAS OBTAINED IN TIME IS ANOTHER G ROUND WHICH CREATES SUSPICION AND DOUBT AND DISMISSED THE APPEAL. 16. IN THE CASE OF METRO AGENCIES, (45 TAXMANN.COM 97 ) THE HON'BLE KERALA HIGH COURT OBSERVED THAT ONE HAS TO SEE WHETHER THE CAUSE SHOWN BY THE ASSESSEE WOULD CONSTITUTE FOR NON-COMPLIANCE IN ORDER TO AVO ID PAYING FROM PENALTY IMPOSED AND HELD THAT IT WAS WITHIN THE REACH OF TH E ASSESSEE TO COMPLETE THE PROCESS OF FINALIZATION OF ACCOUNTS AND THEN SUBMIT AN AUDIT REPORT WITHIN THE TIME PRESCRIBED WHICH THEY FAILED TO DO. EVEN OTHER WISE, ON FACTS, NO MATERIAL IS PRODUCED BY THE ASSESSEE TO SUBSTANTIATE THE CAUSE SHOWN BY THE ASSESSEE. 17. IN THE CASE OF KHUDA WOOD PRODUCTS (P) LTD, (17 2 TAXMANN.COM 49), THE HON'BLE GAUHATI HIGH COURT HAS HELD THAT 'WE ARE OF THE VIEW THAT PROOF RELATING TO SUFFICIENT REASONS IS A MATTER OF FACTUAL DETAIL S AND NO QUESTION OF LAW IS INVOLVED IN THE MATTER AND HELD THAT TRIBUNAL REVER SED FINDINGS OF COMMISSIONER (APPEALS) HOLDING THAT CERTIFICATE ISSUED BY AUDITO R GIVING REASONS FOR DELAY IN AUDITING ACCOUNTS OF ASSESSEE WOULD NOT CONSTITUTE A REASONABLE GROUND WITHIN MEANING OF SECTION 27IB AS THERE WAS NO EVIDENCE ON RECORD TO SHOW THAT ANY EFFORT WAS MADE BY ASSESSEE TO GET ITS ACCOUNTS AUD ITED WITHIN SCHEDULED TIME AND NO PROOF RELATING TO SUFFICIENT REASONS WAS FILED. 18. IN THE CASE OF RIVERVIEW FRONT, [15 TAXMANN.COM 84] THE CALCUTTA HIGH COURT HAS HELD :- ITSSA NOS.342TO348/AHD/2014 ASSESSEE- ASHIK D SANGHVI, GOVINDKUMAR H VERMA & VISHWANATH H. VARMA- AYS : 2005-06 TO 2009-10 - 6 'THE ASSESSES HAS NOT PRODUCED ANY EVIDENCE, WHATS OEVER, AS PROOF OF THE AVERMENTS. IF PLEADING ARC TO BE ACCEPTED ON FACE V ALUE, THEN H WILL HAVE DISASTROUS RESULTS, INSOFAR AS PERSONS WITH IMAGINA TION WOULD COME UP WITH MANY SUCH EXPLANATIONS UNLESS THE SAME IS PROVED TH ROUGH SOME EVIDENCE, IT CANNOT BE ACCEPTED ON FACE VALUE. THE ASSESSES HAS STATED THAT THE FAULT LIES ON ITS ACCOUNTANT AND NOT ON IT. THE ASSESSEE CANNOT S IMPLY EVADE RESPONSIBILITY BY SAVING SO. IT WAS THE DUTY OF THE ASSESSES TO EN SURE THAT THE ACCOUNTANT DOES HIS JOB PROPERLY. THE DELAY IN THE INSTANT CAS E IS ALMOST EIGHT MONTHS. THE ASSESSED SHOULD HAW PERIOD/CULLY OR AT LEAST WI THIN A REASONABLE LIME, AFTER THE DATE FIXED FOR FILING THE AUDITOR'S REPOR T, ENQUIRED WITH THE ACCOUNTANT AS TO WHETHER THE AUDITOR'S REPORT HAS B EEN FILED. THE ASSESSEE DOES NOT STATE THAT IT HAS DONE SO, THEREFORE, THE CONDUCT OF THE ASSESSEE IS CLEARLY CONTUMACIOUS AND. THEREFORE THE PENALTY IS ATTRACTED. THE APPEAL IS, THUS, TO BE DISMISSED' 19. AFTER CONSIDERING THE ABOVE FACTUAL AND LEGAL P OSITION IN AY 2009-2010, IT IS QUITE CLEAR THAT THE APPELLANT DELIBERATELY DID NOT DISCLOSE THE SHARE BUSINESS TRANSACTION / LOSS IN THE ORIGINAL RETURNS OF INCOM E AND DID NOT FURNISH THE AUDIT REPORT OR THE RELEVANT INFORMATION RELATED :TO THE AUDIT IN THE ORIGINAL RETURNS OF INCOME AND THERE IS NO RATIONALITY FOR NOT DISCLOSI NG THEREFORE I AM OF THE CONSIDERED VIEW THAT THE A.O. WAS JUSTIFIED IN IMPO SING THE PENALTY U/S 271B FOR THE AY 2009-10. 7. AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 8. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE FURTHER SUBMITTED THAT THERE WAS A REASONABLE CAUSE ON THE PART OF THE ASSESSEE FOR NOT FURNISHING THE TAX AUDIT REPORT ALONG WITH RETURN OF INCOME, BECAUSE THE ASSESSEE INCURRED HEA VY LOSS IN THE SHARE TRADING BUSINESS AND HE AVOIDED TO DISCLOSE THE TRANSACTION S OF SHARE TRADING IN THE ORIGINAL INCOME-TAX RETURN; HOWEVER, REGULAR BOOKS OF ACCOUNTS WERE MAINTAINED AND TAX AUDIT REPORT WAS DULY OBTAINED O N 22.09.2009 WHICH IS WELL WITHIN THE STATUTORY TIME LIMIT. THE LD. COUN SEL FURTHER SUBMITTED THAT THE ASSESSEE FILED THE RETURN IN COMPLIANCE TO NOTICE U NDER SECTION 153A OF THE ACT, WHEREIN ALL THE DETAILS OF VARIOUS SOURCE OF INCOME EARNED BY THE ASSESSEE WERE SUBMITTED, INCLUDING LOSS FROM SHARE TRADING BUSINE SS. TAX AUDIT REPORT ALONG WITH AUDITED BALANCE-SHEET WAS FILED WITH THE RETUR N IN COMPLIANCE TO NOTICE U/S 153A OF THE ACT. EXCEPT FOR MINOR ADDITION UN DER SECTION 14A OF THE ACT, RETURNED INCOME HAS BEEN ACCEPTED. RELIANCE WAS MA DE ON THE DECISION OF THE ITSSA NOS.342TO348/AHD/2014 ASSESSEE- ASHIK D SANGHVI, GOVINDKUMAR H VERMA & VISHWANATH H. VARMA- AYS : 2005-06 TO 2009-10 - 7 CO-ORDINATE BENCH IN THE CASE OF SAJJAKUMAR H. NANW AL VS. ACIT, VIDE IT(SS)A NO.15/AHD/2015 DATED 24.09.2015, WHEREIN THE PENALT Y U/S 271B WAS DELETED BY FOLLOWING THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KIRIT DAHYABHAI PATEL VS. ACIT IN TAX APPEAL NO.188 1, 1882 AND 1185 OF 2010, WHICH HOLDS THAT RETURN OF INCOME FILED IN RESPONSE TO SECTION 153A NOTICE IS TO BE CONSIDERED AS THE ONE FILED UNDER SECTION 139 OF THE ACT. IN THIS CASE, HONBLE HIGH COURT DELETED THE PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT BY ADOPTING THE SAME REASONING. THE CO-ORDINATE BENCH HAS ALSO FOLLOWED THE SAME REASONING AND HAS DELETED THE PENALTY UNDER SE CTION 271B OF THE ACT. LD. COUNSEL FURTHER REFERRED TO THE ORDER OF THE LD. CI T(A) IN ASSESSEES OWN CASE FOR AY 2010-11 DATED 28.07.2014, WHEREIN THE LD. CIT(A) HAS DELETED THE PENALTY U/S 271B R.W.S. 274 OF THE ACT FOR THE VERY SIMILAR FACTS. 9. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE VEHEMENTLY ARGUED SUPPORTING THE ORDER OF THE LOWER AUTHORITIES AND S UBMITTED THAT ASSESSEE HAS INTENTIONALLY AVOIDED TO SUBMIT THE TAX AUDIT REPOR T EVEN THOUGH IT WAS OBTAINED. PROVISION OF SECTION 271B SQUARELY APPLI ES AND ASSESSEE CANNOT BE PROVIDED ANY IMMUNITY UNDER THE PROVISION OF SECTIO N 271B AS HE HAS NOT FURNISHED TAX AUDIT REPORT UNDER SECTION 44AB OF TH E ACT ALONG WITH ORIGINAL RETURN OF INCOME EVEN THOUGH HE WAS DULY COVERED UN DER THE PROVISIONS OF SECTION 44AB OF THE ACT. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE COMMON ISSUE RAISED IN ALL THESE SEVEN APPEALS IS AGAINST THE ORDER OF LD. CIT(A) CONFIRMING PENALTY UNDER SECTION 271B OF THE ACT FOR NOT FURNISHING TAX AUDIT REPORT UNDER SECTION 44AB OF THE ACT ALONG WI TH RETURN OF INCOME BEFORE THE SPECIFIED DATE OF FILING OF RETURN OF INCOME UN DER SECTION 139(1) OF THE ACT. WE OBSERVE THAT IN ALL THE CASES ASSESSEE(S) HAS IN CURRED HEAVY LOSSES IN SHARE TRADING BUSINESS. ASSESSEES ARE MAINTAINING REGULA R BOOKS OF ACCOUNTS, FINANCIAL STATEMENTS ARE AUDITED UNDER SECTION 44AB OF THE ACT AND TAX AUDIT REPORT HAS BEEN OBTAINED WITHIN STATUTORY TIME LIMI T. ALL THESE FACTS HAVE ALSO ITSSA NOS.342TO348/AHD/2014 ASSESSEE- ASHIK D SANGHVI, GOVINDKUMAR H VERMA & VISHWANATH H. VARMA- AYS : 2005-06 TO 2009-10 - 8 NOT BEEN CHALLENGED BY THE REVENUE. BEFORE GOING F URTHER WE WOULD LIKE TO REPRODUCE THE PROVISIONS OF SECTIONS 44AB, 139(1), 153A(1)(A), 271B AND 273B OF THE ACT, WHICH READ AS UNDER:- SECTIONS 44AB 44AB. EVERY PERSON, (A) CARRYING ON BUSINESS SHALL, IF HIS TOTAL SALES , TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS EXCEED OR EXCEEDS O NE CRORE RUPEES IN ANY PREVIOUS YEAR ; OR (B) CARRYING ON PROFESSION SHALL, IF HIS GROSS REC EIPTS IN PROFESSION EXCEED [FIFTY] LAKH RUPEES IN ANY PREVIOUS YEAR; OR (C) CARRYING ON THE BUSINESS SHALL, IF THE PROFITS AND GAINS FROM THE BUSINESS ARE DEEMED TO BE THE PROFITS AND GAINS OF SUCH PERS ON UNDER SECTION 44AE OR SECTION 44BB OR SECTION 44BBB, AS THE CASE MAY BE, AND HE HAS CLAIMED HIS INCOME TO BE LOWER THAN THE PROFITS OR GAINS SO DEEMED TO BE THE PROFITS AND GAINS OF HIS BUSINESS, AS THE CASE MAY BE, IN ANY PREVIOUS YEAR; OR (D) CARRYING ON THE [PROFESSION] SHALL, IF THE PRO FITS AND GAINS FROM THE [PROFESSION] ARE DEEMED TO BE THE PROFITS AND G AINS OF SUCH PERSON UNDER [SECTION 44ADA] AND HE HAS CLAIMED SUCH INCOME TO B E LOWER THAN THE PROFITS AND GAINS SO DEEMED TO BE THE PROFITS AND G AINS OF HIS [PROFESSION] AND HIS INCOME EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX IN ANY [PREVIOUS YEAR; OR] [(E) CARRYING ON THE BUSINESS SHALL, IF THE PROVISI ONS OF SUB-SECTION (4) OF SECTION 44AD ARE APPLICABLE IN HIS CASE AND HIS INCOME EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TA X IN ANY PREVIOUS YEAR,] GET HIS ACCOUNTS OF SUCH PREVIOUS YEAR AUDITED BY A N ACCOUNTANT BEFORE THE SPECIFIED DATE AND FURNISH BY THAT DATE THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT AN D SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED: [PROVIDED THAT THIS SECTION SHALL NOT APPLY TO THE PERSON, WHO DECLARES PROFITS AND GAINS FOR THE PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (1) OF SECTION 44AD AND HIS TOTAL SALES, TURNOVER OR GR OSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS DOES NOT EXCEED TWO CRORE RUPEES IN SUCH PREVIOUS YEAR:] PROVIDED [FURTHER] THAT THIS SECTION SHALL NOT APPL Y TO THE PERSON, WHO DERIVES INCOME OF THE NATURE REFERRED TO IN SECTION 44B OR SECTION 44BBA, ON AND FROM THE 1ST DAY OF APRIL, 1985 OR, AS THE CASE MAY BE, THE DATE ON WHICH THE RELEVANT SECTION CAME INTO FORCE, WHICHEVER IS LATER : PROVIDED [ALSO] THAT IN A CASE WHERE SUCH PERSON IS REQUIRED BY OR UNDER ANY OTHER LAW TO GET HIS ACCOUNTS AUDITED , IT SHALL BE SUFFICIENT COMPLIANCE WITH THE PROVISIONS OF THIS SECTION IF SUCH PERSON GETS THE ACCOUNTS OF SUCH BUSINESS OR PROFESSION AUDITED UNDER SUCH LAW BEFORE THE SPECIF IED DATE AND FURNISHES BY THAT ITSSA NOS.342TO348/AHD/2014 ASSESSEE- ASHIK D SANGHVI, GOVINDKUMAR H VERMA & VISHWANATH H. VARMA- AYS : 2005-06 TO 2009-10 - 9 DATE THE REPORT OF THE AUDIT AS REQUIRED UNDER SUCH OTHER LAW AND A FURTHER REPORT BY AN ACCOUNTANT IN THE FORM PRESCRIBED UNDER THIS SECTION. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (I) 'ACCOUNTANT' SHALL HAVE THE SAME MEANING AS I N THE EXPLANATION BELOW SUB- SECTION (2) OF SECTION 288; (II) 'SPECIFIED DATE', IN RELATION TO THE ACCOUNTS OF THE ASSESSEE OF THE PREVIOUS YEAR RELEVANT TO AN ASSESSMENT YEAR, MEANS THE DUE DATE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139. SECTIONS 139(1) 139. (1) EVERY PERSON, (A) BEING A COMPANY OR A FIRM; OR (B) BEING A PERSON OTHER THAN A COMPANY OR A FIRM, IF HIS TOTAL INCOME OR THE TOTAL INCOME OF ANY OTHER PERSON IN RESPECT OF WHIC H HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXI MUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX, SHALL, ON OR BEFORE THE DUE DATE, FURNISH A RETURN OF HIS INCOME OR THE INCOME OF SUCH OTHER PERSON DURING THE PREVIOUS YEAR, IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTH ER PARTICULARS AS MAY BE PRESCRIBED. SECTIONS 153A(1)(A) 153A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SE CTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECT ION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BO OKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SEC TION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FU RNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOM E IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS [AND FOR THE RELEVANT ASSESSMENT YEAR OR YEARS] REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PART ICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139. SECTIONS 271B 271B. IF ANY PERSON FAILS TO GET HIS ACCOUNTS AUDI TED IN RESPECT OF ANY PREVIOUS YEAR OR YEARS RELEVANT TO AN ASSESSMENT YEAR OR FUR NISH A REPORT OF SUCH AUDIT AS REQUIRED UNDER SECTION 44AB, THE ASSESSING OFFICER MAY DIRECT THAT SUCH PERSON SHALL PAY, BY WAY OF PENALTY, A SUM EQUAL TO ONE-HA LF PER CENT OF THE TOTAL SALES, ITSSA NOS.342TO348/AHD/2014 ASSESSEE- ASHIK D SANGHVI, GOVINDKUMAR H VERMA & VISHWANATH H. VARMA- AYS : 2005-06 TO 2009-10 - 10 TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS, OR OF THE GROSS RECEIPTS IN PROFESSION, IN SUCH PREVIOUS YEAR OR YEARS OR A SUM OF ONE HUNDRED FIFTY THOUSAND RUPEES, WHICHEVER IS LESS. SECTIONS 273B 273B. NOTWITHSTANDING ANYTHING CONTAINED IN THE PR OVISIONS OF CLAUSE (B) OF SUB-SECTION (1) OF SECTION 271, SECTION 271A, SECTI ON 271AA, SECTION 271B, SECTION 271BA, SECTION 271BB, SECTION 271C, S ECTION 271CA, SECTION 271D, SECTION 271E, SECTION 271F, SECTION 271FA, [S ECTION 271FAB,] SECTION 271FB, SECTION 271G, [SECTION 271GA,] [ SECTION 271GB ,] SECTION 271H, [SECTION 271-I], [ SECTION 271J ,] CLAUSE (C) OR CLAUSE (D) OF SUB-SECTION (1) OR S UB- SECTION (2) OF SECTION 272A, SUB-SECTION (1) OF SEC TION 272AA OR SECTION 272B OR SUB-SECTION (1) OR SUB-SECTION (1A) OF SECTION 272B B OR SUB-SECTION (1) OF SECTION 272BBB OR CLAUSE (B) OF SUB-SECTION (1) OR CLAUSE ( B) OR CLAUSE (C) OF SUB-SECTION (2) OF SECTION 273, NO PENALTY SHALL BE IMPOSABLE O N THE PERSON 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. 11. NOW, ON EXAMINING THE FACTS OF THE CASE OF THE ASSESSEE, WHICH ALSO INCLUDES THE SEARCH PROCEEDINGS CARRIED OUT IN THE GROUP CASES ON 09.03.2011 AND NOTICES UNDER SECTION 153A/153C WERE ISSUED TO THE ASSESSEE, WE FIND THAT ALL THE ASSESSEES HAVE FILED THEIR REGULAR RETURN O F INCOME AND HAVE NOT DECLARED THE LOSSES IN SHARE TRADING BUSINESS IN THE INCOME- TAX RETURN. CASE OF NONE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND IT WAS O NLY AFTER THE SEARCH PROCEEDINGS, THE ASSESSMENTS WERE COMPLETED UNDER S ECTION 153A R.W.S. 143(3) OF THE ACT / SECTION 153C R.W.S. 143(3) OF THE ACT. IT WAS ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER CAM E ACROSS THE FACT THAT THE ASSESSEE IS HAVING LOSS FROM SHARE TRADING AND ITS GROSS TURNOVER HAS EXCEEDED THE LIMIT SPECIFIED IN SECTION 44AB OF THE ACT. IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE HAS NOT CLAIMED THE LOSS OCCURRING FROM BU SINESS TRANSACTION OF SHARE TRADING IN THE RETURN OF INCOME FILED IN COMPLIANCE TO NOTICE UNDER SECTION 153A/153C OF THE ACT. 12. THE COMMON REASONABLE CAUSE FOR NOT FURNISHING THE TAX AUDIT REPORT, EVEN THOUGH OBTAINED FROM THE CHARTERED ACCOUNTANT, WAS THAT THE ASSESSEE HAD A BONA FIDE BELIEF THAT, AS THE LOSS FROM SHARE TRADING HAS NO T BEEN ITSSA NOS.342TO348/AHD/2014 ASSESSEE- ASHIK D SANGHVI, GOVINDKUMAR H VERMA & VISHWANATH H. VARMA- AYS : 2005-06 TO 2009-10 - 11 CLAIMED/SHOWN IN THE INCOME-TAX RETURN, HE IS NOT O BLIGED TO FURNISH IT ALONG WITH RETURN OF INCOME. IN ONE OF THE CASES OF ASSE SSEE NAMELY SHRI ASHIK D. SANGHVI, STATEMENT OF THE CHARTERED ACCOUNTANT, SHR I SHYAM SUNDAR WAS RECORDED UNDER SECTION 131 OF THE ACT ON 22.03.2013 ABOUT HIS CONDUCTING AUDIT FOR VARIOUS ENTITIES OF SANGHVI GROUP. SHRI SHYAM SUNDAR, CA, HAS SPECIFICALLY REPLIED TO QUESTION NO.4 THAT HE HAS CONDUCTED THE TAX AUDIT UNDER SECTION 44AB OF THE ACT FOR AY 2009-10 IN THE CASE OF SHRI ASHIK D. SANGHVI AND HAS ALSO HANDED OVER THE REPORT TO SHRI ASHIK SANGHVI O N 23.09.2009. SUMMARIZING ALL THESE FACTS, WE OBSERVE THAT THE TAX AUDIT HAS BEEN CONDUCTED, REPORT HAS BEEN OBTAINED BEFORE 30.09.2009, LOSS FROM SHARE TR ADING HAS NOT BEEN CLAIMED AS SET OFF AGAINST THE INCOME SHOWN IN THE ORIGINAL INCOME-TAX RETURN, ASSESSMENT PROCEEDINGS WERE COMPLETED ONLY UNDER SE CTION 153A R.W.S. 143(3) / SECTION 153C R.WS. 143(3) OF THE ACT AND NO REGUL AR ASSESSMENT PROCEEDINGS WERE CARRIED OUT AND THE LOSS FROM THE SHARE TRADIN G WAS DISCLOSED IN THE BALANCE-SHEET ATTACHED WITH THE INCOME-TAX RETURN I N COMPLIANCE TO NOTICE UNDER SECTION 153A/153C OF THE ACT, BUT THEY WERE N OT CLAIMED AS SET OFF AGAINST THE INCOME DECLARED IN THESE RETURNS. 13. NOW, WE ADJUDICATE THE ISSUE AS TO WHETHER THE ASSESSEE IS LIABLE TO PAY PENALTY UNDER SECTION 271B OF THE ACT. WE FIND THA T AS FAR AS THE IMMUNITY FROM BEING PAYING PENALTY UNDER SECTION 271B OF THE ACT IS CONCERNED, THE ASSESSEE NEEDS TO FALL IN THE PROVISIONS OF SECTION 273B OF THE ACT, WHEREIN HE IS REQUIRED TO PROVE THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE. ASSESSEES CONTENTION IS THAT, AS HE WAS NOT SHOWIN G THE SHARE TRADING LOSS IN THE INCOME-TAX RETURN, HE WAS UNDER THE BONA FIDE BELIEF THAT HE IS NOT REQUIRED TO ATTACH THE REPORT THERETO. ASSESSEES REASONABL E CAUSE GETS FURTHER SUPPORTED BY THE DECISION OF JODHPUR TRIBUNAL IN THE CASE OF ITO VS. NARENDRA KUMAR, REPORTED IN [2006] 103 TTJ 591 (JODH), WHEREIN PENA LTY LEVIED UNDER SECTION 271B OF THE ACT WAS DELETED BECAUSE THE ASSESSEE HA D A BELIEF THAT AS HIS INCOME WAS BELOW TAXABLE LIMIT, HE WAS NOT REQUIRED TO GET HIS BOOKS OF ACCOUNTS ITSSA NOS.342TO348/AHD/2014 ASSESSEE- ASHIK D SANGHVI, GOVINDKUMAR H VERMA & VISHWANATH H. VARMA- AYS : 2005-06 TO 2009-10 - 12 AUDITED UNDER SECTION 44AB OF THE ACT. SIMILARLY, HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ITO VS. SACHINAM TRUST, REPORT ED IN [2009] 223 CTR 152 (GUJARAT), HAS HELD THAT THE PENALTY ON THE APPELLA NT WAS NOT LEVIABLE UNDER SECTION 271B OF THE ACT, BECAUSE HE HAD A BONA FIDE BELIEF THAT IN THE BUSINESS OF FINANCING, GROSS RECEIPT OF INTERESTS WOULD CONSTIT UTE THE LIMIT OF RS.40 LAKHS AND NOT THE GROSS AMOUNT ADVANCED. IN VIEW OF THES E DECISIONS AND IN THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE BEF ORE US, WE OBSERVE THAT THE ASSESSEE HAS ALSO A BONA FIDE BELIEF THAT, AS HE WAS NOT CLAIMING THE HUGE LOSS FROM SHARE TRADING IN HIS INCOME-TAX RETURN EVEN TH OUGH THE TAX AUDIT REPORT WAS OBTAINED BY HIM, HE IS NOT REQUIRED TO ATTACH T HE SAME WITH THE ORIGINAL RETURN OF INCOME. 14. FURTHER ADJUDICATING THE ISSUE WITH ANOTHER ANG LE BY REFERRING THE PROVISIONS OF SECTION 153A(1)(A) OF THE ACT, WE OB SERVE THAT THE ASSESSEES CASE WAS NOT SELECTED FOR NORMAL SCRUTINY ON THE BASIS O F HIS ORIGINAL RETURN OF INCOME FILED, BUT HIS CASE WAS SELECTED FOR SCRUTIN Y PURSUANT TO SEARCH UNDER SECTION 132 OF THE ACT IN SANGHVI GROUP OF CASES. IT WAS IN COMPLIANCE TO THE NOTICE UNDER SECTION 153A/153C THAT THE ASSESSEE HA D TO FURNISH RETURN OF INCOME. IN THE RETURN OF INCOME SO FILED, THE ASSE SSEE HAS DISCLOSED ALL THE TRANSACTIONS OF SHARE TRADING ATTACHED IN THE TAX A UDIT REPOT OBTAINED BY HIM EARLIER BEFORE FILING THE ORIGINAL RETURN OF INCOME , BUT STILL IN THE COMPUTATION OF INCOME HE HAS NOT CLAIMED THE SHARE TRADING LOSS. ON PERUSAL OF THE PROVISIONS OF SECTION 153A(1)(A) OF THE ACT, WE OBSERVE THAT T HE RETURN WHICH IS REQUIRED TO BE FILED SHOULD BE TREATED AS IF THE RETURN HAS BEE N FURNISHED UNDER SECTION 139 OF THE ACT. NOW, WHEN WE MOVE ON TO SECTION 44AB O F THE ACT AND READ THE EXPLANATION TO IT, WHICH DEFINES THE SPECIFIED DATE OF FURNISHING THE TAX AUDIT REPORT AND IT SAYS THAT THE SPECIFIED DATE IN RELAT ION TO THE ACCOUNTS OF THE ASSESSEE OF THE PREVIOUS YEAR RELEVANT TO ASSESSMEN T YEAR, MEANS THAT THE DUE DATE FOR FURNISHING THE RETURN OF INCOME UNDER SUB- SECTION (1) OF SECTION 139, WHICH MEANS THAT IN SECTION 44AB OF THE ACT REFEREN CE IS MADE TO SECTION 139 OF ITSSA NOS.342TO348/AHD/2014 ASSESSEE- ASHIK D SANGHVI, GOVINDKUMAR H VERMA & VISHWANATH H. VARMA- AYS : 2005-06 TO 2009-10 - 13 THE ACT FOR FURNISHING RETURN OF INCOME AND SIMILAR LY, IN SECTION 153A(1)(A) OF THE ACT, THE INCOME-TAX RETURN FURNISHED IS TREATED AS THE ONE FURNISHED UNDER SECTION 139 OF THE ACT. FURTHER, SUB-SECTION (1) O F SECTION 153A OF THE ACT STARTS WITH THE WORD NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECT ION 153 ., WHICH MEANS THAT THE PROCEEDINGS UNDER SECTION 153A ARE COMPLETELY INDEP ENDENT. AT THIS JUNCTURE, WE NEED TO REFER TO THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF SAJJAKUMAR H. NANWAL (SUPRA), WHEREIN THE CO-ORDINA TE BENCH HAS DELETED THE PENALTY UNDER SECTION 271B OF THE ACT BY FOLLOWING THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KIRIT DAHY ABHAI PATEL (SUPRA), WHICH HOLDS THAT RETURN OF INCOME FILED IN RESPONSE TO NO TICE UNDER SECTION 153A IS TO BE CONSIDERED AS THE ONE FILED UNDER SECTION 139 OF THE ACT AND THEIR LORDSHIPS HAVE DELETED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY ADOPTING THE SAME REASONING. THE CO-ORDINATE BENCH HAS ALSO ADO PTED THE SIMILAR REASONING AND DELETED THE PENALTY UNDER SECTION 271B OF THE A CT. WE OBSERVE THAT IN ALL THESE CASES BEFORE US, THE ISSUES ARE VERBATIM SIMI LAR WHEREIN THE ASSESSMENT PROCEEDINGS HAVE BEEN COMPLETED UNDER SECTION 153A R.W.S. 143(3) OF THE ACT/SECTION 153C R.W.S. 143(3) OF THE ACT. TAX AUD IT REPORT IS BASICALLY REQUIRED TO ASSIST THE ASSESSING AUTHORITY TO EXAMI NE THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE ASSESSEE HAS DULY FURNISHED THE T AX AUDIT REPORT ALONG WITH RETURN OF INCOME FILED IN COMPLIANCE TO NOTICE UNDE R SECTION 153A/153C OF THE ACT, WHICH FULFILLS THE REQUIREMENT OF SECTION 44AB OF THE ACT OF FURNISHING THE TAX AUDIT REPORT BEFORE THE SPECIFIED DATE, SPECIFI CALLY IN THE CASE OF THE ASSESSEE, WHICH WAS SUBJECT TO SEARCH UNDER SECTION 132 OF THE ACT AND CASES WERE NOT SELECTED FOR NORMAL SCRUTINY. 15. WE ARE, THEREFORE, OF THE VIEW THAT, BY RESPECT FULLY FOLLOWING THE JUDICIAL PRECEDENT, IN THE GIVEN FACTS AND CIRCUMSTANCES AND THE DETAILED DISCUSSIONS MADE ABOVE, THE ASSESSEE SHOULD NOT BE VISITED WITH PENALTY UNDER SECTION 271B OF THE ACT FOR NOT FURNISHING TAX AUDIT REPORT AS H E HAD A REASONABLE BASIS ITSSA NOS.342TO348/AHD/2014 ASSESSEE- ASHIK D SANGHVI, GOVINDKUMAR H VERMA & VISHWANATH H. VARMA- AYS : 2005-06 TO 2009-10 - 14 UNDER SECTION 273B AS WELL AS HE HAS FURNISHED THE TAX AUDIT REPORT WITH THE RETURN OF INCOME FILED IN COMPLIANCE TO NOTICE UNDE R SECTION 153A/153C OF THE ACT AND HE HAS ALSO OBTAINED THE TAX AUDIT REPORT U NDER SECTION 44AB OF THE ACT WITHIN THE STATUTORY TIME LIMIT WHICH IN THE GI VEN CASE WAS WITHIN SIX MONTHS FROM THE END OF THE FINANCIAL YEAR. WE ACCO RDINGLY DELETE THE IMPUGNED PENALTY LEVIED UNDER SECTION 271B OF THE A CT AND ALLOW THE APPEAL OF THE ASSESSEE. 16. FACTS, CIRCUMSTANCES AND ISSUE BEING SIMILAR, FOLLOWING THE ABOVE ORDER IN IT(SS)A NO.342/AHD/2014 FOR AY 2009-10 IN THE CA SE OF ASHIK D. SANGHVI, WE ALSO DELETE THE IMPUGNED PENALTY LEVIED UNDER SE CTION 271B OF THE ACT, WHICH ARE UNDER CHALLENGE IN OTHER APPEALS VIDE IT( SS)A NOS. 343 TO 348/AHD/2014 AND ALLOW ALL THESE APPEALS FILED BY T HE ASSESSEE. 17. IN THE RESULT, ALL APPEALS FILED BY THE ASSESSE E ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 17 TH MAY, 2017 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED, 17/05/2017 **BT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. $ & / CONCERNED CIT 4. & ) ( / THE CIT(A)- 5. $ , $ , /DR,ITAT, AHMEDABAD, 6. 0 / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) $ ITAT, AHMEDABAD