M/S.RIVER VIEW BAR & SILVER RESTAURANT V. COMMISSIONER OF INCOME TAX (CENTRAL)

WP(C)/29100/2005

AI Insights

The case revolves around M/S River View Bar & Silver Restaurant, which faced penalties for not filing the required auditors' report on time for the assessment year 2000-2001. The report was due by October 31, 2000, but was filed only on June 29, 2001. The petitioner argued that the delay was due to their accountant misusing funds, which prevented the timely filing. The Income Tax authorities imposed a penalty, which was upheld by the Commissioner of Income Tax in a revision petition. The petitioner challenged these decisions in the High Court, which found that the petitioner did not provide adequate evidence to support their claim of the accountant's misconduct being the reason for the delay.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 756002 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 27-07-2011
• Assessment Year: misc
• Other Referred Cases: COMMISSIONER OF INCOME TAX V. SANKARSONS AND COMPANY (1972 (85) ITR 627), WOODWARD GOVERNOR INDIA P. LTD V. COMMISSIONER OF INCOME TAX AND OTHERS (DELHI) (2002 (255) ITR 745), P.D. SUDHI V. INTELLIGENCE OFFICER, AGRICULTURAL INCOME TAX AND SALES TAX, MATTANCHERRY AND OTHERS (1992 (85) STC 337)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P K R MENON; GEORGE K GEORGE
• Assessee Lawyers: A KUMAR
• Keywords: Audit report; Delay in filing; Income Tax; Penalty; Quasi-criminal
• Section: 264; 271B

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 27TH JULY 2011 / 5TH SRAVANA 1933 WP(C).No. 29100 of 2005(L) -------------------------- PETITIONER(S): ---------------------- M/S.RIVER VIEW BAR & SILVER RESTURANT, THODUPUZHA, REP. BY ITS PARTNER, MR.NEELAKANTA RAJU. BY ADV. SRI.A.KUMAR RESPONDENT(S): ------------------------ 1. THE COMMISSIONER OF INCOME TAX(CENTRAL), KOCHI. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I, ERNAKULAM. ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) SRI.GEORGE K. GEORGE, SC FOR IT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 27/07/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: dmb WP(C).No. 29100 of 2005 APPENDIX PETITIONER'S EXHIBITS:- EXT.P1:- COPY OF THE ORDER DTD 29.9.2003 PASSED BY THE 2ND RESPONDENT EXT.P2:- COPY OF THE ORDER DTD 8.2.2005 OF THE 1ST RESPONDENT IN THE REVISION PETITION FILED BY THE PETITIONER U/S 264 OF THE INCOME TAX ACT RESPONDENTS' EXHIBITS:- NIL //TRUE COPY// P.A TO JUDGE dmb S. SIRI JAGAN, J. ------------------------------------------- W.P.(C) No.29100 OF 2005 ---------------------------------------------- Dated this the 27th day of July, 2011 JUDGMENT The petitioner is an assessee under the Income Tax Act. For the assessment year 2000-2001, the petitioner should have filed audit report before the assessing authority on or before 31.10.2000. The petitioner filed the same only on 29.6.2001. Therefore, the 2nd respondent initiated proceedings under Section 271B of the Income Tax Act for levying penalty for delay in filing of the auditors' report. The petitioner filed an explanation thus: “Our Auddit (sic) report for the A.Y. referred ought to have filed on or before 31st October 2000. To the best of my knowledge and belief, all the formalities under the I.T. Act were completed well before the due date, and all the closing statements with balance tax and interest due Rs.52,731/- was entrusted with my accountant for filing. But only late it came to know that the accountant misutilised the funds for personal purposes and Audit report as well as returns were not filed in time. As the delay was due to none of our default, it is humbly requested to condone the delay in filing the report in time.” The 2nd respondent considered the explanation for the delay and passed Ext.P1 order stating that the explanation is not sufficient W.P.(C)No.29100/05 2 for condoning the delay and imposed penalty of Rs.44,831/- on the petitioner. The petitioner filed a revision before the Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961, which was also dismissed by Ext.P2 order. The petitioner challenges Exts.P1 and P2 orders. The contention of the petitioner is that imposition of penalty is not automatic, and that the imposition of penalty being quasi criminal in nature, it could have been imposed only if there was a contumacious conduct of the petitioner. According to the petitioner, they had done all what they could do to file the auditors' report in time and it was prepared in time also. But, because of the misconduct on the part of their accountant, the accountant did not file the same, which came to the knowledge of the petitioner only later and therefore, they produced the same along with their return of income on 29.6.2001. They would submit that, that is sufficient reason for condonation of delay and absolving the petitioner from penalty proceedings. The learned counsel for the petitioner relies on the following decisions in support of the contention of the petitioner that the reason put forwarded by the petitioner is sufficient and reasonable cause for the delay; W.P.(C)No.29100/05 3 “COMMISSIONER OF INCOME TAX V. SANKARSONS AND COMPANY (1972 (85) ITR 627), WOODWARD GOVERNOR INDIA P. LTD V. COMMISSIONER OF INCOME TAX AND OTHERS (DELHI) (2002 (255) ITR 745) and P.D. SUDHI V. INTELLIGENCE OFFICER, AGRICULTURAL INCOME TAX AND SALES TAX, MATTANCHERRY AND OTHERS (1992 (85) STC 337)” 2. The Standing Counsel for the Income Tax Department opposes the contention of the petitioner. According to him, the initial burden of proof is on the petitioner to prove that they had sufficient and reasonable cause for not filing the auditors' report in time. Except their averment that it was because of the fault of the accountant, the petitioner has not produced any proof whatsoever in support of their averment, without which the averment cannot be accepted on face value, is his contention. He further submits that as held by the assessing authority and the revisional authority it was the responsibility of the petitioner to ensure that their accountant does his job correctly and in time. Even assuming that what the petitioner says is true, he points out that, if such averments are accepted on face value, then every W.P.(C)No.29100/05 4 assessee would come with some such excuses and the department would be forced to accept the same on mere assertion in the pleadings. 3. I have considered the rival contentions in detail. It is not disputed before me that except the assertion in the reply to the notice issued to the petitioner, the petitioner has not produced any evidence whatsoever as proof of the averments. If pleadings are to be accepted on face value, then it will have disastrous results, insofar as persons with imagination would come up with many such explanations. Unless the same is proved through some evidence, it cannot be accepted on face value. Even otherwise, what the petitioner has stated is that the fault lies on their accountant and not on them. The petitioner cannot simply evade responsibility by saying so. It was the duty of the petitioner to ensure that the accountant does his job properly. The delay in this case is almost eight months. The petitioner should have periodically or at least within a reasonable time, after the date fixed for filing the auditors' report, enquired with the accountant as to whether the auditors' report has been filed. The petitioner does not state that they have done so. Therefore, the conduct of the W.P.(C)No.29100/05 5 petitioner is clearly contumacious and therefore, penalty is attracted. I am not satisfied that the decisions relied on by the learned counsel for the petitioner lay down any law to the contrary. Therefore, I am not inclined to interfere with the impugned orders and accordingly the writ petition is dismissed. S. SIRI JAGAN, JUDGE acd W.P.(C)No.29100/05 6 "