SREE KRISHNA HARDWARE,KASARAGOD V. DEPUTY COMMISSIONER OF IT, KANNUR

ITA 538/COCH/2023

AI Insights

The case involves Sree Krishna Hardware, a company engaged in the business of postal trading of cement, steel, and other building materials, which filed an appeal against a penalty imposed for failing to furnish a tax audit report within the due date as required under Section 44AB of the Income Tax Act. The Assessing Officer had initially accepted the returned income but later imposed a penalty of Rs. 1,50,000 due to the non-submission of the audit report on time. The assessee's appeal against this penalty was dismissed by the CIT(A), leading to the appeal before the Tribunal. The Tribunal's decision was based on the procedural error regarding the timing of the penalty order, which was passed beyond the statutory deadline.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633133 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL; SNR
• Keywords: Set aside
• Section: 143(3); 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI SONJOY SARMA, JM ITA No. 538/Coch/2023 (Assessment Years: 2017–18) Sree Krishna Hardware ..….……….Appellant KMC Srikrishna Souodha M.G. Road, Anebagilu Kasargod - 671121 [PAN:AAIFS8343N] vs. Deputy Commissioner of IT , Kannur . ….. …..Respondent Appellant by: Shri. None Respondent by Smt . Leena Lal, Snr,AR Date of Hearing: 05 .06.2025 Date of Pronouncement: 13.06.2025 O R D E R Per Sonjoy Sarma: This appeal is filed by the assessee against the order dated 27.04.2023 by the National Faceless Appeal Centre (hereinafter referred to as ‘CIT(A)’] for the assessment year 2017–18. 2. Brief facts of the case are that the assessee is engaged in the business of postal trading of cement, steel, and other building materials. It filed its return of income for the Assessment Year 2017–18, declaring a total income of Rs.3,69,82,950/-. The return was processed under Section 143(1) of the Income-tax Act. Subsequently, the case was selected for scrutiny, and notices under Sections 143(2) and 142(1) were issued to the assessee on various dates. During the course of assessment proceedings, 2 ITA No. 538/Coch/2023 Sree Krishna Hardware the assessee duly filed the required details and documents. Upon examination, the Assessing Officer accepted the returned income and completed the assessment under Section 143(3) on 19.12.2019. However, since the assessee failed to furnish the tax audit report within the prescribed due date under Section 44AB, the AO initiated penalty proceedings and issued a notice under Section 274 r.w.s. 271B on 25.12.2019. Subsequently, a penalty order under Section 271B was passed on 30.07.2021, levying a penalty of Rs.1,50,000/-. 3. Aggrieved by the above penalty order, the assessee preferred an appeal before the ld. CIT(A), who dismissed the appeal after considering the submissions made by the assessee. 4. During the hearing before the Tribunal, none appeared on behalf of the assessee, and the matter was taken up with the assistance of the departmental representative. 5. We have heard the rival contentions and perused the materials available on record. We observe that the penalty notice was issued on 25.12.2019 and, in accordance with Section 275(1)(c) of the Act and the penalty order should have been passed on or before 30.06.2020. However, in this case, the penalty order was passed on 30.07.2021, which is beyond the time limit prescribed under the Act. Therefore, we hold that the penalty order passed by the AO is barred by limitation and void ab initio and having been passed without jurisdiction and beyond the time limit prescribed under the provisions of the I. T. Act. We find that the procedural requirements and statutory condition to the imposition of penalty was not duly complied with by the AO. Consequently, the penalty 3 ITA No. 538/Coch/2023 Sree Krishna Hardware order suffers from legal infirmity and cannot be sustained in the eyes of law. In view of the foregoing, the impugned penalty order is hereby set aside and appeal filed by the assessee stands allowed. 6. In the result, the appeal of the assessee is allowed . Order pronounced in the open court on 13th June, 2025. Sd/- Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (SONJOY SARMA) JUDICIAL MEMBER Cochin, Dated: 13th June, 2025 Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin "