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Income Tax Appellate Tribunal, AHMEDABAD BENCH ‘B’, AHMEDABAD
Per Justice P P Bhatt, President :
The present appeal has been preferred by the assessee against the order dated 04.05.2018 passed by the CIT(A), Ahmedabad-5 confirming the penalty of Rs.1,00,000/- levied by the DCIT, Circle-5(3), Ahmedabad under Section 271BA of the Income-tax Act, 1961 (in short ‘the Act’) for the Assessment Year 2014-15.
Shree Laxmi Bidi Trading Co Vs. DCIT Assessment year: 2014-15 Page 2 of 5
The brief facts giving raise to this appeal are that the assessee has entered into specified domestic transaction during the previous year relevant to assessment year 2014-15 and has failed to furnish the required Audit Report u/s 92E in Form No.3CEB r.w.r. 10E within the stipulated time, i.e. before the date of furnishing of return of income u/s. 139(1) of the Act. The contention of the assessee, before the Assessing Officer, was that the provisions of Section 271BA are not applicable in the case of assessee because the threshold limit of Rs.5 crores is not exceeded as the interest payments made to partners should not be included to the payment made u/s 40A(2)(b) of the Act. However, the Assessing Officer did not accept the submissions of the assessee and he was of the view that the partners are also covered u/s 40A(2)(b) of the Act and, therefore, the interest payments made to the persons was exceeded the limit of Rs.5 Crores and, thus, the case of the assessee is covered under Section 92EC of the Act. The learned Assessing Officer thus rejected the contention of the assessee and imposed penalty of Rs.1,00,000/- under Section 271BA of the Income-tax Act on 14.09.2017.
Aggrieved, the assessee carried the matter in appeal before the learned CIT(A), but without any success. Learned CIT(A) upheld the stand of the Assessing Officer vide his order dated 04.05.2018. The assessee is not satisfied by the stand so taken by the CIT(A) and is in further appeal before us.
Learned Counsel appearing for the assessee, Mrs. Urvashi Shodhan, at the outset, submits that the penalty order dated 14.09.2017 passed by the DCIT, Circle-5(3), Ahmedabad under Section 271BA of the Act for the Assessment Year 2014-15 is invalid, illegal and void, and, therefore, the said order was required to be set aside by the CIT(A), but the CIT(A), without proper appreciation of facts as well as law, confirmed the penalty of Rs.1,00,000/- levied by the DCIT, Circle-5(3), Ahmedabad. It is submitted that learned CIT(A) failed to appreciate the fact that it was a bona fide belief of the appellant that “the interest payment to partners cannot be covered under Section 92B of the Act. It is covered under Section 40b(iv) of the Act. This being the statutory allowances it cannot be disturbed. If these amounts are taken out, then
Shree Laxmi Bidi Trading Co Vs. DCIT Assessment year: 2014-15 Page 3 of 5 the balance amount will be less than Rs.5 crores”. According to learned Counsel for the assessee, this was the honest and bona fide belief on the part of the assessee. While referring to the decision of Tribunal in the case of Ravikumar Rawat Vs. ITO, Ward 2(1), Jaipur, learned Counsel submitted that it was held by the Jaipur Bench of ITAT that if there is a bona fide mistake on the part of the assessee of not obtaining report in form 3CEB in time, penalty ought not to have been levied. The learned Counsel for the assessee also submitted that assessee filed the audit report on 24.10.2016 before the assessment was completed and the assessee’s accounts were duly audited u/s 44AB of the Act and all the information and evidences were available with the Assessing Officer for completing the assessment under Section 143(3) of the Act.
Learned Departmental Representative, on the other hand, supported the orders of the authorities below and submitted that the view taken by the CIT(A) is in accordance with the provisions of law and, therefore, it is prayed that the order passed by the DCIT, Circle 5(3), Ahmedabad may be confirmed and the present appeal may be dismissed.
Considering the aforesaid rival submissions and considering the facts and circumstances of the case, it appears that the appellant, during the appellate proceedings, contended that it was a bona fide belief of the appellant that “the interest payment to partners cannot be covered under Section 92B of the Act and it is covered under section 40(b)(iv) of the Act. This being the statutory allowances it cannot be disturbed and if this amount is taken out, then the balance amount will be less than Rs.5 Crores.” Thus, there appears to be an honest and bona fide belief on the part of the assessee. In similar set of facts and circumstances, ITAT, Jaipur Bench in the case of Ravikumar Rawat vs. ITO (supra) has held that if there is a bona fide mistake on the part of the assessee of not obtaining report in Form No.3CEB in time, penalty ought not to have been levied. Similar view is also taken by the ITAT Chandigarh bench in the case of Shree Ram Dass Rice & General Mills vs. DCIT, reported in [2019] 105 taxmann.com 290 (Chandigarh – Trib).
Shree Laxmi Bidi Trading Co Vs. DCIT Assessment year: 2014-15 Page 4 of 5
In our considered view, the assessee has given a reasonable explanation and the explanation so offered has not been specifically faulted. As held by Hon’ble Supreme Court in the case of CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14 ( SC) that “while it is not the law that any and every explanation by the assessee must be accepted, it must be acceptable explanation, acceptable to a fact-finding body”. In our considered view, the explanation given by the assessee is a reasonable explanation and nothing has been placed before us to show that the explanation given by the assessee is false, improbable or unreasonable. It appears that the learned CIT(A) has proceeded as if the levy of penalty is automatic. The explanation given by the assessee in the instant case appears to be a bona fide mistake and, therefore, we accept the same as an unintentional bona fide mistake. Being satisfied by the explanation offered by the assessee, after considering the position of law as applicable, we hold that it was a case of bona fide mistake. Accordingly, the respective orders, imposing and confirming the penalty under Section 271BA of the Act, are set aside. The penalty order under Section 271BA of the Act is hereby quashed and the appeal of the assessee is thus allowed.
In the result, the appeal of the assessee is allowed. Pronounced in the open court today on the 09th day of September, 2019.